Two development permit-ready condo properties in Richmond, one on Cooney Road and the other on Westminster Highway, are being marketed by Avison Young in Metro Vancouver. (Courtesy Avison Young)
Vancouver’s multiresidential property market is coming back from the COVID pause with a flurry of choice properties being made available and an uptick in transaction activity.
Commercial real estate firms report more apartment building and development site listings year-over-year in September. Mark Goodman of Goodman Commercial told RENX he and partner Cynthia Jagger had 23 listings worth $300 million in September. Last year, they had 28 listings worth $250 million.
Goodman says his team has completed 14 transactions year-to-date totalling $186 million and eight of those sales were made during the pandemic.
“You push pause on the economy for March, April and May and all of a sudden you open it up.
“People are buying and selling for all of the reasons they were before, but you’ve accelerated the trend because people want to get back to their lives and plan their business,” says Goodman. “So, we’re getting hit with a ton of product.”
18 months of demand in Vancouver market
Activity at Avison Young is also running ahead of last year, says Michael Buchan, principal of investment sales.
Buchan says the pent-up demand in the multiresidential market goes back a year and a half. Investors and sellers sat on the sideline in 2019 as they waited for changes in municipal and provincial policies to be clarified.
The pandemic further delayed the market, but Vancouver’s resilience is now shining through.
“There are so many different types of owners, investors, developers that come from throughout the world,” says Buchan.
“They see how well B.C. held up compared to the rest of the world during COVID and I think Vancouver is still seen as a safe haven and one of the most desirable places to live.”
Goodman points to a diverse buyers’ market in the city, including professionals such as doctors and dentists diversifying their investments, entrepreneurs seeing value in updating older inefficient buildings and Toronto-based REITS and institutional investors.
No “COVID discount” for rental properties
Multifamily rental is moving particularly quickly. Despite the economic shock of COVID, Goodman says his surveys show landlords are collecting about 95 per cent of rents, thanks in part to the CERB income support program for workers laid off due to the pandemic.
“There’s no COVID discount. The cost of money is historically low right now. That’s keeping everybody afloat.”
Rental property, whether existing buildings or development sites, is moving more quickly than condo property, dealers say.
Goodman says the price per unit or per square foot has always been higher for condos, but, with the condo market backing off a bit, the price differentiation has narrowed.
Buchan predicts the higher demand for rental will continue until at least the end of 2021.
Bal Atwal, principal of investment and development properties for Avison Young, says condo prices could come back to earlier levels in six to 12 months.
“As soon as condo prices come back to their previous high and push beyond them, rental might not be feasible anymore, based on what you have to pay for the land,” says Atwal.
Multifamily properties on the sale market
This development site at Main and East 33rd in Vancouver led to a bidding war amongst five developers, according to Mark Goodman. (Courtesy Goodman Commercial)
Choice properties are popping up throughout the Vancouver metro market.
Goodman listings include the Edgewater site on Pacific Street two blocks from Sunset Beach in the Burrard Corridor, which offers an option for redevelopment.
“It’s possible to support a very large building up to 300 feet,” says Goodman.
A six-storey rental development site at Main and East 33rd prompted a bidding war with five developers, says Goodman. There is an accepted offer on the property and the buyer is currently working with architects and the city.
A mixed-use high-rise site in Surrey is listed at $33.8 million. Goodman says the property is the “quintessential Surrey location” close to the SkyTrain, Simon Fraser University and Surrey city hall and library.
In Richmond, a Goodman listing for two side-by-side apartment buildings (asking $50,290,000) attracted six competing offers, half of them institutional investors from Eastern Canada and half of them local buyers. “It just shows you how resilient the market is.”
Avison Young has two condo properties in Richmond, one on Cooney Road and the other on Westminster Highway, which are development permit-ready, a plus for a prospective buyer who wants to launch presales early in the new year.
“One of the two is quite far along in the building permit, zoning stage as well,” says Atwal.
He says the properties could be sold separately or to one owner who wants to launch them one after the other, depending on sales activity. The expectation is the two together will sell in the mid- to high-$40-million range, he says.
Rare full-block development site
A full-block multifamily development site along Cambie Street in Vancouver is being marketed by Avison Young in Vancouver. (Courtesy Avison Young)
Richmond lagged slightly in the Metro Vancouver market before COVID, says Atwal.
“I think Richmond specifically is on the verge of coming back to previous benchmark pricing they were achieving prior to the slowdown and possibly pushing past those numbers,” he says.
Buchan is offering a rare full block for development from 4339 to 4387 Cambie St. in Vancouver. The 42,500-square-foot property could likely support two six-storey condo buildings with two floors of underground parking, says Buchan.
“There’s a multitude of projects that have gone on throughout the Cambie corridor. . . . This one to my knowledge would be the largest potential development site in this area.”
Buchan said it’s too early to predict how much the site will sell for but there is already plenty of interest from developers.
