Vancouver Multifamily Is Poised For Another Record Year
BC multifamily had a huge 2015, with 80 deals worth a record $1.4B, notably the $170M sale of Western Investment Properties' portfolio to CAPREIT (19 properties/titles, 22 buildings, 919 rental units) the province’s largest-ever one-time multifamily portfolio trade. Avison Young principal Rob Greer tells us 2016 is shaping up to be another record year for multifamily. Offshore players are a growing presence, “but don’t underestimate the strength of local investors.” Regardless of where the buyers hail from, Rob notes metrics used to value multifamily assets have been “altered dramatically” in the past year.
When it comes to determining price, the underlying long-term land value of multifamily sites and the potential to reposition a rental building have become the main factors, Rob points out. Buyers are willing to be more aggressive with pricing owing to a property's long-term development potential. This was the case in the Avison Young-brokered sale of 1770 Davie St (seen above), which Rob calls one of the city’s “most notable” rental buildings. “We have a firm deal in place at record pricing levels,” he says. The transaction closes next week.
Municipal plans and programs to boost density and improve affordability have contributed new multifamily supply (the city's Rental 100 program spurred Fixture on Fraser at 708 East 26th Ave, above, sold by AY for $15.6M). But vacancy at well-located properties is under 1%, and rental rates on a turnover at in-demand buildings can be in the 30% to 50% range, notes Rob. So Vancouver must be more proactive in increasing density around older three-storey woodframe buildings (approval for projects can take four years). “More people are moving here and there’s nothing available. So we’ll continue to see rising rents."