Vancouver 0.21-acre commercial site sells for $31.2 million

Lee & Associates
Western Investor

Off-market deal involves multi-level retail/office building on West Hastings Street.

 

Type of property: Retail

Location: 475 West Hastings Street, Vancouver

Size of property: 9,360 square feet

Land size: 0.21 acres

Zoning: DD (Downtown district)

Sale price: $31.25 million

Type of deal: Off-market transaction

Date of sale: August 29, 2020

Brokerage: Lee & Associates, Vancouver

Brokers: Don Mussenenden and Arash Rezai

 

© Copyright 2020 Western Investor

Vancouver rents fall as immigration goes negative

Frank O’Brien
Western Investor

 — East Vancouver 16-suite rental building sold for $5 million.| Goodman Commercial

Net immigration to British Columbia has gone negative, plunging 111 per cent in the first half of this year compared to the first six months of 2019, adding to concerns in the rental housing sector.

During the second quarter, B.C. experienced a net loss of 3,553 immigrants, compared to a net gain of more than 19,600 in the same period a year earlier, according to BC Stats. In the first quarter of 2020, B.C. had a net immigration increase of 6,024 newcomers, down 50 per cent from the first quarter of 2019, as COVID-19 travel restrictions kicked in.

Nationally, immigration levels were down 38.25 per cent in the second half compared to a year earlier, Statistics Canada reports.

The immigration plunge is having an effect on Vancouver’s rental market, according to Capital Economics’ Stephen Brown, who noted in an October 11 bulletin that the declining number of new arrivals are impacting apartment rental prices in both Toronto and Vancouver. Brown noted that both cities have seen a near 10 per cent drop in rental rates, the highest among Canadian cities, since the pandemic began in March.

According to the most recent rental survey by PadMapper, overall apartment rent increases in Vancouver have flatlined recently, but average rents for a two-bedroom apartment have fallen 15 per cent since September of last year, to $2,750 per month.

A separate study released October 15 by Rental.ca and Bullpen Research & Consulting found that the average rent for a Vancouver single-family house in the third quarter was down 29 per cent from a year earlier, to $2,553.

“Condo rents in Vancouver are down 17 per cent in the third quarter of 2020 compared to the third quarter of 2019,” the study found.

But Vancouver multi-family insiders are skeptical of reports on rental declines, noting that in the midst of COVID-19 turmoil, it is difficult to get a bead on trends.

Mark Goodman, a multi-family specialist with Goodman Commercial Inc., said some landlords are offering rental reductions while others are seeing rent increases on turnovers. He suggested that the major impact of lower immigration is on student housing rentals along the Broadway Corridor and near the University of British Columbia.

What Goodman and other agents are seeing is an “avalanche” of apartment buildings hitting the Vancouver area market, which Goodman suggested is in response to the current provincial rent freeze, soaring insurance rates and concerns about ongoing restrictive rent controls in B.C.

“Some long-time landlords are getting out of this market,” he said.

Goodman noted that, despite the angst, there is no lack of investors for Vancouver apartment buildings, saying sales have increased over the past few months and prices have stayed firm.

A national survey of landlords by CBRE, released in October, showed Canada’s multi-family sector has been mostly immune to COVID-19.

Multi-family was able to maintain 65 per cent of its five-year trailing quarterly average investment volume in the second quarter of 2020, the smallest decline of any sector, and “pricing is now even higher compared to pre-pandemic times for select properties and geographies,” stated CBRE’s Canadian Multifamily in the Post-Pandemic Era survey.

 

 

© Copyright 2020 Western Investor 

Vancouver housing is now firmly in seller?s market territory

Sean MacKay
Livabl

What a difference a year makes.

Last October, it was buyers who were calling the shots in the Vancouver region’s housing market as higher detached home inventory tipped the balance away from sellers.

Now, after an anxiety-ridden spring and a remarkable summer bounce back, home sales have continued their high-flying performance in September while new home listings struggled to keep up.

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“Market conditions [in the Vancouver region] are firmly entrenched in a sellers’ market,” wrote Central 1 Credit Union Deputy Chief Economist Bryan Yu in an economic update published late last week.

“While new listings remained elevated, strong sales have largely absorbed these units. The sales to-inventory (active listings) ratio is trending near 30 percent, whereas a balanced market is typically in the 15 to 20 percent range,” he continued.

Yu wrote that the townhome and detached home segments were “particularly tight” but even the market for condo apartments favoured sellers.

With sellers holding the bargaining power once again, home price growth has accelerated and Yu projects that appreciation will pick up further in the coming months even if the economic recovery moderates.

All this, of course, begs the question: After ending 2019 in buyers market territory, how can sellers be back in control during a year that’s seen an unprecedented freeze in sales activity during the spring and a wave of fear and economic uncertainty brought on by a pandemic?

While unemployment remains high in the Vancouver region, Yu said that rock bottom mortgage rates, stronger employment figures for higher income earners, and buyer preferences shifting to ground-oriented homes have all worked in tandem to buoy demand.

This is how the Vancouver market has shifted back into seller’s territory, even with new listings remaining elevated in September relative to year-ago levels.

Yu went on to note that home sales in the region are currently on pace to rise 20 percent over 2019’s total.

 

© 2020 BuzzBuzzHome Corp.

Vancouver council approves 55-storey condo tower

WI Staff
Western Investor

Artist rendering of curvy 535-foot tower. | Jyom Architecture

Vancouver council has approved a 55-storey condo tower that will be the fourth-highest tower in the city.

The September 30 decision approved the slender, curvy 535-foot tower that is set to be the second bookend for a major gateway into the city. Construction could start within a year, with work potentially complete in 2024.

Dubbed 601 Beach Crescent, the tower will stand across the north end of the Granville bridge from the recently completed 49-storey Vancouver House, and is due east of the Seymour Street off-ramp.

It is set to include 303 condominiums and 152 social-housing units.

Vancouver-based developer Pinnacle International pins the project’s value at about $250 million. Pinnacle has completed approximately 12,000 residences in the past 40 years in Vancouver, Toronto and San Diego, California.

While the 495-foot-tall Vancouver House and 601 Beach Crescent have similarities, they also play off each other with different architectural features.

Both projects involve international design firms working collaboratively with Vancouver partners. For Vancouver House, famous Danish architect Bjarke Engels worked in partnership with Vancouver’s DIALOG; at 601 Beach Crescent, the design is the brainchild of Shanghai’s Jyom Architecture, in partnership with Vancouver’s GBL Architects.

Councillors Melissa De Genova and Colleen Hardwick were opposed and Sarah Kirby-Yung was absent in city council’s 8-2 vote to approve the 55-storey tower. •

 

 

© Copyright 2020 Western Investor

Canada, home of North America?s biggest housing bubble risk, defies pandemic with price hikes across the country

Ari Altstedter
other

Median home price expected to reach $693,000 by the end of the year, a 7 per cent increase from the end of 2019
he median home price in Canada is expected to reach $693,00 by the end of the year, a 7 per cent increase from the end of 2019, according to a projection from brokerage Royal LePage. Photo by Peter J. Thompson/National Post files
Even a once-in-a-century pandemic isn’t enough to cool the Canadian housing market, with prices nationwide now forecast to end the year higher than where they started.
The median home price in Canada is expected to reach $693,000 (US$527,000) by the end of the year, a 7 per cent increase from the end of 2019, according to a projection from brokerage Royal LePage. The market continues to show strength across the country, with 97 per cent of regions reporting higher home prices in the past three months, the company said.
In Toronto, which UBS says has one of the greatest housing bubble risks of any major city in the world, the average price reached $975,980 by the end of September, up 11 per cent from the same period a year before.
The resilience of Canada’s housing market is not unique: home prices in many parts of the developed world have been defying the gloom of the COVID-19 recession. Buyers, able to borrow money at historically low rates, have looked to suburbs and smaller cities in the hunt for more space, driving up prices.

Still, with elevated consumer debt levels and a sharp slowdown in new immigrants, Canada’s real estate market stands out as vulnerable, with prices far in excess of what many workers can afford.
“Prices right now are rising at an uncomfortable rate,” said Phil Soper, president of Royal LePage, adding that growth will slow this winter after summer’s post-lockdown boom. “The economy and the social data in Canada right now is not boom time.”
In a sign the pandemic may be starting to shift homebuyers’ behaviour, the biggest price gains in Canada were seen not in Toronto but in suburban cities, including Oshawa, Hamilton and Mississauga, and in smaller cities like Windsor, Ontario, across the border from Detroit. Windsor had the biggest average price appreciation in the country in the last three months at 17 per cent.

Condo Trouble
Toronto’s condo market is trailing other kinds of housing in the city, with 4.9 per cent price appreciation in the July to September period. New data released last week showed a 215 per cent increase in condos listed for sale in the city’s downtown at the end of September, a sign that outright price declines may be on the way in some pockets.
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“The overall housing system seems to be dividing in two, and this is where risks start to appear,” said Aled ab Iorwerth, deputy chief economist at Canada Mortgage & Housing Corp., the country’s national housing agency. CMHC made one of the most bearish market forecasts in May when it said prices could fall between 9 per cent and 18 per cent this year.
While prices have gone the opposite way instead, ab Iorwerth points to falling rents, the growing preference for suburbs over downtown locations, and prolonged economic weakness as causes of potential softness in the condo market in particular, which could end up bringing down other house values too.
“All this suggests there’s going to be pressure on condo prices, and that can drag down other prices in the single detached or other types of housing units,” he said “So there’s a fragility there now.”
Bloomberg.com

© 2020 Financial Post

WestJet drops most Atlantic Canada flights after demand ‘obliterated’ by travel restrictions

Barbara Shecter
other

Eliminates almost 80 per cent of seat capacity from the Atlantic region — after airline boosted routes there
WestJet president and CEO Ed Sims: The demand for travel has been “severely limited by restrictive policies and third-party fee increases” on top of a lack of federal support for the industry. Photo by Gavin Young /Postmedia
In a clear sign of the impact the coronavirus pandemic is having on the travel industry, WestJet Airlines Ltd. said Wednesday that it will suspend many of its flights in Atlantic Canada indefinitely beginning Nov. 2, a move that will eliminate more than 100 weekly flights.
The Calgary-based airline, which was purchased by private equity firm Onex Corp. in December, is completely discontinuing service to Fredericton and Moncton, N.B.; Sydney, N.S.; Charlottetown; and Quebec City. It is also “significantly” reducing service to Halifax and St. John’s.
The suspension eliminates almost 80 per cent of seat capacity from the Atlantic region and the airline’s only route to Quebec’s second-largest city, a four-times-weekly flight from Toronto.
“It has become increasingly unviable to serve these markets,” Ed Sims, WestJet’s chief executive, said in a statement, adding that the airline has been working since the pandemic was declared in March to maintain essential air service to domestic airports.
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He said the company is now “out of runway” to maintain certain routes, with demand for travel “severely limited by restrictive policies and third-party fee increases” and in the absence of “sector-specific support” from government.
Canadian airline officials including Air Canada chief executive Calin Rovinescu have repeatedly called for an easing of 14-day mandatory quarantines after travel — which they say have decimated business travel — or bailout funds such as those given to airlines in the United States and Europe.
Canadian airline officials have also decried mandatory quarantines and periods of self-isolation for travellers to and from some regions within the country.
In WestJet’s statement Wednesday announcing the flight suspensions, the airline noted that it had been the only Canadian carrier to maintain its full pre-COVID-19 domestic flight network for this long.
“While we remain committed to the Atlantic region, it’s impossible to say when there will be a return to service without support for a co-ordinated domestic approach,” said Sims, adding that it would have to be “economically viable” to reinstate suspended flights.
Canada’s Atlantic region has been among the most successful at reducing the spread of COVID-19 by creating a “bubble” that requires visitors from outside the region to quarantine or self-isolate for 14 days, among other travel restrictions. There were fewer than 100 active cases in the region on Wednesday.
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It’s impossible to say when there will be a return to service without support
Ed Sims, CEO, WestJet
But that hasn’t been a boon to the airline industry, according to Morgan Bell, a spokesperson for WestJet. Rather, it has “obliterated” demand for travel to and from the region because each province has its own form of application and approval process, including fines for non-compliance or denial of travel without approved documentation.
“These patchworks of domestic travel restrictions and quarantine periods that are currently in place within our own borders are severely limiting Canada’s economic recovery and putting hundreds of thousands of jobs in our critical industry at risk,” Bell said.
Prior to the pandemic, WestJet had beefed up competition in Atlantic Canada by adding 28 routes either into or within the region in recent years. In addition, nonstop transatlantic flights to London, Paris, Glasgow and Dublin were introduced “to grow Halifax as the Atlantic gateway to Europe,” the company said Wednesday.
In addition to announcing the suspension and reduction of domestic flights in Atlantic Canada, WestJet said it would permanently lay off 100 corporate and operational support employees due to fading prospects for any near-term recovery as demand remains weak across its operations. The airline said an earlier reorganization triggered by the pandemic means the latest layoffs do not include staff from airports in Atlantic Canada.
In June, WestJet contracted out airport operations in all domestic airports except Vancouver, Calgary, Edmonton and Toronto, and consolidated call centre activity in Alberta.

© 2020 Financial Post

Will a pause in open houses slow Ontario’s raging real estate market?

Clayton Jarvis
Mortgage Broker News

 On Friday, the Ontario Real Estate Association called on the province’s realtors to put a temporary halt to open houses. The recommendation came just hours before the province announced that it had recorded 939 new COVID-19 infections, smashing the previous record of 797 set on Thursday.

“As we see the cases around Ontario continue to rise and that second wave starting to take hold, we wanted to make sure that Ontario real estate is doing its part to help keep people and their communities safe,” OREA president Sean Morrison told Mortgage Broker News by phone.

A pause in open houses is unlikely to impact business for the province’s realtors or mortgage brokers, many of whom were given a crash course in using technology to enhance business during the pandemic’s first few destabilizing months. From Zoom calls to e-signatures to 3D tours, real estate pro’s have already grown adept at using the kinds of tools that make open houses somewhat unnecessary, especially in Ontario’s most active real estate markets. These days, that’s practically all of them.

“I think, because realtors are so adaptive, we’ve already been shifting toward those digital tools. Under COVID-19, everybody had to make that shift a lot quicker,” Morrison says.

InTouch Mortgage Solutions broker Anthony Venuto doesn’t foresee a drop in business resulting from a lack of open houses, but he does hope realtors will see the next few days or weeks as an opportunity to provide better visual representations of homes online.

“If the industry adapts a higher standard of listings – not camera phone pictures of your listings – a client can look through those photos and narrow down from five or ten properties to just these two, or just this one,” he says. “Am I going to risk my life to go see a house if the photos aren’t really good? I’m going to pass.”

Venuto is quick to point out that open houses are not the only way for buyers to view a property. Private viewings are still permitted. But he says some sellers are only allowing viewings once an offer has been made. In that light, putting an end to open houses may actually speed up some buyers’ decisions.

“If you want to see a home, you can certainly book it with your local realtor and go through the home one-by-one,” Morrison says. “The concern here was the groupings of people running through open houses.”

Morrison says 3D renderings and virtual reality provide strong alternatives to open houses.

“You can still hold an open house virtually, which is something realtors have been doing throughout the pandemic and were starting to use even before the pandemic,” he says.

Community Trust’s Grant Armstrong is not expecting Ontario’s rising number of coronavirus infections to hinder the day-to-day operations of the province’s broker community, a large portion of which was operating remotely before COVID-19.

“Brokers and lenders have proven their resilience over the years to adapt to changes that are needed to support the industry,” Armstrong says. “This pandemic challenged the industry, and the industry stepped up to meet that challenge.”

 

Copyright © 2020 Key Media

Negative rates down the line are possible, says BoC’s Macklem

Ephraim Vecina
Mortgage Broker News

Bank of Canada Governor Tiff Macklem said in a video conference last week that further rate cuts remain an option in providing economic stimulus.

At present, the central bank’s policy rate is at a historic low of 0.25%.

“We are not actively discussing negative interest rates at this point but it’s in our toolkit, and never say never,” Macklem said.

The timing of the statement made perfect sense, according to Derek Holt, head of capital markets economics at Bank of Nova Scotia.

“He’s putting the concept back on the table if downside risks intensify,” Holt told Bloomberg via email.

This represented a softening in the governor’s stance. Upon taking the central bank’s helm earlier this year, Macklem said that sub-zero rates will significantly disrupt the Canadian financial system.

The possibility of negative rates was floated a few years back, when the bank was reviewing its options.

However, the policy steps taken so far to help the economy weather the pandemic have made the financial system more susceptible to future volatility, Macklem said.

“Without the fiscal and monetary policy actions, the economic devastation of the pandemic could have been much, much worse,” Macklem said. “[But] as much as a bold policy response was needed, it will inevitably make the economy and financial system more vulnerable to economic shocks down the road.”

Macklem said that the bank is keeping a close eye on the national credit environment, despite most Canadians having resumed regular payment schedules as banks’ mortgage deferral programs ended.

A potentially major failure point will be sufficiently large credit losses that will force banks to impose stricter controls on borrowing, Reuters reported.

“If this happens, our banking system would go from being a tailwind that supports recovery to being a headwind,” Macklem said.

 

Copyright © 2020 Key Media

What happens to a home or mortgage when someone dies? Many Canadians don’t know

Clayton Jarvis
Mortgage Broker News

Proposed Vancouver bylaw would force mixed-use commercial real estate values down by up to 30 per cent, according to city documents

Over the objections of its planning staff, City of Vancouver council has recommended a policy change that the city admits would reduce the value of hundreds of mixed-use commercial properties by up to 30 per cent.

In November 2019, council proposed to add C-2 zoned properties –specifically those that mix commercial use with residential rentals – to its current rental housing stock bylaw that requires that any existing rentals be replaced on a one-to-one basis if the building is demolished or redeveloped.

About 80 per cent of the properties affected by the proposed amendment are smaller retail buildings with 10 or less residential rentals.

“For property owners who are intending to sell or redevelop their properties, the impact will include a reduction in land value of approximately 10 per cent to 30 per cent,” according to city documents. “A reduction in land value in some cases may result in a current or future owner’s ability to access credit/financing and current and future redevelopment potential.”

The policy would mean that nearly 400 city property owners could not redevelop the building for pure commercial use, or sell the land for residential strata development without replacing all of the existing rental apartments, and securing them as rentals for 60 years.

Submissions to a city surveyon the proposal, originally scheduled to end October 5, have been extended to October 19, according to a city spokeswoman in an email to Western Investor. She added, “should these changes be referred to public hearing, we expect it will be held in December 2020.”

If approved by council, the amended by-law will come into force in early 2021.

“This may require a separate air space parcel from the rest of a new development, as well as separate ongoing management of the replacement rental units,” according to the city.

“The City has reportedly sent out notifications via hard copy mail to affected owners, though no one we’ve spoken to has received it yet,” said Mark Goodman, a multi-family specialist with Goodman Commercial Inc., a Vancouver real estate agency. Goodman added that the policy is being considered despite the robust creation of rental units in C-2 zoned areas.

City documents show that, over the past 10 years, 497 new rental units have been built in C-2 zoned area of the city, while just 77 rental units have been lost in the same areas due to strata development or property renovations.

Currently, C-2 zoned areas account for about 4 per cent, or about 3,000 units, of the city’s residential rental inventory.

During a marathon 13-hour city council meeting on November 26 last year, city planners cited this increase in rental units and the negative impact on C-2 property values in urging the city not to proceed with the amendment.

“For these reasons staff are not recommending this policy,” Vancouver City senior planner Edna Cho told the meeting.

Anne McMullin, president and CEO of the Urban Development Institute, which has been fighting against the amendment since last year, said the deliberate devaluation of property could drive some owners out of business because they would be restricted in financing of their property for renovations or improvement.

The policy would reduce the number and quality of rentals, she said, which is “the exact opposite of what the city is trying to achieve.”

When asked if she believed the amendment would be approved, McMullin said “I would hope not, but with this city council, what goes into the wash is very different from what comes out.”

© Copyright 2020 Western Investor

Are dark days ahead for the Toronto condo market?

Ephraim Vecina
Mortgage Broker News

Toronto’s condo market weakness is especially apparent in the downtown area, which saw a 215% annual increase in listings last month, according to latest data from Urbanation and the Toronto Regional Real Estate Board.

The market saw a total of 6,480 condos for sale in September, compared to 5,599 units just a month prior and 3,403 listings during the same time last year, Bloomberg reported.

For perspective, the number of listings across all residential asset classes in Toronto went up by a mere 5.3%.

“Demand is just not keeping up with new supply right now,” said Shaun Hildebrand, president of Urbanation.

The condo sales-to-new-listings ratio in Toronto’s core dropped to 24% last month. The last time that it was around this low was the early 1990s, Hildebrand said.

Aside from an influx of newly built complexes, the entry of condo units previously used as Airbnb rental suites into the market was a major driving factor, Urbanation said.

GTA average rents declined by 11% annually in September, while downtown average rents fell by 14.5% during the same time frame, a trend that industry players attributed to waning demand over the last few months.

“It’s simply because of all the new construction completions and absolutely no new blood of tenants coming in,” said Simeon Papailias, co-founder of management company Real Estate Center. “We’re going to see people move to get cheaper rents.”

 

Copyright © 2020 Key Media