The real estate world in BC and Canada at large has been very focused on supply chain issues and rising interest rates this year, but new real estate market investment statistics show that those factors did not noticeably affect the market in terms of transactions.
According to a new report published by Avison Young, BC saw approximately $8.29B worth of commercial real estate investment in the first half of 2022, across a “near-record” amount of 458 transactions. Those transaction types include investments in the following markets: office, retail, industrial, land, and multi-family.
The Office Market
Real estate investment in BC office spaces was quieter in the first half of 2022 compared to the same period last year. Between January 1 and June 30, BC recorded a total of 20 transactions totaling a value of $475M, compared to 31 transactions for $771M in the first half of 2021, which is about a 33% decrease in the amount of transactions. As a percentage of all sales, investment in office space also decreased, representing 12.7% of total sales in the first half of 2021, but just 6% in 2022.
This waning can be primarily attributed to a lack of supply, Avison Young says. Downtown Vancouver is the traditional hotspot, but Avison Young notes that nearly a third of office transactions in the first half of this year occurred outside of Metro Vancouver, in places like Victoria, Nanaimo, Port Alberni, Kelowna, and Kamloops. The biggest such sale was a $10.1M deal for the Yates Centre in Victoria, which was acquired by an institutional buyer in January.
Within Downtown Vancouver, however, the largest office sale was that of the 16-storey, 147,088-sq.-ft building on 1185 West Georgia Street for $135M. A different Avison Young report that focused on the office market alone in the first half of 2022 found that Downtown Vancouver is adding high-end supply faster than absorption can keep up with, resulting in a high vacancy of class AAA office space. Absorption was starting to catch up in the first half of the year, but more office buildings are set to add to Downtown Vancouver’s supply before the end of the year, such as The Stack, but have yet to reach full occupancy.
Investment in the retail market waS “exceptionally strong” in the first half of the year, Avison Young says. The first half of 2022 saw $892M of investment in the retail space, not much more than the $885M in the first half of 2021, but there was a large increase in the volume of transactions, with 2021 registering 41 deals and 2022 registering 59 at mid-year.
Avison Young says that although the pandemic changed how people shop, with fears that it would destroy brick-and-mortar retail, investment statistics such as that increase in transactions are showing that those fears have turned into confidence. The Province of BC announced in late August that it had a surprising budgetary surplus of $1.3B, with a re-opened economy also cited as a significant reason.
Similar to the office market, however, a significant amount of that activity in the first half of the year occurred in secondary markets, primarily due to there generally being more land available the farther away from Downtown Vancouver you get.
To that tune, Vancouver still saw the highest amount of transactions, with close to 15 of the 59 deals, but the highest-value transaction was a $30.8M transaction for the Wing Sang Building in Chinatown, which is set to be turned into Canada’s first major Chinese-Canadian museum.
Meanwhile, outside of Vancouver, multiple deals involved significantly more money. Those include the sale of New Westminster’s Columbia Square for $136M, Valley Fair Mall in Maple Ridge for $76M, Trenant Park Square in Delta for $70M, and Logan Creek Plaza in Langley for $57.3M.
The Industrial Market & Land Market
Both industrial and land markets were hot in the first half of the year, according to statistics. The BC industrial market saw 79 deals for a total value of $1.26B, up slightly from the 73 deals and $1.1B at the same point in 2021. Last year saw an unprecedented 154 deals for $2.3B for the entire year, which means we are currently on pace to surpass that.
“Demand for development lands as well as for complete buildings for industrial remains strong as product continues to improve and increase in quality and efficiency,” says Avison Young. “However, demand for strata units is not quite as strong, making up a much smaller portion of the market.”
For land, which is primarily valued-based on redevelopment potential, BC registered 61 ICI (Industrial, Commercial, Investment) deals for a total of $1.36B in the first half of 2022, while the residential sphere registered 182 deals for a total of $2.88B.
Noteworthy is that unlike the office and retail space, transactions for land occurred primarily within Metro Vancouver. In 2021, Avison Young estimates that 51% of ICI land deals occurred in Metro Vancouver, but so far this year that number has increased to 83%. That was the case for residential land deals as well — despite increasing interest outside the region — with only 8% of sales occurring outside Metro Vancouver.
The top ICI land transaction in the first half of the year was a $158M deal for 1868 and 1951 Glen Drive in Vancouver, while the top two residential land transactions both occurred in Burnaby, for land near Brentwood Mall. The first was a $215M deal in March for 8.34 acres of land and the second was a $112M deal in May for 2.58 acres of land.
The Multi-Family Market
In 2021, BC saw a total of 141 transactions valued at $3.2B for the entire year. In the first half of 2022, BC registered 57 sales totally $1.4B, which was still strong compared to five-year and 10-year averages, but nonetheless hints at a cool down, especially considering nearly a third of the $1.4B for the first half of 2022 came from a single deal. That transaction was the portfolio acquisitions made by Starlight Investments for 12 properties across the province, for a total of $493.8M.
As one may expect, this softening can largely be attributed to rising interest rates, which started 2022 at 0.25% and has since been raised to 3.25%. That increase is likely going to continue, compounds with existing problems the industry is facing — such as labour shortages and construction costs — and could result in projects being delayed, plugging up the region’s housing supply while demand remains consistent, as some in the industry previously told STOREYS.
“Due to uncertainty around increased interest rates as well as rising construction costs, it is expected that projects will continue to be stalled and that the cooler demand for multi-family will persist through the remainder of 2022”, Avison Young notes in their report. “However, demand for multifamily dwellings from consumers remains high — vacancy rates are low and international students are returning due to re-opened borders. While developers may be stalling projects, there is still a need for more multi-family product on the market. This will likely cause a rebound in multi-family at some point in the future when uncertainty around interest rates eases.”
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
