The real estate pinch in Vancouver and other major cities has caused skyrocketing values, garnering a national housing warning from the Canada Mortgage and Housing Corporation. Affordable supply has also dwindled in the industrial market, forcing developers to consider densification of warehouse facilities in Vancouver. Even one of Vancouver’s cheapest housing options – manufactured homes – is being pushed out of reach by unaffordable land prices. Meanwhile, a resort town in Alberta hasn’t lived up to its once-upon-a-time real estate boom, showing a glut of ghosted, unfinished resort suites.
Here are Western Investor’s top picks of commercial real estate coverage published this week.
Canada’s housing market still flashing ‘red’ warning, but some signs of improvement, says CMHC – Financial Post
The Canada Mortgage and Housing Corp. saw some improvements in the national housing market in the second quarter 2017, but its red warning label is still in place. The label is CMHC’s strongest warning to characterize “problematic conditions” in housing, according to The Financial Post.
“With the continued detection of price acceleration in Vancouver, Victoria, Toronto and Hamilton, homebuyers in these centres should be prudent and ensure that their purchases are aligned with their needs as well as the long-term market outlook,” said Bob Dugan, chief economist with CMHC, in a conference call with journalists.
CMHC says its quarterly Housing Market Assessment report released Wednesday provides an “early warning system” to alert Canadians about concerns the Crown corporation has about housing markets so people can take action. CMHC says the goal is to promote stability in the market.
Conditions are broken down into four categories, overheating, price acceleration, overvaluation and overbuilding. Each category gets a weak, moderate or strong rating and 15 centres are studied with an overall rating and then further overall rating produced for the country.
In Vancouver, where a 15 per cent tax on foreign buyers has been place since August and year over year average price increases have flattened out, there is still strong evidence of problematic conditions when it comes to overvaluation. Price acceleration is moderate in Vancouver and the evidence is weak the market is overheating, said CMHC.
“However, the market for resale homes cooled unevenly. Moderately priced properties sold quickly and often over the asking price compared with higher priced homes,” according to the report.
Warehouses growing ever taller – The Globe and Mail
Columnist Frances Bula took a look at a recent report from Britain-based TechNavio citing multi-storey warehouses as a new trend. The trend is slowly spilling over into North America, and Bula believes it could make economic sense for Vancouver to be the first Canadian city to embrace densification of industrial stock.
It has always seemed like the ideal solution to Vancouver’s shortage of industrial land, one that is talked about as an impending crisis.
Densify. Build higher. Build two- or three-storey industrial buildings, planners have urged, reminding everyone that developers around the rest of the world are doing it.
But the man whose company has built the region’s tallest industrial building so far says that, although local developers and commercial brokers are carefully watching all those trends, there are challenges in Vancouver that Seattle or Shanghai don’t have.
“I think Vancouver ultimately will have something similar but I don’t think we’ll see it in the short term,” says Paul Tilbury, chief operating officer of Vancouver’s Dayhu Group of Cos. “But we’ll see how the tenants in Seattle react to the availability of that kind of space there.”
Ultimately, he says, Vancouver might see more multistorey buildings on industrial land soon, but of a different kind.
Instead, buildings that have one floor of industrial use on the ground level and then office spaces above are the more feasible option.
That’s a concept that has been taken up enthusiastically in Vancouver’s Mount Pleasant industrial area, where a new set of zoning rules adopted a few years ago allowed for that. New buildings are proliferating that have shoe-distribution facilities on one floor, for example, and accounting offices above.
Soaring assessments threaten B.C.’s most affordable homes – Victoria Times Colonist, Western Investor
Manufactured homes are generally much more affordable than other traditional housing models in B.C. – however, skyrocketing land values are causing increased rents at trailer parks.
Manufactured homes on rented pads cost about one-tenth of what an average detached house in B.C. costs, and provide thousands of seniors and others with the lowest-cost homes in the province, said Al Kemp, the alliance’s executive director.
That security is in doubt, the alliance’s executive director said, because park owners are under annual rental restrictions while assessed values, and subsequent property taxes, are increasing dramatically.
“Owners are being squeezed,’, Kemp said. Assessment values on manufactured home parks have skyrocketed in the past year, but park owners can increase pad rents by only 3.7 per cent this year under B.C.’s Residential Tenancy Act.
One owner of a Vancouver Island park appealed to Kemp for help after receiving their 2016 assessment. “We will be out of business soon as our low rent-controlled increases never allow us to catch up,” the owner wrote.
Kemp explained that BC Assessment “doesn’t have a clue” how to value manufactured home parks, which are a hybrid of commercial and residential real estate. The land-value sale of one park, for example, will raise the assessed value of neighbouring parks that may not have the same development potential, he noted.
“There is a park in Nanaimo where [the assessed value] went up by $1.2 million because of the sale price of another park in the area,” Kemp said.
Some park owners, including longtime owners, are selling their parks for redevelopment, which means residents must scramble to find affordable housing somewhere else.
Such is the case in View Royal near Victoria where the assessed value of the 18-unit Thetis Lake Campground and Trailer Park jumped by more than $400,000 in the past year, to $2.98 million.
The owner of the park is now selling to a developer who wants to build 45 single-family homes and 14 townhouses on the 12.5-acre property. Residents are facing eviction by next fall.
Abandoned Canmore condo project faces bulldozer – Western Investor
Over in Alberta, developers aren’t struggling to snap up affordable space as they are, but rather, they’re abandoning it. Bighorn Mountain Resort has sat unfinished for a decade after Camore’s real estate boom never materialized. It now stands to be demolished
The condo project at 110 Montane Road has been a thorn in the side of municipal planners for a decade. Now, after almost 10 years of the project sitting unfinished, Richard Williams, junior planner with the Town of Canmore, said a demolition permit has been issued.
“The owners are in discussions with the Town regarding the demolition and redevelopment of the property,” Williams wrote in an email to the Rocky Mountain Outlook.
Bighorn Mountain Resort, as it was called when it began construction, saw financial difficulties hit its Kananaskis Way project in 2007. By 2009 it went into receivership. By September 2010, a new company had purchased the project, which sat idle and unfinished for a year and a half at that point, and rebranded it as Innoka Point Resort.
But that deal also fell through, with no construction restarted on the fractional ownership project consisting of five blocks of four townhomes as well as a 5,000-square-foot amenity building.
The abandoned building was a significant cause for concern for local condo projects and hotels, like the Windtower directly across the street from it. With balconies falling off the sides of the building, by 2012 the municipality was receiving complaints about the project’s state.
While the derelict condo project was eventually fenced for safety, by 2013 it was owned by a numbered Alberta company. By the summer of 2015, the development permits to finish the project had expired with the municipality. Demolition became the final option.
