Vancouver apartment market heats up as building starts stall

Peter Mitham, Business in Vancouver
January 2, 2018

One of the first purpose-built rental properties to sell in a forward sale in Vancouver during the current surge in rental construction has come forward again.

Déjà vu

Mayfair Properties Ltd. is selling MC2, bought from Intracorp Projects Ltd. in 2013 for $26.8 million. The 110-unit project is fully leased and listed with the Goodman team at HQ Real Estate Services Ltd. for $54 million.

“It’s been a very successful project from a lease-up perspective,” Mark Goodman said as the project hit the market last month. “There was very little precedent at the time for modernized new suites with dishwasher and laundry in a part of town that hadn’t really been developed.”

The project’s success has paid off for Mayfair, supporting a doubling of what it paid (and then some) in the current list price.

“It was a big price when they paid,” Goodman said. “They took the risk and now, fast–forward, very positive things have happened.”

Those things aren’t necessarily positive for renters, of course: vacancies in Vancouver rental apartments remain low despite new construction, and rents continue to increase. Average monthly rents in MC2 run from $1,430 for studios and one-bedrooms to $2,338 for two-bedrooms. This compares with the city of Vancouver average Canada Mortgage and Housing Corp. (CMHC) reports of $1,388 a month for leased units and $1,547 a month for vacant and available units.

Coming soon

Rents for units at MC2 listed with Airbnb Inc. are significantly higher than those in the rental market, beginning at $118 a night. The rental search engine PadMapper pegs the monthly rent at $3,403.

Whether or not the rental is legal is another question, of course. Despite city efforts to bring units listed with Airbnb into compliance, the presence of such units creates headaches for landlords and strata property managers.

To address the issue, Vancouver-based Bazinga Technologies Inc. hopes to announce a partnership with Airbnb this spring that will give strata corporations a better sense of what’s going in their buildings and even to reap a benefit from the presence of the units through a share of booking fees.

“We’re working on a really cool product that we think will be a potential solution,” said Joseph Nakhla, CEO of Bazinga. “It’s basically allowing stratas to manage the buildings with a bit more transparency and understanding of how much Airbnb activity is affecting the building.”

The new tool will require a data-sharing agreement allowing Bazinga to access Airbnb’s data and share it with building owners, its raison d’être.

Bazinga provides software that facilitates communications within strata corporations. Started in 2012, it went national in 2014 through a partnership with Toronto homebuilder Tridel Corp. It now works with 2,000 communities representing 130,000 units.

A deal with Airbnb would be the latest expansion for Bazinga, which last summer began acquiring property managers to work directly with strata corporations.

Bazinga acquired the property management arm of Peterson Group in April 2017, rebranding it Tribe. Tribe now manages 5,000 units in B.C. and is negotiating two more acquisitions that are scheduled to close in early 2018, boosting its units under management to more than 15,000.

Lagging starts

Vancouver closed 2017 with promises of great advancements in affordable housing, including rentals. Yet as the year closed, starts lagged behind 2016 by nearly half.

CMHC figures indicate 1,717 rental starts in the city of Vancouver in 2017’s first 11 months, down from 3,245 in all of 2016. Hardest hit were non-market units, with just 31 units started versus 414 in 2016.

Regionally, 4,328 rental units were launched across Metro Vancouver in 2017’s first 11 months, down from 6,841 in all of 2016. Of these, 266 were non-market units – about half the 2016 tally of 536.