Later this summer, Vancouver-based Nicola Real Estate — the real estate arm of investment management firm Nicola Wealth — will be welcoming residents to Spencer Block, the company’s latest purpose-built rental community in Victoria.

Located at 610 Herald St. and 635 Chatham St. in the downtown core, near Chinatown, Nicola Real Estate has redeveloped a 1.5-acre parcel into a mixed-use community with 278 purpose-built rental units across two six-storey buildings.

Spencer Block will include over 18,000 sq. ft of amenity space, including co-working space, wellness facilities, social lounges and one of the largest private landscaped courtyards within downtown Victoria. Street-level retail space will also serve as an amenity to both residents and neighbours.

“We’re kind of creating a whole new block, a whole new ecosystem of restaurants, cafes and amenities that are kind of building towards the north end of downtown,” Josh Anderson, VP of development at Nicola Real Estate, told RENX in an interview. “Our project is probably one of the bigger ones that are coming to market right now.”

Nicola's Victoria portfolio

Acquired in 2019, the project was originally a joint venture between Nicola and Denciti Development, but is now fully owned by Nicola Wealth Real Estate through its Nicola Canadian Real Estate LP fund, which had a net asset value of $1.27 billion as of Q1.

Construction commenced a bit over two years ago and leasing is now underway for the first 160 units, with move-ins beginning on August 1. The remainder of the units will then follow later this year. Rents are starting at $1,760 for studio units, $2,350 for one-bedroom units, and $2,610 for two-bedroom units, and units will be air-conditioned and have work-from-home functionality.

Spencer Block is not the only project that Nicola Real Estate has in Victoria and Anderson said they are “quite optimistic” about Greater Victoria.

Just outside of the downtown core, at 1050 Pandora Ave., Nicola and partner Primex Investments Ltd. will be bringing to market a 104-unit rental project called North Park — formerly known as Parkway, but recently rebranded — closer to the end of the year.

In Saanich, at 1555 McKenzie Ave. near the University of Victoria, Nicola is also currently constructing a project called Podium, which will include 384 purpose-built rental units and 19,000 sq. ft of retail space. Construction is expected to be completed in 2028.

In 2020, Nicola also converted a 12-storey hotel tower at 345 Quebec St. in the James Bay neighbourhood of Victoria into a 219-unit rental community they named The James at Harbour Towers. The asset was listed for sale by Avison Young earlier this year.

“We have all these brand new purpose-built rental assets that we’re bringing to market so, as we looked at our overall portfolio, it kind of made sense for us to look at a potential disposition,” said Anderson, adding that Nicola also owns various commercial properties in the Capital Regional District as well.

Curated project strategies

Discussing the three ongoing rental projects, Anderson said there are “slightly different business plans” for each. “We’re trying to differentiate our products in different parts of the city," Anderson said.

“Spencer Block is a great example of this, where it’s a sizeable project right downtown,” he added. “The opportunity to have ample amenities in the middle of the city is pretty special. So, when we look at the business plan for that project, that’s where we’re assuming a younger professional audience, possibly some students.

“North Park is very different. It’s a heritage retention project. When we looked at that project and the neighbourhood, it’s smaller at 104 units. So, we wanted to offer more of an opportunity for larger units and less amenities. So, it’s for maybe a slightly more mature audience.

“As we’re looking at these different projects and these different geographies within the city, as well as neighbourhood competition, we’re kind of curating our approach in different ways.”

Institutional investors arriving in Victoria

“We’re definitely seeing more institutional investors coming to the marketplace in Victoria,” said Anderson. “In the past five or six years, household names on the institutional side are making more of a footprint and there are some big projects both downtown and outside.”

Those include Starlight Investments, Harrison Street, and this week Leyad announced their acquisition of The Bay Centre in the downtown core. Many of the prominent developers based in Metro Vancouver also have a strong presence in Victoria.

Anderson said Nicola has long-term view. So when they’re looking at developing housing, it’s all rental. For larger projects, they prefer to bring in institutional or family office partners.

“The Victoria market in the past decade, and more so the past five years, has become a lot more sophisticated, both in terms of what the tenants are looking for and what developers are bringing to the table,” he said.

“What that does is create more competition, but we see that increase in institutional attention as a great opportunity. It’s creating more housing diversity. It’s forcing other groups to become more dynamic. I think that infusion has forced the rental market to become more sophisticated.”