With 6,000 units in the works, report suggests relief for renters
The capital region’s rental vacancy rate is about to improve slightly while the trend of building rental projects could be coming to an end, says a new report from Colliers International.
A quarterly report on Greater Victoria’s multi-family market notes there are as many as 6,000 purpose-built rental units in the region either under construction, in the pre-construction phase or in the development application and rezoning process.
Colliers said last year the region added about 15 per cent to its rental housing stock of about 24,885 units, but that didn’t do much to the vacancy rate, which only climbed to 0.7 per cent from 0.5 per cent in late 2016.
The next phase of rental construction is expected to only have a moderate effect on the vacancy rate as demand remains high and in-migration of young tech workers and retirees from across the country continues.
“Victoria is becoming such a vibrant and popular destination for people,” said Colliers International vice-president and multifamily specialist Ken Cloak.
Cloak said while there are more than 6,000 rental units planned for the region, the vacancy rate will only move marginally this year. Demand will take up much of the new supply, many of the units will take three years or more to hit the market, and new mortgage rules and high prices are keeping some renters out of the buyer’s market.
But there is some good news for renters, according to the report. The addition of new units should allow for some movement among the rental pool with longtime renters having choice and ability to upgrade their accommodation.
Still, Cloak warns this mass of rental housing could be the end of the line of such construction for a while. “Builders are certain in the condo market, that market is secure and we will see continued delivery of those units based on market demand,” said Cloak. “But I think it is getting more difficult to try and start a purpose-built rental project now, especially in the downtown, given the rising cost of construction and rising cost of land. That will have impact.”
Colliers’ report notes that with an increased demand for lower-cost housing and rental restrictions either in place or under consideration by the B.C. government, coupled with rising construction costs, developers see more upside in building condos.
Casey Edge, executive director of the Victoria Residential Builder’s Association, agreed his members are bullish on building and the demand has them working full-out. “The way things are moving now, demand is very strong,” he said. “Whether that drops a little or a lot this year remains to be seen. It’s too early in the year to say what the numbers will look like by year-end.”
Edge said they do not expect to see the kind of activity they had in 2017, with 3,862 new units — the vast majority multi-family — in the region.
The pace of homebuilding around Greater Victoria was slow to start the year with builders continuing to work on projects they began in 2017. Only 100 units were started in January, down from the 175 recorded in January of 2017.