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High value, lower volume in Vancouver's multifamily market

Lower Mainland sales remain strong as private investors pile in
Cardston co-op coop
The sale of the 115 Place Co-operative Housing Association's two towers on Cardston Court near Lougheed Town Centre ranked as the largest apartment sale of the first half of 2022.

Business was brisk in Vancouver’s multifamily market as 2022 began, with recent reports noting the prominence of private investors as well as vendors keen to take advantage of strong pricing.

According to the Goodman Report, 84 transactions totalling $1.26 billion took place in the first half of the year, a 23 per cent drop in value and 11 per cent drop in transactions from 2021.

“Although this is down from the previous year, this result represents more volume than all of 2020,” the Goodman Report noted, while pointing out that activity in the period was the third-highest since 2006.

The peak for the sales in the first half of the year came in 2018, when 89 transactions totalling $1.45 billion took place. The second-best year for first-half transactions was 2017, with 87 transactions totalling $1.35 billion.

Private investors have led activity this year to date, according to the Goodman Report, which estimate them at 82 per cent of the market followed by institutional investors at 14 per cent.

“Private investors continue to make up the overwhelming majority of transactions in Metro

Vancouver,” the Goodman Report stated.

An analysis of the Metro Vancouver and Vancouver Island markets by CBRE Ltd. painted a slightly different picture. It estimated private buyers at 90 per cent of the market, with private institutions accounting for 61 per cent of sales value. Smaller buyers accounted for just 29 per cent.

“The institutional activity is expected to continue as we see more amalgamation of multifamily apartment buildings by larger landlords attracted to the strong fundamentals of the BC multifamily market,” CBRE reported.

CBRE’s analysis is based on 59 transactions across the Lower Mainland, including the Fraser Valley, with an aggregate value of $780.4 million. Unlike on Vancouver Island, portfolio sales – primarily Starlight Group’s purchase of 13 properties from Raamco International – were a minor factor in the market, accounting for just five transactions.

The challenge for potential buyers is a lack of product, however.

“There is still lots of capital looking to get into the multifamily market and there is less competing

product in the market for investors to choose from,” Lance Coulson, executive vice-president with CBRE’s National Apartment Group said.

Similar to 2018, sites purchased for redevelopment have been a significant driver of activity in the Lower Mainland. According to the Goodman Report, 16 transactions took place in the first half of 2022. These amounted to 20 per cent of the total transactions in the period.

The sales included the largest transaction in Vancouver, the $76 million sale of the Quilchena Gardens site at 4683 Arbutus Street.

The two largest transactions outside Vancouver were both co-op towers in Burnaby, 9380 Cardston Court for $85.5 million and 4221 Mayberry Street for $54.4 million.

Despite the high prices, especially in Vancouver, the average price per suite for the period fell 12 per cent versus 2021. The average this year was $434,419 per unit, down from $491,019 last year.

By comparison, the average price per unit was $494,723 during the first six months of 2018 and $408,413 in 2017.