Calgary multifamily sale proves value of residential conversion

(Conversion of five floors of office space to 55 residential units at 825 8th Avenue SW in Calgary contributed to the property's successful sale this month.)

This month’s sale of a downtown Calgary highrise is showing the benefits of converting office space to residential in the city’s core.

Westview Heights, a 343-unit apartment tower at 825 8th Avenue SW, sold August 1 for $83.4 million, or $243,149 a door. This works out to blended price of $370 per square foot, compared to the current range of $50 to $100 per square foot for straight office space.

“You’d probably get very little value for the commercial space,” said Samuel Dean, senior vice-president, capital markets, JLL Canada.

The property is not among the 10 projects participating in Calgary’s Downtown Development Incentive Program, which aims to remove 6 million square feet of office space from the market by 2031.

The former owner, Mayflower Ventures LP, acquired the property in September 2007 and began the conversion process prior to the city initiative, recognizing the value that could be gained through residential space. A total of five floors were converted, yielding an additional 55 residential units.


This means the office conversion alone added in excess of $13 million to the value of the property, on top of the natural increase in value since acquisition.

Mayflower decided to sell now as it refocuses on new development opportunities. With strong demand for housing from new arrivals, it saw an opportunity to present the building as rents march northwards. Close to a third of units were vacant at the time of the sale, meaning Westbow Capital has plenty of room to lease them up at market rates.

“The ability to go in there and take advantage of where the Calgary market currently is definitely played a big part in the transaction,” Dean said. “Historically, you wouldn’t really have someone looking to take on that much lease-up risk, whereas in this situation it was actually a positive to have that vacancy.”

According to, the average one-bedroom rent in Calgary in July was $1,718 a month, up 17.2 per cent from a year ago.

Canada Mortgage and Housing Corp. statistics for purpose-built rental units peg vacancies in Calgary at 2.8 per cent as of October 2022.

Close to 80 per cent of units at Westview Heights are one-bedroom apartments fetching in the range of $1,600 a month. The high rates for the market are creating demand for smaller units within the property.

The deal is the largest multifamily sale in Calgary in the past 12 months, and the second largest in Alberta following the sale of a new 396-unit purpose-built rental building in Edmonton on August 8 for $91.6 million or $231,313 a door.

The new owner, Westbow Capital of Chilliwack, will rebrand the building as District. The property is its first acquisition in Calgary. It currently owns properties in Edmonton, Red Deer and Saskatoon as well as B.C., meaning Calgary fills a geographic gap in its portfolio.

Westbow claims to have $550 million in assets under management. Residential rental units are held through Westbow Real Estate Properties Trust, which targets annual returns in the range of 9 to 12 per cent.

Westbow’s purchase occupies the same block as 805 8th Avenue SW, where another B.C. company, Cressey Development Corp., is converting approximately 64,000 sq. ft. to 85 residential units under Calgary’s conversion incentive program.

Cressey plans to retain its project on completion, holding it as an income-producing asset.


Daycare boom drives Alberta retail space race as tenant costs rise

Government funding is driving a boom in daycare operations that’s adding youthful vigour to Alberta’s retail sector.

A mid-year review of national retail markets by CBRE Ltd. notes that daycare operators are booming in Calgary, even as financing for tenant improvements comes under greater scrutiny from lenders.

“It used to be they’d have all their ducks in a row beforehand, but now they’re doing more detailed costing, heavier review of business plans, and it’s just taking longer,” said Alistair Corbett, senior vice-president with CBRE Ltd. specializing in retail properties.

But that hasn’t dampened the appetite of daycare operators, who are crowding the market thanks to federal-provincial funding under the Canada-Alberta Canada-Wide Early Learning and Child Care Agreement.

A For-Profit Expansion Plan launched in February will see up to 22,500 private child care spaces eligible for funding in addition to the 42,500 non-profit child care spaces the province aims to create by 2025-26.


“We had a space come back,” Corbett said. “We put it out for an RFP and we had 14 responses. We got deluged with them. It was just crazy.”

Operator demand is transforming spaces that were otherwise hard to lease, such as restaurants that were shuttered during the pandemic and remain too large for current market demand.

“Very few people want to go and lease 8,000, 9,000-square-foot old restaurants,” Corbett said. “Who’s busy and who’s willing to pay? Right now, it’s daycares.”

Demand for the space being created is being driven another element of the federal-provincial agreement that aims to reduce fees for pre-kindergarten care to an average of $10 per day.

“You can put your kid in daycare for five days a week for less than you can for preschool two mornings a week,” Corbett said. “Parents are definitely taking advantage of the money that’s being given by the government for the subsidized stuff.”

While landlords used to consider daycares a less desireable tenant, given their need for outdoor play areas that lowered tenant density, that’s changed. Play areas can be a convenient use of underutilized parking space, and twice-daily visits by parents mean additional traffic that benefits adjacent businesses.

“It just spins off nicely for the other businesses that are there,” Corbett said. “The landlords have come around to see them as a pretty desireable tenant.”

Daycares aren’t the only alternative operators. Avison Young reports fitness studios have been among the tenants stepping up in Lethbridge, which has also seen strong activity among daycare providers despite higher construction costs.

Spec construction of has largely vaporized, however. Rising construction costs have put the brakes on new options for tenants, pushing up rents in key urban areas of Calgary, including 17th Avenue SW and Kensington Gate.

“There’s never been less space under construction in the city,” Corbett said. “Anyone who wants to open a business here is dealing with a dwindling supply.”

Outside of regional malls, where rents range from $130 to $165 a square foot, Calgary retail rents are running between $25 and $45 a square foot.


Record room rates attract hotel investors

(Banff's Rimrock Resort Hotel sold to Oxford Property Group in June for $170 million, or $515,200 a room -- Western Canada's biggest hotel transaction of the year.)

Record-high rates and revenue are attracting investor interest in Western Canada’s hotels.

The region saw $431 million worth of assets trade in the first half of 2023, or 41% of the national total, according to Colliers' second-quarter review of the hotel sector.

The second quarter some exceptional pricing for properties including the Rimrock Resort Hotel in Banff for $170 million, $515,200 a room, a price that reflected Oxford Property Group’s plans for a $100 million renovation.

Aldesta Hotel Group picked up Fairmont Hot Springs Resort in BC for $40 million, or $264,900 a room, in June. The deal included three golf courses, a 14-run ski hill, RV park, and more than 650 acres of excess lands.

The two properties ranked second and third after The Hazelton, a Toronto property that commanded an outlier price of $110 million or $1,428,000 a room thanks to the inclusion of 11,250 square feet of retail space, an underground parkade and a 50 per cent interest in the on-site restaurant.

Colliers cited strong growth in average daily rates, the resurgence of domestic travel and small to mid-size group activity as contributing the return of investor interest.

“Hoteliers are reaping substantial top-line gains driven by remarkable increases in average daily rates,” Colliers reported.

Canada’s hotel industry reported its highest average daily rate (ADR) and revenue per available room (RevPAR) on record, according June data from CoStar Group.

ADR soared 12 per cent to $221.86 a room while RevPAR increased 16.1 per cent to $164.97.

The increases came as average national occupancy rates rose 3.6 per cent versus last year to 74.4 per cent – the highest level since last August. With the increase coming ahead of the peak summer travel season, the prospects are good for new records being set in the third quarter.

“Canada’s hotel industry is benefitting from elevated spending on discretionary services,” said Laura Baxter director of hospitality analytics for Canada with CoStar.

Occupancies were highest at limited-service hotels, pointing to a trading down in activity, but group activity was up versus a year ago as this segment of demand continued its recovery from pandemic-era lows.

According to Colliers, full-service hotels accounted for 60 per cent of investor activity in the first half of the year. Limited-service-properties ranked second, at 26 per cent of transaction value.

But when the data was smoothed to account for the large number of high-value transactions, average sale price per room showed that investors were still willing to spend on limited-service properties as well as full-service hotels with equal enthusiasm.

The normalized price per room for all transactions in the first half of the year was $192,100, up 32 per cent from a year ago.


Chilliwack hotel plans to address deepening room shortage

Plans for a new hotel in Chilliwack will help address a deepening shortage of rooms in the region as travel recovers from the damper imposed by COVID-19.

“There was a return to travel and tourism across British Columbia in 2022 and a resulting resurgence in the demand for hotel rooms,” says Jeff Krivoshen, CEO of P.R. Hotels Ltd. in announcing plans for a dual-branded Fairfield Inn and Suites & Town and Towne Place Suites by Marriott off Highway 1 at Lickman Road in Chilliwack. “Building a hotel is a significant investment. We chose this location because we see promise in Chilliwack and are committed to growing with the community for the long term.”

Built and operated by P.R. Hotels and Meridian Development Corp. of Saskatoon, the hotel is part of Fraser Gateway Centre, a new mixed-use development Denciti Development Corp. is undertaking on the 12.4-acre site, which it acquired in 2021.

The southern portion of the site will be commercial, with plans calling for a service station and family restaurant in addition to the existing Tim Hortons and private liquor store. The northern portion will feature a light-industrial business park with up to 25 small and large bay warehouse units.

While the warehouse units will address a shortage of industrial space at one the last major undeveloped intersections in the Fraser Valley, the hotel space is also much needed.

Speakers at the Western Canadian Lodging Conference last fall called out the Fraser Valley as an area that could benefit from new construction.


“There are markets in the Fraser Valley that are just dying for some new product,” said Carrie Russell, senior managing partner with advisory services firm HVS Canada in Vancouver.

Chilliwack was among the markets she identified, thanks to the acquisition and conversion of several older properties to alternative uses such as low-income housing, and Hope, which has plenty of older motels but lacks modern, mid-tier product.

More recently, a report accounting firm MNP prepared for Destination Vancouver this spring noted a diminishing supply of hotel rooms in Metro Vancouver, jeopardizing growth of the region’s tourism sector, and in turn, the provincial economy.

While the city of Vancouver has lost approximately 2,000 rooms over the past 20 years, the pace of loss has been greater throughout the region.

MNP reported that Metro Vancouver’s stock of hotel rooms peaked in 2011 at 14,424 rooms across 94 properties, but that was down to 10,002 rooms across 85 properties in 2022.

“Metro Vancouver’s infrastructure is not keeping up in delivering on our global profile,” Royce Chwin, Destination Vancouver’s president and CEO said when the report was released, noting that cities of a comparable profile have been steadily building their hotels stock.

“[The] lack of available hotel rooms will make visiting Vancouver even more expensive, and the city will be less competitive in attracting major conferences, large sporting events and leisure group travel,” Chwin said, noting that the city and region is set to play host to major international events including the Invictus Games, Grey Cup and, in 2026, the FIFA World Cup – the world’s largest single sporting event.

Business travel is also on the rise, with many observers expecting a normalization of conditions by 2024.

While not a silver bullet, the 150-room hotel will be the largest in Chilliwack when it opens in 2025. It represents an upgrade from the Best Western-flagged hotel that formerly stood on the site but closed during the pandemic.

“[It] will bring extended stay into the Chilliwack market that doesn’t exist currently, and will bring a Marriott to the Fraser Valley,” Krivoshen said, describing the dual-branded format as “very efficient.”

The property’s 150 rooms will see 90 allocated to the Fairfield brand, which will focus on serving the short-term and leisure market, while 60 rooms will be allocated to the Towne Place Suites banner, an extended-stay brand that features in-room kitchenettes.

“We can market as two independent hotels gives the travelling public a couple of different options to go with,” Krivoshen said. “We can still use the same employee base, same housekeeping core, same front desk, just service [the market] with two hotels, one general manager, one sales department.”

The project in Chilliwack follows P.R. Hotels’ and Meridian’s completion last December of a 124-room Delta-branded hotel attached to the Cascades Casino Delta on the former Delta Town & Country Inn site.


Seven Alberta seniors' housing assets sold for $440 million

Vancouver-based Optima Living and Axium Infrastructure of Montreal, via a Yarrow joint venture, have added more than 1,200 beds to the venture's Alberta portfolio.

Vancouver-based Optima Living and Axium Infrastructure have paid $440 million for seven seniors' residential projects in Alberta, with a total of 1,200 beds.

The strategic acquisition expands the duo’s Yarrow joint venture’s footprint in Alberta and positions it among top operators by bed count in the Edmonton region.

“This acquisition deepens our collaboration with Axium and demonstrates our ability to create value through acquiring, integrating, and managing a sizeable and varied portfolio of seniors living communities, which significantly solidifies Optima's presence in Western Canada,” said Karim Kassam, Optima Living’s co-founder and principal in a statement.

“We believe there are strong tailwinds ahead for seniors housing due to sector demographics and a shortage of seniors living options creating long wait lists, especially for government funded beds,” he added.

Optima has operated independent and assisted-living care facilities in Alberta and B.C. since 2006 and has a portfolio of 33 assets and more than 3,400 beds.

Montreal-headquartered Axium Infrastructure is an independent portfolio management firm with offices in Canada, the U.S. and the U.K. It had over $10 billion in assets under management as of the end of 2022, as well as $1.7 billion in co-investments, according to the Real Estate News Exchange.

Four of the assets are in Edmonton: the 169-suite Laurel Heights Retirement Residence, the 174-suite Lewis Estates, MacTaggart Place with 180 suites and the 172-suite Rutherford Heights.

The deal also includes the St. Albert Retirement Residence in St. Albert, which opened in 2016, and Summerwood Village in Sherwood Park, Alberta.

The only Calgary asset is Sage Hill Retirement Residence, which was opened in 2016.

Dentons and National Bank Financial acted as legal and financial advisors, respectively, to the joint venture for the acquisition.


Calgary Herald building sold for $17.25 million

The 391,000-square-foot building was bought by U-Haul Canada, which also purchased the Calgary Sun building in 2020. It will be used as a storage facility and truck rentals.

roperty type: Office building

Location: 215, 16 Street S.W., Calgary

Size of building: 391,000 square feet


Sale price: $17.25 million

Date of sale: January 18, 2023 (announcement).


Calgary out ranks Vancouver among world’s best cities

Alberta’s biggest city – tops in Western Canada and third place in the country – lauded for its economic potential

Annual Resonance Consultancy ranking lists five Canadian cities among the 100 best metro regions on the planet in its annual report released November 28.

Resonance is a leading advisor in tourism, real estate and economic development, and its Best Cities rankings quantify the relative quality of place, reputation and competitive identity for the world's principal cities with metropolitan populations of 1 million or more,

Bloomberg calls it “the most comprehensive study of its kind; it identifies cities that are most desirable for locals, visitors, and business people alike, rather than simply looking at livability or tourism appeal.”

In Canada, Toronto is ranked No. 24; Montreal is No. 57; Calgary is No. 65, Vancouver is No. 69 and Ottawa came in near the bottom, ranked at No. 96, just ahead of Hanoi.

Calgary, the top-ranked city in Western Canada, topped Vancouver due to the Alberta city's business acumen, according to Resonance.


B.C. hotel operators hopeful after successful season

A wildly successful tourism season has Western Canadian hoteliers looking to build on the lessons of the past three years as a recession looms.

Occupancies rose 60 per cent nationally in the nine months ended September versus a year ago, pushing average daily room rates to $183.76, or 34 per cent above last year. This boosted revenue per available room (RevPAR) to $110.11, up 113 per cent versus a year ago.

“It’s been a remarkable recovery, and for us it’s been right across the country,” said Brian Leon, CEO of Choice Hotels Canada, speaking at the Western Canada Lodging Conference in Vancouver on October 25. “We’re going to end this year with RevPAR probably a little more than 10 per cent higher than it was in 2019. We would never have expected that.”

Vancouver led the country, with an average occupancy rate of 70.3 per cent in the period. Room rates followed suit, rising 49 per cent to a nation-leading $243.72 a night. RevPAR increased a stunning 153 per cent to $171.34 from just $67.69 a year earlier despite ongoing border closures.

“This market has really seen great recovery over the past year,” said Jim Chu, executive vice-president and chief growth officer of Hyatt Hotels Corp. “And that’s without China.”

The strength of demand in Vancouver stands out next to Calgary, where hotel performance continues to lag Western Canada. Occupancies averaged 57.1 per cent in the first nine months of 2022 while room rates are also below average at $153.63 a night. This compares to 62.5 per cent occupancy in the same period of 2019 when rates averaged $145.92.

RevPAR in most major markets has yet to return to pre-pandemic levels but hoteliers have also reopened with an eye to keeping costs in check. Shorter wine lists, smaller menus, and offerings tailored to visitors  – primarily leisure and group stays – have been critical.

“A lot of job-sharing, a lot of engineering of processes and tasks” took place, said Jiri Rumlena, president of SilverBirch Hotels & Resorts, which saw its workforce fall to 18 per cent of normal during the pandemic. It rebuilt its staff to 80 per cent of normal this summer, but guest experiences took longer to recover. “Standards didn’t come back in certain areas as they normally should have,” Rumlena acknowledged.

Labour woes

While consolidation of roles has helped address the labour shortage, and cutbacks in housekeeping helped control costs, Cindy Schoenauer, vice-president, hospitality and gaming with Cushman & Wakefield, isn’t sure it’s a strategy for long-term success.

“I don’t know if that’s something hotels want to keep doing because at the same time you’re talking about really rapid [room rate] growth,” she said. “There needs to be value to what you’re paying as well.”

The sector’s revival should be good news for workers after two years of turmoil.

“We’re not blind to the fact that the entire hospitality industry, ski included, have been in the forefront of media over the past two years and the basic narrative has been lack of stability,” said Christopher Nicolson, CEO of the Canada West Ski Areas Association, based in Kelowna. “As stability returns, that will definitely help recruiting as well.”

It won’t be easy, though. The sector was down 400,000 workers during the pandemic but recouped about 200,000 people this summer before returning to a deficit of 300,000 workers this fall.

While the federal Temporary Foreign Workers program has been tweaked to allow the sector to bring in up to 30 per cent of the workers it needs, the sector needs to continue working to secure domestic workers.

“We have to get out and tell our story,” said Susie Grynol, president and CEO of the Hotels Association of Canada.

Part of that story is that 90 per cent of hoteliers increased wages this past summer to attract workers.

“We want to be the sector people want to work in,” she said.

“We’ve seen leisure recover, but we have yet to see corporate [incentive travel] and meeting, conference group demand recover,” Schoenauer added. “It’s started, it’s just taking a little longer.”

Asset sales

Leon believes this year’s recovery will support fresh investment in properties that will improve the guest experience and position hotels for the future.

“Our hotels this summer, from a financial perspective, are in a lot better shape than they were a year ago,” he said.

The market is also benefitting from the removal of 6,800 rooms, primarily older product, since 2020, when governments stepped in at the onset of the pandemic to snap up properties for alternative uses, primarily social housing.

“You have rooms coming out that’s going to help our recovery,” McCluskie said.

However, with urban hotel markets still challenged by a lack of business travel, many of the 15 sales seen in B.C. this year have been in smaller, secondary markets outside the main centres. An example is the Kanata Hotel & Conference Centre in Kelowna, which sold this year for what is said to be highest price paid for a hotel in the region.

Just one hotel property changed hands in Vancouver, that was not purchased for redevelopment or an alternative use.

(Looking for Hotel for sale BC , we are happy to help.)


5 top towns for real estate investors in 2023

Western Investor's picks for the top towns in Western Canada for real estate investors in 2023

No. 1, Calgary: With 2,600 new high-paying jobs pledged in September alone, real estate prices a fraction of Vancouver, no rent controls and oil prices flirting with US$100, Alberta's biggest city is ripe for real estate investors right now.

In late September, De Havilland Aircraft of Canada said it plans to build a manufacturing and maintenance facility on a 3,700-acre site it bought in Wheatland County, just east of Calgary, that will employ 1,500 people.

That brilliant news was followed just days later by the announcement that India-based global tech giant Infosys is bringing 1,000 jobs to downtown Calgary.

Infosys, a leader in next-generation digital systems, has doubled its original hiring commitment from when the company first expanded into Canada in 2021.

“Today is the beginning of our next chapter in Canada,” said Ravi Kumar, president, Infosys. “Calgary’s IT innovation potential is unlimited, and we are delighted to be a part of its future.”

Infosys officially opened its new Digital Centre in Calgary Centre on September 26 and will take an estimated 200,000 square feet of office space, analysts say.

Calgary is the top Canadian city for real estate investors now and into 2023. The price of oil hit US$130 per barrel this spring and though it has retreated to the US$89 range as of October, it is twice as high as its bottom in 2014 and will continue to transform the Alberta economy next year.

Calgary real GDP is forecast to expand by 6.3 per cent in 2022 and grow by 3.8 per cent in 2023, according to the Conference Board of Canada, far ahead of Canada’s projected 1.2 per cent growth.

The commercial real estate market is led by the industrial sector, with a tight vacancy rate of 2.2 per cent and average lease rates of $11.65 per square foot, about half the price of Vancouver, which is attracting B.C. players to Calgary.


Investors are also piling into Calgary’s retail sector, drawn by consistent consumer spending of $8 billion per month; and to the multiple-family residential market, where prices are a fraction of Vancouver or Toronto.

With strong job creation, lower provincial taxes, high immigration and a business-friendly environment, Calgary is the place to be in 2023.

No. 2, East Vancouver. The Broadway Subway and Millennium SkyTrain line extensions; the new $2 billion St. Paul's Hospital; detached houses less costly than in the suburbs and half that of Vancouver’s West Side; and a government pledge for higher density. If a real estate investor can't make money here next year they should get into another business.

A detached house price in East Vancouver is now $1.5 million, which is lower than in Burnaby, Richmond or the North Shore suburbs and half the price of the neighbouring West Side of Vancouver. It also represents perhaps the top residential real estate play in Canada.

East Vancouver includes the 450-acre False Creek Flats, where 17-acre St. Paul’s Hospital campus is now under construction, along with other job-generating commercial buildings. But the Flats is not zoned for housing: that will be served by surrounding East Vancouver.  At the same time, the $3 billion extension of the SkyTrain system, which pivots from East Vancouver, has convinced the city to massively boost density around planned stations. Rents in Vancouver are the highest in Canada and East Vancouver will be the most in-demand rental market in the country next year.

As for other commercial sectors, before a new 102,000-square-foot strata office building was about to launch marketing last month in the Flats, a U.S. medical firm bought the entire building. Industrial land in East Vancouver is selling for $13 million an acre; multi-family land at $19 million per acre; and retail sites at more than $1,000 per square foot. Get in now and these prices will seem a bargain in a year or two.

No. 3, Bamfield: The first highway into this tiny Pacific Rim town is now open and completes early in 2023. Land and home prices have shot in the past year in a hamlet with raw freehold land and massive sandy beaches that is being called "the next Tofino.”

What if you could have bought in Whistler or Tofino 30 ago? That is the type of opportunity we see for recreational property in Bamfield on the West Coast of Vancouver Island.

This year a 76-kilometre “sealed” and partly paved highway replaced a rough logging road linking Bamfield with Port Alberni and the rest of Vancouver Island. The highway will officially open in 2023, but pioneers have already bid prices higher.

“There were major increases in housing prices of about 50 per cent to 75 per cent once the road announcement was made in 2020,” Craig Filipchuk of Remax Mid Island Realty told the local Ha-Shilth-Sa newspaper.

The average cost of a home in Bamfield was $261,391 a decade ago. In 2022, the average home price is $644,300. REW.CA had four Bamfield listings in mid-October, priced from $549,000 up to a five-bedroom waterfront house at $1.3 million, which is less than the price of a bungalow in Vancouver and perhaps a third of the cost of Tofino waterfront.

Bamfield is a quaint place reminiscent of an Atlantic fishing village, but we believe it is about to experience the West Coast real estate experience.

No. 4, Penticton and the South Okanagan:   Penticton is challenging Kelowna as the hot spot in the Okanagan. Facing two lakes, it is the centre of the South Okanagan which will lead B.C.'s recreational market in 2023, drawing investors from the Lower Mainland and Alberta.

Best investment: waterfront. This year 23 waterfront homes have sold in the South Okanagan, with average prices down 47 per cent from a year earlier to $1.57 million as of September 2022. This compares with an average waterfront home price of $4.5 million in the Central Okanagan, which is further away from the Lower Mainland. Detached house prices in the South Okanagan, which includes the popular lakefront town of Osoyoos, are now $779,500, the lowest price in the entire Okanagan. Penticton also has a near-zero rental vacancy rate and REW.CA had a dozen condos in the town listed at $275,000 or less in mid-October.

Buy the dip. Penticton is the best recreational and resort residential market in B.C.’s Interior for 2023.

No. 5, Nanaimo: Multi-family​ land is now selling for $3 million an acre; there is huge expansion at Nanaimo's container port; major employers are recession-resistant hospital, medical services and universities – and there is a large influx of people from across Canada. 

Nanaimo has a population north of 100,000 and, according to the 2021 census, is among the fastest-growing cities in Canada, tied for third place with Kamloops, B.C.

Of the record $319 million in building permit values through the first six months of 2022, residential projects account for $238 million.

A recent project includes a hotel and about 700 homes planned for the northern edge of downtown Nanaimo on a seven-acre site near the Millstone River.

The buy here is rental properties, residential – price of both are well below that of Victoria – plus industrial land and industrial strata.

A $100 million-dollar expansion of Nanaimo’s container port led by DP World, a Dubai-based global leader in ­shipping and port logistics, will be a game-changer for the local economy. It is estimated the site’s 30 acres will create about 1,000 new jobs.

The Port Authority has industrial land for lease for industrial, but surrounding land is already in the hands of two major landholders: Harmac Pacific, which owns more than 1,250 acres at Duke Point that it purchased in 2008; and Seacliff Properties which bought 726 acres four years ago and is planning a massive mixed-use development.

Colliers International in Nanaimo estimates that serviced industrial land at Duke Point could eventually be valued at a $1 million per acre, up from around $400,000 per acre today.

Newcomers and a tight commercial real estate market are forcing prices higher, but we feel Vancouver Island’s Harbour City is just beginning its real estate ascension.


Victoria eight-unit multi-family rental sells for $3.6 million

Well located and well-maintained apartment building, built in 1949, with stunning ocean views along desirable Crescent Road, Victoria, B.C.

Type of property; Multi-family

Location: 1860 Crescent, Victoria, B.C.

Number of units: 8


Property size: 14,857 square feet (approx.)

Sale price: $3.6 million


New 129-room hotel pitched for Victoria International Airport

Among the latest signs of a recovery in B.C.’s hotel sector, Victoria International Airport is considering a proposal for a new 129-room Marriott hotel.

Proposed by Kothari Group as its first B.C. project, the hotel will be a TownePlace Suites project by Marriott. The TownePlace brand is described as “an all-suite extended stay upper midscale hotel experience.”

“We see the addition of a hotel at this location as a logical fit and a great new amenity for the airport and community,” said Victoria Airport Authority’s president and CEO Geoff Dickson. “It is an opportunity for Victoria International Airport to further diversify its revenue base which has been dramatically impacted by the pandemic. We look forward to working with the Kothari Group to hopefully see this exciting proposal come to fruition.”

The Kothari Group was established in Canada in 1996 with a focus in real estate related investments. Kothari’s hotel group works with international brands such as Marriott, Hilton, and Hyatt to develop and manage hotels across Canada.

“We are excited to work with Victoria Airport Authority and Marriott International to bring the first true extended stay hotel in this growing tourist and business market. This project is our group’s first of what we hope are many investments in British Columbia and the Greater Victoria region,” said Anupam Kothari, president of Kothari Group, in a statement.


The proposal is on federal land within the Town of Sidney’s boundaries. Sidney’s staff and council will have the opportunity to review and provide comment on the proposal.

If approved, construction could begin in early 2023. It is expected to take 18 to 24 months to complete the hotel with plans that call for a restaurant, 1,500 square feet of meeting space, a swimming pool, and a fitness center.

There are currently more than 400 TownePlace Suites properties across the United States and Canada.


Operating Costs: The Lease Secret That Can Cost You Money

As a ­­­­commercial tenant, the monthly base rent you pay your landlord for leasing commercial space may not be the only rent you pay! Many commercial tenants will also pay a secondary amount for property operating costs. The good news is that both these rents are often negotiable. 

What Do I Pay for When I Pay Operating Costs?

To clarify, operating costs (also referred to as Common Area Maintenance/CAM, Triple Net/NNN Charges, or Additional Rent) are the costs of maintaining and managing a property. Examples of valid operating costs include property taxes, property insurance, maintenance, utilities, landscaping (which includes snow removal), and garbage collection. Valid operating costs will benefit all of the tenants in a commercial property—not just one or two. Commercial tenants need to understand and remember that operating costs are charged proportionately to all tenants. Therefore, a tenant occupying seven percent of a commercial property will, typically, pay seven percent of the total operating costs.

Operating costs are not, however, used equally. For instance, we are familiar with one tenant who created only one bag of garbage per week. He chose to load this bag into his own van, take it home, and place it outside with his own trash. Despite this, he was still obligated to pay his proportionate share of operating costs. In this case, it may be possible to exclude these charges for an individual tenant who can argue they are receiving no benefits from such operating costs.

What Shouldn’t I Be Paying For?

Any costs that are not covered by the commercial tenant’s contribution to Operating Expenses become the responsibility of the landlord. Understandably, landlords want to ensure that tenants’ fees cover all the building costs. What is wrong, however, is when all the tenants within a commercial property are paying needlessly to subsidize capital improvements on the building. The capital improvements costs could mean the construction of a new building or the installation of new pylon signs on a property when none existed before.

Another common scenario when operating costs can increase dramatically is when a new landlord purchases a building that has a large amount of deferred maintenance to be completed. The landlord’s motivation to complete this maintenance is to charge higher rents and fill vacancies, but this comes at the expense of higher operating costs for the current tenants. Commercial tenants should be looking at other similar buildings in the area to compare operating costs. If operating costs at one particular building are quite low and the property appears in need of updating, it is reasonable that these costs may rise significantly in the future.

How Do I Protect Myself from Paying Too Much?

A commercial property’s operating costs need to be completely spelled out in a tenant’s lease agreement. When this occurs, a tenant can examine, question, and negotiate each listed item. Beware that commercial landlords can be quite creative when it comes to listing operating costs. We have seen cases where landlords require all of their tenants to pay an annual fee to have a pool of money available for damage not covered by insurance. In most of these cases, the tenants were required to pay this fee for the entire duration of their tenancy. If damage occurs during a tenancy, a landlord will tap into this reserve fund; if a tenant relocates, the money that he/she paid into the pool will not be refundable.

When a building is fully occupied (or close to fully occupied), the landlord may be less motivated to try to charge their tenants more than their fair share. Before signing the lease, a tenant must ensure that there is no language within the lease permitting the landlord to charge back shares of operating costs for any vacancies to the tenants currently occupying the property. Even if your lease does not permit this, tenants must review their Operating Statements closely every year to ensure that they are not absorbing operating costs that should be attributed to any vacancies.

When it comes to deciphering operating costs, read carefully! These are a few of the potentially detrimental issues that can negatively affect commercial tenants: 

  • Administration/Management Fees: If tenants are paying the property manager’s salary through operating costs, but the landlord adds a further 15 percent management fee to CAM costs, this can be considered double-dipping (or double-billing for essentially the same service). If the landlord levies administration fees on property taxes and/or insurance, it may be possible to exclude these items from the fee as there is very little landlord’s administrative work involved with these.
  • Utilities: Electricity, natural gas, and water may be provided by the landlord or be separately metered for each tenant. In some cases, the landlord may have one meter on the property and a check meter on each tenant’s unit to measure consumption. If you’re paying your own utilities to the utility company, you’ll have your own meter. Often, the landlord bills back utilities to tenants in operating costs. Make sure that you know in advance what your lease agreement calls for so you don’t pay twice.
  • Tenant Audit Rights: The landlord has a fiduciary responsibility for accountability to the tenants for the money collected from and spent on behalf of the tenants. Your lease should include tenant audit rights which allow you to examine the landlord’s books, if necessary.

Canada’s fastest-growing region flexes real estate muscle

Kelowna, and with it the Central Okanagan, has the fastest-growing population in Canada, posting a 14 per cent increase from 2021 to 2026, according to Statistics Canada.

With 224,000 people, the city of Kelowna has twice the population of Nanaimo, Kamloops or Prince George as the second-largest B.C. city outside of the Lower Mainland.

The broader Thompson-Okanagan region is currently growing at about 1.6 per cent per year, hitting 620,000 in 2021 and adding roughly 10,000 new residents annually.

Judging by real estate development being launched this spring the regional population will continue to accelerate, providing the current residential downturn proves shallow and brief. It is housing, after all, that is driving the real estate market across the Okanagan, but residential sales have slowed recently.

In May, total Okanagan home sales were down 28.5 per cent from a year earlier, though the average price increased nearly 10 per cent, year-over-year to $785,600, according to the B.C. Real Estate Association (BCREA).

The BCREA is now forecasting that Okanagan home sales will drop 19 per cent this year, from 2021, and fall a further 14.8 per cent in 2023, with home prices eking out just 1.3 per cent increase that year compared to 2022.

May sales across the Okanagan slid down only 1.2 per cent compared to April, noted Lyndi Cruickshank, president of the Association of Interior Realtors, which she said reflects the market’s stability.


The mantra in the Okanagan real estate community is that a lack of supply has helped to stifle sales and keep prices rising. This year should test that theory, if all the current projects proceed.

One of the largest is Greata Ranch, a 46-acre lakefront parcel near Summerland between Kelowna and Penticton along Highway 97. On the development radar for more than a decade, the property has now been extended with the addition of 28 adjacent waterfront acres, the Butler family lands.

The entire 74 acres is now being marketed as a single parcel for mixed-use with a residential emphasis, according to Stephen Webber, associate vice-president of Colliers International.

The price will be decided by bids submitted by potential buyers on the vendor’s “form of offer.”


Multifamily dominates Edmonton investment activity -Cap rates compress as investor confidence returns

Hazelview Investments paid $332,075 per unit for CX, a 212-unit rental property that ranked as Edmonton's top apartment deal in the first quarter.

Edmonton’s investment market is gathering momentum as the economy reopens post-COVID.

The first quarter of 2022 saw investment transactions increase 19 per cent versus a year ago to $682 million on a volume of 177 transactions, according to new Altus Group data. This was a significant acceleration from growth in all of 2021, when aggregate deal value increased just 2 per cent.

However, the volume of transactions was down 12%, largely due to the surge in transactions at the beginning of 2021 as deals deferred by the pandemic came to completion. The actual number of transactions has held steady for three quarters at 177, give or take a deal.

Multifamily rental properties dominated activity, accounting for the largest segment of sales by value at 39 per cent as well as the strongest growth in the quarter.


The aggregate value of apartment sales in the quarter was $263.4 million, up 122 per cent from a year ago. The top deal, according to Altus data, was the $81-million sale of CX at 10022 110th Street NW.

CX is a newly constructed 212-unit apartment building that sold to Hazelview Investments at a price of $332,075 per unit, the highest per-unit sale price achieved in Edmonton since the The Mayfair on Jasper ($420,168) and Chartwell Emerald Hills ($468,750) sold in January 2020.

The second most-valuable asset class was industrial, with deals totalling $183.7 million the quarter, up 5 per cent from a year ago. However, with little available product, investment activity dropped from recent quarters.

The second-strongest growth occurred in the retail market, which claimed a smaller share of transaction value at $78.3 million, or just 11 per cent of the total. The aggregate value of transactions was up 50 per cent, while number of transactions totalled 23, up marginally from a year ago.

The weakest segments of the investment market were office, hotel and land for institutional, commercial and industrial (ICI) projects.

ICI land was the third-most active asset class in terms of both deals completed (46) and value (slightly less than $83 million) in the first quarter of 2022, but volume was down 13 per cent and value fell 34 per cent versus a year earlier.

Office transaction value was “anemic” at just $25.9 million, posting the largest decrease of any asset class versus a year earlier at 54 per cent.

Nevertheless, overall capitalization rates compressed across all asset classes, Altus reported, pointing to the return of investor confidence to the Edmonton market.

“A rebound in energy prices combined with an improvement in the province’s economic fortunes associated with the winding down of COVID-19 restrictions have led purchasers to increasingly see value and transact in an Edmonton market where investor confidence is on the rise,” Altus Group said, forecasting continued improvement through the remained of 2022. “[It] is likely to continue this trajectory as the province’s economic fortunes start to recover and the region’s affordability combined with improving employment outlook serves to draw people to the city.”


NEWS: Hotel action moves back to Metro markets as pandemic wanes
Smaller hotels and motels in B.C. outlier markets had outperformed occupancy rates of urban flags that rely on corporate and tourism trade, but times are changing                          -Frank O'BrienMar 18, 2022 7:05 AM

SOLD - 40 rooms Motel, Northern Alberta $749,900
Northern Alberta Motel For Sale: 40-room-motel from retiring owner. 10 rooms have desirable kitchenettes. Great location that includes 1.4 Acres Located on the HIGHWAY in a high traffic location with loads of potential. Oil prices are increasing! Has managers suite.  THERE IS AN EXISTING AGREEMENT IN PLACE TO CONVERT TO A MOTEL 6.

SOLD: 27 Acres + 6200sf building, North of Calgary $1.699M

This property is beautifully treed and features 27.07 acres with numerous buildings and a camping area with water/sewer and power. The main building (6,270 Sq.Ft) features a commercial kitchen, dining area/gathering place. The basement in this area (2,811 Sq.Ft) . Outside is just as amazing as the inside with paved/concrete walking trails taking you to baseball diamond, soccer field, volleyball court, auditorium, campground (with power, water and sewer to each site), tuck shop, shower house, new and old cabins, and shop repair (28’x 20’). The shower house has toilet stalls, 6 sinks, 3 showers on both sides (girls and boys) and is heated year round. The round auditorium (built 1972) is massive (5,150 Sq.ft) and has seen numerous upgrades through the years.

There is also a bungalow home for the grounds keeper (approx. 1,100 Sq.ft) with 2 bedrooms living room, kitchen/dining area. This area also has a 1.5 car garage for ground keepers use.

To complete this package, there are 4 cabins built approx. 5 years ago and 16 rustic older cabins. At the East corner of the property there is a small riding arena with barn and box stalls for horses. On the West corner is a pond with boat house that houses 18 Canoes and paddle boats used for recreational use. To complete this package, there is also a playground with a sand base and mini golf course. A true paradise! This camp has tons of amenities with spectacular views and the serenity of the country. 


SOLD - 24 rooms on Highway 1 Alberta, $790,000
Visible on HWY 1 with 24,000+ vehicles/day! Established family-run motel with steady revenue, 24 room motel sitting on 2 city lots + an additional 2 bare lots in South West Industrial subdivision of Medicine Hat. Most rooms have been recently renovated and are clean, bright and well-managed. Several long-term tenants and steady flow of guests. On-site manager's suite feat 2 bedrooms and kitchenette. Great opportunity to cash in on while lending rates are low and "travel local"/staycations are on-trend!

News - Federated Cop-op buys 181 Husky gas stations

$264 million deal is the largest retail acquisition in the Co-op’s history

(Most of the stations being sold are in B.C. and Alberta)

Saskatoon-based Federated Co-operatives Limited (FCL) is investing $264 million to purchase 181 Husky retail fuel sites in Western Canada from Cenovus Energy Inc., the largest retail acquisition in the Co-op's history.

The December 2021 announcement was made on behalf of local Co-ops in the Co-operative Retailing System.

The acquired retail fuel sites include a mix of gas bars, on-site car washes and convenience stores. Once the deal is complete, FCL said, it will transfer the sites to several independent local co-ops across Western Canada. 


"These new locations will strengthen our presence in Western Canada and will bring our unmatched service and support to new geographic areas,” stated the FCL in a release.

The deal is part of about $660 million in asset sales Cenovus announced December 7. It’s subject to regulatory review by the Competition Bureau of Canada, which may determine which sites stay in the deal.

Those that stay will be transferred over to local Co-ops, while others will remain with Husky branding for a short time while being suppled, according to FCL.



NEWS: Calgary real estate is on a late-year roll
Commercial and industrial sales are tracking to top $2 billion this year as the housing market flirts with a 16-year record high for transactions in November (Frank O'Brien Dec 3, 2021 5:43 PM - Western Investor)
A 162,724-square foot warehouse with 80,418-square feet of office space on 14 acres on 42nd Street SE, Calgary, sold for $32.18 million in the third quarter 2021. | Nexus REIT

With $468 million in sales – not counting the $1.2-billion Bow office tower purchase that has yet to close – in the third quarter (Q3) 2021, Calgary is on track to top $2 billion in commercial and industrial real estate sales this year, according to Altus Group.

Meanwhile housing sales in November reached 2,110 transactions, just shy of the record for the month set in 2005, as the sales-to-new-listing ratio hit a blistering 100 per cent.

Altus reports that the Calgary’s commercial real estate market recorded 115 transactions for a total investment volume of $468 million in the third quarter, bringing the total investment volume for the year close to $2 billion. The total sales volume was up 37 per cent from the first three quarters of 2020.

Industrial sales led the commercial and industrial assets investment parade in the third quarter, with 27 transactions valued at $188 million. This sector was dominated by two substantial distribution logistics centre deals. These were the $69.7 million purchase of a Canadian Tire 496,000-square-foot distribution centre by Skyline Commercial Real Estate Investment Trust (REIT); and the $32.18 million sale of the Valad Construction headquarters industrial and office complex to Nexus REIT. 

The ICI (industrial-commercial-institutional) land sector was the second most active in terms of dollar volume with 38 transactions amounting to $83 million, up 62 per cent from Q3 of 2020.

The multi-family rental apartment sector saw 15 transactions totalling $82 million, a 70 per cent increase from the same point last year, and only a marginal decrease from the previous quarter.

The retail sector tallied $44 million in transactions amounting to a 110 per cent increase from Q3 2020. 

The biggest retail sale was the $8.35 million purchase of the Hansen Ranch Plaza, a near-12,000-square-foot retail centre in northwest Calgary, bought by local investors.

“Calgary’s beleaguered office market has remained flat, with five transactions amounting to $15 million, a negligible change from the same quarter last year,” noted Ben Tatterton, manager of data solutions at Altus, who prepared the Calgary report with national research manager Krut DSesai.

The landmark sale of the Bow office tower will be registered in a future quarter, Altus noted.

The two-million-square-foot Bow tower was purchased in August from Toronto-based H&R REIT by Oak Street Real Estate Capital, of Chicago, for $1.216 million, in a deal expected to close by the end of this year.

The Calgary Real Estate Board (CREB) reported a rush of home buyers in November.

“Lending rates are expected to increase next year, which has created a sense of urgency among purchasers who want to get into the housing market before rates rise,” said CREB chief economist Ann-Marie Lurie. She added that supply levels have tightened, causing prices to rise.

The benchmark composite home price in November was $461,000, up nearly 9 per cent from November of 2020, according to Lurie.

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