Avison Young’s Rob Greer sees potential for new growth in investment in multifamily in BC going forward, despite an AY report showing few quality assets available in the second half of 2013, and little deal activity. In fact, if it wasn’t for a portfolio sale involving the Norgal apartment portfolio in the second half of 2013 for $51M—and the sale of 119 rental units involving the former housing development for Olympic athletes for $41.5M (there might even be a couple of bronze medals sitting around—there would have been a limited number of deals above $5M (AY tracks multifamily investments greater than $5M). Overall, there were 16 deals completed at a value of $234M during the second half of 2013.

Rob points to high land costs since the early 1970s across Metro Vancouver as the main culprit, compared with the rest of Canada. “The only way the numbers could work was for residential developers to build condominiums,” he says. Look for that to change, with the city’s recent move to create a rental construction incentive program increasing density and removing certain municipal fees tied to new rental construction. (Though let's hope that's the only way we start emulating the early '70s.)

In the image is Dorchester in North Vancouver, which sold for $12M in November. “The numbers are still tight, but it is helping new rental projects move forward,” he says. CMHC points to the number of new purpose-built rental apartments completed during the first half of 2013 (1,047 units), the highest level in 10 years, as a sign of things to come. The impact on vacancy levels with the new product will be mitigated by pick-up in employment, Rob says. According to the report, the vacancy rate is expected to rise to 2.2% in 2014 (2.1% in 2013). Rob says multifamily is of particular interest to institutional investors because those assets supply slow, but steady rental rate growth—a nice, conservative complement to other assets in a diversified portfolio.