Big deals
Despite the quips at June’s meeting of commercial real estate association NAIOP about the challenges of getting two business people in the same room before September, the latest crop of investment figures indicates that business boomed in the lead-up to summer and continued in earnest through July and August.
CBRE Ltd.’s mid-year review of real estate investment in Canada says activity staged a “mild pullback” in 2015’s first six months, calling the tally of transactions “disappointing.”
However, Vancouver bucked the trend, spurred by foreign buyers whose willingness to compete for the limited supply of assets drove “pricing up to aggressive levels.”
“Vancouver continues to demonstrate ongoing strength, leading the way with 42% year-over-year growth,” CBRE said, pegging the volume of transactions for the first half of the year at $2.1 billion.
Avison Young, tracking transactions larger than $5 million, issued a tally of $879 million, the third greatest in the past 10 years.
The cash was spent in 67 deals – the most Avison Young has ever recorded in a six-month period.
But if deals done were smaller, a few transactions grabbed the headlines: among them, Victoria’s Bay Centre, for approximately $123 million, and the office block at 1550 Alberni Street in Vancouver, for $47.1 million (notable for its proximity to 1500 West Georgia and other properties eyed for redevelopment).
The trend appears set to continue in the current quarter, with the Westin Bayshore again changing hands, this time to Concord Pacific. Plans for the property – as with so many others bought and sold recently – include redevelopment with a view to maximizing density.
Grey market
Seniors’ housing is once more on the rise, as the return earlier this year of veteran developer Don Ho to the sector via Element Lifestyle Retirement Inc. underscores.
Now, BayBridge Seniors Housing Inc., a wholly owned subsidiary of the Ontario Teachers’ Pension Plan, has agreed to buy Amica Mature Lifestyles Inc. for approximately $578 million. The deal gives BayBridge 26 properties in B.C., Alberta and Ontario and reflects institutional buyers’ renewed interest in real estate.
“Pension funds are back,” CBRE Ltd. chairman John O’Bryan remarked last fall, and the Amica transaction proves it.
Just seven of Amica’s properties are in B.C, but the market for seniors’ housing is strong nationally.
Canada Mortgage and Housing Corp. reported earlier this year that B.C. seniors’ housing vacancies dropped from 6.8% to 6.1% between 2014 and 2015. Average rents, meanwhile, were virtually unchanged at $2,035 a month (a $14 difference from a year earlier).
However, a relatively smaller drop in vacancies nationally (from 8.7% to 8.1%) corresponded with a 3.1% jump in the rents owners were commanding.
Stable conditions in B.C. also came with a silver lining for seniors: while the province is widely known for a crisis in affordable housing (and one may question the affordability of an average monthly rent of $2,035 for someone on a fixed income), B.C. boasts the second-lowest monthly rent for seniors’ accommodation in the country.
The circumstance promises steady cash flow for BayBridge, while growth will follow as the population of seniors blossoms over the next two decades.•
