If an urban planner designed an environment for commercial real estate success, Metro Vancouver would fit the bill perfectly.
With a population of around two million big-spenders hemmed in by mountains, oceans, the U.S. border and decades of progressive politics that has frozen thousands of acres out of the market and stalled necessary development, there is nowhere better to make money in real estate.
And the data shows it.
Metro Vancouver has the lowest industrial real estate vacancy in North America and the highest leasing and strata costs in the country. The industrial land base has shrunk close to zero, driving land prices into the stratosphere.
In the multi-family sector, where rental construction is low, demand and rents are the highest in Canada. Sales of existing apartment buildings hit a record $1.6 billion through the first half of this year.
New condo apartments, meanwhile, are pre-selling for $2,000 to $3,000 per square foot at new Vancouver towers at Oakridge and downtown.
Despite the pandemic, confidence in downtown offices is so strong that developers are building giant towers without a single tenant signed on, and the biggest strata office offering sold out two years ago at more than $2,000 per square foot.
The retail sector, which should be suffering in a pandemic, has been buoyed by Metro consumer spending that is rising faster than anywhere else in Canada. Even in the Downtown Eastside, retail sites sell for the equivalent of $10 million an acre and retail strata sells at up to $800 per square foot. When the province bought skid row hotels in the area this spring, it paid up to $327,000 per door.
Yet, while the opportunity to profit from a captive market appears legendary, Metro Vancouver real estate developers must be wily to make it all work.
Industrial
Serviced industrial land has virtually disappeared in Metro Vancouver. Developers are now looking east to areas like Chilliwack and Abbotsford, even Mission, for raw land. With 150,000 acres locked in the 40-year-old Agricultural Land Reserve, industrial developers and owner-occupiers are paying tens of millions per acre for brownfield parcels and turning to questionable sites for construction.
This year investor Veramax Holdings paid $44 million for a 2.5-acre industrial site in North Vancouver and biotech firm AbCellera paid $38 million for two acres of East Vancouver industrial land.
Beedie, B.C.’s largest industrial developer, has been struggling for six years to turn 163 acres of a Delta peat bog into an industrial park, a plan that has raised protests from environmentalists and huge infrastructure costs.
In Richmond, a 170-acre waste landfill is being converted into a $300 million industrial park by Montrose Property Holdings. The resulting Richmond Industrial Centre will include up to 14 buildings ranging from 100,000 square feet up to 500,000 square feet when completed.
The payoff could make it worthwhile. The second quarter of 2021 marks the fourth consecutive quarter of no industrial vacancies in the 100,000-square-foot segment across Metro Vancouver, with the largest vacancy being 47,495 square feet, according to Colliers.
Industrial space now leases for an average of $14.88 per square foot, up 13.7% from a year ago and the highest in Canada. Suburban industrial strata space is selling for an average of $488 per square foot, but that price can more than double in Vancouver or the North Shore.
Office
There is some debate about how many workers will return to the office this September, and the office vacancy rate is rising, but downtown developers appear giddily bullish on the future.
There is 3.3 million square feet of office space under construction in Vancouver’s downtown, including three towers scheduled to open from this year to 2024 that have no tenants in place. A 215,000-square-foot, 25-storey office tower set to open this fall has signed only one tenant, which has taken just 27,000 square feet.
Still, reports Avison Young, 61% of all the new office lease space now under construction to the end of 2023 is pre-leased.
In its mid-year 2021 office report, the agency summed up the core confidence.
“Despite a significant increase in vacancy, the overall market performed quite well through the pandemic with very few tenant defaults or lease terminations or developers abandoning development projects,” the report noted. “An increase in new supply may actually provide a short-term benefit for the market and stimulate leasing activity and accelerate the recovery.”
Retail
Metro Vancouver saw a multimillion-dollar shopping spree by investors snapping up retail assets this year before the province began to lift restrictions on store openings July 1. But, for many retailers, the traffic had already returned, according to a Cushman & Wakefield study.
“Google data shows that, as of the end of June, Metro Vancouver was just 3% below normal traffic for destinations including restaurants, cafés [and] shopping centres,” the agency reported July 28.
Its Marketbeat report also noted that at least 10 notable brands, including Athleta, Dollarama (TSX:DOL), Herschel Supply Co., Lucid Motors (Nasdaq:LCID), Nike (NYSE:NKE) and Peloton (Nasdaq:PTON), had all either expanded or opened retail outlets in Metro Vancouver while restrictions were still in place.
May Metro Vancouver retail sales, at $3.7 billion, were up 34.5% from the same month a year earlier. This is the largest year-over-year increase of any city in Canada, according to Statistics Canada.
Bricks-and-mortar retail investors have been piling into the Metro Vancouver market for months.
On May 12, the 42,000-square-foot Nordel Centre shopping centre in Delta sold for $21.3 million, nearly $3 million over its BC Assessment value, reported the Fraser Elliott Group, which brokered the deal.
Other big sales in the first half of this year included the 81,000-square-foot Lougheed Super Centre in Coquitlam, bought in a share-sale worth $42 million; and an assembly of three retail properties on Victoria Drive at East 49th in Vancouver, totalling 45,257 square feet, that sold for $42.5 million.
In the second quarter, Skyline Real Estate Investment Trust paid $31.4 million for a 71,800-square-foot Abbotsford shopping centre; and a private investor bought the 34,781-square-foot Rodeo Square in Surrey for $23.3 million.
There has also been an increasing number of storefront retail assets and strata retail sales across the City of Vancouver, based on Western Investor Done Deals listings.
“Economic recovery is ramping up in Metro Vancouver and can be expected to gain significant momentum through the second half of 2021,” the Cushman & Wakefield Marketbeat report concluded.
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.
