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Weekly Buzz: church land sold for development, Vancouverites priced out

Western Investor's media content roundup for the week of Mar. 20 to Mar. 24, 2017, featuring top stories from Business in Vancouver and The Tyee
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As land values continue to soar, the Vancouver middle-class are reportedly forced to consider an exit route, while wealthier developers are looking to untraditional sources for development potential. Most of this week’s top stories focus on the increase in Vancouver commercial real estate prices, included two editorials covering how Lower Mainland residents are dealing with being priced out. We also take a look at how churches are considering cashing in on the real estate boom.

Here are Western Investor’s four most buzz-worthy articles of the week. 



Are people fleeing Vancouver? Census suggests exit trend becoming a stampede – Western Investor

An editorial by WI Editor Frank O’Brien went viral this week after 2016 census results showed Vancouver’s population growth has decreased considerable – possibly due to the city’s rising unaffordability.

So how come so many people are leaving, driving the city’s population growth rate down 30 per cent in the past five years?

The 2016 census shows that Vancouver’s population increased 6.5 per cent between 2011 and 2016, which looks great except that is well down from the 9.3 per cent increase from 2006 to 2011.

Virtually all of the population growth is coming from immigration, according to Statistics Canada.

This is a troubling trend that threatens to become a stampede before the next census.

A staggering 34 per cent of Metro Vancouver homeowners say they are planning to sell their expensive homes and move to more affordable regions over the next five years, according to a new study conducted by Insights West for Resonance Consultancy, a global adviser on real estate and economic development.

Even more alarming is that 40 per cent of gen-X (aged 35 to 54) homeowners in Metro Vancouver said they are considering cashing in and getting out. Also planning to move are 35 per cent of millennials and 28 per cent of boomer homeowners.

Cherise Burda, executive director of the city building institute at Ryerson University, said out-migration means big trouble for cities like Vancouver.

“Families need to stay,” said Burda. A city requires a diverse population that includes young families that help to support services and infrastructure in the city, she argued.

But the move-out trend is becoming pronounced. In January, for example, more people bought a detached house in Saanich and Langford than in all of Vancouver. Kelowna house sales were also higher than in B.C.’s biggest city, and as many detached houses sold on the affordable Sunshine Coast (population 34,000) than across all of Vancouver’s west side, where the typical house lists at $2.8 million.

The census shows that Vancouver trailed all western Canadian cities in population increases in the latest five-year period, including Lethbridge and even tiny Sylvan Lake, which were among western cities posting double-digit growth.

[Western Investor]


Why Real Estate Developers Are Ignoring the Middle Class – The Tyee

It’s no surprise that wealthy developers aren’t catering to the average Vancouverite as they purchase expensive pieces of land to produce less-than-affordable housing. But will neglecting to build more purpose-built affordable housing come back to bite them? The Tyee reports.

Those are some of the takeaways from “Emerging Trends in Real Estate — United States and Canada 2017,” a report produced by PwC and the Urban Land Institute. Its authors describe it as “one of the most highly regarded and widely read forecast reports in the real estate industry.” Its conclusions were drawn from a wide-ranging survey of investors, developers, advisers, consultants and other real estate industry leaders. “Researchers personally interviewed more than 500 individuals and survey responses were received from more than 1,500 individuals,” the report explains.

The report’s authors declined an interview with The Tyee. “We’re going to have to pass on this one,” said a spokesperson. But many of the experts quoted in the report spoke candidly about the industry. Some of them are concerned about the direction it’s heading. “We’re not paying enough attention to affordable housing, and I don’t mean low-income or government-subsidized. Just regular rents. No new buildings are providing that kind of product,” said one CEO. “Time will tell if that’s going to come back to haunt us. Not everybody makes $75,000 to $100,000 a year.”

Housing has become so expensive in cities like Vancouver, San Francisco and New York that the industry has amended its definition of “affordable.” There is now a “distinction between ‘big-A’ and ‘small-A’ affordability,” the report explains. Big-A affordable housing is what most of us are familiar with. It refers to housing for our society’s poorest members, often built with the support of governments. Small-A affordable housing refers to the needs of people earning $31,000 to $87,000 per year. “In many markets,” the report observes, “middle-income households... are housing stressed, spending more than a third of their income on housing costs.”

The industry knows that this is a problem. A society in which a majority of people can no longer afford your product is bad for business. Increasing numbers of real estate leaders seeming to be paying attention. “Housing costs and availability were rated by Emerging Trends survey participants as being ‘considerably important’ issues,” the report reads, “increasing in importance this year when compared with the ‘moderate importance’ given to future home prices and affordable/workforce housing in our survey a year ago.” But acknowledging a problem is only the first step. The real estate industry doesn’t seem interested in actually addressing it.

[The Tyee]


INFOGRAPHIC: Commercial real estate sales continue record increase – Western Investor

The Real Estate Board of Greater Vancouver released its 2016 year-end statistics package detailing commercial real estate sales in the region. To few people’s surprise, sales and dollar volumes are at five-year high.

Commercial real estate sales have reached a five-year high in the Lower Mainland, posting record increases in sales volume in every sector except for multi-family.

Sales totaled $12.99 billion in 2016, up 47.4 per cent from 2015. Development land sales saw the most dramatic surge in sales, according to the Real Estate Board of Greater Vancouver.

“We saw steady activity across the commercial real estate market in 2016,” said Dan Morrison, president of REBGV, in a release. “It’s no surprise that land sales had the largest increase last year given the supply shortage we’re experiencing in our residential and commercial markets today.”

There were 1,177 commercial land sales in 2016, up 41 per cent from 835 sales in 2015. The 2016 sales totaled $7.20 billion, up 81.3 per cent from $3.97 billion the previous year. Three hundred and eighty-seven land sales occurred in Surrey in 2016 – the most of any municipality, followed by 226 in Vancouver. Vancouver recorded the highest dollar value of sales at $3.24 billion.

Office and retail sales in 2016 increased 12.8 per cent, from 814 sales in 2015 to 918 in 2016. Dollar values were up 46.9 per cent year-over-year, from $2.47 billion in 2015 to $3.62 billion in 2016.

Industrial sales posted the slightest increase of 9.9 per cent over the 557 sales in 2015, bring the total number of sales in 2016 to 612. Dollar value increased 3.4 per cent to $1.06 billion in 2016 from $1.03 billion in 2015. One hundred and seventy-seven industrial transactions took place in Surrey, with the second-most transactions occurring in Richmond.

[Western Investor]


Separation of church and real estate – Business in Vancouver

First it was strata councils – now churches are considering packing it in to sell their land to residential developers for an impressive sum. Business in Vancouver takes a look at what could become a developing trend if available land continues to be sparse.

A small church in Vancouver’s Mount Pleasant neighbourhood is attracting a lot of visitors this April, but most will be drawn by something other than the Holy Spirit.

Like at least a score of other Vancouver churches, the Bethlehem Lutheran Church near Main Street and East 15th Avenue has been put up for sale. Submissions to purchase are being accepted. No formal price has been set for the property, which sits on about half an acre of land zoned with a potential 1.45 floor space ratio.

That would allow more than 41,000 square feet of real estate in one of Vancouver’s prime housing markets.

“Most of the interest so far has been from residential developers,” said Cynthia Jagger, a listing broker with HQ Commercial in Vancouver.

HQ’s call for submissions has attracted 90 distinct bids from developers, mostly local, and a handful from other church groups.

In most jurisdictions, church officials would typically give preference to a developer who would consider rebuilding a new church for the congregation.

But this is Vancouver.

“[Bethlehem Lutheran] will also consider selling the property as is,” Jagger confirmed.

[Business in Vancouver]