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Kelowna's downtown core reaching new heights – Vancouver Sun

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Kelowna-based developer Mission Group has announced it is building a 16-storey office tower, The Block, at the corner of Bernard Ave. and St. Paul St., in the downtown core.


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Two new tower projects in Kelowna are pushing the Okanagan city’s office market into a taller and bolder future.

Kelowna-based developer Mission Group has announced it is building a 16-storey office tower, The Block, at the corner of Bernard Ave. and St. Paul St., in the downtown core.

Pending permissions, The Block will include 85,000 square feet of class-A office space on levels six through 16, as well as four levels of parking and 16,000 sq. ft. of street-level retail.

It’s part of a 1.5-acre complex by Mission Group that also includes two residential towers, the Brooklyn, which is under construction and Bertram, which will launch for sales in the spring.

“We’re very bullish on Kelowna’s downtown in general,” said Luke Turri, executive vice-president with Mission Group. “In the past few years we’ve started to invest quite a bit in the historic core of downtown with residential condo towers. What we’ve seen in that time is certainly a maturing of Kelowna’s economy and also an enhanced interest in downtown Kelowna in general.”

He said pre-releasing has just launched on The Block and they expect to start construction this coming fall.

Meanwhile, construction work continues on Landmark 7, a 23-storey tower by Al Stober Construction that will add about 250,000 square feet to the Landmark District.

More than 3,500 people already work in buildings at the Landmark district in mostly technology, professional services, education and retail.

The building is part of a cluster of office towers that have risen in the district since 1994, creating a commercial district separate from downtown on the south side of Highway 97 between Burtch and Spall roads.

Landmark 7 is expected to complete in mid-2022.

Stephen Webber, an associate vice-president with Colliers International in Kelowna, said the two projects represent the most prominent office buildings currently being built or planned in the city, which has seen its office vacancy rate drop by about half in the last two years.

The local industrial, residential and office markets have all been strong and are fuelling the need for job space, but there has emerged a disparity between the various office classes, with older product getting emptied almost as soon as new product becomes available, Webber said.

The current vacancy rates are 1.7 per cent in class-A, 3.4 per cent in class-B and 7.3 per cent in class-C. Altogether the rate is 4.1 per cent for the Okanagan city of about 130,000, which is starting to claim technology as a major employer.

Overall, Kelowna has just under two million square feet of class-A office inventory across 46 buildings and a total office inventory of just under four million square feet, according to Colliers.

Webber said there will likely be an uptick in overall vacancy once Landmark 7 and The Block open in coming years. To what extent is unclear.

The typical users for the new space will include a mix of professional services and maybe tech companies.

In the 18 hours prior to speaking with Postmedia, Webber said he heard from an accounting firm from Calgary that was seeking office space as part of a move to Kelowna and from a small architecture firm from Alberta looking to relocate to Kelowna as soon as possible.

“That’s your typical kind of user,” he said. “The growth is still happening. The influx and new businesses that are opening and new businesses that are coming here have been absorbing (space) fairly steadily.”

Mission Group’s Turri sees his project as a major step for downtown core that hasn’t seen much new office space.

“To be able have that shared energy of the residential and the office and the supporting retail is just going to create a new presence in this part of the downtown,” he said.

Turri said it’s likely that the space will leased by several tenants, rather than to a single business.

“Certainly, we would make the building available for an entire floorplate or multiple floorplates should tenant demand go there,” he said.

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Real estate sales set record in Powell River – Powell River Peak

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Residential real estate sales in the Powell River region in August 2020 were significantly higher than those of the previous year.

According to Powell River-Sunshine Coast Real Estate Board president Neil Frost, August featured a significant year-over-year gain and marked a new sales record for that month.

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“Home sales in the region continued to rebound in August, smashing the previous record for the month set back in 2005,” said Frost. “New supply is also on the rise but is not keeping pace with demand. As a result, the market has tightened significantly and the imbalance between supply and demand is putting upward pressure on prices in the region.”

In August 2020, the average single-family home sold for $464,655 and was on the market for an average of 60 days. In 2019, the average single-family home sold for $394,763 and was on the market for 70 days.

Frost said August statistics regarding vacant land speak to how busy the market has been, and that more people are turning to building. Some people coming from out of town want new properties or are not finding what they want, according to Frost.

He said the median house price of $419,000 is probably accurate. He said that is the going price of a decent family home in Powell River.

“We have seen a bit of a bump here over these past couple of months,” said Frost. “The activity has kind of pushed prices up. It’s still active and there were quite a few sales in the higher price range in August, which really pulled average prices up.”

In terms of single-family homes, in August 2020, there were 48 homes sold, valued at $22,768,111, compared to 28 homes, valued at $11,053,358, in August 2019.

There were three single-family mobiles and manufactured homes, valued at $598,900, sold in August 2020, compared to five units, valued at $668,000, in August 2019.

For single-family condos, apartments and duplexes, there were four sold in August 2020, valued at $1,178,200, compared to eight, valued at $2,090,500, in August 2019.

Totals for residential properties for August 2020 were 56 units valued at $24,545,211, compared to 41 units, valued at $13,811,858, in August 2019.

For non-residential, in August 2020, there were 10 parcels of vacant land sold, valued at $1,761,000, compared to five parcels in August 2019, valued at $363,000.

In terms of industrial, commercial and institutional, there were three units sold in August 2020, compared to no units the previous year.

Frost said Texada Island has been active, with affordability and the lifestyle it offers over there.

In terms of year-to-date residential sales comparisons between this year and last, in 2020, there were 283 homes sold, compared to 274 in 2019.

“In a year where we thought we were going to sell less, we’re pleasantly surprised that we’re on track to do the same kind of sales,” said Frost.

According to the buyer and seller statistics for August 2020, there were 30 local buyers and 25 out of area buyers. Statistics for all of 2020 show 51.1 per cent local buyers and 48.9 per cent out of area buyers.

In terms of sellers in August 2020, 49 were local and 10 were from out of the area. The year’s statistics show 87.3 per cent of sellers were local and 12.7 per cent were out of area.

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The Pandemic is Changing Life Sciences Real Estate – GlobeSt.com

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As other segments of the economy have suffered in 2020, life sciences are emerging as a bright spot. 

Private investors have put more than $16 billion to work in life sciences in the first half of 2020, while the National Institutes of Health continues to up its grant volume. In 1994, NIH gave out $11 billion in grants. By 2019, that number jumped to $39.1 billion, JLL’s Life Sciences practice Global Leader Roger Humphrey wrote for NAIOP

The pursuit of COVID-19-related therapeutics, antibody tests and a vaccine contributed to this increase in funding. But it wasn’t the entire story, according to Humphrey. An aging US population needing life-sustaining and life-extending care, wellness-conscious millennials and a prescription drug market on track to reach $1 trillion by 2022 also drove this market. 

To secure funding, Humphrey writes that life sciences companies must create a work environment that encourages innovation and productivity while remaining flexible to meet new and evolving demands. 

As these firms need to remain flexible, they’re adopting more technology, such as machine learning and artificial intelligence. 

“That means a growing portion of today’s lab looks more like a traditional office, even if its operational systems are far more sophisticated,” Humphrey writes.

While computers and the internet have allowed many office workers to work remotely, Humphrey writes that life sciences companies still brought workers into labs. They are incorporating staggered shifts and social distancing to keep their work on track. Many administrative staffers at these companies are working from home.

“Flexible lab space that can adjust to a variety of work tasks with limited downtime will be critical, along with ‘free’ space that can be called on to meet changing industry conditions,” Humphrey writes.

The locations of this space could be changing, though. Boston, San Francisco and San Diego secured up to 70% of venture capital investments in 2019. While these locales offer proximity to a highly educated workforce and ties to leading research institutions, Humphrey reports some companies are starting to look to secondary markets to cut costs. He writes that these secondary markets include Maryland, North Carolina’s Research Triangle, Philadelphia, New York and Los Angeles.

Others agree that high costs are creating new life science hubs. “Major metropolitan cities like Boston, San Francisco, Seattle and San Diego that have been long-established life science hubs are expensive to operate in,” Mark Hefner, CEO and shareholder of MGO Realty Advisors told GlobeSt. in an earlier interview

 “Everything from real estate to cost of living in these cities is expensive. Now, with the Covid-19 crisis, companies are facing tremendous budget constraints and increasing pressures on their bottom line, forcing them to reconsider where they are located.”

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Moody’s Doubles Down On Forecast of Canadian Real Estate Prices Falling Soon – Better Dwelling

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One of the world’s largest credit rating agencies doubled down on its Canadian home price forecast. Moody’s Analytics sent clients its September update on Canadian real estate prices. The forecast reiterates they expect price declines to begin towards the end of this year. The report also names impacted cities this time, with Toronto expected to be a leader lower.

Forecast Vintages 

A quick note on reading Moody’s charts, which includes “forecast vintages.” If you’ve only looked at consumer forecasts, these might be new. They’re scenarios that vary depending on the forecasting model’s inputs. Instead of giving a forecast like, “prices will drop x%,” they give a range based on factors. These factors are fundamentals that have typically supported prices. 

The Moody’s forecast shows vintages as baseline, S1, S3, and S4. The September baseline is the scenario they believe has the highest probability. The S1 is what happens if indicators are better than expected. This would mean unemployment drops fast, and disposable income doesn’t fall much. The S3 is what happens if fundamentals are worse than expected. S4 is the worst scenario that can unfold in a reasonable amount of time. Abrupt scenarios and black swans can still be worse. It’s just those are outside of the range of reasonable expectations.

Canadian Real Estate Markets To Start Showing Weaknesses Soon

Moody’s previous forecast didn’t expect the market to show signs of weakness until Q3, and they’re doubling down. The report’s economist expects stimulus, mortgage deferrals, and interest rates to contain damage until Q3. They expect by Q3, the optimism of those programs will begin to wear thin. The reality of how meaningful the improvements are, should be apparent by then. The optimism should then fade. It’s at this point they believe prices can no longer defy employment, vacancy, and delinquency rates.

Canadian Real Estate Prices To Drop Around 7%

The firm expects all scenarios to show a drop in the near future, but how much depends on fundamentals. In the September baseline, the firm’s economist is forecasting a ~7% decline at the national level. This scenario expects unemployment at 8.56%, and a 2% drop of disposable income next year. Since the rise in disposable income was due to temporary supports, the fall is expected.

In the other scenarios, things vary from a brief drop to a very deep, multi-year decline. In the S1 scenario, there’s only a brief dip in Q1, before prices rocket even faster and higher. In S3, a slightly worse than base case, prices fall about 15%, taking them back to 2016 levels. In S4, if disposable income, GDP, and/or unemployment worsen,  prices drop about 22%, back to 2015 levels. Of course, this trend isn’t evenly distributed across Canada. However, it’s also not distributed how most might expect. 

Prairie Cities and Toronto Real Estate To Lead The Declines

The base case sees Prairie cities and Toronto real estate leading price declines. Calgary, Edmonton, and Regina lead the drop, with a peak-to-trough decline between 9 to 10%. This is a trend already apparent in the regions’ condo markets. Toronto, a little more unexpected, is forecasted to see a 9% price drop, from peak to trough. Vancouver’s drop is forecasted below the national average, with an average decline of almost 7%. The last market is interesting, since other organizations gave Vancouver much worse forecasts.

Toronto Real Estate To Experience Uneven Declines Across Regions

The base case for Toronto expects an uneven decline, with some regions harder hit. The drop across Toronto CMA is expected to be about 9%, from peak to trough. Pickering should see smaller declines, but experience minimal growth through 2025. Markham is the most surprising though, not expected to hit 2017 highs by 2025. The trend here appears to be regions short on space will recover the fastest. Although that is likely to depend on the type of housing as well.

The forecast notes pandemic uncertainty, and its potential to bring greater downside. As it gets colder, the potential of more indoor activity may lead to a second wave. The report’s economist believes this can bring even larger declines to prices. Shifting consumer behavior is also a wild card that can also push prices lower, as are any vaccine delays.

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