VICTORIA BUILDING BOOM DRIVEN BY CONDOS
Re-urbanization trend includes rental and commercial units
A new wave of residential and commercial towers is going up in downtown Victoria that is reminiscent of Vancouver’s downtown revival in the early 1990s.
“There are cranes everywhere,” said Kathy Hogan, the vice-chair of the Downtown Victoria Business Association.
Hogan, who also heads the Urban Development Institute for the capital region, said Victoria feels like downtown Vancouver did in the early ’90s when a large number of residential towers started to sprout.
“That’s exactly what’s happening in Victoria right now,” she told Postmedia in an interview. “An influx of residential (development) in the downtown, which is in turn changing the retail that’s in the downtown.”
She said there are currently more than 2,200 development permit applications for condo and purpose-built rental units in the city of Victoria. There’s also another 2,000 units under construction at the moment, she said, noting that about 80 per cent of those units are downtown.
“It has been 30 years since a purpose-built rental unit was built in Victoria,” she said. “We really are playing catch-up.”
Hogan said she has visited coastal U.S. cities such as Portland, San Francisco and Seattle, and has seen similar trends of re-urbanization, with younger people increasingly moving into downtown cores amid booming residential development.
“It has a lot to do with the younger people who have the good-paying jobs in the tech world, and that’s huge for Victoria, she said.
Hogan said the tech sector is now Victoria’s Number 1 employer, followed by tourism and government.
Chard Development has been keenly aware of the residential picture in Victoria. They’re set to complete their seventh residential project in Victoria in March, said Byron Chard, the company’s chief financial and acquisitions officer. That one is at 819 Yates Street and will add 209 purpose-built rental units.
“Two months ago, we also launched Yates on Yates, which is a 20-storey, 112-unit market condo building,” he said. “And this fall, come late September, we’ll be launching a 135-unit affordable condo building.”
Chard said developers are playing catch-up. “With a (rental home) vacancy rate of 0.5 per cent, I think it’s a lot of the typical players have remained in Victoria from a developer standpoint. The market is now at a level where a substantial amount of rental product is coming to the market, as well as condo buildings. They’re actually being absorbed at a faster rate than typically in the past.”
He said most of their buyers come from the local area, with about 11 per cent coming from other parts of B.C. and Canada.
Developers and brokers claim that only about five per cent of condo units in Victoria are being purchased by foreigners.
“We’re on the 11th floor, and I look towards the eastern quadrant of the downtown core and I’m counting six cranes in just that one quadrant right now,” said Dave Ganong, Colliers International’s managing director in Victoria. “The level of overall development in the capital region … is on a scale that we’ve never experienced and I’ve lived here since 1983.”
Ganong said commercial development is accelerating in lock-step with the residential picture. “We have half-a-million square feet of new class-A LEED gold, or platinum office buildings under construction right now in the downtown core,” he said.
Once complete, that would double Victoria’s downtown class-A office inventory, he said.
The downtown class-A office vacancy rate is only 1.3 per cent, and when including all classes of office, it climbs to six per cent — similar to Vancouver’s downtown office vacancy rate.
He said about 240,000 square feet of the new office space is coming in the form of a joint venture between Jawl Properties and Concert Properties near the legislature.
Most of that space has already been pre-leased for 20 years by the provincial government, he said. Jawl Properties is adding another 280,000-sq. ft in a mixed-use twobuilding complex at 1515 Douglas Street across from City Hall.
Ganong said one of the buildings at that location has already been leased entirely by the Victoria-based British Columbia Investment Management Corp., an investment fund with a global portfolio worth about $135 billion.
Overall, about 75 per cent of the new office is pre-leased, he said. “That tells you it’s a pretty dynamic market.”
These are well-paying jobs that will add roughly 1,000 new people to downtown Victoria, he said. “Those people weren’t there a year or two ago.”