Upward pressure
Shenanigans in the U.S. Capitol and the prospect of a tapering in government bond purchases stand to make financing more expensive for both developers and homebuyers, Scotiabank’s chief economist said during a visit to Vancouver last week.
Warren Jestin expects the deadlock between Democrat and Republican lawmakers to work itself out, but the uncertainty it creates and the inevitable scaling back of government bond purchases in 2014 – now US$85 billion a month – will ultimately boost borrowing costs.
A reduction in U.S. government purchases of Treasuries will increase bond yields market-wide and in turn borrowing costs for developers and homebuyers alike.
Jestin sees mortgage rates rising a half percentage point or more on three- and five-year mortgages when tapering begins. This will dampen home-buying activity because the five-year rate is what banks use to assess borrowers for mortgages.
But B.C. may be well-placed to weather the transition. Population growth has slowed and owners have tempered expectations of significant capital gains, while the coming year could bring some good economic news. Jestin said, “[The Lower Mainland] doesn’t have that strong momentum that existed in previous years, but we still feel it’s a market where there’s lots of opportunity.”
On the block
Avison Young has announced the listing of 815 West Hastings Street, a 106,943-square-foot office block built in 1976. The property last sold in December 2010 for $45.3 million, when a private buyer acquired it from Investors Group.
According to RealNet Canada Inc., office properties valued in excess of $10 million enjoy an annual compound growth rate of 7.2%. Documentation Avison Young circulated last week suggests a “pricing guideline” for 815 West Hastings of $60 million, though a formal list price has not been set.
Certified outcomes
A spate of crane accidents in recent months might be no more than coincidence, but they’re hardly what one would expect six years after mandatory operator certification took effect.
Certification of boom trucks, mobile cranes and tower cranes – save those with a lifting capacity of less than five tons or booms of less than 25 feet – has been required since July 1, 2007. Approximately 10,000 operators have been certified in the past six years.
The number has surpassed industry expectations, said Fraser Cocks, executive director of the BC Association for Crane Safety, but so have recent accidents.
“Everybody out operating today by regulatory requirement must have been through this process. Having said that, obviously, the goal is to have zero incidents,” Cocks said.
But on October 4 a veteran operator died at East 29th Avenue and Slocan Street when the crane touched a power line. A crane’s contact with power lines sparked a fire at West Broadway and Collingwood on September 6; the operator was unscathed. A worker was also injured on July 18 when a crane clipped a power line at a strata office project on Broadway just west of Cambie Street. Despite the impressive numbers for crane certification, claims related to crane accidents filed with WorksafeBC indicate that accidents have tracked the province’s economic activity more closely than accreditation.
The biggest drop in claims came with the recession in 2009, and they have since risen steadily. The metal and minerals sector, as well as transportation, have posted the biggest drops from previous claim levels.
Construction sector incidents fell to 18 a year between 2009 and 2011, but rose to 30 in 2012.
Cocks says the crane operation comes with risks, but proper training and safety protocols should mitigate those. •
