Kamloops, population 90,000 and growing, is B.C.’s largest city to be spared from the provincial speculation tax on secondary homes – but B.C.’s fifth-largest city outside of the Lower Mainland is more than a tax haven.
A four-hour drive from Vancouver and served by a busy airport, Kamloops is at the junction of two branches of the Thompson River and also boasts Kamloops Lake and close proximity to one of B.C.’s best ski hills, Sun Peaks Resort, and the award-winning Tobiano Golf Course, named among the best in Canada last year.
A major impetus for the growth of Kamloops, though, is Thompson Rivers University with 14,000 students on campus and an ambitious master plan that may transform the entire city.
The Reach, as the 90-acre campus development is known, is a master-planned community completely pre-zoned for residential and commercial use. The Reach has zoning for a total of three million square feet of residential with retail-commercial space.
At completion in the next two decades, the Reach will include 3,500 homes and about 180,000 square feet of retail and commercial space. It will also create what proponents say will be “vibrant, walkable and social space that is not currently available anywhere else in the Thompson-Nicola region.”
It sounds ambitious, but a look at Kelowna’s downtown, which has transformed successfully along those lines, suggests the Reach could achieve it.
The Reach is already well underway.
Last fall Cape Group broke ground on Creston House, a 56-unit condominium project with one- two- and three-bedroom units, including penthouses. Prices start at $289,900 for a one-bedroom and rentals are allowed. It is already 50 per cent sold out.
Cape CEO Ralph Schwartzman founded Cape Construction in 1956 in Brandon, Manitoba, and has completed developments across Western Canada.
Thompson Rivers University Community Trust (TRUCT), which is handling the Reach land sales, has inked a deal with Kelson Group for a second parcel of land.
Kelson, a local company, which won out in a request-for-proposal competition, is developing a 56,000-square-foot project that includes a flour-storey residential complex to complete next year.
The new rentals will be welcomed in Kamloops, which has a tight 1.2 per cent vacancy rate and need for more student housing.
The current market offering at the Reach is a 3.25-acre commercial and residential parcel located at the gateway to Thompson Rivers University.
“We allow the market to determine the price of the land,” said TRUCT spokeswoman Chantelle Stone.
The benchmark price of a home in the Lower Mainland is now close to $1 million. It is less than $400,000 in Kamloops district, which makes the four-hour drive from Vancouver worth about $150,000 per hour.
To meet the demand for housing from both local and out-of-town buyers, Kamloops residential building permits topped $20 million in the first four months of this year, compared to $10.1 million in the same period in 2007. This April alone saw 33 residential building permits approved, noted Jim Anderson, executive director of Venture Kamloops, the economic development arm of the city.
In May, 348 homes sold in the region, reports the Kamloops and District Real Estate Association (KDREA). This was down 6.5 per cent from a decade-high May 2017 but still represents one of the best showing on record for that month.
In the first five months of this year, 1,224 homes had sold.
“Home sales remained at healthy levels in May after having rebounded in April from a brief dip in March,” said KDREA president Doren Quinton.
The average price of homes sold in May 2018 was $390,697, up 3.5 per cent from May 2017.
Active residential listings numbered 1,188 units at the end of May. This was the lowest level of inventory for the month in 11 years, Quinton noted.
A boon to the Kamloops housing market is the area’s exemption from B.C.’s new speculation tax, which is levied against secondary homes in some areas of the province, including Kelowna and the Central Okanagan, Metro Vancouver and most of southern Vancouver Island.
In 2018, the tax rate for all properties subject to the tax is 0.5 per cent on the property value. In 2019 and subsequent years, the tax rates will be 2 per cent for foreign investors; 1 per cent for Canadian citizens and permanent residents who do not live in British Columbia; and 0.5 per cent for British Columbians who are Canadian citizens or permanent residents.
Partially due to the tax exemption, the BC Real Estate Association is forecasting Kamloops-area home prices will rise an average of 7.6 per cent this year and a further 2.9 per cent in 2019, to $404,600.
Commercial real estate
A total of 11 commercial building permits were issued in April 2018 with a value of $17,851,934, up from the 10 permits issued in April 2017 with a value of $588,750, according to Venture Kamloops.
Much of the new construction is related to industrial, including speculative development, said Mona Murray, a commercial agent with Colliers International in Kamloops.
There has been an increase in strata industrial, she noted. Murray expects new industrial strata space to sell for around $250 per square foot and demand lease rates, net, from $14 to $16 per square foot.
Murray noted that, aside from traditional demand from manufacturers, trucking and distribution firms, she has also been fielding calls from cannabis producers.
One marijuana grower, she said, is seeking a 50,000-square-foot warehouse space.
That could prove expensive.
Colliers currently has a 26,900-square- foot space in the Mount Paul Industrial Park, which is on leased First Nation land, with an asking price of $4.4 million.
For companies seeking industrial land for build-to-suit projects, prices range from $350,000 to $850,000 per acre, depending on location. Industrial land offerings right now include a flat 2.6-acre site with Trans-Canada Highway access, offered at $699,000.
There are also five lots available at the 100-acre Gateway Industrial Park.
Murray said retail is emerging as a hot sector in Kamloops as the city’s population edges to 100,000, often a signal to national retailers of a market to watch.
Kamloops has not had much problem backfilling retail space left vacant by some high-profile closures. The Wholesale Sports building, which closed in December, was taken over June 1 by Bianca Armor’s Liquidation Supercentre; and the old Target space was leased by a trio of tenants, including Planet Fitness.
Aberdeen Mall is still working to fill its former Sears space, but it quickly found a new tenant, Sephora, when Le Chateau closed earlier this year. Sephora opens this summer.
“We are having a pretty good year in Kamloops,” Murray concluded.