Canadians’ homebuying enthusiasm remains strong: report

Fergal McAlinden
other

News arrives despite growing concerns over interest rates

Even despite the affordability challenges of recent times – not to mention the current rising-interest-rate landscape – Canadians’ ultimate ambition to own a home appears undimmed, according to RE/MAX’s 2022 Housing Affordability Report.
That survey showed that 68% of respondents were willing to make at least one sacrifice to purchase a home within their price range, with just under two thirds (64%) indicating that they would be prepared to relocate to achieve that dream.
A willingness among many Canadians to cast a wider net to secure an affordable property is perhaps little surprise: among those surveyed, 43% cited high real estate prices in their area as a barrier to purchasing a home, while higher living costs, an unpredictable market and interest rate hikes also figured prominently.
For Christopher Alexander (pictured top), RE/MAX Canada’s president, the report affirmed that Canadians’ enthusiasm for housing remains as strong as ever, even despite rising borrowing costs and the recent rapid cooldown across the market.
“It just shows how far Canadians are willing to go to own real estate, and this desire runs as deep as ever despite all these changes,” he told Canadian Mortgage Professional.
“Canadians are really into buying real estate – which is a good thing. Traditionally, it’s been a really good wealth creation vehicle.”
Read next: Is Canada’s urban exodus on the wane?
Despite the willingness of many Canadians to relocate, survey respondents appeared split on how far they’d be prepared to move to purchase a home. Half said the furthest they’d travel would be less than 100 kilometres, although 38% said they would move to a different city, province, or region regardless of how far it was from their current location.
That shows that many Canadians remain wedded to their local environment despite the surging trend of interprovincial migration over the past two years, Alexander said – perhaps partly because of work considerations with offices and workplaces having reopened and fully-remote arrangements no longer possible in many cases.
“If you bought out of province and your employer’s asking you to come back to the office, it’s almost impossible to commute, even if it’s a couple of days a week,” he said. “All the affordability advantages you gained by moving to a less expensive area or community, you would lose if you had to fly in every week.”
Among the hurdles that Canadians said prevented them from entering the housing market, concerns over rising interest rates had climbed to 24%, an increase of 6% over last year, in a clear indication that the Bank of Canada’s rate hikes are looming large in many would-be buyers’ minds.
RE/MAX said in its report that while the record-low-rate environment of recent years had heralded an “excellent opportunity” for Canadians to enter the housing market, they had also added further intensity to a market that was already seeing high levels of activity.
As inflation surges and the Bank of Canada embarks upon some of its largest rate hikes for years, the report said that 57% of Canadians have now decided to wait to either buy or sell a home with speculation about a possible recession gathering pace.
Read next: Canadians’ debt concerns surge amid rising rates
Banking giant RBC said in a recent report that rate hikes, labour shortages and worsening inflation were all set to weigh heavily on the Canadian economy and push it into a “moderate” recession next year.
While the jobless rate is set to rise, the report said it would be to a “less severe” extent than in previous downturns – and added that higher rates were necessary to curb the threat of inflation.
The market typically takes some time to adjust when rates rise as prospective homeowners wait to see what they can afford under new scenarios, Alexander said.
Still, with the country’s longstanding housing inventory shortage continuing, he said he expected a busy market to resume as soon as the central bank has reached the endpoint of its plans for further hikes.
“When there are consistent rate hikes, that is concerning because people need time to adjust and historically speaking it takes them a little bit to understand, ‘OK, now I don’t have as much buying power, what’s my next move?’” he said.
“With continual rate increases, and a fast [pace] of increases, that is going to potentially pose challenges. But once things settle down and the market adjusts, I think because of our supply challenges it’s going to get competitive again.”

Copyright © 1996-2022 Key Media, Inc.

Feds contribute $7 million for $81M passive house tower in Coal Harbour

Mike Howell
Western Investor

Vancouver MP: ‘Once completed, the fully electrical building will emit 94 per cent less GHG emissions than a standard building’

 The $81-million project underway at Coal Harbour got a $7-million lift from the federal government Friday to assist the builder of the 11-storey tower meet “net zero energy and passive house” standards. Rendering courtesy City of Vancouver

The federal government announced Friday (July 29) a $7 million contribution towards the construction of an $81-million project in Vancouver’s Coal Harbour neighbourhood that includes social housing, a school and childcare.

The money is to assist builders of the 11-storey tower to meet “net zero energy and passive house” standards, according to Vancouver-Granville MP Taleeb Noormohamed, who made the announcement at city hall on behalf of Minister of Natural Resources, Jonathan Wilkinson.

“Once completed, the fully electrical building will emit 94 per cent less GHG emissions than a standard building,” Noormohamed said. “It will also improve indoor air quality, reduce water consumption and maximize the building’s overall energy performance, making those homes safer, more comfortable and more affordable.”

Waterfront land

“Passive house” is a world-leading standard to create energy efficiency in buildings. The construction concept is meant to reduce a building’s ecological footprint by adding features such as proper ventilation, insulation and thick pane windows to a project.

The building is under construction at 480 Broughton St. on waterfront land the city has owned since 1996. The site already has a community centre, which was completed about a decade ago.

The first three levels of the new development will provide a 340-student, 14-classroom elementary school with a gym, library and multi-purpose room. A licensed 65-space childcare facility will be built on level four and 60 social housing homes on levels five to 10.

Vancouver council approved the project despite pushback from some residents concerned about their waterfront views being blocked, more traffic coming to the neighbourhood and the suggestion that the area already had enough social housing.

’15-minute city’

Mayor Kennedy Stewart, who joined Noormohamed for the announcement, defended the project, saying it was a model for future developments because of the way it incorporates a school, childcare facility and homes for people on low incomes.

“Essentially, you’re building a 15-minute city right into one place for the life of the residents,” Stewart said. “So I do think that this is the best way forward for all cities in the middle of a climate crisis and affordability crisis.”

Stewart said change is “always tough” in neighbourhoods and acknowledged people are generally under pressure with affordability, inflation and interest rates and can’t take one more change.

“But I think this is a change that they’ll all get behind because it’s so wonderful for the families that are involved here,” the mayor said.

Taneen Rudyk, president of the Federation of Canadian Municipalities (FCM), told reporters that an estimated $700,000 will be split among Soroptimist International of Vancouver, John Howard Society of Victoria, the Sooke Region, Greater Victoria Housing Society, Capital Region Housing Corporation and Gabriola Housing Society to fund plans and studies for 497 future homes.

The total $7.7 million package announced Friday comes via the FCM’s Green Municipal Fund’s sustainable affordable housing initiative.

‘Ravages of the pandemic’

Rudyk noted how COVID-19 has had an impact on the country’s health care system, businesses and municipalities, yet efforts are still being pushed forward to fight climate change.

“Despite the ravages of the pandemic in communities across Canada, local governments — big and small — have continued to push towards fewer greenhouse gas emissions, net zero energy and environmental sustainability,” she said.

“Today is about orders of government working together for a vibrant and inclusive recovery. Solutions are possible and local governments are ready.”

As of 2017, all rezoning applications submitted to the City of Vancouver require projects to meet near zero standards or low emissions targets.

 

© 2022 Western Investor

Squamish District 78.8-acre rural parcel finally sells

London Pacific Property Agents Inc.
Western Investor

Listed off-and-on the market for about seven years, the acreage is on the Squamish River in Brackendale, B.C., and sold in July for $5.8 million for an equestrian centre.

Property type: Land

Location: 1050 Depot Road, Squamish B.C.

Size of land: 78.8 acres

Zoning: Agri-3 (not in the Agriculture Land Reserve)

B.C. Assessment value: $1.24 million

List price: $5.9 million

Sale price: $5.8 million

Date of sale: July 28, 2022

Brokerage: London Pacific Property Agents Inc., Vancouver

Broker: Mike Guinan-Browne

 

 © 2022 Western Investor

 

Survey: Home prices remain on a strong growth trend

Ephraim Vecina
other

Increases were particularly notable in suburbs and smaller communities

While interest rates have been on the rise for the past few months, the Canadian housing market continued to see price growth during the first six months of this year, according to the latest “Price Per Square Foot” survey by CENTURY 21 Canada.

The increases were particularly notable in suburbs and smaller communities outside metropolitan centres, spurred by a flight from the mounting unaffordability of the Greater Toronto Area and Greater Vancouver regions.

“While some markets have cooled after the boom that occurred during the COVID-19 pandemic, prices overall have continued to remain elevated for the start of the year,” CENTURY 21 said.

Long-term growth is also expected to continue despite fears surrounding higher interest rates.

“The highest point of the boom may have passed, but the trend is still towards higher prices, especially in suburbs where younger and first-time home buyers are looking to escape competitive metropolitan areas now that remote work has become more common,” said Brian Rushton, COO of CENTURY 21 Canada.

Read more: Cancelled projects bode ill for housing affordability, says CIBC’s Tal

Rushton said that more volatility is not out of the question as the full impact of rate hikes will become clearer as the months go on.

“What will be interesting is to compare the data we’ve received from the first half of this year with the data we gather in 2023 to see how the rising rates impact the market for the next six months,” Rushton said.

“We don’t want to get ahead of ourselves, we’re going to keep seeing how the market performs and whether or not it cools down after the frenzy of the past year. With inflation on the rise, folks may be less able to purchase but even a slight dip would only take us to the level of a few years back, possibly the 2018-2019 period.”

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Kelowna says ‘no for now’ for three-tower downtown development

Wayne Moore
Western Investor

City council has turned down a proposal for a massive development on Coronation Avenue – but leaves its options open

 A massive three-tower development proposal of Safari Capital that would redefine Coronation Avenue in downtown Kelowna has been turned down by city council.

At least for the time being.

The proposed development includes towers proposed to reach 33, 27 and 20 storeys in height situated atop one long podium stretching across a land assembly of more than a dozen properties.

As it did with a proposed 46-storey tower on Bertram Street 18 months ago, planning staff brought this plan forward for “early consideration” by council before staff and the developer invest more resources and money into a project planning manager Terry Barton calls a complex file that “sits well beyond our existing policy framework.

The overall development would feature more that 700 units, including two towers of market rental units and some condominium units.

It would also include an 85-room hotel and some ground floor commercial.

Barton says planning staff did not support the project because of the overall height, density and negative fit within a more low-rise neighbourhood.

Barton also called the project, “premature,” saying there are still so many unknowns, development-wise, in the downtown area.

He said it was staff’s view the project was largely predicated on the University of
British Columbia Okanagan (UBCO) tower which is “not approved, not built and not operating.

If UBCO is built, if Kerkhoff’s building [35 storeys] is built, if Mission Group’s rental tower at 17 storeys is built on Bertam, if some of the other tower proposals come forth and we are talking five or 10 years down the road, does this proposal make more sense – potentially,”

Coun. Luke Stack said he believed the development was too much for the site, specifically the single podium that would run the entire length of the development. He also suggested it would signal too much of a shift from the new Official Community Plan.

While council agreed with staff, they also left the door wide open for the developer to come back with something different at a later time.

“I really like this project, but I think it’s beyond where it needs to be,” said Mayor Colin Basran.

“I really encourage you to work with our planning staff because a consolidation like this doesn’t come along very often.

“We have a unique opportunity here that can be a win-win scenario, but I don’t think we are quite there yet.”

 

© 2022 Western Investor

New development proposal for downtown Kelowna has been turned down by city council

Wayne Moore
Western Investor

City council has turned down a proposal for a massive development on Coronation Avenue – but leaves its options open

 A massive three-tower development proposal of Safari Capital that would redefine Coronation Avenue in downtown Kelowna has been turned down by city council.

At least for the time being.

The proposed development includes towers proposed to reach 33, 27 and 20 storeys in height situated atop one long podium stretching across a land assembly of more than a dozen properties.

As it did with a proposed 46-storey tower on Bertram Street 18 months ago, planning staff brought this plan forward for “early consideration” by council before staff and the developer invest more resources and money into a project planning manager Terry Barton calls a complex file that “sits well beyond our existing policy framework.

The overall development would feature more that 700 units, including two towers of market rental units and some condominium units.

It would also include an 85-room hotel and some ground floor commercial.

Barton says planning staff did not support the project because of the overall height, density and negative fit within a more low-rise neighbourhood.

Barton also called the project, “premature,” saying there are still so many unknowns, development-wise, in the downtown area.

He said it was staff’s view the project was largely predicated on the University of
British Columbia Okanagan (UBCO) tower which is “not approved, not built and not operating.

If UBCO is built, if Kerkhoff’s building [35 storeys] is built, if Mission Group’s rental tower at 17 storeys is built on Bertam, if some of the other tower proposals come forth and we are talking five or 10 years down the road, does this proposal make more sense – potentially,”

Coun. Luke Stack said he believed the development was too much for the site, specifically the single podium that would run the entire length of the development. He also suggested it would signal too much of a shift from the new Official Community Plan.

While council agreed with staff, they also left the door wide open for the developer to come back with something different at a later time.

“I really like this project, but I think it’s beyond where it needs to be,” said Mayor Colin Basran.

“I really encourage you to work with our planning staff because a consolidation like this doesn’t come along very often.

“We have a unique opportunity here that can be a win-win scenario, but I don’t think we are quite there yet.”

 

© 2022 Western Investor

Vancouver council backs controversial Kitsilano social housing development

David Carrigg
The Vancouver Sun

Thirteen-storey B.C. Housing project at Arbutus and 7th Avenue will provide permanent shelter for 129 homeless people

 An artist’s rendering of the Arbutus project in Kitsilano that will provide 129 single-occupancy units. jpg

Vancouver council has approved rezoning for the second of five B.C. Housing developments in the city that will create 424 suites for single homeless people.

Council voted Tuesday night in favour of rezoning a city-owned site on Arbutus Street in Kitsilano between 7th and 8th Avenue (alongside the planned Arbutus subway station) to permit a 13-storey building with 129 one-person social housing units offering mental health and other supports. The project will be managed by the MPA Society, a long-standing non-profit agency with 220 full-time employees.

Each unit will have a kitchen and bathroom and occupants will have security of tenure, said Celine Mauboules, the city’s director of housing and homelessness services. She said that 99 per cent of the estimated 250 people living in tent and tarpaulin structures along Hastings Street at the moment would jump at the chance to occupy one of these units.

Last week, a community group called The Kitsilano Coalition asked the City of Vancouver and B.C. Housing to reconsider the Arbutus social housing project after the then housing minister, David Eby, fired the board of B.C. Housing. They were fired because it was found the agency sometimes handed out multi-million contracts without a rigorous process to ensure the best provider is chosen.

Some neighbours worried the new development would affect safety in the area, fearful of the situation when the 147-unit Marguerite Ford social housing project on the 200-block of West 2nd Avenue opened and generated over 700 police calls in 18 months. The development is also across the road from an elementary school.

Coun. Colleen Hardwick, who is running for mayor in the October municipal election, was the strongest advocate for those neighbours and voted against the project. Councillors Melissa De Genova and Sarah Kirby-Yung also opposed the project.

Hardwick said 75 per cent of 300 speakers at council were opposed to the project, including mental health researcher Dr. Julian Somers, retired provincial court judge Tom Gove — who ran the downtown community court — and the staff of the nearby Sancta Maria House recovery home for women.

“Instead of standing up and demanding a better model, the majority of city council accepted the failed model presented by B.C. Housing as good enough,” Hardwick said.

Coun. Adriane Carr — who backed the project — noted that former mayor Gregor Robertson had promised to end homelessness by 2015 and that it was a false promise with homelessness in the city “worse than ever.”

Coun. Lisa Dominato said the community consultation process for the project was deficient, but the MPA Society had a good reputation and would work to create a good mix of tenants.

The project was backed by the rest of council and Mayor Kennedy Stewart.

“As more and more neighbours are pushed to the streets due to a lack of supportive housing, this project provides hope of a better way forward,” Stewart said in a statement. “129 residents will soon have their own place to call home, with wraparound services which will ensure they are well supported.”

Part of council’s approval was that the MPA Society and B.C. Housing create a advisory group to hear about any concerns once the project is operating, that a flashing pedestrian controlled traffic light be installed at 7th and Arbutus and that the project consider offering more than just single-person occupancy in the units.

The other B.C. Housing project that has been approved is on the 1400-block of King Edward Avenue East. This will be a 14-storey building with 109 units operated by the Vancouver Native Housing Society.

The three projects that have not yet received rezoning approval to go ahead are a planned six-storey building at 2930 Renfrew St. offering 50 single units operated by Lu’ma Native Housing Society, a six-storey 64 unit development on the 2500-block of South Grandview Highway run by Community Builders and a six-storey 72-single-unit project at 1925 Southeast Marine Drive operated by The Kettle Society.

 

© 2022 Vancouver Sun

Douglas Todd: Why is Vancouver so secretive about this First Nations’ highrise project?

Douglas Todd
The Vancouver Sun

Opinion: With bulldozers moving in and roadways being prepared on park grass, Kitsilano residents near the Senakw project say the city is proceeding behind a cloud of confidentiality

 Squamish Nation Council Chairperson Khelsilem and Vancouver Mayor Kennedy Stewart discuss a Senakw agreement, which is unavailable to the public, at a press conference at the Museum of Vancouver Wednesday, May 25, 2022. Photo by Jason Payne /PNG

Bulldozers recently dug up land next to the Burrard Bridge. Large trees have been cut down. Construction fences went up last week.

 

And new survey signs mark where a road is planned to run across Vanier Park, which will provide access to Sen̓áḵw, which urban analysts say is the most dense highrise development ever proposed for Canada.

Yet last week, until nearby residents notified them, even Vancouver park board officials didn’t know a road was being prepared across the parkland it operates. They launched an investigation and requested a stop on the encroaching work.

Meanwhile, Vancouver city council is doing everything it can to support the Squamish First Nation in erecting 11 highrise towers, with some skyscrapers soaring to 59 storeys, on a narrow portion of reserve land in Kitsilano at the west side of the bridge.

The Kitsilano Point Residents Association strongly supports the Indigenous undertaking, seeing it as a potential act of reconciliation. But its directors believe, along with former Vancouver mayor and B.C. premier Mike Harcourt, that the property is being overdeveloped.

 

And they’re especially bothered by city council’s secrecy, the complete lack of any consultation with residents and voters. They describe the city as operating behind a thick cloud of non-transparency, confidentiality, hidden reports, in-camera meetings and councillors being sworn to secrecy — while the city paves the way for roughly 10,000 new residents to pack in closely beside the bridge.

 

Artistic rendering, aerial view, of the proposed Senakw development in Kitsilano, from website created by Westbank Corp. Nearby residents say such drawings don’t show roadway through Vanier Park. PNG

The city says it has no “mandate” to hold hearings on the massive construction effort, since it’s on a reserve. But in May the city signed a memorandum of understanding, which isn’t available to the public, to provide water, sewer, electricity, police and firefighter services to the project of the Squamish Nation, which is in partnership with Westbank Corp., a developer of mostly luxury condos.

 

Kits Point residents, however, are among those bothered that the city hasn’t held one public event on Sen̓áḵw’s community impact or on whether it intends to provide schools, transportation, recreational centres, traffic mitigation or amenities in response to the megaproject, which they say will be 10 times more dense than the West End.

The residents’ group isn’t alone in being worried. Former Vancouver councillor Gordon Price, an urban affairs scholar, has written a piece about it, titled, How do we talk about Senakw?

While Price endorses B.C.’s “new era of billion dollar Indigenous real estate projects,” he laments there was no public consultation a decade ago when the Tsawwassen First Nation built a megamall on precious Delta farmland. He fears the Senakw project will also be pushed through by hushing dissent.

 

“But if reconciliation of any kind means being honest and open, to declare interests and be open to accommodation, then this is that time,” Price says. “The best outcomes will be if there’s a sense of mutual benefit.”

Neither the city, nor the 4,000-member Squamish Nation’s development arm, the Nch’Kay Corp., have provided Vancouver residents with commitments regarding Sen̓áḵw, including the proportion of units for renters, condo owners or businesses.

Still, a Westbank-developed website, called Sen̓áḵw, says the highrise development “represents an opportunity to heal.”

The site adds: “The world is full of too much talk, and too little action.” The aim of the Sen̓áḵw development is to “construct 6,000 homes in Downtown Vancouver in as little as five years, start to finish. Ready to commence construction in 2022.”

 

 

The proposed development site. Photo by Francis Georgian /PNG

Sen̓áḵw will help resolve the city’s housing crisis, the website claims, because it’s being built on “reserve land, with the Squamish Nation in the driver’s seat: no drawn-out approvals or permitting delays.”

A Nch’Kay Corp. representative said officials weren’t immediately available to respond to Postmedia News’s questions.

A City of Vancouver official, however, said in a statement: “Vancouver land-use policies and regulations are not applicable to these (reserve) lands, nor is the city directly involved in any part of the planning or design.”

Even though city officials have been negotiating for two years to provide infrastructure to Sen̓áḵw, the statement said, “there is no timeline” on when staff or council will engage with residents on transportation or other issues. In regard to a services agreement, it said, “the city will make the details public shortly.”

 

While the city acknowledged Vanier Park is leased by the federal government to Vancouver and is operated by the park board, it suggested Ottawa is responsible for approving the road through the park. Staff ignored a question about whether the city, as lessee, requested the roadway.

Eve Munro of the Kits Point Residents Association said city councillors and officials are being “disingenuous,” including about “the unprecedented level of secrecy surrounding the Sen̓áḵw  development.”

Munro, a lawyer, accepts that Sen̓áḵw isn’t subject to the city’s normal consultation process because it’s on reserve land, which was granted to the Squamish Nation in 2000, along with $92 million, for relinquishing its claim to Kits Point and other lands.

 

However, Munro said “there is nothing stopping the city from consulting about how the residents of the city would like to have their resources deployed … in support of a development of this scale and density.”

 

Vancouver’s mayor and city staff are “promoting a false narrative suggesting the nature of the (Senakw) development is beyond their influence and control,” says Eve Munro, a director of the Kitsilano Point Residents Assoc. She stands with Jeremy Braude, centre, and fellow direct Scott Dunlop on the site’s would-be access road on Vanier Park property. Photo by Francis Georgian /PNG

Vancouver Mayor Kennedy Stewart recently commented about a services deal with the Nch’Kay Corp.: “We have an obligation to provide services as a good neighbour. To use that as a tool for blackmail really isn’t in the spirit of reconciliation.”

But Munro said the mayor and staff are “promoting a false narrative suggesting the nature of the development is beyond their influence and control.”

Other B.C. municipalities faced with urban reserve developments, she said, have not been so reluctant to protect their community’s interests.

 

Jeremy Braud, whose home is close to the project, said Kits Point residents generally feel “a lot of good will” toward the Sen̓áḵw development. But he worries the lack of transparency is creating a “public relations disaster. If I don’t know what’s going on in my backyard, I think the worst.”

It’s not only the city, he said. There is nothing to stop the Nch’Kay Corp. from reaching out to residents.

In his article on Sen̓áḵw, Price cautioned that “there will be a real danger of it getting pulled into a political culture war” if community concerns aren’t taken seriously.

“Guilt and shame are ultimately counterproductive ways to negotiate a healing future,” Price said. But he said if Sen̓áḵw, one of many Indigenous developments in the works in Metro Vancouver, proceeds with respect shown by all sides it could turn into the city’s “next great megaproject.”

[email protected]

 

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© 2022 Vancouver Sun

Ontario home sales activity still slowing down

Ephraim Vecina
other

The rapid rise in interest rates and continually elevated inflation levels are taking their toll

 New home sales in Ontario continued to ease in June, a trend that was especially apparent in the Greater Toronto Area (GTA), according to Altus Group and the Building Industry and Land Development Association.

A total of 1,694 new homes were sold in the GTA in June, representing a significant annual decline of 56%, and hovering 52% below the 10-year average for that month. New condo home sales totalled 1,519 units, down by 44% annually and 36% below the region’s 10-year average for the asset class.

Single-family home sales fell by 85% year over year, accounting for just 175 units sold.

“New home sales numbers for June reinforced the expected easing of sales from last year’s exceptionally fast pace,” said Edward Jegg, research manager at Altus Group. “With interest rates continuing to rise, high inflation, affordability pressures, and general economic uncertainty, many buyers are adopting a wait-and-see attitude that is expected to run through at least the summer months.”

Read more: How much do you need to afford a home in Toronto and Vancouver?

The number of new homes remaining in the market was 11,639 units, comprised of 9,717 condominium apartment units (3.5 months of inventory) and 1,922 single-family units (2.7 months of inventory).

Benchmark prices stood at more than $1.8 million for new single-family homes (up by 31.2% annually) and at nearly $1.2 million for new condo apartments (up by 12.4%).

“While many prospective home buyers in the GTA are delaying purchasing the homes they need in the midst of economic uncertainty, our region’s fundamental challenges around housing supply remain unresolved,” said Dave Wilkes, president and CEO of BILD. “Shorter-term demand-side economic conditions and inflationary pressures cool demand but increase the costs of new builds simultaneously. This will continue to impact overall supply.”

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Copyright © 1996-2022 Key Media, Inc.

Metro Vancouver industrial vacancies ease as supply increases

Frank O Brien
Western Investor

With more than 1.7 million square feet added this year – and more on the way – the vacancy rate has eased to a still-tight 0.5 per cent, study finds

 Metro Vancouver’s industrial vacancy rate, which hit a North American low of 0.1 per cent this year, according to Colliers, has eased to 0.5 per cent due to a huge increase in supply, a new Cushman & Wakefield market survey says.

The report notes that 1.7 million square feet of industrial space was completed so far this year and another 1.8 million square feet, mostly speculative, is under construction,

“The vacancy rate will likely bounce in the 0.5 per cent range for the next few quarters,” said Derrick Gonzales, a research analyst with the commercial real estate agency, who noted that this remains a historically low number.

Up to 80 per cent of the new space being built has been pre-leased or pre-sold as strata, Gonzales estimated.

This is good news for developers but bad news for tenants who are facing dramatic increases in lease rates and dwindling options, according to Cresa, a Vancouver-based occupier-focused commercial real estate advisor.

“The distress for warehouse users continues with region-wide vacancy falling to a crippling 0.57 per cent, down from 0.62 per cent in the fourth quarter [2021], and 2.1 per cent a year ago. Per-square-foot warehouse rents jumped by $0.63 during the first quarter to $16.78 and were up by $2.09 from year-ago levels,” its report concluded.

Industrial lease rates increased to an average of $18 per square foot in the second quarter, Cushman & Wakefield reported, with some markets flirting with $20 per square foot for new product.

Approximately 683,739 square feet of new supply was added to the Metro Vancouver and Fraser Valley regions in the second quarter. Notable completions included Conwest’s build-to-suit development for Lordco in Port Coquitlam (341,113 square feet); buildings B & C at Wesmont’s multi-phase industrial strata project in Langley City (160,880 square feet); and Beedie’s strata project at DECA Business Center at 7927 River Road, Delta (45,584 square feet).

Several additional projects are slated for completion in the second half of 2022 and Gonzales doubts they will have any problem being absorbed.

“Wholesale trade and third-party logistics groups are looking 18- to-24 months in the horizon in securing industrial space in an extremely competitive supply-constrained marketplace,” he noted in the report. “This quarter, Conwest fully leased its large bay multi-unit development at 1725 Coast Meridian Road in Port Coquitlam one quarter prior to completion while Beedie fully leased its multi-unit project at Parallel 32 in South Surrey’s Campbell Heights which is scheduled for a fourth quarter of 2022 completion.”

But, with interest rates increasing and lease rates skyrocketing, Gonzales cautions that smaller companies may be muscled aside in the hunt for Metro Vancouver industrial space.

© 2022 Western Investor