Sales activity in the Lower Mainland?s commercial real estate market continued to decline in the third quarter

REBGV

Sales activity in the Lower Mainland’s commercial real estate market continued to decline in the third quarter (Q3) of 2019 compared to recent years.

There were 405 commercial real estate sales in the Lower Mainland in Q3 2019, a 32 per cent decrease over the 596 sales in Q3 2018 and a 42.3 per cent decline compared to Q3 2017, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).

The total dollar value of commercial real estate sales in the Lower Mainland was $1.886 billion in Q3 2019, a 59.8 per cent decrease from the $4.694 billion in Q3 2018.

“Activity in our commercial market this year is trailing the pace we’ve experienced over the last five years,” Ashley Smith, REBGV president said. “We’ve seen activity pickup in our residential market over the last few months and we’ll watch to see if conditions strengthen on the commercial real estate side in the last quarter of 2019 or the first quarter of next year.”

Q3 2019 activity by category

Land: There were 114 commercial land sales in Q3 2019, which is a 44.9 per cent decrease from the 207 land sales in Q3 2018. The dollar value of land sales was $821 million in Q3 2019, a 61.7 per cent decrease from $2.142 billion in Q3 2018.

Office and Retail: There were 155 office and retail sales in the Lower Mainland in Q3 2019, which is down 37.2 per cent from the 247 sales in Q3 2018. The dollar value of office and retail sales was $433 million in Q3 2019, a 78.4 per cent decrease from $2.005 billion in Q3 2018.

Industrial: There were 124 industrial land sales in the Lower Mainland in Q3 2019, which is a 4.2 per cent increase from the 119 sales in Q3 2018. The dollar value of industrial sales was $415 million in Q3 2019, a 41.7 per cent increase from $293 million in Q3 2018.

Multi-Family: There were 12 multi-family land sales in the Lower Mainland in Q3 2019, which is down 47.8 per cent from 23 sales in Q3 2018. The dollar value of multi-family sales was $217 million in Q3 2019, a 14.3 per cent decrease from $253 million in Q3 2018.

Natura to offer parkside residency

Michael Bernard
The Province

Bruno Jury isn’t your garden-variety developer. His mission encompasses much more than building homes to put up for sale. He says he wants create happy places where the residents not only spend more time getting to know each other, but also look outwards to making their environment a better place.

And to do that, Jury, a Mexican attracted to Vancouver eight years ago by the city’s goal of becoming the greenest place on the planet, is using his first development — the 73-unit Natura, which overlooks Abbotsford’s Horn Creek Park— to put his mission in motion.

“We’re not selling condos, we are selling a lifestyle that everyone can identify with. I am not really selling you a particular unit, I am selling you a community that you will be happy to live in.”

One of Jury’s prime goals is to get Natura homeowners  – many of them downsizers — to take ownership of the 3.3-acre Horn Creek Park that surrounds the development on three sides.

“These are people who are retired and have free time. Why not organize them and make them feel proud of the park? I’ve already been in contact with the Fraser Valley Conservancy, an organization that takes care of green spaces in the valley. They want to provide tours for kids to learn about the kinds of plants that grow in the forests and to keep the park clean.”

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Greg Lowe, whose firm rareEarth Project Marketing Ltd. is selling the homes at Natura, said the development has been designed to take full advantage of the park view, but also to encourage interaction among homeowners. “As you come in the front lobby, you look through an interactive lounge area to see the park,” he said. “The lobby opens on to a lounge with comfortable seating where people can share workspace, as well as meet at a coffee bar.”

Outside the indoor lobby/lounge will be a terrace with firepits, loungers and a gazebo with eating tables. Similar interactive space has been created upstairs on the fifth floor, where the “sky lounge” will be built.

Jury, who is also a strong advocate of green technology, is proud that the development being built by his partner, Kerkhoff Construction, is also adopting Step Code Level 3, an accelerated program for upgrading building standards designed to achieve a 50-per-cent increase in efficiency.

Inside, all homes will have nine-foot-high ceilings with the level-five penthouses having 14-foot ceilings in the living and dining rooms.

Kitchens feature a dining peninsula or island topped with durable quartz stone and porcelain tile backsplashes. Buyers can choose a KitchenAid package with a 30-inch or 36-inch refrigerator with ice dispenser, a stainless steel range with induction cooktop, a Faber stainless steel slide-out fan and a stainless steel dishwasher or an optional package is by Fisher & Paykel.

The ensuite bathroom has quartz countertops and vanities with dual sinks in select homes. It is also equipped with a frameless 10-mm glass shower, while the main bathroom has a shower and tub combination with porcelain tile surround.

Natura 

What: 73 one-, two- and three-bedroom homes in a five-storey wood-frame building overlooking Horn Creek Park

Where: 3182 Gladwin, Abbotsford

Residence size and prices: Starting at $259,900 for homes ranging from 444 to 1,458 square feet

Developer: Naturbana Properties and Kerkhoff Construction

Sales centre: 33338 South Fraser Way, Abbotsford

Sales phone: 604-776-4588

Hours: noon — 5 p.m., Mon — Sat

© 2019 Postmedia Network Inc.

Squamish Nation approves highrises

Joanne Lee-Young
The Province

The Squamish Nation has approved going ahead in partnership with Westbank Development to build a $3-billion housing project with 6,000 new units in 11 towers on reserve land in Vancouver’s Kitsilano neighbourhood.

Khelsilem, a Squamish Nation councillor and spokesperson who goes by one name, described a vote on Tuesday as a “resounding mandate” in a process that required simple majority of votes cast by eligible nation members.

He said 87 per cent of voting members, or 718 out of 827, said Yes to three plots of reserve land at Sen̓áḵw being leased for 120 years. A slightly smaller number of voting members, 665 out of 826, or 81 per cent, approved of the partnership with Westbank Development whereby the parties will split the revenue equally.

The estimated construction cost of the project, in a prime location next to the Burrard Bridge and Vanier Park, is $3 billion.

The Squamish Nation is hoping to make between $8 billion to $10 billion in revenue from rent and condo sales over the project’s 120-year life, said Khelsilem. With Westbank making an equivalent amount, total revenue estimates rise to as much as $20 billion.

Money from provincial property transfer taxes and others for condo sales will flow to the nation and it also has the authority to levy its own taxes as municipalities do.

Khelsilem said the nation will be contributing the land to the partnership, and take on half the debt, but Westbank will be responsible for securing the $3 billion in construction financing.

Construction on the first phase is expected to begin in 2021.

Reserve land cannot be used as collateral for bank financing because it can’t be seized for nonpayment. Under the Indian Act, it is deemed to be owned by the federal government and cannot taken away from the Squamish Nation. Also, the city of Vancouver has no power to regulate what is built on it.

So the new partnership intends to ask for a 120-year lease from the federal government and Westbank will present that lease as collateral to potential financiers, which Khelsilem said will include the Canada Mortgage and Housing Corporation.

Khelsilem said all major decisions will be made jointly by the two partners. He brushed aside questions about the developer’s reputation for building and selling luxury condos to overseas buyers as being at odds with the Squamish Nation’s desire for this to be “an economic development project with intended revenue to pay for social services and housing.”

The currently targeted mix for the approximately 6,000 new units at this project will include between 70 to 90 per cent of market rental units and the rest will be strata condos, with the ratio varying depending on market conditions, said Khelsilem.

If the market changes and there is a need to raise revenue more quickly, the number of strata condos could increase, said Toby Baker, the CEO of Nch’kay Development Corporation, which is the Squamish Nation’s economic development company.

There will also be several hundred affordable rental housing and other units for Squamish nation members.

The nation’s experience working in a 50-50 partnership with another large, powerful developer on a project for 1,400 homes at Porteau Cove, off the Sea to Sky-Highway in Howe Sound, ended with Concord Pacific using an option to buy out the Squamish nation for $1 after the project got caught in the credit crisis of 2008. Court documents showed that the Squamish Nation tried to retain its stake.

Khelsilem described the deal with Westbank as being much better and more sophisticated with the biggest difference being that the Sen̓áḵw lands “can’t be lost to the Squamish Nation,” whereas the Porteau Cove deal involved fee-simple land that was jointly owned.

“With the value of the lands as our contribution, we have a strong negotiating position.”

© 2019 Postmedia Network Inc.

This single project includes $325.5 million in community amenity contributions

Kenneth Chan
other

With its terraced landscaping resembling “urban mountains,” the mixed-use redevelopment of the Plaza Nations in Northeast False Creek greatly parts ways from Vancouver’s standard tower design.

Local architect James Cheng and developer Canadian Metropolitan Properties recently submitted their development application to the municipal government for the 10.3-acre redevelopment of the former BC Pavilion of the Expo ’86 World’s Fair.

This follows city council’s approval in July 2018 of the project’s rezoning application, which will provide a staggering $325.5 million in community amenity contributions (CACs), largely in the form of in-kind value through on-site development.

 At 750 Pacific Boulevard, there will be approximately 2.1 million sq. ft. of total floor area, including 1.6 million sq. ft. of residential space, providing homes for thousands of people. This includes 380 social housing units within the lower levels of the two largest buildings, facing Pacific Boulevard and BC Place Stadium.

Within the lower levels around the central plaza and waterside public spaces, there will be 350,000 sq. ft. of commercial space, entailing retail, restaurant, and brewery space on the ground level that will help form a lively entertainment district, as well as larger commercial spaces up to 42,000 sq. ft. within several levels above.

The civic centre portion in the lower levels of the northeast building includes a 17,000-sq-ft music venue on the ground level, a 30,000-sq-ft ice rink facility on the third level with 390 grandstand seats, a daycare facility on the sixth level with lower rooftop play space, and a dedicated community centre space of 34,000 sq. ft. spread over four levels.

The ice rink is a partnership with the Vancouver Canucks, which will use the rink as its new purpose-built practice facility. The team’s ice time is typically only in the morning, and when the team is not on the ice, the rink will be open for community and public use.

Additionally, the Canucks will occupy about 25,000 sq. ft. of commercial floor area spread over three levels, including 8,530 sq. ft. of space next to the ice rink for a sports medicine facility, which will be available to the public when not in use by the athletes.

The latest step of the city’s review process indicates the project will be constructed in three phases, with the westernmost half of the site built in the first phase, the northeastern parcel of the site containing civic and recreational facilities built in the second phase, and a parcel along the water at the southeast corner built in the third phase.

There is no indication of the overall timeline for the project at this time.

As for the very extensive public realm, a grand public staircase in the southeast building leads to a publicly accessible viewing platform and green rooftop space, which is directly connected to the civic centre building by a public pedestrian bridge.

Seating platforms along the sloping staircase also double as an amphitheatre for events held in the public plaza below, potentially including a floating performance stage at water’s edge.

A central north-south plaza, stretching through the site from BC Place Stadium to the extended seawall and lined with retail and restaurants, will be partially covered to better ensure it can be used as a year-round space for events.

“The terraced typology of the Plaza of Nations provides a unique opportunity to provide a diversity of expressions while enhancing the City of Vancouver skyline,” reads the design rationale, which notes the forms of the two largest buildings have preserved some of the views of BC Place’s iconic roof.

“The base building is diversified in terms of scale and character and directly responds to the varying character zones of the public realm. Furthermore, the Civic Centre provides an anchor for the block with great scale and identity. Retail anchors are proposed at the corners on each individual block along Pacific Boulevard and contrast the smaller-scale retail facades on the water’s edge and local streets.”

The development components of Northeast False Creek Plan also entail a residential rental tower at the southeast corner of BC Place, which had its rezoning application approved by city council in July 2018 as well, but with conditions. The largest component of the Northeast False Creek Plan is Concord Pacific’s project east of the Plaza of Nations, but its rezoning application has yet to be considered by city council.

As of July 1, 2018, following the rezoning approval, the Plaza of Nations property had an assessed value of $535 million — up from $365 million in the previous year.

Daily Hive is a Canadian-born online news source

Federal government incentive plan for first-time home buyers

other

The First-Time Home Buyer Incentive (FTHBI) was launched on September 2, 2019 by the federal government and offers a 5% or 10% contribution towards your down payment in the form of a shared equity mortgage. The program aims to improve affordability by reducing the monthly mortgage payments for buyers.

There is no interest charged on the FTHBI amount nor is there an ongoing repayment schedule, instead the government will share in the upside and downside of the property value. The FTHBI offers the following down payment contributions:

• 5% for a first-time buyer’s purchase of a re-sale home
• 5% or 10% for a first-time buyer’s purchase of a new construction
• 5% for new and re-sale mobile/manufactured homes

Property Types Eligible for the FTHBI

Only residential properties in Canada that are suitable for full-time, year-round occupancy are eligible. The property must be intended for the homebuyers’ own occupancy and investment properties are not permitted.

Examples of residential properties include:

• detached houses
• semi-detached houses
• duplexes
• triplexes
• fourplexes
• townhouses
• condominiums

Home Buyer, Down Payment and Mortgage Requirements

Buyers who wish to participate in the First-Time Home Buyer Incentive program must meet the following criteria:

• Be Canadian citizens, permanent residents, and non-permanent residents who are legally authorized to work in Canada
• Buyers’ combined qualifying income cannot exceed $120,000; this includes the income of guarantors co-signing on the mortgage
• At least one buyer must be a first-time home buyer
• Buyer(s) must have the minimum down payment

For the purpose of the FTHBI, you are considered a first-time home buyer if you meet any of these qualifications:

• You have never owned a home
• You experienced a breakdown of a marriage or common-law partnership (even if you don’t meet the other first-time home buyer requirements)
• In the last 4 years, you did not occupy a home that you or your current spouse or common-law partner owned

Minimum down payment and mortgage requirements for the FHTBI:

• The minimum down payment the buyer must have through their own sources is 5% of the first $500,000 of the home value and 10% of any value above $500,000
• Mortgages must be eligible for mortgage loan insurance through either Canada Guaranty, CMHC or Genworth, which means the total down payment including the FTHBI amount must be 19.99% or less
• For a 5% FTHBI, the maximum down payment the buyer can provide is 14.99%; for a 10% FTHBI, the maximum down payment the buyer can provide is 9.99%
• Total amount borrowed (including the FTHBI amount) is limited to 4 times the qualifying income

In addition, the closing date for a re-sale home must be within 6 months from the application approval. The closing date for new a construction home must be within 18 months from the application approval.

Maximum Home Price Allowed Under the FTHBI

The maximum price you could buy a home for under the FTHBI depends on your qualifying income as well as your down payment.

Here is a sample maximum home price calculation:

Suppose your annual qualifying income is $120,000/year (the maximum allowable when using the FTHBI). The FTHBI stipulates the maximum amount you can borrow, including the FTHBI amount, is four times your income, thus you can borrow up to $480,000 to purchase a home.

1. Maximum home price if you have the minimum down payment of 5%

The minimum down payment required from the home buyer is 5%, thus the maximum price of a re-sale home you could purchase is $505,263 (calculated as $480,000 divided by 0.95).

14. Maximum home price if you have a down payment of 14.99%

With a down payment of 14.99%, the maximum price of a re-sale home you could purchase is $564,639 (calculated as $480,000 divided by 0.8501).

Repaying the FTHBI

The home buyer must repay the FTHBI amount in full after 25 years or when the property is sold, whichever comes first. The full amount can be repaid in full anytime, without a pre-payment penalty; however, partial repayments are not permitted.

The amount due to be repaid is calculated as the percentage of the FTHBI times the home’s value at the time of repayment. For example, if a homebuyer received 5% of the down payment through the FTHBI at the time of purchase, the homebuyer will repay 5% of the home’s fair market value at the time of the repayment.

Here is a sample repayment calculation:

You purchase a property for $400,000 and receive a 5% for your down payment through the FTHBI in the amount of $20,000. When you sell your home within 25 years, the home value has increased to $600,000. The repayment amount due would be 5% of $600,000, or $30,000.

Applying for FTHBI

To apply for the FTHBI, complete the application documents found on the official First-Time Home Buyer Incentive Plan website, speak to your mortgage lender and notify the lawyer who will be managing your home closing.

Additional Resources

Visit the official website for the First-Time Home Buyer Incentive Plan for additional details and resources, including a maximum home purchase price & eligibility calculator.

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Multiple condo owners exempt from speculation tax

Rob Shaw
The Province

Owners of multiple condos and apartments who can’t rent their units due to strata restrictions will get an extended exemption from the province’s speculation tax, under changes announced Tuesday.

Finance Minister Carole James said people who own a unit that falls under a strata rental ban will be exempt from paying the speculation tax until Dec. 31, 2021. That exemption had been set to expire this year. But the relief only applies to people who bought before the tax came into effect on Oct. 16, 2018. Anyone who bought since then doesn’t qualify, even if their strata forbids rentals.

“The minister of housing is doing a lot of work around rental properties, and those are things that need more discussion,” said James. “So we felt it was only fair to look at an extension.”

The government introduced the tax in 2018 to crack down on properties left vacant during a rental- and affordable-housing crisis.

Although initially described as a tax that targeted foreign residents, B.C. and Canadian owners of multiple homes face a 0.5 per cent surcharge on the assessed value of their properties in certain areas if those residences aren’t rented at least six months of the year. The rate for foreign owners and satellite families increases to two per cent this coming year.

The tax applies to Greater Victoria, Nanaimo, Lantzville, Kelowna and West Kelowna, Metro Vancouver (excluding Bowen Island, Lions Bay and Electoral Area A), Abbotsford, Chilliwack and Mission. In Vancouver, the provincial surcharge is on top of the municipal empty homes tax.

James didn’t agree to any of the exemption requests from municipalities like Kelowna, Langford, Nanaimo or Belcarra, after a meeting in September. Instead, the province announced on Tuesday new exemptions for “water-access-only properties,” which the government defines as “owners who have residential properties that cannot be accessed by road and are not within a short walking distance to a public or private road.” The exemption will be retroactive to 2018.

“The (speculation) tax is working,” she said. “And I think that was the discussion with mayors that yes I understand not everyone is going to support the speculation and vacancy tax, but the purpose of the tax is to address the issue of affordable housing.”

Belcarra Mayor Neil Belenkie, whose tiny village of 300 homes was set to be particularly hard hit by the tax because many cabins are water-only access, said he was happy some properties will get the exemption but had “mixed emotions” overall.

“My concern remains for people who hand-built their cabins 50 or 60 years ago and who are being taxed as speculators,” he said.

Belenkie said James hasn’t wanted to listen to his arguments, and the local NDP MLA for Port Moody-Coquitlam, Rick Glumac, has only visited the area once since 2018 and hasn’t provided any answers for residents.

The exemptions to strata units is a sign that the government is backing off of plans to use legislation to forbid stratas from restricting rentals, said Tony Gioventu, executive director of the Condominium Home Owners Association. James confirmed such legislation is “not on the table” currently.

Although government had hoped that the speculation tax would pressure owners of multiple apartments or condos to sell them or put them up for rent to avoid the surcharge, Gioventu said that hasn’t happened.

“Most people who have vacant units with the speculation tax just pay the amount, they couldn’t care less,” he said.

“What we have seen, which is an interesting little flurry, is in months like June-July or July-August or August-September, we’ve seen individuals rent out units through Airbnb to basically offset the amount they pay in the speculation tax. Basically in one month they make enough money to pay the speculation tax.

“It hasn’t solved the problem. But the solution to the problem is a really good, accessible level of affordable rental housing, and the problem is the price of real estate has been so expensive and the local governments have been so overprocessed, overburdened and over-demanding on community-benefits charges that it wasn’t financially feasible for developers to build rental units.”

James said she hasn’t heard such stories, but hopes regular audits will capture such activity.

Government mailed out 1.62 million speculation tax forms this year. Roughly 98.9 per cent of people filled out declarations, though about 17,000 declarations still haven’t been completed. The tax made the government $155 million last year.

© 2019 Postmedia Network Inc.

Vancouver saw a significant decline in the trend of multi-unit starts for a second consecutive month

Steve Randall
Canadian Real Estate Wealth

The key measure of Canadian home construction showed little change last month.

CMHC reported that the 6-month housing starts trend was 219,047 units in November compared to 218,253 in October while the standalone monthly SAAR of housing starts for all areas in Canada was 201,318 units in November, a slight increase of 0.3% from 200,674 units in October.

“The national trend in housing starts was essentially unchanged in November, reflecting slight increases in the national trends of both multi-family and single-detached starts” said Bob Dugan, CMHC’s chief economist. “Vancouver saw a significant decline in the trend of multi-unit starts for a second consecutive month in November, following a period of elevated construction activity earlier in the year. However, this decline was offset by modest gains in the multi-unit trend in most other major markets, including Toronto.”

The monthly figure for urban starts (SAAR) was up 0.4% in November to 188,559 units. Multiple urban starts increased by 2.3% to 141,753 units in November while single-detached urban starts decreased by 5.1% to 46,806 units.

Rural starts were estimated at a seasonally adjusted annual rate of 12,759 units.

Copyright © 2019 Key Media Pty Ltd

The growth in other major markets offsets Vancouver’s decline in housing starts

Gerv Tacadena
Canadian Real Estate Wealth

Canada’s residential property market recorded slight increases in housing starts in November, according to the latest report from the Canada Mortgage and Housing Corporation (CMHC).

There were 219,047 units that commenced construction in the month, up from 218,253 units in October. CMHC said this trend measure is a six-month moving average of the monthly seasonally adjusted annual rate (SAAR) of housing starts.

“The national trend in housing starts was essentially unchanged in November, reflecting slight increases in the national trends of both multi-family and single-detached starts,” said CMHC chief economist Bob Dugan.

The standalone monthly SAAR of housing starts for all areas in Canada was 201,318 units in November, a slight increase of 0.3% from 200,674 units in October.

The SAAR of urban starts also increased, up 0.4% in November to 188,559 units.

Multiple urban starts improved by 2.3% to 141,753 units in November, while single-detached urban starts decreased by 5.1% to 46,806 units.

Vancouver saw a significant decline in the trend of multi-unit starts for a second consecutive month. This is after a surge in construction activity earlier this year.

“This decline was offset by modest gains in the multi-unit trend in most other major markets, including Toronto,” said Dugan.

Copyright © 2019 Key Media Pty Ltd

Taxpayers to be alerted to changes, revised exemptions for coming year

Jeremy Hainsworth
Western Investor

B.C.’s speculation tax will rise from 0.5 per cent to 2 per cent for homes and land owned by foreign owners or satellite families before December 31, the Ministry of Finance said December 10.

In addition, an exemption for vacant land will end December 31, 2019.

A speculation and vacancy tax year is the same as a calendar year, so tax levied December 31 is due the following July. For example, for a property owned as of December 31, 2018, the 2018 tax rate of 0.5 per cent applied, and the tax was due on July 2, 2019.

The changes are in line with legislation that created the tax; a levy the government says has been successful in targeting speculators.

“When we introduced the speculation and vacancy tax, our province was at the peak of a real estate crisis, and moderation in the market was long overdue,” Minister of Finance Carole James said. “Based on the data from the first year, we see the tax is working as it was designed to: capturing speculators, foreign owners and people who own vacant homes, while exempting more than 99.8 per cent of British Columbians.”

James said in July that the province collected $115 million from property owners in major urban centres deemed to be extremely unaffordable and subject to land speculation, millions more than had been expected.

The government said those funds would be used to help fund affordable housing.

What else can be expected in the tax’s second year?

The ministry said property owners will benefit from a retroactive exemption for Canadian Armed Forces members and spouses while in active service and a retroactive exemption for people who own properties accessible only by water.

A longer phase-out will be provided for temporary exemptions, and the exemption for rental-restricted stratas will now end December 31, 2021.

Water-access-only property owners with residential properties accessed by road and within a short walking distance to a public or private road will be exempt from paying the tax, a change retroactive to the 2018 tax year.

Canadian Armed Forces members and spouses will now qualify for a stand-alone exemption on residences if they are unable to reside in their home. There is no limit on the number of years that the exemption may be claimed by a forces member or spouse. The exemption can, however, only be applied to one property and is retroactive to the 2018 tax year.

Strata condo property owners restricted from renting when the tax became law will continue to qualify for a grandfathering exemption, meaning new owners and owners subject to new rental restrictions do not qualify. The exemption will now end December 31, 2021.

To prevent tax avoidances, Victoria is increasing identification and information required from corporations, trusts and partnerships and foreign owners. The government said those changes are being put in place to improve efficiency and compliance and will not affect the vast majority of British Columbians.

Some who thought their privacy was being violated by that information-gathering contested the information being sought.

The Office of the Information and Privacy Commissioner thought otherwise.

“I am satisfied that the property owner’s name, address, date of birth, social insurance number and email address relate to and are necessary for the program of administering the tax,” adjudicator Erika Syrotuck said in an October ruling.

Copyright © Western Investor