Where, and why, more purpose-built market rental buildings are going up in B.C.
Ask anyone in B.C. who has tried to rent an apartment in the past 25 years, and they’ll tell you what a tight market it is. By the end of 2014, vacancy rates were just one per cent in Vancouver and 1.5 per cent in Victoria (see sidebar).
But now, for the first time in years, things are looking up. Industry observers credit several factors: tightened CMHC criteria for mortgage eligibility; the struggle for many first-time buyers to come up with a downpayment; delays in starting families; and close to 20,000 people moving to B.C. every year on temporary or student visas.
In each of the past two years, more purpose-built rental apartments were constructed in B.C. than in the previous 25: 2,960 units completed in 2013 and 2,763 in 2014, according to CMHC. Most were in the Greater Vancouver and Victoria areas, where new players are beginning to develop market rental properties.
Bosa and BlueSky Properties
Vancouver-based Bosa and BlueSky Properties, best-known for its condo and mixed-use projects, is one prominent developer with several new Vancouver rental projects either on the market or under construction. The Standard, 106 furnished rental studio suites on Granville Street, was completed in 2012 and is fully rented; the Bosa False Creek’s 95 suites began leasing last November; 192 suites are under construction in BlueSky Chinatown on Main Street; and 190 suites are in development in the West End. Bosa will retain long-term ownership of all the properties.
Hollyburn Properties, which owns and manages more than 5,000 suites in 73 buildings across Canada, broke ground in November on its first-ever new property development: Marlborough Tower 2 (M2), a 130-unit highrise in North Vancouver, the city’s first purpose-built rental highrise in decades. The company has also applied to build two infill rental buildings in West Vancouver. Hollyburn director David Sander says building is attractive because interest rates are low, construction costs are stable, and the cost to buy existing buildings is high. “In the case of Marlborough Tower 2, we could build a building for less than it would cost to buy.”
In Victoria, Honeycomb Realty Advisors Inc., a real estate asset management company, is converting a downtown heritage hotel into 97 furnished high-efficiency micro units with ground-floor retail. The Dominion Rocket is expected to be completed by March. “We’re looking at markets and trying to understand where is there a niche opportunity,” says Honeycomb CEO David Fullbrook. “The demand for rental just continues to go up, and there’s no way that the condo market can meet that demand. Our intent is to continue to own and operate the facility and to do others.”