Shawn Brown sat down with CBRE commercial agent, Andre Alie Day, to learn more about downtown Vancouver’s current office tower boom. With over three million square feet of new office space under construction, it is estimated that there will be approximately 17,500 new workers Downtown.
See a sample from the interview here.
Access the full interview and recap in the link below.
When we faced the initial pandemic unknowns and transitioning to working from home, there was an understandable desire for many to flock to the suburbs to gain more space. Flash forward a year and many of us have acclimatized and are back working in our offices which has resulted in what some are calling the beginning of a “U Turn” of a purchasing pattern.
Interestingly enough, we are concurrently seeing a boom like never before in commercial development with over 3.5 million square feet currently in the works. This is enough new office space for approximately 17,500 people. This tells us that there is a confident expectation for a robust demand to work, and therefore live, in Downtown Vancouver in the years to come.
Background on Downtown Vancouver
According to the Downtown Vancouver BIA (DVBIA), the downtown peninsula is the most densely populated area in BC. It consists of two areas: The West End and Downtown. The West End (2.04 sq. km.) is known for its proximity to English Bay and Stanley Park. Downtown (3.75 sq. km.) is primarily known for its business and entertainment districts but is also home to a large number of residents who live in high-rises. It includes the neighborhoods of Yaletown, Gastown, and Coal Harbour.
The DVBIA’s most recent stats show that by the end of 2019, Downtown’s population, as well as its workforce, had both increased 10.8% since 2016. It is worth noting that Downtown’s five-year resident population growth rate remains three times greater than that of Vancouver.
Despite this continued substantial growth and a workforce outnumbering 150,000 people, office vacancies remain low at 2.6%.
Downtown development underway
Given the high demand to live Downtown and the ongoing shortage of office space, it is no surprise that commercial developers jumped on the opportunity.
As mentioned in the opening, there are 3.5 million square feet in new commercial space under development – you have likely seen the unique new Deloitte Summit office tower at 400 West Georgia Street which recently celebrated a milestone, achieving its full height of 301 ft with 24 storeys. Right across the street is “The Post”, the massive redevelopment of the city’s former central post office that will house more than one million square feet of office space. And these are just two of the many commercial developments at play.
This will lead to an approximate 12% increase in the Downtown working population. Let’s say half of those people want to limit their commute—that is an influx of 8,750 new potential buyers in the Downtown core.
Given how densely populated Downtown Vancouver is, supply will always be constrained and therefore prices will continue to climb.
New housing supply is currently made up of mostly new luxury builds and pre-sales, such as what we are seeing on Alberni, the Northeast corner of downtown, around the Viaducts area, and Robson and Smithe but these are all very expensive at around $2,000+ per square foot.
This means that realistically, most of these expected people moving to Downtown will be looking to buy resale properties.
In 2019, there were only 1,772 downtown sales under two million dollars. In short, if there are almost 9,000 new buyers expected in the near future, we are going to see a severe short supply.
Current trends in pricing and sales
As we highlighted in our latest market update, condo sales have increased 111.7% in March compared to 2020 with 944 sales.
This desire to live in the heart of Downtown Vancouver is being revived once again by leading indicators of life going back to “normal” through increased vaccinations taking place and the expectation of upcoming easing restrictions.
The average price of a condo is $810,900, only a 1.8% increase year over year, whereas the average price of a townhouse is $1,110,200 which has seen a 6% increase. So condos, even in desirable areas like Downtown, are still accessible.
But, keep in mind, this doesn’t take into account the pent-up demand for ongoing immigration, currently on hold due to the pandemic.
So what does this mean for me?
If you have been thinking about buying and are interested in Downtown Vancouver, now is the time to start seriously looking. Condo prices are just starting to go back up to pre-covid levels which offer a unique opportunity to get into the market—whether for a home or as an investment rental property.
Once restrictions ease with vaccination rollout expected to be completed by the end of summer, there will once again be a strong desire for housing Downtown. Then, add in these large new office spaces of major tech and finance companies bringing in even more people from across Canada and the world in the next 5+ years, coupled with the already tight supply—there will be a robust demand. Downtown Vancouver is a smart investment and now is the time to buy and we are here to help.
The West Haven Group can help guide you in making the best property decision for you and your lifestyle. To speak with one of our industry-leading agents, reach out and connect with us!
With 2020 now behind us, many are wondering what the Vancouver property/real estate market will look like in the coming year. Thankfully there are a number of reports that analyse actual data (rather than sensationalised media headlines) which we will utilise for our 2021 Vancouver real estate update. Before we look at the data, however, we’d like to issue a word of caution surrounding the sensational nature of property media in general, and a reminder to always approach these ‘headlines’ with a pinch of salt.
What’s Right and Wrong With Vancouver Real Estate Forecasts?
First and foremost, it’s important to remember that property and real estate articles found in the media are often sensationalised in order to grab your attention. More often than not the media will find and exacerbate negative (or positive) or extreme examples to create marketable pieces. It is also very common to see the general media:
Take and highlight one aspect of a story that seems interesting, whilst ignoring other aspects that makes the story less extreme (attention-grabbing)
Use statistics that are overly generalised, which can often mislead buyers and sellers. These statistics can vary a lot by property type, city, neighbourhood, and sometimes even between buildings.
Focus on theories rather than the big fundamentals which actually affect property availability and prices. For example, immigration, unemployment levels, infrastructure etc…
The Vancouver property industry is also full of varying predictions, based on different numbers and assumptions. This often means that the media can find ‘supporting’ information to back up whatever predictions they choose to make, to reinforce their bias or attention-grabbing headlines.
Conversely, there are some quality and quantitative analyses that exist in the Vancouver real estate industry that can give you accurate forecasts and predictions, based on real data. Whilst no one has a crystal ball, these reports will:
Offer real/in-depth explanations based on actual figures- with notes on limitations. These tend to be longer pieces, and as such many people are not interested enough to read through them, but they are available if you know where to look.
Emphasise and make Vancouver property predictions around fundamental drivers such as supply and demand. Generally speaking, these reports are more reliable.
When we zoom out a little further, it’s easier to establish and predict longer-term trends by looking at the macro fundamentals such as immigration. When it comes to short term predictions and price behaviour (such as the next few months) however, the most accurate means is by way of the Sales-to-Actives ratio. That is, the percentage of active listings being absorbed by the market. This is also a version of supply and demand and can be useful for short term predictions.
How Did The Property Market Finish in 2020?
Whether it was a return of confidence, lower interest rates or pent up energy from the restrictions we saw across 2020, Vancouver’s property market finished the year in a strong position. Regardless of calls earlier in the year that an impending recession would limit movement in the property market, sales by the end of November had already exceeded those made in both 2018 and 2019.
To obtain an overall view of the market, we look at the MLS Home Price Index. This is a composite benchmark that measures the change in prices of housing features, over a given time period. When we compare the figures from the past 12 months (December 2019-December 2020), the benchmark price for all residential properties in Metro Vancouver saw a 5.4% increase. By individual property type:
Apartments increased by 2.6%
Townhomes increased by 4.9%
Detached homes increased by 10.2%.
Vancouver Detached Homes
As the graph below depicts, throughout 2020 we have seen a general uptrend in the benchmark price of detached homes in Metro Vancouver. Although this looks at the whole area, it’s important to note that this figure is averaged, and the median prices have varied between neighbourhoods. If you would like more information about your neighbourhood please reach out to our team.
According to the Saretsky Report and REBGV statistics, sales of detached homes in December 2020 saw their second-highest month in the past 5 years. This higher demand was compounded by dwindling inventory, and these forces have led to an average price increase of more than 10% over the year.
Vancouver Condo Market
The condo market has been impacted by a number of factors throughout 2020:
An increase in downtown and condo residents wishing to relocate to the suburbs where they can afford to purchase a detached property
A lack of international visitors or residents oftentimes purchasing investment properties
Various types of investors selling their condos as part of their plan to change their real estate portfolio and lifestyles related to Covid-19.
As a result, we have seen the supply of condo listings increase in Metro Vancouver. However, it’s important to note that although listings are increasing, so are sales- up 41% from December 2019- causing the overall condo inventory to drop. As you can see in the graph below, the number of condo’s available across greater Vancouver dropped significantly in the last few months of 2020, from more 6,648 listings in October to 4326 in December.
We have also seen condo inventory drop in downtown Vancouver between October and December 2020:
East Vancouver’s inventory reduced from 665 to 402
West Vancouver’s inventory reduced from 2053 to 1319.
This lowering of supply could soon be reflected by a rising price in the condo market as we enter 2021.
Potential Market Risks and Trends for the Vancouver Real Estate Market in 2021
Whilst no one can accurately predict how the market will fare across 2021, the general sentiment is clearly in favour of sellers. The annual property cycle may also see sales increase across the first half of 2021, as we approach summer and (hopefully) the end of the wave two COVID restrictions.
There are a number of considerations to take into account which could impact Vancouver’s real estate market, however, depending on your circumstances they could also be beneficial to you. These include:
Declining population growth across B.C. and Vancouver due to the restrictions. This can reduce the pressure on housing prices. Though, I’m sure this will quickly reverse and revert back to the rapidly expanding population pre-Covid.
The potential for mortgage delinquencies. However, it’s important to note that the vast majority of deferred mortgages expired in 2020, and as we’ve seen from the sales figures this has had little impact on the market to date. The government’s assistance policies seem to have worked effectively in this regard.
Property prices across Vancouver are near all-time-highs. This has the potential to price first time home buyers out of the market. However, a higher number of new condo buildings are expected to be completed in the coming 24 months, which may also ease some of this pressure. Additional government support may also come into play for first-time buyers/low-income earners, which can increase the availability of finance and boost sales figures.
Unemployment rates. This will largely be dictated by the state of the economy and COVID restrictions, particularly if they are sustained and/or reimplemented in the coming year. As it stands, the official unemployment rate in Vancouver is 7.4% of the population (up from 4.4% pre-pandemic).
Foreign investment dwindling due to lack of access, the newly increased Empty Homes tax rate (from 1.25% to 3%), and the 20% foreign owners tax. This should allow Canadian residents more access to the market. This being said, for a while now we have already been seeing primarily (almost solely) locals driving the market.
As we have seen in the latter half of 2020, sales of detached homes have increased across Vancouver. Presumably, this has been caused by an increase in people working from home, and a lesser need/desire to live and work in the city centre.
With a limited supply of detached homes, however, we would expect to see these prices increase, as well as a potential increase in the number of 2-3 bedroom condos available on the market as new developments catch up with the change in the market. This may also coincide with condo’s offering larger and more spacious floor plans, and home office spaces becoming a more prominent feature of new builds.
Regardless of whether you’re looking to buy or sell property in Vancouver, the best way to be informed of the state of the market is to reach out and connect with our team. As some of Vancouver’s top-performing Realtor’s, we are dedicated to achieving the results you expect and can help with each step of the property acquisition and/or sales process.