Western Investor's first annual pick of the top 10 towns for western Canadian real estate investors BY WI STAFF No. 1: Surrey When Mayor Dianne Watts opened Surreys' $36 million City Centre library in September, it underscored what may be the smartest town for real estate investing in Western Canada. Just days earlier, Ivanhoe Cambridge had announced a $220 million expansion of its Guildford Town Centre mall. The 77,000-square-foot library forms a key part of the giant Central City complex in Canada's 12th-largest city, the second biggest in British Columbia. The centre includes a new city hall, a new campus for Simon Fraser University and the Central City shopping mall. Close by is the sprawling new headquarters of the RCMP, the largest joint federal government/private-sector project in the Pacific Region. The expansion of the Surrey Memorial Hospital, with a satellite campus for the University of BC, part of a $239 million care and surgery centre, is another link in the outstanding infrastructure in the fastest-growing city in B.C. Surrey attracts 1,000 new residents every month, which convinced giant developer Concord Pacific to launch a five-tower master-planned community of 3,000 homes in the heart of Surrey's once-troubled Whalley area. More new homes were started in Surrey this year than in Vancouver, and Surrey accounts for one-third of all detached housing starts in B.C.'s Lower Mainland. Yet, at an average price of $569,000 for houses and $222,370 for condos, Surrey homes are half the price as in the City of Vancouver.
NAIOP, the Commercial Real Estate Association based in Vancouver, recently praised Surrey for both its tax incentives and its action against red tape, including its new mobile reporting for building inspections and an "e-business" system that allows developers to check project status, engineering reports and inspections online. These are among the reasons why Surrey accounts for half of all the office construction in Metro Vancouver this year and has the region's second-highest inventory of industrial real estate. No. 2: Calgary With oil prices flirting with five-year highs and an influx of new workers and families, Calgary takes second spot among our top 10 towns in the West. The action is seen on the streets, where Oxford Properties, the real estate arm of the Canadian pension plan, has announced plans for a 25-storey downtown office tower. "As we look around the markets globally we believe Calgary is in our top five list of places to invest and re-invest," said Dave Routledge, Oxford's vice-president of real estate management. Calgary's downtown class A office vacancy has plunged to 4.5 per cent from 12.5 per cent in 2010, according to commercial real estate firm CB Richard Ellis Ltd. Meanwhile, Calgary's industrial market is surging. With the vacancy rate in the 5 per cent range, more than 2 million square feet were leased up in the first half of 2011 alone. Out near the airport, WAM Developments is completing one of the largest industrial plays in Western Canada, with 1,100 acres and plans for 10 million square feet of space. Calgary's housing market has also shaken off the slump, with a rush of new condo towers underway and the resale market posting an 8.25 per cent increase in sales to September. The average house price is $466,000. Alberta's largest city is also a magnet for immigrants and those moving from other provinces. Last year 12,000 people moved into Calgary and, since 2004, the city accounted for 36 per cent of all Alberta immigration. No. 3: Saskatoon There is nothing like consumer confidence to drive a city's performance and resource-friendly Saskatoon is a prime example. This year Saskatoon is forecast to lead the nation with retail sales growth of 6 per cent for the second year in a row. Saskatoon's retail boom is the result of the overall growth the province has been experiencing, with 10,000 new jobs expected in Saskatchewan this year. Over the past three years, Saskatoon has averaged a net migration growth rate of 2.7 per cent. In the last four years alone, Saskatoon has also added more than 1.8 million square feet of retail space. "This shows national and regional retailers are continuing to view Saskatoon as a viable retail market," said Keith Webb, vice-president at Colliers Saskatoon. Saskatoon also has Canada's tightest industrial vacancy rate, at 2.7 per cent, with an acre of industrial land selling for around $400,000. The city's office vacancy rate is 6.6 per cent, but much tighter for prime space downtown. Meanwhile, the residential vacancy rate is 3.4 per cent, considered relatively healthy, and the average house price is around $335,000, just slightly above the national average. No. 4: Kelowna The 2008-09 recession that quaked B.C.'s Central Okanagan left confident Kelowna stirred but not shaken. Now the city of nearly 100,000 is getting ready to reclaim its standing as one of the hottest real estate and investment markets in Western Canada. Evidence is seen downtown where seven buildings were taken down for the construction of the $25 million mixed-use SoPa project by local developer Edgar Fenwick. SoPa, which started in the midst of the downturn, has already leased out all of its block-long ground-floor retail, which will open in 2013. Above the retail are 96 residential condominiums capped by large luxury penthouses, priced from $1.2 million to $1.3 million, and selling fast. The Chartered Accountants of BC forecasts a recovery that began in 2010 is gaining traction right across the Kelowna region. Its report found the economy rebounded last year with the addition of 9,200 new jobs. The local job-growth rate of 3.7 per cent is leading the entire province. Government has helped to put a base under Kelowna's construction economy, with close to $12 billion in institutional projects going ahead this year. Kelowna has 3,000 acres of land either zoned or set aside for industrial use under the official community plan and it may all be needed as this Okanagan powerhouse fires up. No. 5: Red Deer A resurgent oil and gas sector is pushing demand for industrial space in Central Alberta's heartland and spurring commercial and mixed-use residential development. Industrial is the trump card, with the vacancy rate now at a tight 3.7 per cent and as low as zero per cent in two popular business centres, including the Riverside Heavy Industrial Park, says a study by Soderquist Appraisals Ltd. The study found just 177 vacant land parcels for industrial in a city with 11.5 million square feet of leased space. Fully serviced industrial land is selling for around $270,000 per acre. Retail growth is also seen in this transport-centric city. This year will see retail expansion in the northeast sector with Melcor Developments Ltd.'s Clearview Market Square that will eventually see 263,000 square feet of new commercial space on a 22-acre site. Qualico Developments is starting construction on Southpointe Junction, 350,000 square feet of retail development immediately west of Qualico's existing Southpointe Common project. New retail space is leasing in the $22-to-$25-per-square-foot range. The average sale price of a Red Deer house is around $300,000 and sales are up 10 per cent from 2010. No. 6: Fort McMurray/Wood Buffalo Fort McMurray, the anchor city for the northern Alberta boom centre of Wood Buffalo, has just signed a new land deal with the province that will see enough room for industrial, commercial and residential development for up to 200,000 residents. Earlier this year Pacific Investments and Development paid $35 million for 980 acres in Fort Mac, all of it deemed for industrial and commercial land. Meanwhile, the Regional Municipality of Wood Buffalo is selling serviced industrial land for more than $1 million per acre. Add in the highest housing prices in Alberta, a tight rental vacancy rate and a new surge in oilfields investments, and Fort McMurray will be a leading centre for real estate investment for years to come. No. 7: Brandon The second-largest city in Manitoba, Brandon's economy is anchored on the Maple Leaf Foods plant that employs 2,200 and has attracted workers from around the world. But it is a new pro-business attitude in the city of nearly 50,000 that makes it a good real estate play. New Mayor Shari Dector Hirst has pledged to cut red tape and lead a downtown revival to draw 1,000 more people to the core. Last year, housing sales hit an all-time high of $230 million, yet the apartment rental vacancy rate is 1 per cent, tied as the lowest in Western Canada. Construction is booming this year, much of it government related, with a new CancerCare Manitoba facility, the second-largest YMCA in Canada and a new $13 million police station. No. 8: Prince George When Prince George was named the No. 1 city in Western North America for cost competitiveness in 2010 it didn't surprise many in this northern B.C. city that is riding a resurgence of investment yet still has some of the cheapest real estate in the province. Prince George is at the crossroads of the world's two most powerful economies and is the biggest and best-equipped city between the Alberta oilfields and the Asian continent. Prince George is where the airport has been expanded to land the biggest cargo plans on the planet; from where rail lines and highways radiate to the ports of Prince Rupert, the northern coal fields, new gold mines - and into the heart of the United States. It is the northern hub for the recovery in B.C.'s forest industry, which is feeding an apparently insatiable demand from Asia for dimensional lumber. The $917 million Mt. Milligan mine northwest of Prince George is under development as the first major mine in B.C. in 15 years. The Dome Mountain mine project is also re-opening. Proposed northern mine projects represent $9 billion in capital investment, and Prince George is the centre of the action. At 5.7 per cent, the city has an unemployment rate 3 per cent lower than the B.C. average. The typical detached house price is $261,000, up 6 per cent from 2010 and far below the provincial average of nearly $590,000. No. 9: Comox We include the Comox Valley - made up of Comox, Courtenay and Cumberland - on the list because of its potential as the economic centre for mid- and north Vancouver Island. "The Comox Valley represents the most affordable land prices in B.C.," said John Evans, president of Trilogy Corp., who has launched Trilogy's 719-acre Cayet development at Cumberland. The plan calls for a huge shopping centre, offices, casinos, institutional space and more than 1,000 homes. Costco Wholesale also opened this year with a 146,000-square-foot store and Thrifty Foods will lead a major commercial development on a 12-acre parcel in east Courtenay. The rental vacancy rate in the Comox Valley is under 2 per cent and investors can find still condos for under $120,000. One drawback to developers in the valley is very high development cost charges (DCCs). The DCCs for industrial development in the Comox average $114,912 per acre and are north of $59,000 per acre in Courtenay. In Cumberland, the industrial DCC is $49,923 per serviced acre. No. 10: Langley Township With a population of more than 100,000 and covering 122 square miles in B.C.'s Fraser Valley, Langley Township is one of the top commercial and residential investment centres in Western Canada. Right now, Qualico is completing the $58 million, 148,000-square-foot Willoughby Shopping Centre first phase, with future plans for about 1,000 homes across the 20-acre site. A new BMW dealer has just opened in a giant auto business park, where office space sells from $400 per square foot. The first park-and-ride transit station is now under construction for Vancouver-bound commuters, and the housing market is the strongest in the Fraser Valley. In September, detached house sales in Langley shot up 51 per cent from a year earlier, and average house prices rose 9 per cent to $566,700. So far this year, 761 new homes have started in Langley Township, up 30 per cent from a year earlier.
from Western Investor November 2011 |
