National vacancy levels remain healthy as we move into Q3, supporting strong income stability for owners and investors active in the Canadian apartment market.
That said, with the energy sector crisis still affecting the province of Alberta, Calgary has been impacted with RealNet Canada reporting that no major sales closed during the months of April or May. To entice new tenants, apartment owners in Calgary have resorted to offering incentives like free rent.
Elsewhere in Canada where vacancy remains strong, the demand is surpassing the supply of available product.
Keith Reading, Director of Research at Morguard, notes: “Despite moving to a high of 3.3 per cent—the highest it’s been since 1998 for the nation’s 35 largest markets—the apartment investment sector continues to be healthy, posting an annual return of 8.6 per cent for the 12 months ending in March 2016, which, according to MSCI, is outperforming the broader index at 7.7 percent.”
Notable apartment market activities during Q2 2016:
• InterRent REIT acquired two new buildings; the first a 127-unit apartment at 1101 Rachel Rd East in Montreal for $21.6 million (or $169,685 per unit); the second a 418-unit complex on Parkway Park in Ottawa for $55.7 million (or $133,254 per unit)
• Starlight Investments acquired Denwin Investments’ portfolio in Toronto, which contains 131 units for $19.3 million (or $146,147 per unit).
• Starlight also acquired 15 Maple Avenue in Barrie (shown above) located on the shore of Lake Simcoe, which is comprised of 169 units for $62 million (or to $366,864 per unit)
• Golden Equity acquired 25 Trudelle Street in Toronto for $32.4 million for 216 units (or $150,000 per unit)
According to CMHC, during the first quarter of 2016, multi-unit starts decreased by 4.2 per cent compared to the fourth quarter of 2015, based on seasonally adjusted data. This downward trend is expected to continue throughout 2016 with multi-unit starts slowing but eventually stabilizing in 2017.
For more apartment market info, please visit our transaction section regularly at: www.reminetwork.com/canadian-apartment-magazine/transactions and send all pertinent information to email@example.com
Photo credit:Turner Fleischer