The condo market in B.C. and Calgary make up the bulk of today’s weekly buzz, although their respective markets face opposite challenges. In B.C., prices and pre-sales of condo developments in the Fraser Valley are heating up, while increases in per-square-foot value of Metro Vancouver condo assignments are causing a re-sale frenzy. In Calgary, owners looking to back out of purchase agreements for condos still under development will soon have a way out, thanks to government intervention. On the flipside, Victoria’s retail and office market are beginning to outshine its housing market.
Here are Western Investor’s top picks of notable commercial real estate news in Western Canada this week.
Assignment sales surge as buyers hope to cash in on rising value – Western Investor
Limited supply and high return means units in Metro Vancouver condo developments are often snapped up long before they’re even completed. However, a rise in land value allows current owners to re-sell their units at a much higher price.
Excluding land value, the hard construction costs to build a new highrise condo tower in Vancouver is now $290 per square foot compared with $230 a year ago, according to appraisal firm Altus Group.
However, land values for Vancouver residential development sites have rocketed up as much as 260% from a year ago, based on 2017 assessments. Some developers are paying up to $1,000 per square foot for Vancouver building sites with high-density potential.
The result has been a surge in assignment sales of condos in sold-out but uncompleted Vancouver towers, with investors hoping to catch the uplift in value since the condos were first sold.
Strathcona Village, now under construction on East Hastings Street, where one-bedroom condos originally sold two years ago for $450 per square foot to $497 per square foot. The condos are now being advertised as assignments for $770 to $787 per square foot.
The Independent project at Main Street and East Broadway, a Rize Alliance tower that sold out in 2015 at an average price of $672 per square foot, has assignments being offered at more than $900 per square foot. One two-bedroom is listed by Rennie & Associates at $991 per square foot. The Independent is scheduled to be completed this fall.
Last week, 58 Metro Vancouver condo assignment ads were posted on Craigslist, some offering multiple units in Vancouver towers from downtown Vancouver to Surrey. Most are listed by real estate agents.
Assignment sales are exempt from B.C. anti-flipping legislation. Enacted in May 2016, it stipulates that sales contracts can’t be assigned without the written consent of the seller and that any profit from an assignment goes to the initial seller.
Condo act updates aim to improve consumer protection – Calgary Herald
The condo market in Calgary is much slower than it is in B.C., and soon-to-be announced amendments to the province’s Condominium Property Act will allow buyers to cancel a purchase agreement and get their deposit back if developments do not complete as scheduled.
Phase 1 will address consumer protection, including stronger requirements for condo developers to provide more definitive occupancy dates, better budgets for operations and for setting condo fees, and placing buyer deposits into a trust.
Under the proposed amendments, buyers will also be able to cancel purchase agreements if a developer doesn’t meet the occupancy date.
“Albertans deserve to be protected when they make big purchases like a home. That’s why our government is proposing new rules to better protect condominium buyers, while balancing the needs of condo corporations, developers and managers,” says Stephanie McLean, minister for Service Alberta, the provincial body revising the act.
McLean inherited the condo act amendments when she took office in 2015.
“We consulted Albertans, and they told us loud and clear that when a developer doesn’t finish on time, buyers ought to have the option to cancel the agreement and get their deposits back. This is one of many changes we expect to bring forward this year.”
She says that Service Alberta will be sharing more in the coming months.
Valley apartment action up; joint venture helps house veterans – Business in Vancouver
Fraser Valley apartment prices are rising in the face of declining detached housing prices, WI sister publication Business in Vancouver reports. As demand increased, so do the amount of new developments cropping up.
Year-end data indicates that Fraser Valley apartments were alone among Lower Mainland housing types to appreciate steadily through 2016, rising 26.3% to $259,000. It’s also attractive compared with a benchmark apartment price in Metro Vancouver of $510,300.
In Abbotsford, Quantum Properties Inc. is developing the tallest residential building between Surrey and Calgary – 26 storeys – in response to demand. Pre-sales accelerated in 2016 as markets across the region hit fever pitch.
Set for completion in 2019, the tower will have three floors of commercial space designed to serve both residents and the community and 152 units that average about 1,000 square feet – larger than those in Vancouver, but smaller than the ranchers that dominate surrounding streets.
Quantum president and CEO Diane Delves says most buyers are local, people who wanted to downsize from detached homes while staying within the community. A handful relocated from more expensive communities.
All told, Abbotsford saw 667 multi-family starts last year, according to Canada Mortgage and Housing Corp., a 61.5% increase from 413 in 2015.
Victoria real estate boom shifts from residential to commercial – Western Investor
Victoria’s housing market has seen record-breaking housing starts in the last year and half, which may be lending to old commercial developments springing back to life. With a significant amount of housing starts, developers are now looking to revive long-abandoned retail and office sites.
“Victoria has been climbing out of a significant downturn since 2009, and it’s only in the last year and a half that we have been able to see reasonable numbers,” Edge said. Edge did note there is some concern that 80 per cent of all new home are being built in just three municipalities — Langford, Victoria and Saanich.
Commercial real estate could be the bigger news for 2017, however, with dormant sites springing to life.
Among these is Dockside Green, an ambitious mixed-use development that has been stalled for seven years.
In 2005, the city chose Vancity Enterprises along with Windmill Development to turn the former city-owned brownfield in Vic West into a sustainable showcase featuring 1,000 housing units, along with commercial and light industrial uses. The project stopped in 2010 with just 22 per cent of the site built out.
Now Dockside Green is seeking to reinvigorate the 15-acre development. The new master plan calls for a mixed-use community of commercial and residential buildings and a retail centre between the Point Ellice Bridge at Bay Street and the Johnson Street Bridge.
If the new master agreement is approved by Victoria, Vancity credit union will invite third-party developers to build their own projects on individual lots.
In Sidney, developer Omicron will break ground this spring on the $35 million Gateway shopping centre.
The centre is on Victoria International Airport land on Beacon Avenue and Patricia Bay Highway and recently received approval from Sidney council.
In downtown Victoria, the first new office buildings in years are under construction and slated for completion of a total of 500,000 square feet in 2018. According to Colliers International, the downtown office vacancy rate recently dipped below 7 per cent for the first time in years.
The hotel market in Victoria has set record levels for revenue per available room – $120– in the past year and an historic hotel connected to the landmark Craigdarroch Castle will test the investment market. The 1913-era, 15-suite Craigmyle hotel has just been listed for $3.6 million by Newmark Knight Frank Devencore agent Randy Holt.