Vancouver’s Unrelenting Rental Apartment Market

Mark Goodman’s trying to take his family on vacation, but the white-hot rental apartment market keeps thwarting him. “It’s the busiest summer we’ve ever had," says the HQ Commercial principal. "And it’s unrelenting.”

The first six months of 2015 saw 73 apartment sales, versus 61 at the same point in 2014—a 20% spike. He alone had 18 sales worth $135M in the first seven months. “It’s moving so fast. We’ve never witnessed this kind of deal volume and activity," says Mark, who took a moment to get his pic snapped on his office rooftop. His team is forecasting 155 buildings will sell this calendar year— $1B in volume (vs 123 buildings sold in 2014 worth $778M). “We’re at just over 100 now,” he says, and "rumour has it” a 26-building portfolio sale just went firm. “So we’ll hit those numbers."

Interest is unprecedented. “When I send out a listing,” says Mark, “I’m getting 25, 30 people showing up over two-day periods,” many coming in over asking with unconditional offers. HQ just sold 2572 Birch St, a 13-suite wood-frame building in South Granville (above), for $5.52M. “We listed it for $5.35M, over $400k per door, and it went over asking to an offshore buyer.” In April Mark sold to Cressey Development Group a five-building complex occupying the 6300 block of West Boulevard in Kerrisdale—a redevelopment play, below—for $26.3M, or $597k per suite, which Mark notes is “well above” the $350k area average.

In Burnaby, 14 buildings recently sold in the Metrotown area will be demolished to make way for condos. And in the West End, among the hottest of apartment markets, Alexandra English Bay—a new 49-suite luxury rental complex at 1221 Bidwell St with ground-floor retail (below)—has generated mucho traffic from offshore buyers, including Chinese and Vietnamese investors, and groups from Germany, Austria and England. “They’re interested because the euro is so strong versus the Canadian dollar,” Mark explains, noting the site, now under contract, had multiple offers.

But the usual suspects—nearly nonexistent new rental supply and low interest rates—are also driving demand. Indeed, perhaps the strongest factor fueling the rental-apartment market surge, says Mark, is a realization among investors that rents are rising “at a lightning-fast pace” upon turnover and, amid super-low vacancy and an absence of fresh supply, will likely continue to soar. “And despite what the city is saying about building new rental product and having programs to pave the way and create efficiencies,” he says, “it’s just not happening.”