Rents rose by more than 10 per cent in Greater Victoria’s rental market last year, meaning tough times for tenants despite an increase in vacancies to 1.5 per cent last year from one per cent a year earlier and the addition of more than 1,400 units.
The situation in Esquimalt is even tighter, with vacancies steady at 1.2 per cent according to Canada Mortgage and Housing Corp.’s latest rental market report. Rents increased in step with the region, but were more affordable at $1,321 a month. This has made the area a refuge from the higher-priced Victoria market, where rents average $1,457 a month.
The appeal has prompted an uptick in new supply, with more than 200 units added to the local rental stock over the past year, the largest increase since 2018.
A new mixed-use project in Esquimalt will add to the number, delivering 198 rental homes on the site of the former Cask & Kettle liquor store at 858 Esquimalt Road. Rental rates have yet to be set for the project, which is scheduled to complete in late 2025.
Developed by PC Urban Properties and partner Fiera Real Estate CORE Fund, ground broke this week on the project with a view to creating a new gateway to Esquimalt’s West Bay neighbourhood and Town Centre.
“This development will provide much needed homes for families and individuals who want to be close to the city centre, and brand-new retail for the whole community to enjoy,” said Brent Sawchyn, CEO with PC Urban Properties in a press release announcing the start of construction.
PC Urban currently has 1,200 rental units under development in B.C., which research presented at this week’s meeting of commercial real estate association NAIOP indicates is one of the most under-supplied markets in Canada, itself among the most undersupplied countries in the G7.
This supports investment in the market, a panel discussion at the meeting said, even though provincial rental controls often mean rent growth lags expenses.
“The margins are low but the fundamentals area really, really good,” said Jordan Carlson, senior vice-president, investment with Anthem Properties Group. “This market is great for it.”
The big challenge for investors looking at supporting new housing are municipal approval times.
“Time kills all deals, and what you’ve seen, historically, in Vancouver is it takes seven years for a project to get off the ground,” said Vera Liu, director, investments with KingSett Capital Inc. of Toronto, who says her team works to expedite approvals when it undertakes projects.
In the case of Esquimalt, the township envisioned 858 Esquimalt Road for what PC Urban described as “an active, mixed-use residential and retail redevelopment” within its West Bay Local Area Plan. This helped smooth the road to development, bringing the project to launch much sooner than elsewhere.
“This development represents a positive move forward for Esquimalt,” said Esquimalt Mayor Barbara Desjardins in a statement. “We’ll see the property flourish to not only retail space, but retail alongside much-needed rental housing – housing that offers amenities that reinforce active, green and connected communities.”