Vancouver investment deals strong in Q2 as headwinds increase
Cap rates set to rise as values reset following interest rate hikes
Metro Vancouver commercial real estate sales were down just 2 per cent in the second quarter versus a year ago, Altus Group data reveals, but recent interest rate hikes by the Bank of Canada could dampen activity in the latter half of the year. “It’s pens down,” says Colin Johnston, president of research, valuation and advisory with Altus. “Do you want to buy in this market, knowing that maybe next month you can buy something cheaper? Do you want to sell in this market knowing that you may not get the price that you wanted?”
Johnston believes people are taking stock of the situation, with the result that less capital will be placed this fall while parties wait to see how things shake out. “We’ve got this period of price discovery that’s going to happen for a few months,” he said. “[It’s] akin to the early days of the pandemic, where people didn’t know what was going on and it was hard to get some metrics because nothing was trading.” According to Altus, the uncertainties will deepen in the coming months.
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UBCM proposes increased support for solar panels, water systems
While the province supports heat pumps, there are no equivalent incentives for home and building owners to increase their own supply of renewable energy
Union of BC Municipalities (UBCM) delegates have called on the B.C. government to add financial incentives for home and building owners to install solar panels and solar hot water systems as demand for renewable forms of energy increases.
A City of Vancouver resolution presented Sept. 15 at the UBCM annual convention in Whistler said the CleanBC Roadmap to 2030 and BC Hydro’s five-year electrification plan promote rebates to purchase electric heat pumps that incentivize British Columbians to switch from using fossil fuels to hydro-electricity to heat their homes and hot water to combat climate change. But no equivalent incentives exist for home and building owners to increase their own supply of renewable energy or to reduce the demand for hydroelectricity.
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Industrial leads drop in CRE transactions across Lower Mainland
With a 34 per cent decline in property deals, total commercial real estate sales volume in the second quarter fell to $3.26 billion
Activity in the Lower Mainland’s commercial real estate market edged down in the second quarter (Q2) of 2022 from the brisk sales pace experienced at the start of the year.
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Lack of drivers may stall Amazon’s Vancouver Island rollout
Online retail giant preparing to open its last-mile distribution centre at Victoria International Airport, likely in early October, but a lack of delivery drivers presents a challenge
Amazon-branded delivery vans will soon be seen everywhere around the capital region as the online retail behemoth prepares to open its last-mile distribution centre at Victoria International Airport. Ken Mayes’ company, Zenzen Logistics Canada, is one of two courier firms being contracted by Amazon to operate about 120 vehicles that will shuttle parcels and packages from the warehouse to homes and businesses in Greater Victoria and the Island. A non-branded courier company based out of Nanaimo will handle larger parcels over 40 kilograms. Mayes said he’s aware that hiring hundreds of drivers is going to be a tall order amid the region’s tight labour market, where unemployment remains one of the lowest in the country at 4.9 per cent last month and businesses are struggling to fill all types of jobs.
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Opinion: Broadway Plan ignores schools, parks and affordable homes
In a prelude to Vancouver’s civic elections next month, we present a comment on the city’s largest planning initiative
A city planning document to accommodate future population growth and spur transit ridership along the Broadway subway line would clearly propose high-density, mixed-use towers at Broadway subway stations – especially at Cambie – where two subways intersect, plus midrise residential density along the Broadway arterial road from Commercial to Arbutus. This is good planning.
But the Broadway Plan does far more than that.
It aims to increase density to accommodate nearly the entire population of Metro Vancouver, as if Surrey City Centre and Metrotown didn’t exist. The densities proposed are not supported by any data estimating Vancouver’s population growth projections that match those densities.
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Fraser Valley home prices up from last year as market ‘balances’
August sales were up from July and benchmark prices increased about 15 per cent compared to a year earlier
A year-over-year increase in active listings and relatively steady sales activity brought a degree of balance to the Fraser Valley housing market in August, with benchmark home prices up from a year earlier. The Fraser Valley Real Estate Board (FVREB) processed 1,017 sales on its multiple listing service (MLS) in August, an increase of 2.4 per cent compared to July 2022, but a 51.3 per cent decrease compared to August 2021.
The month ended with a total active inventory of 5,871, down 8.5 per cent from this July, but up 44 percent compared to August 2021. August’s overall sales-to-active ratio was 17 per cent, which the FVREB considers a “balanced” market. “For the past three months we’ve seen the local market return to a more balanced state,” said Board president, Sandra Benz. “With the Fraser Valley continuing to settle after months of record sales and prices, we expect to see more activity this coming fall.”
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Rental properties a growing focus for Metro Vancouver homebuilders
U.S. experience prompts Mosaic to launch a new rental home division
Parker in Surrey is one of four existing rental projects managed by Mosaic Living.
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Mortgage stress test the killer as Bank of Canada hikes rate
Homebuyers with a new mortgage must qualify at rates 2 per cent higher than actual market rates
The Bank of Canada is maintaining its aggressive posture when it comes to hiking its key rate. The central bank revealed Wednesday September 7 it was hiking its rate 75 basis points to 3.25 per cent – its highest policy rate since 2008. This comes after an unexpected rate-hike of 100 basis points back in July, all in a bid to tamp down record-setting inflation.
However, under the federal mortgage stress, all home buyers taking out a new mortgage at a federally-regulated lender must qualify at a rate of 5.25 per cent, or a rate 2 per cent higher that what their lender is offering, whichever is higher. “The implications of today’s Bank of Canada action are considerable for the housing market. The prime rate will now quickly rise to 5.25 per cent increasing the variable mortgage interest rate another 75 bps, which will likely take the qualifying rate to roughly 7 per cent,” said Sherry Cooper, chief economist with Dominion Lending Centres.
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La Ronge envisions $8 million economic corridor on Hwy 102
Lac La Ronge identified as a magnet for new investment, residents
The first phase of the Highway 102 Economic Corridor Master Plan includes new highway commercial development.
Phase 2 of the Highway 102 Economic Corridor Master Plan is part of a long-term vision for La Ronge.
Highway 102 Economic Corridor Master Plan will create a welcoming entrance to La Ronge.The Highway 102 Economic Corridor Master Plan will create a welcoming entrance to La Ronge.Town of La Ronge
Northern Saskatchewan’s largest town is laying the foundation for an ambitious economic development initiative designed to create a welcoming frontage for new businesses as well as existing residents. The Town of La Ronge hopes to create a major new economic draw for the community and region by preparing lands along Highway 102 for development. That’s according to preliminary findings from a Highway 102 Economic Corridor Master Plan developed by Saskatoon community planning firm Crosby Hanna and Associates for $96,000. The plan is meant to help the community capitalize on new economic activities by proposing to create new entries to town from the highway, wayfinding, more access, land servicing and lot layout, development standards, and future streetscape and waterfront projects.
“We are now looking for comments and feedback from the community to give us a sense of how they feel about the plan, what might be some of the concerns, or what really speaks to them about the plan,” said La Ronge’s chief administrative officer Lyle Hannan. “Prior to finalizing it, if there is anything we need to tweak or adjust, there are opportunities to do that.” The master plan states that La Ronge has significant valuable land holdings for development. It notes a number of businesses have expressed interest in serving the community, but that readiness of the land has been a barrier. It’s expected that having a plan with costs and a timeframe appropriate for the town’s financial capacity would be a key factor in attracting hotels, restaurants, and retail concepts.
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Vancouver’s new downtown office towers meet high demand
Don’t expect the abundance of top-quality office space to last long in Vancouver’s downtown core
Downtown office vacancy reached 8 per cent as of mid-year 2022, up one full percentage point compared with the first six months of 2021, according to a new report from Avison Young (Canada) Inc. But the real estate firm notes this trend is unfolding “due to significant amounts of new supply” being delivered to the market. Nearly 570,00 square feet additional AAA space was made available by the end of 2021 and has been “steadily absorbed” into the market, the report said.
Most notably, this has come via the openings of such towers as the Deloitte Summit on West Hastings Street and Bentall 4 on the corner of Dunsmuir and Burrard Streets. “While there are still elevated levels of vacancy relative to pre-pandemic levels, the market is starting to stabilize,” the report stated, acknowledging that the hybrid model of work has reshaped demand for office space. “Further increases in vacancy are likely but will be more attributable to delivery of new buildings on a vacant or largely vacant basis, rather than COVID-19.”
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BC economy still strong, despite inflationary headwinds
Province’s forecasted deficit now expected to be a surplus
As B.C.’s economy navigates uncertain waters between a pandemic and a possible global economic recession in 2023 — precipitated by an energy crisis, war, inflation and rising interest rates — it appears B.C.’s ship of state is still steady and not taking on any water.
Employment remains strong, revenues from commodities like natural gas are up, and a $5.5 billion deficit that had been forecast for 2022-23 is now expected to be an operating surplus of $706 million, according to an economic uopdate based on the first quarter of the fiscal year that was released today by B.C. Finance Minister Selina Robinson.
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Mortgage stress test the killer as Bank of Canada hikes rate
Homebuyers with a new mortgage must qualify at rates 2 per cent higher than actual market rates
The Bank of Canada is maintaining its aggressive posture when it comes to hiking its key rate. The central bank revealed Wednesday September 7 it was hiking its rate 75 basis points to 3.25 per cent – its highest policy rate since 2008.
This comes after an unexpected rate-hike of 100 basis points back in July, all in a bid to tamp down record-setting inflation. However, under the federal mortgage stress, all home buyers taking out a new mortgage at a federally-regulated lender must qualify at a rate of 5.25 per cent, or a rate 2 per cent higher that what their lender is offering, whichever is higher.
“The implications of today’s Bank of Canada action are considerable for the housing market. The prime rate will now quickly rise to 5.25 per cent increasing the variable mortgage interest rate another 75 bps, which will likely take the qualifying rate to roughly 7 per cent,” said Sherry Cooper, chief economist with Dominion Lending Centres.
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Rising cost of pre-sale condos makes resales a better deal: study
Condominium starts fall 41 per cent in Vancouver as land prices, input costs and government fees threaten to push prices out of reach
A shortage of new condominiums and townhouses is looming in Metro Vancouver as soaring costs of new construction has chopped presales at new project launches and put several planned developments on hold.
For buyers, this means that resale condos may represent not only lower prices but the only option in some markets, according to a new study.
“Construction costs of residential buildings grew by 25 per cent year-over-year in the first quarter of 2022,” noted Engel & Völkers in its Mid-year 2022 Luxury Real Estate Report. “These rising costs are trickling down to consumers and contributing to increases in new home prices. Higher material costs combined with government regulation are creating real and present pressures on new home building in Canada.”
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Landlords in the lurch as B.C. caps rent increase at 2 per cent
As property taxes, utility costs and borrowing costs soar, rent increases remain virtually frozen in 2023 for the third year in a row
The B.C. government has set the maximum allowable rent increase for 2023 at 2 per cent, far less that would have been allowed had the government benchmarked the increase to inflation.
“LandlordBC is very disappointed to learn of this decision to cap the 2023 increase to 2 per cent after a nominal increase of 1.5 per cent in 2022,” said David Hutniak, CEO of LandlordBC. “In recent weeks we have expressed to the Housing Minister that our sector is facing huge challenges due to inflation and the impacts of the pandemic. These challenges are especially pronounced for the many small landlords who provide the majority of rental housing in B.C.”
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Opinion: Downtown Vancouver isn’t what it used to be
‘Our beautiful city is going down the toilet:’ as a prelude to the Vancouver civic elections next month, a comment from a visitor underlines perhaps the city’s major issue
Street people in Yaletown at a former dental Clinic at Seymour and Helmcken.
‘Our beautiful city is going down the toilet. It needs us, but how can we be expected to support it at the expense of our personal safety.’
‘Our beautiful city is going down the toilet. It needs us, but how can we be expected to support it at the expense of our personal safety.’
‘Our beautiful city is going down the toilet. It needs us, but how can we be expected to support it at the expense of our personal safety.’Spent any time in downtown Vancouver lately? I have, and it’s shocking. If you’re heading there to shop, to see a game at BC Place, or a concert at Rogers Arena, you better have your wits about you. Plan on walking around homeless people sleeping on the street at Georgia and Granville in front of the Bay.
Watch for people begging, selling stolen goods and drugs, getting arrested for shop lifting and loitering at shop entrances. I’ve seen it all in the last year. On a recent quick trip to Nordstrom I parked my car on Homer Street. Walking up Robson I encountered a young man, most likely my sons age, staggering around the sidewalk with his pants at his knees. This over six-foot man was clearly high on drugs, twitching and stumbling, and partially naked. Not one person took a second look at him, no one stopped. Every pedestrian skillfully maneuvered around him. I had to pass by him two times and it was tense.
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Vacant Calgary office towers eyed as next frontier for Alberta farming
Company setting up an indoor farm in Calgary Tower says vacant office space offers an opportunity
Calgary Tower the test case for vertical farming in vacant commercial space.
There is a lot of vacant office space in Calgary and other cities that could be converted to indoor farms, says Dan Houston, president of Agriplay Venture. Photo: Agriplay VenturesExpand___________________________________________________
Land costs lead to conversions and multiple-storey self-storage
Converting existing buildings to self-storage can also be ticket to overcoming high land and construction costs, expert says
Self-storage development continues to build momentum in Canada, with a high percentage of new supply added annually, particularly in Metro Vancouver and Greater Toronto. This has been the case since our company, StorageMart, entered the market in 2009. Elsewhere, in Alberta and the prairies, development has been cyclical due to the ebb and flow of natural-resources commodity pricing, which is heavily indicative of two key market drivers: job growth and housing demand. For these reasons, we haven’t pursued expansion in Alberta or Saskatchewan since 2015.
Following is a brief overview of development trends and challenges in the market, plus some advice for aspiring investors and owners.
New vs. conversion
Due to the high cost of planning, permitting and construction in Canada, self-storage facilities often exceed 100,000 net rentable square feet and can take three to five years to complete, from land purchase to grand opening. Repurposing existing assets, such as land or buildings, can be an efficient way to ensure a predictable return on investment. During the last 10 years, we’ve consistently converted traditional self-storage to climate control, in-filled large sections of bulk building space, and built additional structures at existing locations. When weighing the merits of larger projects, there are benefits to ground-up development as well as conversion opportunities. For example, a converted building is often already grandfathered into a number of permissible uses, which can eliminate some planning and permitting hassles. From a developer’s perspective, if the existing infrastructure can be reused, this can help ensure a good return in a tight pricing market, especially when compared to undertaking a full redevelopment. On the other hand, a new development is sometimes the only way to achieve a properly branded, modern presence on a “1st and Main” location, something most conversion projects won’t be able to match. In addition, new builds are often accompanied by added peace of mind, since you know exactly what you’re getting in terms of building efficiency and compliance with current best practices. They also offer comparatively limited capital-expenditure concerns for the first 10 years. If obtaining land was cost-effective, I’d always build drive-up self-storage facilities. Unfortunately, that often isn’t the case. When land prices impact overall net rentable square feet, developers have to consider the potential benefit of multi-story conversions, along with a reassessment of current rental rates to make the model work.
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Homebuyers, sellers take a breather in the August heat
As listings decline, Metro Vancouver home sales dropped 40.7 per cent from a year earlier and the composite home price fell 2.2 per cent from July 2022
August was one of the warmest Metro Vancouver summers on record but one of the coolest for the housing market, as sales in the month fell 29.2 per cent below the 10-year August average. Sales totalled 1,870 in the month, down 40.7 per cent from August 2021, but just 0.9 per cent below the 1,887 transactions in July 2022, based on sales through the multiple listing service (MLS) of the Real Estate Board of Greater Vancouver (REBGV). “With inflationary pressure and interest rates on the rise, home buyer and seller activity shifted below our long-term seasonal averages this summer,” Andrew Lis, REBGV’s director, economics and data analytics said. “This shift in market conditions caused prices to edge down.”
The composite benchmark price for all residential sales in August is $1,180,500, a 7.4 increase from the same month last year and down 2.2 per cent from July 2022. The composite price is down nearly $133,000 from the peak in February 2022. Detached houses saw the biggest year-over-year sales decline, with the 517 transactions marking a 45.3 per cent decrease from a year earlier. The benchmark price for a detached houses dipped 7.9 per cent from August 2021 and was down 2.3 per cent from July 2022, to $1,954,10. Based on the current price, that represents a $45,000 drop in value in a month. Sales of condominium apartments reached 998 in August, a 38.8 per cent decrease compared to August 2021. The benchmark condo price is now $740,100, down 8.7 per cent from a year ago and 2 per cent lower than a month earlier.
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Squamish Nation to pay $48.4M in servicing costs for Senakw towers
Vancouver servicing agreement signed in May and recently released details plan for 11-tower, 6,000-unit rental project in Kitsilano
Squamish Nations’ 11-tower, 6,000-unit Senakw project to be built at the south end of the Burrard Street Bridge, Vancouver
Senakw buildings will be completely rental units, with original plan for a strata condo tower apparently nixed.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.
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Kelowna ‘carriage home’ fees balloon up to $28,000
Provincial rules increased the city fees 10-fold and is expected to curtail construction of the infill housing
The City of Kelowna, B.C., has found itself in a no-win situation when it came to development cost charges (DCC) it levies on new carriage home construction.
But a province-mandated solution that will increase DCCs charged on carriage homes from $2,500 to between $22,000 and $28,000, didn’t sit well with everyone on city council.
“We have an affordable rental housing crunch, and this will affect the number of people wanting to have carriage homes,” said Councillor Mohini Singh, who opposed the new fee introduced as part of a wide sweeping update of the city’s DCC program.
“I feel people building a carriage home are doing it as a mortgage helper. $10,000 I could take, but to zoom up to $23,000 or more, I don’t think I could support such a dramatic increase.”
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Student rental housing tower approved in New Westminster
Douglas College $295M, 20-storey, 368-bed facility will start construction in 2023
Backed by provincial funding, the first student housing will be built near the Douglas College campus in New Westminster, B.C.
The $292.5-million project received $202.3 million in provincial funding, while Douglas College has provided $90.2 million. Construction is expected to begin in the summer 2023, with anticipated completion in mid-2026.
While a first for Douglas College, it is part of a provincewide campaign to build 8,000 student rentals by 2028, according to Anne Kang, Minister of Advanced Education and Skills Training.
Douglas College’s first on-campus housing will be a new 20-storey building with 368 student beds, academic space and parking. It is the largest provincial capital investment into a post-secondary institution that will benefit both students and local renters.
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Coquitlam eyes downtown streetscapes before City Centre booms
The city is hoping to turn downtown into a modern utopia with 24,000 more people expected to move to the neighbourhood in the next 25 years.
Lincoln Station and the Coquitlam Centre mall campus form part of the City of Coquitlam’s new downtown core under the City Centre Area Plan (CCAP) update.
The proposed streetscape for Coquitlam City Centre.
The proposed streetscape for Coquitlam City Centre.
Wider sidewalks, more street lighting, trees and benches, and a lane for e-bikes and e-scooters is on the horizon for Coquitlam City Centre.
City hall is looking to make the neighbourhood more walkable and safe as it readies the area to become a vibrant downtown with 50 more towers, an entertainment district and business core.
The proposed streetscape guidelines are set to be presented to city council this fall — with a public hearing to follow — aiming to shape City Centre into a modern place with an expected 24,000 more residents over the next 25 years.
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Poor Fraser River sockeye run may spell end of the south coast salmon fleet
“The final straw”: B.C. commercial fisherman shut out for fourth year in a row
B.C. commercial fishermen are now forced to resign themselves to the reality that they will be shut out of the Fraser River sockeye fishery for the fourth year in a row, and for some that means the end of the road. “I think this is pretty much the end of the south coast salmon fleet,” said Dawn Webb, an organizer for the UFAWU-Unifor fisherman’s union. Earlier in the season, fairly strong returns of sockeye for the Skeena River, Barkley Sound and early Stuart Fraser River sockeye seemed to bode well for a healthy enough return to allow for a commercial opening this year.
This is, after all, supposed to be a dominant year for Fraser River sockeye. But the latest run size estimates are that they will come in at about half the pre-season forecast of 9.8 million – about 5.5 million. One of the most important sockeye populations – the Adams River late summer run – have been estimated to be returning at well below the pre-season forecast.The Pacific Salmon Commission (PSC) reports that the late summer run forecast has improved slightly for an adopted run size of 1.6 million, which is still well below the 3.7 million pre-season forecast. Commercial openings are only allowed after escapement targets have been met, and First Nations allowed to catch their quotas for food, social and ceremonial (FSC) purposes.
“FSC has priority, and there are apparently in-river and up-river bands that have not received their FSC, so because there are constraints on the late stocks, we can’t go fishing,” Webb said. Fishermen had hoped there might be a limited commercial opening announced today., based on decent run sizes of summer sockeye. But Webb said they have been told that won’t happen. If there is any kind of commercial opening in the coming days, it will be so limited that many fishermen would have wasted $4,000 on a licence that they can’t use, not to mention the $10,000 it costs to get a gillnet or troll boat and gear ready — $40,000 for a seine boat. Kyle Louis, a First Nations commercial fisherman from Cowichan, has Area E (Fraser River) and Area D (Johnstone Strait) gillnet licences. He said it cost him about $10,000 to gear up to go fishing this year.
He sometimes does FSC fishing for First Nations under protocol agreements.
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Victoria builders busy even as homebuyers take a break
2,681 new homes were started through the first seven months of this year in Greater Victoria, with most of them in just two of 13 Greater Victoria municipalities
Greater Victoria’s housing sales may be taking a breather, but there has been no such break for homebuilders in the region, judging by new residential construction figures from Canada Mortgage and Housing Corporation. The numbers, released for July 2022, show 2,681 new homes were started through the first seven months of this year in Greater Victoria, ahead of last year’s pace when 2,500 new units were started. It’s a tale of multi-family projects in two parts of the region, said Casey Edge, executive director of the Victoria Residential Builders Association. Edge said Victoria and Langford are once again doing all of the heavy lifting. “There are a bunch of municipalities that just fly under the radar every year, like Oak Bay that still doesn’t have zoning for duplex housing,” he said noting Oak Bay has built just 19 new homes this year, while North Saanich has started 16. “And people question why we have a housing affordability problem,” he said “Well, you have just a handful of municipalities that are really carrying the weight for 13 municipalities.” The lion’s share has been done by Victoria so far this year. With a focus on condo and rental apartments, the city has seen 1,219 homes started, well ahead of last year’s 696. Langford has started 663 so far this year, off last year’s pace of 862 through the end of July.
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$21 million for hard-hat hires goes directly to contractors
Construction companies can receive payments for up to $80,000 if they hire two first-year apprentices during the two-year campaign
Federal Seniors Minister Kamal Khera addresses media in Victoria: grants double to $10,000 if the new hire is a woman, new Canadian, LGBTQ+, Indigenous, a person with a disability or a visible minority. | Adrian Lam, Times Colonist
Funding will help address B.C.’s skilled-worker shortage and recruit from an ‘untapped’ labour pool, says the B.C. Construction Association
The B.C. Construction Association hopes a large federal infusion of cash will translate into a larger and more diverse labour pool in the industry. The $21-million grant, announced August 24 in Victoria, which will be paid directly to contractors who participate over the next two years, is to incentivize the hiring and registering of new apprentice ships. “This will make a difference because these dollars are going right to contractors — small- and medium-sized contractors with up to 500 employees,” said association president Chris Atchison.In order to qualify, a contractor must demonstrate they are hiring a labourer to become an apprentice or registering someone who wants to switch trades and apprentice in another discipline.
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Opinion: Patience, please, during multi-tenant cost adjustments
Everyone involved in the sale of multi-tenant commercial property must wait until the final occupancy costs are revealed
All parties to a sale (brokers, property managers, buyers, sellers, and lawyers) must be prepared for the process necessary to calculate occupancy cost adjustments at sale closing. If you’re selling multi-tenant commercial real estate, the final statement of adjustments that your lawyer provides could take a couple of months to complete.
Let me explain.
Typically, at the beginning of the calendar year, a property manager or owner will estimate the occupancy costs tenants must pay for their proportionate share of the property. This estimate is based on the previous year’s expenses. One example is that the property taxes for the upcoming year are not yet finalized when that estimate is prepared. Let’s assume a sale takes place on June 31st. The property manager or lawyer must wait until all invoices for Jan 1st to June 31st have been received. Expense items, such as utility charges, yard maintenance, repairs, etc., can vary monthly and are therefore impossible to project with certainty. Once all invoices have been collected, an adjustment is made in favor of either the buyer or seller for the subject period. At year-end, the buyer must total the invoices, compare the occupancy cost estimates to actual numbers, and reconcile with each tenant.
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Commercial-industrial builder battles fuel costs and wage pressures
As part of a Glacier Media series on how businesses are overcoming labour shortages, supply chain breaks, inflation and other challenges, a commercial builder explains his strategy
Orion Construction is a Langley, B,.C.-based commercial and industrial building design and construction company.
Inflation and wage pressures are atop the list of challenges for Orion, which employs 36 people directly and several hundred more through contractors on construction projects. The company has been feeling the pinch of inflation, especially high gasoline and diesel prices, which in turn increase other input costs. Orion principal Joshua Gaglardi said the company’s costs are up 25 per cent to 30 per cent over the last two years, partly due to ongoing supply chain issues, but largely due to inflation.
“Fuel is a major determinant in our overall budget, and we’ve seen major increases recently,” Gaglardi said. “Really, fuel goes all the way down and manages its way through the entire supply chain. We’re seeing fuel surcharges on concrete delivery. We’re seeing fuel surcharges on delivery of steel and materials. Unlike some businesses, Orion cannot simply pass on the increased costs to customers, Gaglardi said, due to the nature of the contracts it has with developers. “We’ve got a limited ability to pass on costs to our customers because a lot of our contracts are based on fixed or stipulated amounts. So we’ve had to become very creative in our approaches.”
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Chinese government launches ‘Belt and Road’ warehouse in Surrey
The consul general of the People’s Republic of China in Vancouver extolled how the warehouses could be instrumental in expanding trade between the two countries
A massive logistics facility in Surrey officially opened last month, paving the way for more trade between B.C. and China. The Vancouver Logistics Park, which opened on July 28, was originally dubbed the “World Commodity Trade Center” and was billed as a massive $190-million, 470,000-square-foot complex. Today, the sprawling import-export facility is only about 80,000 square feet as only the first of three phases is complete.
The business park, first conceived in Beijing, was to have four warehouses and two large exhibition halls — to be lined with Chinese and Canadian flags, although the final version appears to have been altered and is without flags and with the new name. It’s unclear what the final size of the complex will be. The business park is purported to be one of several non-Chinese import-export facilities servicing a central commodities hub on the outskirts of Beijing, called Yanjiao International Trade City. It’s being developed by World Commerce Valley, a division of Hong Kong-based trading firm Shing Kee Godown Group. The local industrial park was developed by North America Commerce Valley, a subsidiary of World Commerce Valley.
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Portfolio sales drive active Victoria multifamily market
Rising interest rates, low inventory set to cool deal activity
Starlight Group was the most active buyer of Victoria multifamily properties in the first half of 2022, keeping activity on par with 2021 despite a pending shortage of product.
Of the 26 properties that changed hands in the period according to data gathered by CBRE Ltd., 14 were picked up by Starlight through the acquisition of three different portfolios.
The largest was the 13-property Raamco International Properties Canadian Ltd. portfolio, which included eight properties in the Victoria area. The deal included 1,027 units in the market, or more than half the 2,012 units that changed hands in the period.
All told, the sales contributed to $663.8 million in transactions in the first half of the year – just $100 million shy of $756.6 million in transactions in all of 2021.
Portfolio sales also supported the Nanaimo market, where three of the seven properties that changed hands were part of a single deal. The value of transactions in Nanaimo during the period totaled $75.9 million with per-unit pricing on par with 2020 at $259,181.
But the high volume of activity isn’t likely to continue into the second half of the year.
“Overall these all occurred prior to our current real estate environment,” said Sim Waraich, a senior financial analyst with CBRE who prepared the report.
While institutional buyers are still interested in the market, thanks to strong fundamentals including low vacancies and a limit supply of units, the cost of financing has made many buyers hold off, at least temporarily.
Sellers are also reticent to list given the downward pressure on prices in the current market.
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BCGEU pickets B.C. booze and pot operations
First day of strike action hits one of province’s biggest revenue generators
The union representing B.C.’s 33,000 government workers is targeting one of the biggest government revenue generators in its first strike action, taken Monday, August 15
The B.C. General Employees’ Union (BCGEU) waited until Monday morning to announce its first round of picket lines: provincial liquor and cannabis wholesale operations.
Picket lines are going up at B.C. Liquor Distribution Branch (LDB) wholesale and distribution warehouses at 3:30 p.m. August 15 in Delta, Kamloops and Richmond and the Victoria wholesale customer centre.
While the wholesale customer centre and cannabis customer care centres are included in the job action, there will be no picket line.
“Retail liquor and cannabis stores will not be part of this phase of job action,” said the union’s news release.
Restaurants, bars and privately owned liquor stores are bracing for impact. Ian Tostenson of the B.C. Restaurant and Foodservices Association said he would be able to comment “once we understand the contingency LDB plan.”
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Metro Vancouver housing starts down 28 per cent in July
Sharp drop from a month earlier is in step with a downturn in housing sales
Bucking a national trend, Metro Vancouver July housing starts fell 28 per cent compared to a month earlier, according to the latest data from Canada Mortgage and Housing Corp. (CMHC).
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High value, lower volume in Vancouver’s multifamily market
Lower Mainland sales remain strong as private investors pile in
Business was brisk in Vancouver’s multifamily market as 2022 began, with recent reports noting the prominence of private investors as well as vendors keen to take advantage of strong pricing.
According to the Goodman Report, 84 transactions totalling $1.26 billion took place in the first half of the year, a 23 per cent drop in value and 11 per cent drop in transactions from 2021.
“Although this is down from the previous year, this result represents more volume than all of 2020,” the Goodman Report noted, while pointing out that activity in the period was the third-highest since 2006.
The peak for the sales in the first half of the year came in 2018, when 89 transactions totalling $1.45 billion took place. The second-best year for first-half transactions was 2017, with 87 transactions totalling $1.35 billion.