Oct 6, 2014 - files/Offices/Vancouver/Research/2014/Vancouver_MFReport_Fall2014.pdf. British Columbia multi-family dolla
For Immediate Release (3 pages) Monday, October 6, 2014
Contact: Andrew Petrozzi (604) 646-8392 email:
[email protected]
Editors/Real Estate Reporters • Please click on link to view Avison Young’s Fall 2014 British Columbia Multi-Family Investment Report: http://www.avisonyoung.com/sites/default/files/contentfiles/Offices/Vancouver/Research/2014/Vancouver_MFReport_Fall2014.pdf
British Columbia multi-family dollar volume pushes to new levels as investor demand resurges Avison Young releases its Fall 2014 BC Multi-Family Investment Report Vancouver, BC -- A $140-million portfolio sale and the City of Vancouver’s disposition of its remaining interest in the Olympic Village residential development for $91 million propelled the multi-family segment of the BC market to its strongest first-half performance (in terms of dollar volume) in more than five years. With 23 transactions totalling $396 million in the first half of 2014, sales activity surpassed the first half of 2013 (17 deals/$154 million) and was on par with the first half of 2012 (25 deals/$386 million). While deal and dollar volume were both strong in the first half of 2014, stripping out the portfolio sale and the Olympic Village transaction reveals a more telling portrait of market activity. Fifteen of the remaining 19 transactions were for less than $10 million, with seven of those around the $5-million mark. Only two of the 19 transactions were notable stand-alone deals, including the $18-million sale of Seaview Towers in Victoria and the $25.5-million disposition of the Parklea Apartments in North Vancouver. These are some of the key trends noted in Avison Young’s Fall 2014 British Columbia MultiFamily Investment Report, released today. “There has never been a time in Metro Vancouver when it has been more difficult for a purchaser, institutional or private, to buy quality, well-located rental apartment buildings,” comments Avison Young Principal Rob Greer. “While interest rates are debatably as low as we have seen in some time, low financing costs have little to do with the tight market. It is due to a lack of available supply and, as a result, we are still seeing significant cap rate compression on multi-family assets.”
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The sale of Boardwalk REIT’s BC apartment portfolio to the Realstar Group for $140 million represented the largest investment transaction in BC in the first half of 2014. The three multiresidential buildings included: Horizon Towers in Burnaby ($54 million), Surrey Village ($48 million) and Christie Point Apartments in Victoria ($38 million). The inability of Boardwalk REIT (along with most REITs and institutional and private investors) to further acquire scale in BC’s multi-residential market in the face of highly compressed cap rates allowed Boardwalk to recognize premium pricing for its BC assets and to redeploy capital to markets that generate higher returns for the REIT’s unit holders. Demand from local and international buyers remained exceptionally strong with many older, smaller buildings trading hands despite highly compressed cap rates and continued near record pricing. Buyers often purchase buildings with the intention of performing major upgrades in an effort to achieve higher rents and boost the property value. Current yields do not make sense otherwise. “The market is so competitive that in order to make sense of the pricing, purchasers need to have a plan beyond buy and hold,” adds Greer. “Supply remains tight despite the construction of new rental product in Vancouver thanks to city incentive programs. It remains very difficult for institutional and private investors to buy quality, well-located rental apartment buildings in Metro Vancouver.” Eleven of 23 transactions occurred in Vancouver while eight were located in the suburban markets. Victoria remained popular with investors who purchased three apartment buildings in the provincial capital. One transaction in the Fraser Valley – a former hot spot for investors in 2011/2012 – rounded out the deals in the first half. Demand is expected to remain strong with pricing not anticipated to moderate in 2015. Further cap compression is highly unlikely with transactions for quality, well-located properties already trading at sub 3%. Supply will remain the primary constraint to deal and dollar volumes moving forward as investors continue to seek to acquire multi-family assets in Metro Vancouver. The report also contains a Q&A with Erin Gibault, managing partner of Headwater Projects, on how his firm has been able to grow in Vancouver’s pricey and supply-constrained multifamily investment market. Avison Young is the world’s fastest-growing commercial real estate services firm. Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 1,600 real estate professionals in 60 offices, providing value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-family properties. -end-
For further info/comment/photos: • Robert Greer, Principal, Avison Young: 604.647.5084
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• Michael Keenan, Principal and Managing Director, Vancouver, Avison Young: 604.647.5081 • Andrew Petrozzi, Vice-President, Research, (BC): 604.646.8392 •Sherry Quan, Principal, National Director of Communications & Media Relations, Avison Young: 604.726.0959 or 604.647.5098
www.avisonyoung.com Avison Young was a winner of Canada’s Best Managed Companies program in 2011 and 2012 and requalified in 2013 to maintain its status as a Best Managed company Follow Avison Young on Twitter: For industry news, press releases and market reports: www.twitter.com/avisonyoung For Avison Young listings and deals: www.twitter.com/AYListingsDeals Follow Avison Young Bloggers: http://blog.avisonyoung.com Follow Avison Young on LinkedIn: http://www.linkedin.com/company/avison-young-commercial-real-estate Follow Avison Young on YouTube: www.youtube.com/user/AvisonYoungRE
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