After a relatively sedate 2018, Toronto is heating up again

After exhibiting relatively modest performance for most of 2018 with the advent of stricter mortgage qualification rules, Toronto is seeing a resurgence in market competition once again.

The latest numbers from the city’s real estate professionals’ association indicated that the total number of active for-sale listings in the GTA saw a 9.8% year-over-year decrease in November, down to 16,420 units.

During the same time frame, the volume of new for-sale listings in the region shrank by 26.1%.

“New listings were actually down more than sales on a year-over-year basis in November,” TREB President Garry Bhaura said, as quoted by Bloomberg.

Read more: Toronto apartment inventory having trouble catching up with demand

“This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth,” Bhaura added.

Average home sales price last month was $788,345, growing by 3.5% from the same time last year.

Meanwhile, total sales in November stood at at 6,251 completed deals, representing a 14.5% annual decline.

TREB stressed, however, that any year-over-year comparison should take into account that November 2017’s performance is “distorted” due to a large number of buyers rushing to beat the implementation of B-20 in January 2018.

www.canadianrealestatemagazine.ca
by Ephraim Vecina07 Dec 2018

New small-space flex offices push $1,000 a square foot

Metro’s high-tech sector driving demand for new office-industrial strata projects

New light industrial/office strata projects springing up from Mount Pleasant to East Vancouver may have tapped into a profitable path, despite per-square-foot prices ranging from $800 to $1,000.

The most recent manifestations include a four-storey project on Yukon Street at West 6th Avenue – formerly the 3 Vets outdoor store – by Chard Development, which bought the site last year for $20.4 million.

Now under development, the 49,000-square-foot Yukon project will feature a high-ceiling ground floor for light industrial, with bay access for trucks, capped by three floors of stylish office space.

Chard recognized a demand for smaller office sizes from the area’s tech, finance and retail services industries. As a result, Yukon will feature smaller unit sizes (1,000 to 5,000 square feet) to adapt to this new Vancouver real estate reality, according to Byron Chard, Chard’s principal and CFO.

A similar Chard project at 34 West 7th Avenue sold out all 48,000 square feet while still under construction.

Nothing has pre-sold yet at the Yukon, where strata space starts at $1,000 per square foot.

The building will include a freight elevator, bike lockers, showers and 83 parking stalls, and it could prove popular, according to the type of high-tech tenant Chard is targeting. Completion is expected in 2020.

“I can definitely see the demand,” said Dogu Taskiran, a partner and founder at Stambol Studios, a virtual-reality startup that concentrates on the real estate market.

Taskiran said the Mount Pleasant location and ample parking would be among the draws.

Stambol is currently splitting 2,000 square feet of space in False Creek Flats, where the total monthly rent is $3,000, which Taskiran described as “a very good deal, very cheap.”

Chard noted that a startup could buy office or industrial space at Yukon and lease out part of it until it expands, but he expects most of the buyers will be sole owner-occupiers.

“Our goal is to make the space as flexible as possible,” he said.

Alliance Partners is trying the same concept in East Vancouver with a five-storey, 55,000-square-foot light industrial/office strata project on Clark Drive at Adanac Street.

Kevin Kassautzki, vice-president at Avison Young, which is handling sales of the project, expects per-square-foot prices to be in the $700 range for industrial space and $800 for offices.

“I think this area is on its way to becoming the next Mount Pleasant,” Kassautzki said.

There is an appetite for buying strata office space from larger players in the tech community, Taskiran said, but he added that Stambol and other startups often prefer to lease. A common theme, he said, is to stay out of the downtown, where higher lease rates and a lack of parking are considered obstacles.

Frank O’Brien | Western Investor
November 21, 2018

Opportunity abounds for investors in booming Kitimat

With Kitimat getting a $40 billion LNG windfall, the town’s biggest new residential project Riverbrook Estates is the perfect way to get in on the action

Kitimat. Until recently, that name conjured up a little-known town with a population of less than 9,000 in north-west British Columbia. But today, Kitimat is a town known around the globe for one thing: the single largest private-sector investment in Canadian history.

With the announcement of LNG Canada’s $40 billion project, everyone is looking to get in on the action, whether they’re an energy worker, a contracting company, a product supplier, a facilities service companies, a land developer or an individual real estate investor. The opportunity is enormous for many – and a real challenge for others trying to find a way in.

Jason Pender, a real estate developer, investor and principal of JV Dev Group, and his development partner, Leonard Kerkhoff of Kerkhoff Construction Ltd., are two local players who stand to reap the benefits from the LNG deal. Having made a land purchase in Kitimat four years ago, they are confident that it will now pay dividends – not only to their development group, but also to those who buy into their new residential community, Riverbrook Estates.

“The lights went out”

In 2014, a development group comprising Kerkhoff Construction, JV Dev Group and three other partners purchased a 27-acre parcel of land in downtown Kitimat, when the LNG deal was first on the table.

Pender tells Western Investor, “Things were going great. Then in 2015, the natural resource sector took a huge global downturn. LNG in Kitimat took a pause and, in 2016, the front runner, LNG Canada, announced they would delay a decision indefinitely. All the lights went out.”

The group’s land parcel had achieved a lot before those lights went out. Some of their 27 acres had been rezoned into two phases of new townhomes of 93 units in total, and the development group had passed third reading on a 70- lot bare land strata site. There were an additional 32 single-family lots, with the potential to rezone half into two multi-family sites, for up to another 100 units. At close to 300 units, Riverbrook Estates was set to be the largest residential development in Kitimat in 50 or 60 years.

Then, in early October 2018, LNG Canada was approved, and, as Pender puts it, “The lights went back on. We had already accomplished a lot of ground work at Riverbrook Estates. We were ready to go then and we are ready to go now. Riverbrook Estates is significantly further ahead of any other residential development project in Kitimat.”

“Not since the gold rush”

Leonard Kerkhoff, President of Kerkhoff Construction, is extremely confident about Kitimat’s prospects. He says, “This town is about to go through unprecedented economic growth, the likes of which has not been seen since the gold rush of the mid-1800s. Kitimat is the centre of an LNG energy industry well regarded for its lesser impact on the climate, and used the world over, which is just now making headway in Canada.”

The LNG Canada project is set to bring a potential $18 billion of construction work to the town of Kitimat alone. The town’s population, last pegged at 8,131 (2016 Census), is expected to triple in the coming years as skilled workforces and management teams move in. In addition, three other LNG facilities are also under development, aiming to ride in on LNG Canada’s coattails. This includes Chevron’s proposed facility, which – if approved – could bring a further decade of development in the LNG industry to Kitimat.

 Baxter Landing by Kerkhoff Construction is a 36-unit townhome development in Kitimat, the first multi-family project in the city in decades. Image supplied

Baxter Landing by Kerkhoff Construction is a 36-unit townhome development in Kitimat, the first multi-family project in the city in decades. Image supplied

“Explosive housing demand”

Since October, Kerkhoff has been in discussions with major contracting and engineering firms, such as FluorLedcorGrahamStuart OlsonSeaspan and Mammoet, about the pressing need for rental housing in Kitimat for their management staff. With a new workforce of 7,000-10,000 workers, if even only 10 per cent require permanent homes, this represents a demand for 700 to 1,000 new homes, says Pender. He points out, “The management staff for the largest energy contract in Canadian history cannot be expected to live in a work camp.” And those estimates do not factor in new homes needed for the likely increase in support workers such as retail and hospitality staff, medical support workers and ancillary services companies.

A 50-year-old construction company, Kerkhoff Construction has been building in the region for more than five years, and has become the largest residential developer in Kitimat. Completed projects include Baxter Landing, a 36-unit townhome project, and a 49-unit condo building at Haisla Town Centre for the Haisla Nation.

 Kerkhoff Construction was selected to build a 49-unit condo building at Haisla Town Centre for the Haisla First Nation. Image supplied

Kerkhoff Construction was selected to build a 49-unit condo building at Haisla Town Centre for the Haisla First Nation. Image supplied

These are the first and only multifamily projects to be built in Kitimat in 50 years. “These projects have brought much-needed new homes into Kitimat to replace the aging homes built by Alcan in the 1950s and 60s, many of which are reaching the end of their life,” says Pender.

He adds, “Kerkhoff Construction is definitely the best positioned and furthest ahead of any other developer-builder to deliver new homes for the explosive demand Kitimat will require in the near future.”

“The timing is exceptional”

With Riverbrook Estate’s first phase of 47 new townhomes coming to the pre-sale market at the end of November 2018, and occupancy expected in spring 2020, now is the time for investors to get a piece of the action, says Pender.

“We believe the timing is exceptional, as LNG construction will be ramping up and in full swing and housing needs will be at an all-time high. Whether you’re an investor looking for price appreciation and cash flow, or you are looking for a new home to live in for the next decade of economic growth in this region, these are exciting times as a developer and for those buying an investment to live in or rent out.”

WI staff Western Investor
November 20, 2018
Copyright © 2018 Western Investor  

White Rock multi-family site sold for $7.12M

The 25-unit apartment building sold for $285,000 per suite

A 25-unit apartment building in White Rock has sold for $7.12 million, Macdonald Commercial Real Estate Services reports. 

The multi-family suite sold in an off-market transaction for $285,000 per suite, on October 30, 2018. The property has an assessed value of $5,485,000. The site is 22,000 square feet, with future redevelopment potential. 

The property is located at 1485 Fir St., White Rock. 

Breakdown: 

Price: $7,127,000

No. of Units: 25

Price/Unit: $285,000

Lot Size: 22,000 SF

Property Type: Multi-family 

Zoning: RM-2

2017 B.C. Assessment Value: $5,485,000

Date of Sale: 10/30/2018

City: White Rock    

Province: B.C. 

Stuart Wright Nick Goulet Macdonald Commercial Real Estate for Western Investor

November 14, 2018

CMHC releases Sept. housing starts data

The annual pace of Canadian housing starts fell to their lowest level in nearly two years in September.

Canada Mortgage and Housing Corp. says the seasonally adjusted annual rate came in at 188,683 units last month, down from 198,843 in August.

Thomson Reuters Eikon says economists had expected an annual rate of 210,000 for September.

September marks the third straight monthly decline.

The slowdown in the pace of housing starts comes amid rising interest rates from the Bank of Canada, and more restrictive mortgage rules.

``The September housing starts report fits with the relative calm and return to normality in sales, market balance and price growth that we are seeing across most of the country this year, in particular Toronto, following speculative excesses in Southern Ontario earlier last year and a moderate correction in response to policy measures earlier this year,'' wrote Sal Guatieri, a senior economist with BMO Capital Markets, in a note.

``Demand continues to be supported by the fastest population growth in 27 years and new millennial-led households. A calmer housing market is just what the doctor ordered, and won't discourage the Bank of Canada from raising rates on Oct. 24.''

CMHC says the pace of urban starts fell by 5.9 per cent to 175,653 units. The slowdown was dragged down by an 8.9 per cent drop to 122,656 units in urban multiple-unit projects such as condos, apartments and townhouses. Single-detached urban starts increased by two per cent to 52,997.

Rural starts were estimated at a seasonally adjusted annual rate of 13,030 units, while the six-month moving average of the monthly seasonally adjusted annual rates was 207,768 for September, down from 213,966 in August.

British Columbia led the declines with a drop of 43.3 per cent due to stiffer mortgage rules and growing lack of affordability, particularly in the Greater Vancouver area. Alberta also saw a drop of 34.8 per cent, amid a weakening in the oil-producing economies.

Meanwhile, Ontario housing starts increased 21.3 per cent, led by Toronto condos and Quebec was up 15.4 per cent.

 

The Canadian Press

Mortgage stress test could become election issue

The Conservative Party of Canada plans to make the mortgage stress test a hot button issue in time for next year’s election, but explaining such a convoluted issue to Canadians could pose a challenge.

The party’s Deputy Shadow Minister for Finance tabled two motions this year to study the impact of the stress test, known as B-20, but they were both rejected by the Liberals. Nevertheless, MP Tom Kmiec has vowed to put the mortgage stress test on the agenda in time for the Oct. 2019 federal election.

“It will be an election issue, absolutely,” said Kmiec. “I’m willing to use procedural tools to get this study done. I’m not necessarily saying to get rid of B-20 completely; I’m saying take a look at the data and then make a decision on it. I’m asking the Liberals to provide any internal documents they have showing why the mortgage rules were introduced in the first place.”

Kmiec has started a website to pressure the Liberals into studying B-20’s effects. He claims that he was initially told B-20 wouldn’t be examined in the absence of more data, however, much has since come to light about Canadians being shut out of the housing market.

Kmiec is dogged, to be sure. He participated in the electoral reform committee’s filibuster.

“If it comes down to it, I’m happy to use up every two-hour time limit on every single committee until we agree to do a mortgage study,” said Kmiec. “I’m not asking for the moon, either. All I want are a few meetings in Ottawa where we can invite people with data who can then tell us what’s happening with the market.”

But communicating the message will doubtless be challenging for the Conservatives. Ron Butler of Butler Mortgage can attest to how difficult buying homes has become this year, but too few Canadians have born that brunt for the impact to truly be understood.

However, given that mortgage renewals are subject to the same stringent B-20 qualification rules, Butler believes it is still possible to make Canadians understand how detrimental the stress test is.

“It won’t be hot button, but if it’s messaged right, it could be,” he said. “If it’s presented properly as a group of themes about the incompetence, in terms of the ability to handle the file—why has Mexico settled NAFTA already and Canada hasn’t? Why did we buy a pipeline that got shut down? It’s a good thing to add to the general list of incompetence. On its own, it isn’t a hot button issue, but if you want to weave it into a tapestry of every day, practical fiscal management, it could work.”

 

by Neil Sharma01 Oct 2018, www.canadianrealestatemagazine.ca

Vancouver council approves duplexes in most neighbourhoods

Decision came despite opposition from some residents

City council voted to allow duplexes in most single-family neighbourhoods in Vancouver in a 7-4 decision after a two-day contentious public hearing that ended Sept. 19.

NPA councillors George Affleck, Elizabeth Ball and Melissa De Genova, as well as the Green's Adriane Carr, voted against the proposal, which was considered one of the "quick start" actions in the city's new Making Room program that aims to increase housing diversity in Vancouver.

Council's decision means duplexes will be allowed with or without small lock-off suites. It's an option for new construction only, and it doesn't include an increase in floor area over what's currently permitted. Laneway houses also won't be allowed in conjunction with duplexes. City staff say they don't anticipate land value to escalate thanks to those restrictions.

The rationale for allowing duplexes wasn't based on affordability, although they will be cheaper than single-family homes. It's meant to increase housing options.

Before voting in favour of the proposal, Vision Vancouver mayor Gregor Robertson said the city needs more options between single-family and higher-density housing forms. He pointed out laneway homes and secondary suites were also controversial, but allowing them has worked out well.

"The big challenge that we have as a council is, in these neighbourhoods, we need to make decisions that are not just for the people who live in the neighbourhoods right now, but as Coun. [Raymond] Louie said, for the people who want to live there and who, hopefully, will be able to live there for many years to come," he said.

Coun. Andrea Reimer said despite complaints there wasn't enough consultation, a great deal took place through the Housing Vancouver strategy, which led to the Making Room program.

Reimer said the duplex proposal isn't a huge step, but it's a matter of justice to give less affluent residents hope that council will use "tiny tools" such as zoning to try and help meet their needs.

Coun. Raymond Louie said "if this is not gentle density, I don't know what this is because there is no extra density."

But De Genova argued consultation wasn't robust enough before she voted against the proposal.

"Zoning needs to be led by Vancouver's 22 neighbourhoods," she said.

Carr said she didn't see any evidence that the zoning change was important or needed.

"The real point is that we need to build affordable homes through different kinds of housing types than the ones that are aimed [at] the upper end of the income scale," she said.

Affleck took aim at Vision Vancouver in his remarks.

"After 10 years of Vision Vancouver leadership, this council has become renowned for lack of public consultation," he said. "If you tear this city apart to achieve these goals, you've not achieved much at all."

Ball said the sense of betrayal some residents feel won't be a good legacy for council, while Hector Bremner, who supported the proposal, questioned how duplexes could be an affront to democracy.

In comments before the vote, senior planner Paula Huber said staff anticipate there will be a shift away from building single-family dwellings to building duplexes. Currently, the city gets about 800 applications for new single-family homes a year. She expects half of that figure might flip to duplexes so there's the potential to produce 800 duplex units.

She estimated new East Side duplexes go for about $1.2 million, while West Side ones go for upwards of $2.5 million.

Duplexes will likely appeal to households earning $150,000 or more, according to Huber, which accounts for about 15.5 per cent of the city's households.

There are currently 283,000 dwelling units in the city, she added, 4,500 of which are duplexes, which translates to 1.6 per cent of the housing stock.

During the first day of the public hearing on Sept. 18, there was mixed reaction about the proposal, while on the second day the bulk of speakers raised objections, including Judy Graves, the city's former advocate for the homeless. Graves said she spent the past two decades moving First Nation families, immigrants, single parents and working class seniors, as well as other individuals, into suites across the city, which she now fears will be torn down in favour of duplexes.

She called for amendments to the proposal that would guarantee that displaced families would be relocated into suites in the same school district and that displaced seniors would also be relocated into their same neighbourhoods because elderly people aren't comfortable with change.

Other critics, meanwhile, outlined many of the same complaints lodged on the first day of the hearing, including the fact that councillors, most of whom aren't running for re-election, were making a decision that they won't be accountable for, that there wasn't nearly enough consultation, that many residents likely didn't even know the proposal was up for consideration since notices weren't sent to individual homes, that character homes will be knocked down, and that it will lead to land speculation by developers, worsening the affordability crisis.

Colleen Hardwick, an NPA candidate in the upcoming election, called the process fundamentally flawed.

"That you would even consider sweeping changes without due process is unconscionable. You need to listen to the people, and you have not."

Hardwick argued if council passed the rezoning it would be like "putting out a fire with gasoline. It will be a feeding frenzy."

Janice Wong said the changes contravened community plans, which undermines residents' faith in the process.

"The public must have meaningful input in the planning of their neighbourhoods," she said.

The city says its Housing Vancouver strategy, which was adopted in 2017, included consultation with more than 10,000 residents over 18 months. That process identified a desire for "missing middle" housing options across Vancouver, which led to the Making Room program, which was adopted in June. The program included the duplex proposal as a "quick start" action.

Four information sessions were held this month about the proposal.

The meetings were advertised in the newspaper, at community centres and libraries, and through a social media campaign. Email notices were also sent to neighbourhood organizations and individuals who had signed up for notifications through the Housing Vancouver process.

Individual notices were not sent to homes. The Vancouver Charter only requires the city to notify the public about rezoning proposals in the newspaper and at city hall.

For site-specific rezonings, the city notifies residents within a certain proximity directly, which goes beyond what's required by the Vancouver Charter. Residents are typically not directly notified for citywide rezoning proposals. That was also the case when laneway housing was introduced in single-family districts in 2009 and when additional density was added to single-family zones to allow secondary suites that same year.

Representatives from Abundant Housing Vancouver, who spoke in favour of the plan at the public hearing, were happy the duplex proposal passed but stressed it was a very small step.

"With all the work that the planning department put in, I would have been very disappointed if it didn't pass," Owen Brady told the Courier. "We've been saying it's a step in the right direction, but it's a very small step. I don't think any of the disaster scenarios are going to come true."

Stuart Smith agreed.

"It's just such a small thing that we are up in arms over the idea of simply allowing two families to share the same square footage that we currently require [single-family] homes to consume. The drama over this is crazy... This isn't any extra density and it was called an atomic bomb. What would you call it if the proposal was for a four-storey apartment? What would that be? Would that be the Death Star?" he said.

"So yes, it's a positive step. It's a positive step simply because it gives more options, more ways to live in Vancouver. Some people want duplexes, some people don't. That's fine. Some people want single-family homes, that's fine. You don't need to tell people how to live. It's one extra choice, so why not? There was a councillor, Geoff Meggs, who once said tiny homes are not the solution. And this is true, tiny homes are not the solution, but homes like that, and laneways, and duplexes, work for some people. We do not need to look for a housing typology that works for every single person in the population. We need to allow lots of different housing types that work for lots of different people."

 

Naoibh O’Connor Vancouver Courier
September 20, 2018
Westerninvestor.com

B.C.'s capital region sees rental housing construction boom, especially Langford

More than 900 housing units started this year in Langford, triple the amount of the next closest municipality

DB Services Victoria is so busy building rental projects in Langford that it turns away new projects every month, says the company’s director of development.

vka-construction-0392-jpg.jpg

Workers pour footings for the Arc, a 93-unit rental building at the corner of Bryn Maur Road and Hockley Avenue. August 2018 — ADRIAN LAM

The Langford-based firm is one of the developers supporting the West Shore’s building boom, where rental apartments, condominiums and single-family houses are under construction.

In the first seven months of this year, 911 housing units were started in Langford, far outpacing other Greater Victoria municipalities. Saanich followed with a distant 284 housing-unit starts.

So far this year, 2,185 homes have been started in the capital region, up from 1,913 for the same seven months in 2017, according to Canada Mortgage and Housing Corp.’s latest report.

And every CMHC report shows strong construction in the West Shore, where the population is growing and where councils say they are committed to an efficient approval system.

“We have been turning away work for about two years here. We have five years worth of work lined up on the books right now. It’s all rental stock,” said Matthew McKay, partner with his mother Margaret McKay and with Gary Lahnsteiner, in DB Services.

DB Services is building three rental projects in Langford. It builds and owns about one-third of its projects, with the rest constructed for clients. The Arc, at 2849 Bryn Maur Rd., is being built for a client. The six-storey, wood-frame building will have 93 units. “We just poured our first footing there today,” McKay said Thursday.

The Arc is next to Hockley Corners, 765 Hockley Ave., which will have 63 units and be owned by DB Services. It is the first residential building on Vancouver Island to be built with cross-laminated timber, although some local institutional buildings have used that product, he said. It replaces a traditional floor system.

“We erected today pretty much our whole floor system,” at Hockley Corners, McKay said. That work would normally take five days and require more workers.

Prefabricated cross-laminated timber floor panels, supported on glue-laminated timber and parallel strand lumber columns, were used in the University of B.C.’s 18-storey Brock Commons student residence, which opened in 2016.

DB Services’ third under-construction project is the 11-storey, steel-and-concrete Danbrook One, which will have 90 units in the core of Langford.

The company only builds rental. That type of housing is in demand in the growing West Shore and financing is easier to obtain with rental developments, because it is not conditional on presales, as with condominiums, McKay said.

In June, the company finished the 63-unit Peatt Commons Phase One, at 2854 Peatt Rd. “Before we even turned it over to the client it was fully rented,” he said.

Despite the year-to-date climb in housing starts, the 417 starts in July was lower than the 695 in the same month last year, CMHC said.

Month-to-month housing starts numbers can vary significantly depending on timing of projects. Longer-term figures reveal a more accurate picture of the state of housing construction.

The number of Greater Victoria homes under construction — some projects can take two years to complete — stood at 4,731 as of July, CMHC said.

As well, the value of building permits, which signal builders’ plans, has climbed.

The value of building permits in the region was $160.4 million in June, up by 29.5 per cent from June 2017 when the value was $123.8 million, Statistics Canada said in its monthly report.

June of this year was up by 9.2 per cent from May, when permit values reached $146.9 million.

“It is definitely the residential market that is driving some of our bigger numbers with the permit data. It’s continuing to demonstrate that it is a strong market,” said Rory Kulmala, chief executive of the Vancouver Island Construction Association.

Greater Victoria’s low rental vacancy rate is one factor driving market demand for more housing, he said. “I think we are seeing that in a lot of communities on Vancouver Island.”

Carla Wilson Times Colonist, August 10, 2018, Westerninvestor.com