Fourteen months ago, when LNG Canada, an international consortium led by Royal Dutch Shell, announced the final investment decision on the biggest private-sector resource project in Canadian history, it lit a fire under residential real estate investors. The blaze was no where more apparent than in Kitimat, where a new $17 billion liquefied natural gas (LNG) terminal is being built, fed by a network of gas pipelines that would converge on the northern B.C. coastal town along with thousands of workers, all part of a $40 billion development.
Shannon Dos Santos, of Re/Max Kitimat Realty, was on the front line last year when the news hit and the phones starting ringing.
“We had 87 home listings 40 hours ago. Now we have less than 10,” Dos Santos told Western Investor three days after the October 1, 2019, announcement.
JV Development Group and Kerkhoff Construction, dusted off plans for a 27-acre townhouse development with 47 homes, most to be sold to rental investors.
Developer Jason Pender, who is now completing the joint venture project, noted that 16 of the first 23 units have already sold, though they won’t complete until next year.
He estimates that investors will rent the two-bedroom units for more than $2,500 per month.
Like others, he said the Kitimat residential upturn will become obvious over the next two years and will likely spread to neighbouring Terrace.
“It is still early days,” Pender said.
Meanwhile, some of the largest rental portfolios in Kitimat have been put up for sale. Other landlords took their properties off the market and some did not rent out vacant units, counting on an influx of workers to drive vacancies down and rental rates and prices up.
A year later, most are still waiting for the elusive boom to begin.
“Kitimat housing sales are probably down 50 per cent this year compared to 2018,” Dos Santos said this November.
Last month about 1,000 workers were on site in Kitimat — about half of them from the Kitimat-Terrace area — and that’s just to set the stage for the main construction phase, which isn’t expected to start for another couple of years.
Dos Santos said one can feel the action in town, though it hasn’t yet shaken the housing market.
“It’s definitely buzzing,” agreed Kitimat Mayor Phil Germuth. “The hotels are full; there’s another brand new hotel that’s being built. There’s a brand new townhouse development being done.”
Kitimat’s residential rental uptick has not yet materialized, partly because of the huge work camps being built to house thousands of LNG pipeline workers.
From 2022 to 2024, up to 7,500 people will be employed on the project. Another 2,500 will be working on the associated $6.2 billion Coastal GasLink project. The project is so massive that a work camp in Kitimat, the 1,186-room Sitka Lodge, is being used to house some of the workers who are building a bigger work camp, the 4,500-room Cedar Valley Lodge.
That work village, being built by Bird-ATCO Joint Venture, will have an entertainment and recreation complex that will feature a movie theatre — something the town of Kitimat doesn’t have — separate gyms for men and women and a basketball court. The first 1,500 beds will open in April 2020.
The idea behind Cedar Valley Lodge is to avoid having workers moving into Kitimat or Terrace and pushing rents up, which often occurs on large projects when contractors provide living-out allowances.
“From the very beginning, we made a commitment not to support living-out allowances,” said Susannah Pierce, director of external relations for LNG Canada. “We don’t want people to be displaced, which is why we went on a very rigorous process to ensure that we developed housing to support our workers, and developed a camp which would make people want to stay and come back to.”
Real estate agents and landlords maintain that architects, engineers and other professionals working on the project, and a large number of subcontractors, will easily fill most of the rental units available locally.
Kitimat is not alone waiting for an immediate residential recovery.
The number of homes sold through the BC Northern Real Estate Board was down 15 per cent this October from a year earlier. The average detached-house price across the north was $306,327, unchanged in 12 months. In the northeast, central to the LNG pipeline expansion, the average home price is $268,000, unchanged from last autumn