Winnipeg bright spot in Prairie multi-family rentals

Alberta, Saskatchewan cities seeing higher vacancies than in the more stable Manitoba capital

By
Western Investor
February 28, 2017





Prairies Rental
Winnipeg has the lowest rental vacancy rate of all major cities on the Prairies, at less than 3 per cent. | Akman Property Management

 

Winnipeg has emerged as the big-city bright spot for residential landlords with a rental vacancy rate a fraction of that in most large cities of Alberta and Saskatchewan.

The vacancy rate in Manitoba’s capital is now 2.8 per cent, according to Canada Mortgage and Housing Corp. (CMHC), virtually unchanged from a year ago.

This compares with vacancies of 10.3 per cent in Saskatoon and north of 7 per cent in Calgary and Edmonton. 

Winnipeg apartment building sales picked up late in 2016, with nine apartment buildings selling for at least $1 million through Manitoba Land Titles, reports Stevenson Advisors. The average sale price per suite for apartment buildings during the first three quarters of 2016 was approximately $84,000. 

Western Investor recently tracked recent Winnipeg sales closer to $90,000 per door, with cap rates in the 4.5 per cent to 5 per cent range. An average two-bedroom rents for $1,100 per month, up fractionally from last year. 

Two downtown conversion projects were announced in the third quarter of 2016: the $17  million redevelopment of the historic James Avenue pumping station into 84 rental apartments, and the remake  of  a  building on Portage Avenue into 55 rental apartments.

Regina 

Regina’s rental vacancy rate is now 5.5 per cent, up just 0.1 per cent from this time last year, CMHC reports.

A relatively weaker labour market and lower migration to the Regina area have moderated overall housing demand. The average rent for a two-bedroom apartment in Regina is $1,109, unchanged from a year ago.

Investors can find smaller rental apartment buildings in Regina for less than $100,000 per door and four-plexes from $50,000 per door, based on recent listings provided to Western Investor.

Saskatoon

CMHC reports that Saskatoon has the highest apartment vacancy rate in the country, with an overall vacancy of 10.3 per cent, up from 6.5 per cent last year.

The average two-bedroom apartment rent is now $1,100, down 0.9 per cent in a year. 

Nearly a quarter of Saskatoon’s condominiums are rented, CMHC noted, and the condo rental vacancy rate has doubled in the past year to 3.1 per cent. 

Calgary

Calgary condominium developers are facing the highest unsold inventory – 800 units – in 16 years as low oil prices tank new home sales in Alberta’s biggest city, according to CMHC. And Calgary’s slumping rental market offers scant shelter for those planning to convert condos to rentals, said Shamon Kureshi, president and CEO of Hope Street Real Estate Corp., a major Calgary property management firm.

“Times are hard for every single landlord with whom I’ve spoken in the past eight to 12 months,” Kureshi said.

He said his company’s research of smaller rental properties, including houses and duplexes, shows that 37 per cent of Calgary’s rental units are empty, or nearly 3,000 vacant units. 

This is dramatically higher than the 7 per cent apartment vacancy rate that CMHC reported in October of last year, which the agency said was the highest level in 25 years. 

Calgary’s purpose-built rental units increased by 1,296 units in 2016 from the previous year, to 36,523 units – the highest annual gain since 1994.  CMHC said two-bedroom rents average $1,258. But in a February scan, Western Investor found  two-bedroom downtown Calgary apartments for less than $1,100 per month.

Edmonton 

Big investors remain active in Edmonton’s rental apartment market, snapping up eight apartment blocks priced at $25 million or more in 2016, according to Barclay Street Real EstateThe price per door, however, is now 5 per cent lower than last year, at $132,000. With a 7 per cent vacancy rate – the highest in 20 years – Edmonton landlords are offering incentives to attract tenants.


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

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