Kelowna attempts to lure back expats

The Okanagan city's hot economy is brimming with residential and commercial opportunities, seeking to draw in expats and newcomers alike

By
Western Investor
July 18, 2017





Kelowna-Towers.jpg
A Florida-based developer is involved in a bid to build two mixed-use towers in downtown Kelowna. | Submitted

 

This January, the Central Okanagan Economic Development Commission launched a multi-tiered digital shout-out to Canadian expatriates in California in a bid to attract more people – especially entrepreneurs – back to the Kelowna area. California was targeted because of its comparable lifestyle and high-tech strength.

The response was tremendous: since the Internet shout-out started, traffic from California has spiked 272 per cent, primarily from Canadian expats aged 23-50 living in the San Francisco area, home of Silicon Valley.

It is just the latest evidence that Kelowna, already one of the fastest-growing cities in B.C. and ranked as the No. 1 entrepreneurial city in Canada, is striding into an unprecedented growth phase. 

With a population topping 194,000, up 8.4 per cent since 2011, the city is reaching mid-city critical mass and even U.S. developers are taking note.

In June, Florida-based North American Development Group, in a venture with B.C. developer Kerkhoff Construction, submitted a proposal for a twin-tower downtown Kelowna project that would include the tallest tower between Vancouver and Calgary.

The mixed-use commercial and residential project, if approved by Kelowna council, would raise  29-storey and 36-storey towers at the corner of Water Street and Ellis Street.

Both towers would surpass Kelowna’s current tallest building Skye condo, which climbs to 26 floors.

The residential component is understandable. 

The past two years have seen a surge in residential demand that has been answered by a big increase in housing starts, up 87 per cent in the first five months of 2017 – to 1,644 units – compared to a year earlier, with multi-family construction dominating the action.

One telling statistic: more new homes are being built now in Kelowna than in Greater Victoria or any other urban centre outside of the Lower Mainland. In fact, this year Kelowna accounts for 11 per cent of all B.C. housing starts, according to Canada Mortgage and Housing Corp.

Commercial real estate 

But Kelowna’s hot economy is about more than residential opportunities.

The city’s office market has an inventory of four  million square feet of space and the vacancy rate will inch up to the 12 per cent range this year, from 9 per cent six months ago, because of the new construction: 170,000 square feet completed by the end of last year.

New office space for Interior Health and the 105,000-square- foot Okanagan Centre for Innovation – which is open but still a work in progress – has drawn tenants away from older office space, explains Jeff Hudson of HM Commercial Group, which is licensed with Macdonald Realty, Kelowna.

The six-storey, $35 million Okanagan Centre for Innovation is funded largely by the Kelowna Sustainable Innovation Group, majority owners and operators of the building. The facility is on city-owned land valued at more than $2 million, under long-term city lease. 

Hudson said the centre is a reflection of a “mindset” change in Kelowna, that is characterized by more people biking, walking and living downtown, and the profusion of trendy brew pubs, restaurants and shops that have blossomed.

“There has been a real change downtown over the past two or three years,” Hudson said.

Murray Wills, vice-president of Colliers International for the B.C. Interior, also expressed confidence in the commercial sector.    

The Kelowna residential vacancy rate is around 0.5 per cent, but there are more than 1,200 units of new rentals planned or under construction.

Smaller investors, agents say, may want to look at buying triplex or fourplex rentals because the older apartment buildings are seldom listed for sale. 

Hudson added that large developers from both Vancouver and Calgary are scouting for land in Kelowna, which has some huge acreage available. 

Examples include a 3.6-acre highrise development site downtown approved for a 26-storey mixed-use tower and listed at $6.9 million, and a 30-acre parcel in West Kelowna zoned for residential and commercial space.

Vancouver-area developers may be attracted not only by the large amount of available land but also by the civic reception they will receive.

Hudson, whose office often deals with developers, said the City of Kelowna planning and permit structure “is a dream to work with.”


Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
Copyright © Western Investor

Email to a Friend

Close
Most Popular
Get the WesternInvestor.com Newsletter