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Halifax multi residential market q4 2016
- 1. HALIFAX MULTI-RESIDENTIAL MARKET The multi-residentialrental market had a strong finish in 2016, with the overall vacancy rate declining to 2.6% and approximately 750 completions according to CMHC’s Rental Market Report. This strength in the rental market was driven by a record year for immigration in the province, combined with a robust local economy supported by a diversity of industries. At a robust 2.8% GDP growth in 2015, Halifax ranked 4th of 28 CMA’s in the country and in 2016, ranked 2nd only behind Vancouver with a GDP growth of 2.9%. Halifax remains a vibrant market with new household formation and strong apartment absorption throughout the City. However, the limited amount of new supply added to the market in 2016, the lowest amount since 2011, also contributed to the declining vacancy rate. The ten year average annual completions in Halifax is 829 rental suites. A high level of multi-residential development continues in Halifax and CBRE estimates completions in the 2017 calendar year will approach 2,000 new units; though a few larger projects may get pushed into 2018. Of those 2,000 units, over 1,000 are located on Halifax peninsula. We believe pent up demand for multi-residential offerings on the peninsula will ensure strong rental absorption in 2017 and 2018 as product becomes available. Outside the peninsula, a number of projects make up the balance of the units, with developments in Dartmouth/Cole Harbour, Halifax Mainland, Bedford South and the Fairview area. The previous high-watermark for completions was in 2014 when just over 1,400 rental units were introduced to the market in Halifax. Fourth Quarter, 2016 CBRE CAPITAL MARKETS | ATLANTIC CANADA Robert Mussett Senior Vice President 902 492 2077 robert.mussett@cbre.com Chris Carter Vice President 902 492 2085 chris.carter@cbre.com Andrew Cranmer Sales Associate 902 492 2065 andrew.cranmer@cbre.com Edwina Govindsamy Client Service Assistant 902 492 2069 edwina.govindsamy@cbre.com CONTACT US Overall Vacancy Rate (YoY)* 2.6% r, 201 Overall Average Rent (YoY)* $987 Units Under Construction 3,935 *Source: CMHC, 2017 OUTLOOK CBRE expects multi-residential development and the active pursuit of development sites will continue unabated. While development has slowed in certain suburban markets, pent up demand for new apartments and condominiums on the peninsula is driving unprecedented levels of construction. All areas throughout the peninsula are sought after by developers and residents alike. A large influx of new suites coming to market in 2017 and 2018 will put upward pressure on vacancy rates with a marginal increase expected in 2017.Source: CMHC Halifax Rental Market Report, CBRE Research, 2017. Vacancy Rate and Rental Completions, Halifax 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017(f) Completions Vacancy Avg. 10 year Vacancy: 3.0% WHAT TO EXPECT IN 2017
- 2. © 2016 CBRE,Inc. This information has been obtained from sources believed reliable. We have not verified it and make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the AVAILABLE PROPERTIES RECENTLY SOLD HALIFAX MULTI-RESIDENTIAL MARKET Fourth Quarter, 2016 PAIGE PLAZA ADDRESS 9-54 Paige Plaza, Lower Sackville, Nova Scotia PRICE $7,750,000 SUITES 72 units LOT SIZE 2.30 acres BRUNELLO MAPLE GROVE SITE ADDRESS Maple Grove Avenue, Timberlea, Nova Scotia PRICE $1,225,000 SUITES Up to 70 units LOT SIZE ± 1.80 acres The Centre Plan process continues to loom over current multi-residential development proposals on the Halifax peninsula and in downtown Dartmouth. Recently it was noted by Halifax’s CAO, Jacque Dube, that staff is expected to deliver a report and the draft Centre Plan to Halifax Council in May 2017. Billed as the next phase of HRM by Design, the Centre Plan is intended to guide the development in Halifax for the next 15-years. With the Centre Plan underway, many active development applications submitted for sites in the city centre area are proceeding slowly, if at all. Confusion over the current status of the by-laws and whether development applications should be considered under Centre Plan rules, a document and by-law yet to be adopted by Halifax Council, has resulted in regular public scrutiny and media reports on development business. Once the Centre Plan is approved, we expect a backlog of applications resulting in a slow period of approvals for the following 24 – 36 months. In fact, many current applications are measured against current rules with commentary on how the proposal compares to the Centre Plan. Development pipelines and the addition of new supply to, in particular, Halifax peninsula, may be impacted. NAME MARKET DEVELOPER UNITS The Maple Downtown Halifax Southwest Properties 300 Point North Peninsula North End Banc Properties 140 The Kensington Russell Lake West Blue Iron Developments 114 Boss Plaza Fairview United Gulf Developments 104 St. Joseph’s Square Peninsula North End Dexel/Lawen Group 106 AVERAGE INVESTMENT CAP RATE Apartment Q4 2015 Q4 2016 High Rise A 4.75-5.25% 4.75-5.25% High Rise B 5.00-5.75% 5.00-5.50% Low Rise A 5.00-5.50% 5.00-5.25% Low Rise B 5.50-6.00% 5.25-6.00% Source: CBRE Research, 2017. CAP RATE SURVEYCURRENT LARGE DEVELOPMENTS UNDER CONSTRUCTION QUINELLA & TOUCHSTONE COURT DATE January 2017 PRICE $8,525,000 SUITES 82 PRICE/SUITE $103,963 BUYER Private National Investor THE CENTRE PLAN CBRE