Commercial buildings drive permit growth with 11-year high

Building permits issued by Canadian municipalities saw an increase in November, the latest month of data available.

But new homes are not the intention with residential permits declining 2.5% to $5.0 billion, while non-residential permits increased 3.3% to $3.3 billion.

The decline for home building intentions was seen across five provinces led by Ontario which posted an 8.1% decrease in single-family permits to $930 million – the lowest since January 2016 – and a $232 million decline in multifamily intentions.

Quebec saw the largest rise overall, including a $204 million gain for multifamily permits.

Single-family permits nationwide totaled $2.2 billion in November, a 5.5% decrease after increasing 4.7% the previous month. Multifamily permits totaled $2.9 billion, down 0.1% from October.

Municipalities approved the construction of 19,378 new dwellings (-3.1%), consisting of 4,725 single-family units (-7.0%) and 14,653 multi-family units (-1.8%).

Commercial buildings led the gains
In the non-residential sector, it was commercial properties that led the rise in permits.

This segment posted a 16.8% increase to $2.1 billion, the highest level since May 2007. Office buildings in the Vancouver and Quebec CMAs were the largest driver of this rise.

The value of industrial building permits rose 21.9% to $527 million in November, snapping three monthly declines. The increase was mainly attributable to permits for new agricultural buildings.

by Steve Randall11 | Jan 2019 | Canadian Real Estate Wealth  

B.C. commercial building permits break record

Statistics Canada data for November show the province issued the highest value of commercial building permits on record

The value of permits issued for commercial buildings in B.C. has never been higher.

New commercial permits topped $564 million in November, a 130 per cent increase over October, according to Statistics Canada. The agency reported that a $240-million permit for a new office tower in the Greater Vancouver region contributed most to the gain.

Total non-residential permits – which include commercial, institutional and industrial developments – reached nearly $742 million, a 75 per cent increase over the month before.

B.C. accounted for most of the national increase in non-residential building permit values, which rose 11.6 per cent in November to $3.3 billion.

Not all B.C. values rose.

Month to month, the value of permits for residential buildings fell 27 per cent to $893 million. The decline was driven primarily by a drop in permit values for single family dwellings, which fell 30 per cent.

Victoria, Vancouver among top national permit issuers

At the regional level, Victoria and Vancouver saw the third and fourth largest year-over-year gains for total permit values.

In Victoria, November values rose 72.6 per cent over 2017. In Vancouver, they were up 63.4 per cent.

Both regions were behind only Quebec, where values rose 177.3 per cent, and Brantford, where values increased by 158.2 per cent.

In total, Canadian municipalities issued $8.3 billion in building permits in November, up 2.6 per cent from October and 6.6 per cent over 2017.

Hayley Woodin Business in Vancouver | January 10, 2019

https://www.westerninvestor.com/news/british-columbia/b-c-commercial-building-permits-break-record-1.23590123

Provincial leaders hear conflicting advice on strata rentals

Rental task force recommends allowing all strata condo units to be rented, while industry group argues this would fuel speculation


B.C.’s Premier John Horgan and housing minister Selina Robinson are receiving opposing recommendations on whether to ban rental restrictions on strata units, or continue to allow strata corporations to limit rentals.

Currently, B.C. strata corporations formed before 2010 may have a low cap on the number of rentals allowed in their building – a bylaw that some housing advocates have argued causes units to sit empty as they cannot be rented out.

To avoid this, all strata corporations formed since 2010 have not been permitted to put rental restrictions in place, which means all owners of post-2010 condos may rent out their units.

The NDP government’s Rental Housing Task Force last week issued 23 recommendations for amending the Residential Tenancy Act. Its ninth recommendation was to “increase the availability of currently empty strata units by eliminating a strata corporation's ability to ban owners from renting their own strata units” – no matter how old the building.

The task force wrote in its Recommendations and Findings, “As one online participant wrote in support of removing rental bans in strata properties, ‘Allowing stratas to ban rentals assumes that renters are hazardous, and supports vacant condos owned by speculators. Condos have become fundamental to the supply of rental housing and should not be allowed to be prohibited.’ Most Canadian provinces allow owners of strata units to rent them out and do not allow discrimination against renters.”

It added, “While the Task Force believes this change will help to increase the rental housing supply, it is also important to give strata corporations the ability to evict tenants in exceptional cases where negligence, abuse or law breaking is disrupting the quiet enjoyment of other residents, putting people in danger, or harming the building.”

Would rental free-for-all fuel speculation?

However, the Condominium Home Owners’ Association of B.C. (CHOA) is lobbying to maintain the status quo that allows strata corporations to limit rentals in their buildings.

Tony Gioventu, executive director of CHOA, told Glacier Media ahead of the task force’s recommendations that allowing all condos to be rented out at the owner’s discretion would do the opposite of the intended result to increase supply, and would fuel investor speculation.

Gioventu said that condo buildings with no rental restrictions actually tend to have a much higher rate of empty units, as a higher proportion of the homes are purchased by investors. Units in unrestricted buildings are much more attractive to investor-purchasers, as those units can be rented out at any time. However, buildings with a lot of investor-owners tend to also have a higher proportion of units sitting empty.

Gioventu cited the results of a CHOA study of 16 buildings in Greater Vancouver with 50 or more units. Eight were built after 2010, and therefore had no rental restrictions, and eight before 2010.

“The pre-2010 strata buildings with rental restrictions bylaws had the lowest proportion of empty units,” said Gioventu. He said that these buildings had vacancy rates of two per cent or lower, meaning that virtually every unit was occupied, mostly by owners or their families.

In the strata buildings built after 2010, CHOA found vacancy rates were between 20 and 35 per cent. However, Gioventu added this had less to do with the freely permitted rentals, and more to do with investors and speculators tending to buy higher proportions of post-2010 condos.

He said, “They’re empty because the owners don’t want to deal with tenants. Those are the buildings that should be targeted.”

The City of Vancouver’s empty homes tax, and the province’s speculation and vacant homes tax, were implemented recently with the aim of solving exactly that problem.

Selena Robinson, minister of municipal affairs and housing, said she will deliver the recommendations to Premier Horgan, and the ministry will spend the coming weeks considering how the recommendations might be implemented and consulting with stakeholder groups.

Joannah Connolly Glacier Media Real Estate | December 19, 2018 | www.westerninvestor.com

Commercial real estate investment value on pace to surpass 2017 total

Investment in Canadian commercial real estate is expected to break records for a third consecutive year, led by demand in the Toronto markets and industrial sector

Commercial real estate dollar volume in the third quarter of 2018 has signified potential for another record-breaking year in investment value.

Commercial investment across the country may reach an all-time high for the third year in a row, according to new statistics by CBRE. The third quarter recorded 38.6 billion in sales year-to-date, nearly exceeding the $43 million total investment value in 2017. 

“This is the third year Canadian CRE investment will have hit an all-time high in trading volumes, and it’s no secret why: Canada boasts a rapidly growing population and diverse economy, and the security of income from real estate versus other asset classes looks like a safer bet,” said Peter Senst, president of CBRE Canada, Capital Markets. 

Investment value was led primarily by demand in the Toronto market and the industrial sector. 

Commercial investment in Toronto accounted for $14.5 million year-to-date, followed by $4.5 million in Montreal, $3.8 billion in Calgary and $3.3 billion in Edmonton.

Industrial investment across Canada accounted for more than a quarter of all real estate transaction value at $10.1 billion year-to-date – eclipsing the total dollar volume for 2017 of $7.4 billion. 

“Calgary has already doubled its 2017 industrial investment total and Edmonton has tripled its 2017 industrial investment volumes, while Halifax has seen its industrial investment increase nearly tenfold compared with 2017’s total: $215 million versus $26 million,” the press release reads.

Multi-family real estate is the second-best performing asset class, accounting for $5.5 billion in sales so far this year. 

Moving forward, lack of available multi-family stock and land supply for new projects may slow further investment.

Tanya Commisso | Western Investor | December 20, 2018

  

Demand surges for strata office space

As Vancouver’s vacancy rate for office space remains among North America’s lowest, there’s growing appetite for strata office developments in the city.

Driven primarily by low downtown vacancies and, consequently, surging rents—and compounded by large companies like Amazon, Apple and Deloitte buying hundreds of thousands of square feet of office space—Vancouver has become inhospitable to smaller businesses looking to set up shop. Not surprisingly, savvy investors have taken note and are beginning to fulfill this need in the marketplace.

“There is great opportunity for investors looking to purchase space, particularly when you consider the many strong, local businesses looking to lease space in a AAA building,” said Matt Carlson, vice president of Colliers International. “These businesses are often unable to find a landlord who is willing to lease less than 10,000 square feet, or in some cases less than 20,000 square feet. Investors purchasing smaller units will have many tenants interested in renting space from them at historically high rental rates.”

Chard Development has capitalized on the demand and built The Yukon in the Mount Pleasant neighbourhood, with strata units designed for creative or light industrial ventures and for businesses with as many as 30 employees.

Byron Chard, principal and chief financial officer of Chard Development, notes that the neighbourhood’s appeal alone has attracted investor attention. A slew of residential and retail developments line the streets of Cambie and Main and within the Olympic Village, quickly turning it into one of Vancouver’s most desirable neighbourhoods.

“Strata office ownership isn’t exclusive to those looking to relocate or establish a business within their purchased space,” said Chard. “Savvy investors are also able to take advantage of this opportunity and to lease their space to business owners looking to set up shop in this coveted neighbourhood. In our experience, we have had many buyers purchase multiple units—one for themselves and one for investment or future growth planning.

“With our Mount Pleasant projects, we’ve seen interest from the creative class of businesses who have long appreciated that neighbourhood—including architects, design firms and furniture retailers—as well as the high-tech businesses who have made this area home in recent years. With the Yukon, we’ve seen interest from smaller professional firms, as well as film production companies, breweries, coffee roasters, and food uses that have a production component.”

by Neil Sharma20 Dec 2018 | www.canadianrealestatemagazine.ca

Five hottest British Columbia news stories of 2018

Western Investor's most-read stories, from dual-agency regulation to new and expanded residential real estate taxes

During a year of major real estate policy and regulation change, it comes as no surprise that WesternInvestor.com’s most-viewed B.C. stories gave readers the insight into these new developments, including B.C’s foreign buyer tax, restrictions on assignment sales to prevent ‘shadow flipping’ and ‘ double-ending’. Readers also frequented the sight to get the lowdown on up-and-coming investment destinations.

Here is our annual countdown of our five most-read British Columbia stories published in 2018.

5. Mill town of Powell River becomes low-cost investment destination

Our first story to garner the most views this year focuses on the economic growth of Vancouver Island town Powell River, a los-cost alternative to the mainland with a 80.3 per cent increase in housing sales year-over-year. 

4. Dual agency rules will disrupt housing market, real estate agents claim

Changes to the B.C. Real Estate Services Act that came into effect June 15, 2018 prohibited "double ending" – representing both a buyer and a seller in a real estate transaction. In our story, real estate professionals worried it could slowdown sales – and as the year progressed, they may have had a point. 

3. China's largest online retailer to start selling Canadian real estate

This quick-hit story on Chinese real estate portal Juwai.com and retail site JD.com teaming up to offer Canadian real estate to Asian consumers garnered the third-most views this year, showing us that readers are still drawn to stories on foreign investment in Vancouver property. 

2. Higher-priced house markets nailed by tax hike

Our second-most read story of the year focused on the first effects on the housing market following the B.C. Budget 2018 housing measures announcement. Pricey markets like Vancouver’s west side were the first to fall, seeing prices down 70 per cent in April 2018 versus April 2016. 

1. Canada Revenue Agency recruited to help fight mortgage fraud

Our most-read story of the year covered the CRA’s recruitment to combating mortgage fraud together with the Canadian Mortgage and Housing Corporation, by allowing lender to have access to an applicant’s tax data. Together with numerous Bank of Canada interest rates this year, it’s no surprise that readers we’re reading and watching to see how new regulations would affect mortgage eligibility in a changing market. 

REMAX forecasts Canadian markets in 2019

According to the REMAX 2019 Housing Market Outlook, the country’s average sale prices will get a 1.7% boost, an indication that the balance has finally returned to Canada.

The report notes that markets throughout the country stabilized this year after the 2017 aberration that saw prices in markets like Toronto’s surge beyond reasonable levels. Stabilization is expected to continue through 2019, a likely consequence of interest rate hikes that are believed will increase as the year goes on.

Thirty-one percent of REMAX survey respondents don’t believe interest rates have hitherto affected their ability to afford a mortgage, but that optimism doesn’t extend beyond December. Another REMAX survey of its brokers and agents revealed 83% expect interest rates to make Canadians’ home purchases cumbersome next year.

The report also expects sale prices in Vancouver to decline 3% in 2019 because obtaining a mortgage in the Metro region is becoming well-nigh impossible.

"The drop in sales in key markets across British Columbia can be partially attributed to Canadians' increasing difficulty in getting an affordable mortgage in the region," says Elton Ash, REMAX of Western Canada’s regional executive vice president. "The situation created by the introduction of the mortgage stress test this year, as well as continually increasing interest rates, means more Canadians will be priced out of the market."

The Greater Toronto Area, on the other hand, is expected to fare better next year as REMAX predicts sale prices will rise 2%, thanks to high demand for homes priced below $1 million. Demand will be weaker for homes above $1.5m, though. According to Christopher Alexander, REMAX’s vice president and regional director for Ontario-Atlantic Region, looming rate hikes might be spurring the restraint.

“People are a little more cautious than they were in the past because interest rates are starting to rise,” he said. “Government said it would be more aggressive with interest rates and people are waiting to see how it will all shake out.”

Alexander added that Toronto remains a popular destination, which should balance out weaknesses in its market.

“It’s not surprising [November sales in the GTA] were down year-over-year, but because Toronto is such a big destination, both domestically and globally, there will be good pockets of the city that balance everything gout.”

by Neil Sharma12 Dec 2018 | www.canadianrealestatemagazine.ca