Greater Vancouver’s multi-family sector is still in overdrive, as investors have pushed up sales volumes and values significantly from the same period a year ago.
Goodman’s company sold 24 properties worth more than $300 million in the first eight months of this year. Overall, there have been 145 multi-family transactions through August, compared to 101 last year. The value of transactions is just over $1.3 billion so far, a 93 per cent increase over last year for the same time frame.
A lot of apartment owners who’ve held off selling for years may now want to retire or find themselves with older buildings requiring more maintenance and capital expenditures, and the high prices their properties can fetch is an added incentive.
“Now is the best time to sell”
“Now is the best time to sell because the demand is there and the concerns are that there may be a shift in the market,” said Goodman.
“When you see a lot more product coming on the market there’s a lot more competition, and more supply could mean a leveling off or even a decline in prices. I’m not saying that’s going to happen, but there’s a lot more product coming on the market right now.”
The Kitsilano, Kerrisdale, South Granville and University of British Columbia neighbourhoods generally have the highest values, and that’s reflected in the rents they can achieve. Goodman said value-add buyers are acquiring 50-year-old apartments, investing $50,000 per unit to renovate them, and then doubling rents from $1.50 to three dollars per square foot.
“I’ve seen up to $3.75 per square foot for a really nice retrofitted suite. You can’t get that same level of rent bump in the suburbs, so you have to be a bit more selective of the property and how much money you want to put into it.”
Burnaby and New Westminster are active
Burnaby is the most active suburb for multi-family transactions, particularly in Metrotown, as properties are being acquired for redevelopment. New Westminster and North Vancouver follow while, at the other end of the spectrum, Surrey, Mission and Port Moody have seen much slower building turnover.
The 15 per cent tax introduced for foreign buyers of Greater Vancouver residential properties has had a negligible effect on the purpose-built, multi-family market. Local investors and institutional money are driving the bulk of sales. Just two of HQ Commercial’s last 50 sales were to foreign owners and Goodman estimates that two to three per cent of purpose-built apartments in the region are owned by foreigners.
“The apartment business is very hands-on and management-intensive at times, so you’d have to have a local group here to handle it. “
HQ Commercial hires Cynthia Jagger
HQ Commercial has become so busy that it recently hired Cynthia Jagger as a broker. She was a senior appraiser at Altus Group, specializing in multi-family land and apartment buildings, and has underwritten and provided guidance on some of the biggest land deals in Vancouver’s history.
“This is the first time where any brokerage has hired someone of this calibre and with this expertise in doing very complex residuals for developers,” said Goodman. “She has extensive knowledge and relationships with a lot of institutional groups and pension funds and brings another level to our operations here.”
Meridian is new purpose-built rental project
HQ Commercial’s biggest new listing is a purpose-built luxury rental apartment and townhouse project called Meridian in Langley being built by Tannin Developments, which has been responsible for several apartments, condominiums and townhouse projects in British Columbia.
The apartment complex features a five-storey, 90-suite apartment building that’s scheduled for completion in January. The very rare rental townhouse complex features 24 three-level homes with rooftop decks that are scheduled for completion in September 2017. Meridian is on the market for $47.5 million, which works out to $468.52 per square foot. It will provide annual net operating income of $1.91 million.
“The suites have really good layouts,” said Goodman. “It will have all of the modern trappings that you would expect to see in a condo building.”
There’s private secured parking for each apartment unit, secured bicycle storage, storage lockers on each floor as well as surface parking for visitors. The townhomes include two parking stalls per unit and eight visitor spots.
A stand-alone amenity building for apartment and townhome tenants features: a secure outdoor area with a playground; an entertainment room with a gas fireplace, children’s play area and a full kitchen for functions; a 16-seat theatre room; and a workout gym with separate cardio and yoga spaces.
Meridian is situated close to a variety of shops, restaurants, cafes, Willowbrook Shopping Centre, recreational centres and an elementary school. Parks, a BMX bike trail, golf courses and equestrian centres for horseback riding are also nearby.
The Kaleden is renting for less than market values
Another HQ Commercial new listing is The Kaleden, a wood-frame walk-up rental apartment building featuring eight two-bedroom and three one-bedroom suites. It’s located on the northwest corner of West 13th Avenue and Oak Street in Vancouver’s South Granville neighbourhood, near transit routes and a hospital.
The Kaleden was built in 1950 and underwent major renovations in 2008 and from 2013 through this year. The asking price is $6.545 million. While rents in the building now average $1.88 per square foot, Goodman said it’s conceivable that they could reach three dollars once current tenants leave.
“The prospective investor will have a clean and well-maintained building with a great suite mix and, on turnover, they won’t have to touch the suites. They’ll just remarket it.”