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Where is GDP, employment growth and other economic fundamentals heading for 2020 and beyond? How are BC and Vancouver performing within the context of the remainder of the country and other major cities? What impact are federal and provincial government policies having on BC’s economy? This presentation will offer insights and perspectives on these and other trends and key fundamentals across Canada.
Benjamin Tal, Deputy Chief Economist, CIBC World Markets Inc.
The ongoing transformation of Metro Vancouver and the Lower Mainland continues in the face of rising land and construction costs combined with NIMBYism and increasingly impactful political policies. How are developers responding to these constraints and overcoming barriers to entry? To what extent do planning policies differ among the various municipalities in the GVRA? What strategies should municipalities consider for rezoning and development applications?
Vancouver is ranked among the top markets experiencing high-tech job growth in North America with Microsoft, Google, Apple, and Amazon all opening offices in just over a year. The GVRA has also nurtured three of Canada’s tech unicorns: Slack, Hootsuite, and Avigilon. It appears that Vancouver has become a magnet for technology giants looking to expand outside of the U.S with its proximity to Seattle and Silicon Valley. With such a meteoric rise, how sustainable is the growth of this sector? Are Vancouver and the Lower Mainland capable of absorbing more high-tech and providing the human capital that meets its needs? What impact does Vancouver’s proximity to Seattle and being part of Cascadia on this trend?
The Vancouver industrial market vacant space is almost nonexistent. What is driving this insatiable demand? To what extent is trade and the Port playing a role? How sustainable is this tight market? How are developers creating innovative solutions in order to provide much needed product into this very tight market, e.g. construction has started on Canada’s first multi-level industrial building in Burnaby. Is multi-story becoming a viable option? How are industrial strata developments impacting the market? Given the cost of land, are secondary markets seeing an increase in industrial activity?
Vacancy in Vancouver’s multi-residential market has continued to be well under 2% as it remains a source of relatively more affordable housing. However, provincial legislation capping rent increases at 2.5% and soaring property taxes have put upward pressure on owners with older buildings that need updating. How is Vancouver’s new Tenant Relocation and Protection Policy impacting the market? Combined with high land and construction costs, will purpose built rental still be feasible? Is condominium development a better alternative? What are investors doing in this market under these conditions?
Given the strong investor sentiment in the Canadian and Vancouver markets, many opportunities have emerged for entrepreneurialism in the real estate industry. Who are they and what are they doing? They are experienced at being innovative, thinking “outside the box” at times, and accessing well priced capital. They are often privately-owned firms. While they do not dismiss risk, they often have the ability to see value and reward where many others do not. What have been the most significant challenges that they have had to endure? How do they see opportunities unfolding in the future?
In the first half of 2019, there was 700,000 sq.ft. of positive net absorption in the Vancouver market, with downtown vacancy falling to 2.4%. The suburban office market is a little softer. Vancouver has been ranked as the 12th of the top 50 markets for tech talent in North America. What are the underlying factors that are driving this strong demand? How are companies managing their future growth in such a tight market? Is the growth of flex office space addressing some of the need? How has the nature of work impacted this market? Over 5M sq.ft. of space is under construction in Metro Vancouver. Who will be the occupants of these new buildings?
Overall investment activity in Vancouver have decreased from 2018. The session will open with a brief overview of some of the bellwether transactions over the past twelve months. The panel will address a range of questions including: What are becoming the major challenges to buy assets in this market? Discussion will then focus on each asset class. Where are cap rates and valuation heading? How will the cost of capital affect investment decision-making? What does it take to complete an investment deal in this market? What do investment fundamentals look like for the remainder of 2020 and beyond for the Vancouver market?
A panel discussion will examine the construction and debt financing markets and what borrowers can expect for the remainder of 2020 and beyond. This will include comparative insights from a cross-section of lenders. To what extent are their priorities, underwriting and strategies varying at this time? How are they assessing a transaction and pricing it in this market? How are bond yields and government regulations affecting spreads? Are there any property classes that they are avoiding or reducing exposure particularly with respect to construction financing? Case studies of actual transactions including smaller projects will be examined during the session.
Building on the conversation from last year’s Forum, this conversation will provide insights on foreign capital flows into the Vancouver market. Who is entering this market and who is not? Why? What is attracting the capital? Where are the trends heading? Have U.S. investors replaced Asian buyers?
Technological innovation is transforming the world at unprecedented speed and the real estate market and industry is not exempt from this transition. PropTech is now a commonly used term pertaining to the intersection of real estate and technology. While many advancements are being made today, fast forward five years and the pace of change and evolution will be significantly more accelerated. What is the range of strategies that you could be considering in order to take advantage of technological innovations that can benefit your real estate assets, your portfolio, your firm, your clients? What are some examples of PropTech initiatives that have entered the market successfully?
Despite having some of the highest land and construction costs in Canada, Vancouver is still seeing strong levels of development activity. From joint ventures, to mixed-use to TOD and more complex development, this session will examine projects that have gone through the process and have been successful. This session will examine both larger scale suburban development, inner city projects and activity in the Lower Mainland. How are viable projects going forward given land constraints and construction costs? What are other constraints to development and how can you overcome them? What are the most practical opportunities at this time?
As Vancouver continues to grow as a global gateway city and popular tourist destination, it also continues to be an attractive market for new retailers. While stores like Hermes and Tiffany & Co. have doubled down their footprints in the downtown core, a plethora of Asian-based low-cost retailers are also setting up shop. How is last mile fulfillment impacting the design of the back of house? How do new tenants like Colony and Cineplex Rec Room fit into the traditional retail environment? Trends such as food halls are seeing increased popularity. What other strategies are owners and developers using to fill vacant space? The panel will also examine other emerging trends and how landlords and retailers are responding to them.
Drawing on their experience and overview of the Canadian market, a panel of senior real estate executives will share their insights about the Vancouver market for the second half of 2020 and beyond. What trends are they watching closely in Vancouver and the Lower Mainland? What key challenges and risks face investors, owners and developers of office, retail, industrial and multi-family properties in this market? Is the demand for more space sustainable? What asset classes and transactions will likely offer the best possible returns in 2020? What are their overall views of Vancouver as a key strategic market?