‘Record high activity’: Calgary’s industrial real estate market blossoming in 2022

Dylan Short
The Vancouver Sun

Latest numbers show there is about 158 million square feet of vacancy in the city, representing a 1.5 per cent vacancy rate.
A commercial for lease sign in the Manchester industrial area in Calgary was photographed on Wednesday, August 24, 2022. Gavin Young/Postmedia
Calgary’s industrial real estate market is seeing record high activity after a COVID-19 pandemic boost, which experts say could mean more job opportunities for residents and a growing tax base for the city.
Real estate company JLL recently released national Q2 2022 insights into industrial real estate markets, including Calgary. The latest numbers show a high level of activity, with 905,410 square feet of space taken off the market as investors look to keep up with sky-high demand brought on during the pandemic.
“Calgary continues to present a viable market for national industrial occupiers and developers alike,” reads the latest JLL report.
Latest numbers show there is about 158 million square feet of vacancy in the city, representing a 1.5 per cent vacancy rate. By comparison, Toronto has a 0.9 per cent vacancy rate and Vancouver sits at 0.8 per cent
Ilya Raykhlin, an associate broker with Re/Max Commercial, said Calgary’s vacancy rate and location allow it to be an attractive alternative for companies needing space who want to look outside of major markets such as Vancouver and Toronto.
“Our vacancy rate as of the end of Q2 2022, and it really depends on which broker you ask, it’s hovering somewhere between 1.5 to 2.5 per cent…That is the lowest vacancy rate that Calgary has experienced since 2008,” said Raykhlin. “It’s record high activity, and it’s continuing to soar. Demand is soaring.”
Raykhlin said absorption rates are hitting record high levels as are rental rates in the city. He said the only constraint on the market at this time is having enough infrastructure to keep up with demand, adding demand around the world increased during the pandemic and grew almost entirely around e-commerce as most of the world’s population took their spending online.
“Unlike other areas of the country, Calgary is not constrained by things like mountains or the ocean and we offer level topography with development-friendly soil conditions, so we’re just a natural location to develop these large footprint facilities,” said Raykhlin.
Greg Kwong, regional managing director for the Canadian Prairies for CBRE Ltd., said all the major retail companies operating in e-commerce, such as Amazon and Canadian Tire, are either distributing through Calgary or are planning to be here.
“Virtually every major retailer that has an e-commerce base component to their business is here or looking to be here,” said Kwong. “Most of them are located along the highway, Deerfoot Trail corridor, and you can see all the signs as you drive through and around those neighbourhoods.”
Kwong said Calgary’s industrial market has historically been centred on oil and gas but there has been a shift to tailoring to other industries, such as e-commerce. He said the continued growth of investment in the region means the city will benefit from a broadening tax base and Calgarians will have access to more employment.
“The skill sets of workers are changing and we have to certainly allow through immigration and retraining of people to again be able to work in these warehouses,” said Kwong.
While continued investment and attraction in the sector could be good news for residents and for the owners of industrial real estate, Raykhlin said it could spell higher rental rates for retailers and renters.
“It’s not going to be a favourable economic climate, in that sense, for the tenants,” said Kwong.
However, JLL data show Calgary’s rental rates currently remain fairly low compared to other major markets. Over the past quarter, Calgary saw an average rate of $9.93 per square foot, compared to Toronto where rent averages $15.32 per square foot, and Vancouver, where the average rate sits around $18.70 per square foot.

© 2022 Vancouver Sun

Canadas millennials still bent on owning homes even if it means relocating

Shantae Campbell
The Vancouver Sun

Urban markets remain out of reach for younger Canadians who earn too little to qualify for mortgages

 Three quarters of millennials said that if housing was more affordable, they would prefer to stay in their current city or town. Photo by Azin Ghaffari/Postmedia

Canadian millennials remain committed to buying homes, so much so that many are prepared to leave the country’s biggest cities in order to find a house they can afford, according to a survey by Royal LePage.

Millennials are aged 26 to 41. Some 60 per cent of that cohort aim to get out of the rental market, or their parents’ basement, despite some of the highest real-estate prices in the world, the survey said. However, of that group, 52 per cent said they would have to relocate to do it.

Canada’s housing market is cooling, as higher interest rates have curbed feverish demand, reducing the prevalence of multiple-offer bidding wars that characterized the stunning surge in house prices through the pandemic. Still, the country’s larger urban markets remain out of reach for would-be buyers who haven’t had the time to stash enough money for a down payment, or who earn too little to qualify for the mortgages required to buy in places such as the Greater Toronto Area, Vancouver and Montreal.

The survey results could signal that demand for housing in smaller cities and rural areas — which spiked during the pandemic, as the forced shift to remote work made working from anywhere a possibility — could continue, even as all the restrictions tied to COVID-19 fall away. Royal LePage said its study suggests that more than four million young Canadians will be looking to make a purchase between now and 2027.

“A huge number of millennials are telling us, `Yes, if I move, I could own my home,’ and that is very surprising,” said Royal LePage CEO Phil Soper. “We haven’t seen this before, and I’m sure this is a direct result of what we saw during the pandemic, which was people slowly leaving (Toronto) for places like Saint John, New Brunswick, and Moncton (N.B.), and PEI, and Montreal, as well as Calgary and B.C. We saw people migrating when they found they could work from home.”

Three quarters of millennials said that if housing was more affordable, they would prefer to stay in their current city or town. However, 54 per cent do not believe their salaries will increase at a rate that will allow them to buy a home in their current location. When asked what their ideal scenario would be, 19 per cent of respondents said they would prefer to live in the city and work fully remotely, and another 19 per cent said they would prefer to live outside the city and work fully remotely.

“What this survey confirms is that a large number of millennials — whether they live in a city or outside of an urban centre — appreciate the option to work remotely,” Geneviève Langevin, a Royal LePage broker in Montreal, said in the report. “To achieve this, some are choosing to leave the city, although this trend is less common today than it was at the height of the pandemic.”

A for-sale sign outside a home in Montreal. Photo by Christinne Muschi/Bloomberg

Take Montreal, where a significant number of millennials appear set to leave, even though housing prices are the cheapest among Canada’s biggest cities.

Some 82 per cent of millennials who do not currently own a home believe they will one day, the highest rate among regions surveyed by Royal LePage; however, 55 per cent  of that group said they would have to relocate in order to achieve that milestone.

The average cost of a single detached home in Montreal was $533,300 in July, compared with $1,357,500 in Toronto, $2,000,600 in Vancouver, $643,600 in Calgary, and $770,000 in Ottawa, according to the Canadian Real Estate Association.

Still, the survey found that just 35 per cent of millennials in the Greater Montreal Area are homeowners, lower than all the other big Canadian cities covered in the survey. The cause could be related to wages, as the average annual income in Montreal — $40,079 — is 15.6-per-cent lower than the national average of $47,487, according to CareerBeacon.com.

Still, 61 per cent of Montreal’s millennials plan to purchase a home within the next five years; 56 per cent say they will remain in their current city or town, while 38 per cent say they plan to relocate.

The relatively lower prices in Montreal appear to offer millennials hope of staying that doesn’t exist in other cities. In the Greater Toronto Area (GTA), 59 per cent of millennials who do not currently own a home believe they will one day, but 63 per cent of them said they would have to leave Canada’s biggest city to do so.

In Vancouver, 78 per cent of millennials said that if the cost of living wasn’t an issue, they would choose to continue living there. However, 58 per cent said they didn’t believe their salaries would increase at a rate that would allow them to buy a home in their current location — the highest rate among regions surveyed.

Soper said relocating simply to buy a home is an “oversimplified way to solve your life’s problems.” Regardless, the commitment of millennials to buying real estate suggests that the strong demand that has driven Canada’s housing boom over the past decade could persist, adding pressure on policymakers to address a chronically short supply of living spaces.

“If you follow their intent, millennials could be the highest homeownership generation in Canadian history,” Soper said. “Now, not all of them are going to pull that off, but even if half of them pull it off, we’d be looking at homeownership rates in this generation at a higher rate than the baby boomers who are the previous record holders.”

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© 2022 Vancouver Sun

Millennials remain hopeful they will be homeowners: Poll

Scott Laurie
The Vancouver Sun

“This generation of Torontonians overwhelmingly desires to be homeowners”: Royal LePage

 A home for sale and sold sign in Calgary, May 4, 2021. Photo by Gavin Young /Postmedia Network

The dream of homeownership remains strong among millennials who do not currently own real estate, according to a survey by Royal LePage.

 

But most believe they would have to move in order to afford a home.

“Many Canadians who are in the stage of life where home-buying is a top priority — especially younger millennials — remain committed to achieving homeownership and are optimistic about the opportunities that lie ahead,” said Royal LePage CEO Phil Soper.

According to the survey, 60% of Canadian millennials — people aged 26-41 — who do not currently own a home, believe they will one day.

Among those respondents, 52% say they would have to relocate in order to achieve this milestone, said the poll, which was conducted by Leger.

Skyrocketing prices have made affordability a major challenge among aspiring home buyers.

The survey also found 57% of Canadian millennials are already homeowners.

 

About one-quarter of millennials who do not currently own a home believe they never will.

“Policymakers should take note that between millennial demand, immigration and the growing pipeline of those who could not transact over the last two years, more supply is required,” said Soper.

“We could see another surge in price appreciation, following short-term economic softening, when these sidelined purchase intenders transact.”

For the Greater Toronto Area specifically — the survey found 59% of millennials who do not currently own a home believe they will one day. Among those, 63% say they would have to relocate in order to achieve this milestone.

“This generation of Torontonians overwhelmingly desires to be homeowners, and many of them are willing to make concessions in order to get on the real estate ladder,” said Tom Storey, head of The Storey Team, Royal LePage Signature Realty.

According to the Toronto Regional Real Estate Board, the average price for all home types was about $1.07 million in July. The average price for a single, detached GTA home was nearly $1.4 million.

The online survey of 2003 Canadian millennials using Leger’s online panel was conducted June 10-16. A probability sample of this size would have a margin of error of 2.5%, 19 times out of 20.

© 2022 Vancouver Sun

Squamish Nation to pay $48.4M in servicing costs for Senakw towers

Bob Mackin
Western Investor

Vancouver servicing agreement signed in May and recently released details plan for 11-tower, 6,000-unit rental project in Kitsilano

 Vancouver city hall’s landmark agreement to enable construction and provide utilities to the Squamish Nation’s 11-tower condo development around the Burrard Bridge is 250 pages long.

An appendix lists $48.43 million of costs estimated for 15 street, bike lane, sewer and seawall projects, mostly paid by the Nation. Of that, $15 million is the estimate for the Squamish Nation to build a transit hub on the Burrard Bridge. 

But a government information watchdog said it was published in back-of-the-napkin fashion. 

Vancouver city hall’s communications department sent two advisories before and one after Mayor Kennedy Stewart signed the agreement May 25 with Squamish Nation council chair Dustin Rivers, aka Khelsilem.

The city’s freedom of information office (FOI) told a reporter in early July to file another request in mid-August. Then the communications department quietly published the agreement the day after the summer’s last city council meeting, on July 29, the Friday of the B.C. Day long weekend.

“It’s important that when a government at any level starts working in these types of things, that they are appropriately transparent, and they’re not making it up as they go along,” said Jason Woywada, the executive director of the B.C. Freedom of Information and Privacy Association. 

“When a public institution can’t undertake routine business in a routine way, that’s where questions start coming up, that’s where trust starts being eroded. Even more tricky when you start getting into elements of reconciliation, appropriate negotiations and the nation-to-nation relationship.”

Squamish Nation members agreed to a 50-50 partnership in 2019 with Westbank Development, which is planning to build up to 6,000 rental units in four phases on Kitsilano Indian Reserve land known as Senakw. 

 

An Ernst and Young report commissioned for the project and provided to Squamish Nation members in 2019 estimated Senakw could generate as much as $12.7 billion in cashflow. 

By 2029, up to 10,000 people could be living on the 10.6 acres regained through court settlements.

The heart of the deal is the 40-page contract that spells out how Senakw will connect to the city’s water and storm sewers, sidewalks, roads, bike lanes and public transit. Because it is on reserve land, under the auspices of federal departments, the city’s normal permitting, taxation and user fee collection powers do not apply. The Nation agreed to pay in full for service delivery and lifecycle costs and reimburse the city for costs it incurs.

City hall agreed to notify the Squamish Nation on area work that could impact the construction site, “but that does not fetter in any way city council and the city engineer’s legal rights and duties to manage city streets in the public interest.” Likewise, the Squamish Nation must regularly update the city with its design and construction schedule.

When the contract and appendices were released, the title page stated it was the “final execution version for May 25, 2022 effective date.”

Angela MacKenzie, city hall’s associate director of civic engagement and communications, said  the Squamish Nation took the lead on communications and the city hall FOI office was likely not aware of the exact timing of the release. 

“When the Nation released the full agreement on their website on July 29, they asked to take the lead on sharing this with media and the public,” MacKenzie said. “The city supported this by creating a corresponding webpage, which was also made public on July 29.”

Senakw is officially a partnership between Westbank and the Squamish Nation’s Nch’kay Corporation.

Westbank is famous for building luxury downtown towers, like the Shaw Tower, Fairmont Pacific Rim, Shangri-La and Telus Garden, and marketing condos for sale in Hong Kong and Singapore. Its latest construction project is the redevelopment of Oakridge Centre for 2,600 units in 10 buildings. 

 

© 2022 Western Investor

East Vancouver 4,026-square-foot industrial lot sells for $2.46 million

Avison Young
Western Investor

Currently improved with a fully leased residential triplex, Graveley Street lot of less than a 10th of an acre has potential for 3FSR of industrial density.

Property type: Industrial lot

Location: 1321 Graveley Street, Vancouver

Land size: 4,026 square feet

Potential: 3 FSR ((Floor space ratio to 12,078 square feet

Zoning: I-2 (Light industrial)

Sale price: $2.46 million

Brokerage: Avison Young, Vancouver

Brokers: Ronan Pigott and Stuart Wright

© 2022 Western Investor

Scotiabank reports Q3 earnings

Fergal McAlinden
other

The banking giant revealed its financial results amidst turbulent economic conditions

Scotiabank reported higher earnings compared with a year earlier in its Q3 financial results released on Tuesday morning, although the banking giant’s profit in the third quarter came in slightly below estimates.

The bank posted net income excluding one-off items of $2.61 billion ($2.10 a share), a shade below analyst estimates of $2.11 per share, with provisions for credit losses coming in at $412 million compared with $380 million the same time last year.

Its performance was bolstered by high loan growth and higher margins because of the current rising-interest-rate environment, with its Canadian unit seeing a 12% boost in earnings and international business recording a 30% earnings spike.

Its global banking and markets business saw a 26% decline in profit, with its wealth management business also down 3% thanks to lower fees and an uncertain market.

Scotiabank is the first of Canada’s traditional Big Six banks to post its earnings for the final quarter, with each of the rest expected to reveal their financial results in the coming days.

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East Vancouver 4,026-square-foot industrial lot sells for $2.46 million

Avison Young
Western Investor

Currently improved with a fully leased residential triplex, Graveley Street lot of less than a 10th of an acre has potential for 3FSR of industrial density.

Avison Young, Vancouver, for Western Investor

 

Property type: Industrial lot

Location: 1321 Graveley Street, Vancouver

Land size: 4,026 square feet

Potential: 3 FSR ((Floor space ratio to 12,078 square feet

Zoning: I-2 (Light industrial

Sale price: $2.46 million

Brokerage: Avison Young, Vancouver

Brokers: Ronan Pigott and Stuart Wright

 

© 2022 Western Investor

Sunshine Coast, Squamish buck trend of lower home prices

Jeremy Hainsworth
Western Investor

High-priced Vancouver’s West Side and West Vancouver also out-perform three-quarters of Metro markets

 Detached house prices on the Sunshine Coast of B.C. are holding steady, Re/Max study finds. | Western Investor

While three-quarters of Metro Vancouver markets saw home price declines, detached house prices on the Sunshine Coast and Squamish held steady from the first quarter to the second quarter (Q2), a new Re/Max Canada report says.

High-priced West Vancouver and Vancouver’s west side are also bucking downward price trend, according to the 2022 RE/MAX Hot Pocket Communities Report released August 18, which looked closely at municipalities across the Metro Vancouver region.

“Buyer sentiment changed virtually overnight as growing geopolitical concerns and spiralling inflation destabilized global markets, leaving the Bank of Canada little option but to raise interest rates,” says Christopher Alexander, president at Re/Max Canada, in a statement. “Those fast and furious incremental increases placed downward pressure on housing sales and prices, improving affordability on one hand, but eroding it on the other.”

The report said while detached housing values showed substantial year-over-year gains in the first half of 2022, successive increases to the Bank of Canada’s overnight rate put a damper on price appreciation in the second quarter of the year in both the Greater Toronto and Vancouver regions.

The central bank surprised market watchers July 13 with a hike of 100 basis points, bringing its target for the overnight rate up to 2.5 per cent.
Re/Max said at the time it was the bank’s biggest move since 1998, and the fourth in a series of increases expected for 2022, as the bank tried to tamp down the soaring inflation rate.

The study found core markets in Vancouver’s west side and West Vancouver/Howe Sound bucked the downward price trend in terms of preliminary estimates of Q2 median values, posting increases of 2.4 per cent and 8.2 per cent, respectively. 

Further north, Squamish and the Sunshine Coast also held steady, with no value changes reported between the first and second quarters.

The current benchmark price of detached house on the Sunshine Coast is $997,000 and it is $1.78 million in Squamish, according to the Real Estate Board of Greater Vancouver. This compares with more than $3.3 million in both Vancouver’s west side and West Vancouver.  

Re/Max found that 75 per cent of Greater Vancouver markets experienced a downturn in second median values, coming off peak levels reported in 2022’s first quarter.

Most of the declines reported were below 10 percent, with one outlier — Whistler/Pemberton, which fell by just over 16 per cent.

In the Fraser Valley, percentage declines in average price ranged from a low of just over 3 per cent in Langley to a high of close to 13 per cent in Delta-North between the first and second quarter.

The report found Burnaby, Coquitlam and Port Coquitlam to be among Metro Vancouver’s most durable areas.

These established communities are drawing purchasers who are looking for affordable detached housing with good accessibility to the downtown core, with preliminary estimates of the Q2 median values ranging from just $1.44 million in Port Coquitlam to $2.12 million in Burnaby.

North Vancouver and Squamish have also held up well, with both experiencing rapid growth well before it was further accelerated by the pandemic.

The report said market shifts could be good for condo owners looking to jump to a detached home or detached owners looking to upsize.

The report explained that the ‘spread’ — the difference between an existing property’s selling price and the purchase price of a new one — has narrowed. So, with mortgage portability, the move can work in favour of the buyer.

“Condominium and strata owners have also seen benefits in the ‘spread’ as values for their apartments and townhomes have remained relatively stable, while detached housing values have softened,” the report said.

 

© 2022 Western Investor

The top five reasons townhouses are hard to sell

Jonathan Russell
other

The top five reasons townhouses are hard to sell

 Townhouses are an attractive option for anyone looking to buy a home quickly, usually young families. But while purchasing a townhouse may make sense, there are things to consider a little further down the line, such as reselling and appreciation. Here are five reasons why townhouses can be hard to sell.

Townhouses are usually individually owned but share walls with other homes. They are often seen as inferior to single-family homes and are therefore considered less valuable. The value of a townhouse is, however, dependent on the structure of the building as well as location. Thanks to updated designs, some townhouses are becoming more appealing, especially for small families who are looking to purchase a home for the first time. Why, then are townhouses hard to sell? Here are a few possible reasons.

Less desirable on the market. Townhouses are somewhere between single homes and condos on the market, since you usually own the whole house (often two floors) but still share walls with at least one neighbour, if not two. That means townhouses share the disadvantages of both single homes and condos. Most families want to purchase a single home for the yard and fence their kids and pets. Single people or young couples usually want to live in a condo for the downtown location and facilities. It is a cheaper option than buying a townhouse.

More competition with single attached homes in the area. One reason it is more difficult to sell a townhouse versus a single-family home, for instance, is the competition for other homes in the neighbourhood. To avoid overpaying, homebuyers usually seek houses for selling and compare the prices, the reason being that homes in the same area have the same floor plan, square footage, and location.

In other words, you will have less of an opportunity to sell your home fast if there is a motivated seller in your neighbourhood who drops the price for a faster sell. However, for a higher price, you will likely be able to sell a single home since there are fewer immediate comparable properties on the market with the exact floor plan and size. Because your floor plan, decoration, and yard will be more unique, you will likely have the opportunity to sell at a higher price.

Paying HOA fees. Typically, townhouses are managed by the homeowners’ association, which charges monthly fees, such as the HOA fee ranging from $50 to $300 per month. The HOA fee could deter possible homebuyers because some HOA fees in certain communities can be quite high, and also include transfer fees.

Buyers are not motivated with limited home improvement. Because every townhouse in a neighbourhood usually has the same design and floor plan, homebuyers are not motivated by their exterior and interior designs.

This can pose a problem when selling your townhouse since most buyers understand that home improvement or repairs will help generate a profit during the resale of the home. In other words, usually homebuyers avoid townhouses because they do not allow any changes.

Value of townhouses are influenced by other properties in the community. Since, as mentioned, all townhouses in your area will have the exact same design and floor plan, the value of your townhouse will be influenced by other properties in the community. When bad things happen within your area, you must ensure you are protected. For instance: the value of the entire area tends to drop if a bank forecloses a townhouse in your neighbourhood. That means you are likely to have issues with appraisals of your townhouse, since appraisals compare homes in the area to figure out the value.

Do townhouses have good resale value?

No, townhouses do not usually have a good resale value. You will be more likely to make more money if you rent out your townhouse. And selling your townhouse will be more difficult since they do not appreciate in value.

One of the major reasons townhouses do not have a good resale value is that any improvements you can make to the interior or exterior are limited. Put another way, homes that you can improve on will appreciate and therefore bring a good resale value.

The appreciation rate of most townhouses is low even though most houses generally appreciate over time. While stacked townhouses are gaining in popularity, first-time homebuyers still tend to prefer condos due to the purchasing price, location, utilities and amenities attached to them.

 

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Alberta community receives substantial housing funding

Ephraim Vecina
other

New housing complex to begin accepting residents by next month

Federal and provincial officials announced a massive $15.8 million in combined funding during the grand opening of the 64-unit Cottages at Southgate housing complex in Lethbridge, Alberta.

The development, which will primarily cater to seniors in need of affordable and accessible homes, received $4.8 million from the government of Canada through the National Housing Co-Investment Fund and $3.4 million from the Albertan provincial government, coupled with $790,000 from the Lethbridge municipal government and a private donation of $500,000.

Another $6.26 million will be financed by Lethbridge & Region Community Housing Corporation.

“The Cottages at Southgate’s innovative and modern design will provide our seniors with accessible, affordable homes, outdoor gathering green spaces and is conveniently located near shopping centres, lakes, and walking paths,” said Robin James of Lethbridge and Region Community Housing Corporation.

Read more: Why Canadians are relocating during the post-pandemic era

“The Southgate complex in Lethbridge shows how the private sector, non-profit sector, and different orders of government can all work together to help more Albertans access the housing they need,” added Josephine Pon, Minister of Seniors and Housing. “Strategic, long-term partnerships, a key initiative under our Stronger Foundations affordable housing strategy, will help us meet Alberta’s diverse needs now and in the future.”

The housing complex is set to begin accepting residents by September 2022.

 

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