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Commercial real estate remains hot commodity in Greater Victoria

Commercial real estate remains hot commodity in Greater Victoria

Victoria city hall is reflected in the glass of the mixed-use development at 1515 Douglas St. | Adrian Lam, Times Colonist

Market rental tower going up on Robson Street

Vancouver mayor welcomes pet-friendly West End highrise, citing need for market rental buildings

To emphasize that the new highrise being built at 1500 Robson St. will be pet friendly, two dogs — Hazel and Trink — made an appearance at the Feb. 20 ground breaking. They're pictured with (left to right) Mayor Kennedy Stewart, as well as Ralf Dost, Steve Marino and Jeff Fleming from GWL Realty Advisors.

It’s unusual to see a pair of dogs — in this case Hazel and Trink — at a press conference packed with developers, real estate types and politicians. But not when you’re trying to underscore the fact a new development will be pet friendly in a city where it's notoriously difficult to find an apartment that accepts animals.

That was the case Feb. 20 at a ground breaking for a 21-storey market rental building going up at 1500 Robson St. in Vancouver’s West End.

The pooches got a front-row seat to hear speakers, including Mayor Kennedy Stewart, praise the tower, which will produce 128 rental units, a third of which (42 units) will be two- and three-bedroom family-sized apartments ranging from 753 to 978 square feet.

London Life Insurance Company is the owner of the project, which is being developed by GWL Realty Advisors and designed by IBI Group

The tower is being built on Robson at Nicola Street and is expected to be completed in 2021. | Rendering IBI Group

The tower is being built on Robson at Nicola Street and is expected to be completed in 2021. | Rendering IBI Group

It’s one of the first rental towers to be built along Robson in decades, “in a city that’s in need of rental housing and in a neighbourhood of luxury condominiums,” according to GWL Realty, and the first rental project on Robson to be approved under the city’s West End Community Plan, which was adopted in 2014.

Ralf Dost, president of GWL Realty Advisors’ real estate portfolio, said it’s important to create more purpose-built rental apartments given Vancouver’s tight vacancy rate and the fact much of the existing stock is dated and in need of upgrades.

“We also know how challenging it is to make financial sense of multi-residential developments, especially in this West End neighbourhood, so all of these factors make the launch of this project today that much more gratifying,” he said.

Stewart agreed that increasing the supply of secured market rental apartments “is more important than ever” when more than 50 per cent of residents are renters and vacancy rates are at an all-time low.

“It’s the kind of ground-breaking we all like to come to because it is helping us with our key problem of [increasing] market rentals. We need all kinds of rentals in the city — we need affordable rentals, but market rentals are also a key part of fixing our supply problem,” he said, while adding that residents have also been pushing for the construction of units big enough for families.

“Increasing the supply as well as diversity of rental housing in our city will benefit all Vancouverites, especially young families. I used to rent right across the street so I know how vibrant this neighbourhood is, and bringing 128 more families in here is just going to really help the local merchants.”

The highrise, located at the corner of Robson and Nicola streets, is expected to be completed in 2021. It will feature “substantial” bicycle storage and maintenance facilities, as well as indoor and outdoor amenities, including fitness, yoga and lounge rooms, a rooftop patio and a common area for tenants on the penthouse floor.

It’s replacing a low-rise commercial building that used to face Robson, which featured a few residential units, as well as a residential building behind it that was mostly rented to international students. The 12 tenants who lived in the two buildings were relocated elsewhere with some assistance. GWL Realty Advisors provided tenants with the equivalent of two or more months’ rent based on length of tenancy, and support with moving expenses.

It’s too early to say what rents will be in the new building, but they will be at market rates.

The average rent for a bachelor suite in the West End was $1,254 in 2018, according to CMHC data, while a one-bedroom was $1,566, a two-bedroom was $2,330 and a three-bedroom was $3,368 — tough rates for the average Vancouverite to afford.

Stewart told the Courier the city is focused on ensuring both market and affordable rental units are created.

“We need rental for all income levels. I’m a renter. My wife and I are renters, and we can afford to live in market rental housing, and that’s what we live in. There’s lots of employment in this city that’s coming in where you have folks that have a higher income level that need this kind of housing too,” he said. “[While] our focus is going to be on making sure we maximize the number of the non-market housing units that we have built, we also have to encourage this kind of build... That’s why I’m here at this announcement today. [It's] because this kind of housing is also needed.”

When asked what he would say to West End residents who’ve complained the community plan bumped up land values so high that it’s pushing people out of the neighbourhood due to redevelopment, Kennedy said: “The West End area plan is full of protections for folks living there now and into the future, so we just have to make sure we get the balance right. It is these developers and these construction companies that are building all the housing in the city. We are living in a market economy. However, we have to do everything we can to incentivise non-market housing development and get the federal and provincial governments back into the housing game so they can help us provide much more affordable units. But the focus is on rentals of all levels here at the city.”


The 21-storey tower at 1500 Robson St. will feature 128 market rental units. Rendering IBI Group

The 21-storey tower at 1500 Robson St. will feature 128 market rental units. Rendering IBI Group

Naoibh O’Connor Vancouver CourierFebruary 20, 2019 | westerninvestor.com

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

  

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

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