Victoria, Kelowna top list of best B.C. landlord markets

High populations of ‘TAMI’-sector millennials and seniors in these B.C. cities are broad indicators of current and future demand in the rental housing sector

Western Investor
December 15, 2016

Victoria, with a growing high-tech sector and steady retiree demand, is among the top landlord markets in B.C. for 2017. — Chateau Victoria

The rental housing business in British Columbia is doing fine as far as most landlords are concerned. Their property is rising in value, the vacancy rate is near record lows, rental rates are the highest in the country and mortgage financing is the cheapest available in the residential sector.

But, even in the land of plenty, there are some regional markets that we expect will do better than others in 2017, with at least part of the rental demand coming from growth in the technology field.

Here are Western Investor’s five picks for the best landlord markets in British Columbia over the next 12 months.


Forecast: rental vacancy rate of 0.8 per cent through 2017

Average two-bedroom rental in 2017: $1,200

British Columbia’s capital represents one of the best landlord markets in the province, if not in Canada. The rental vacancy rate is now a tight 0.7 per cent and is expected to remain below 1 per cent for the next two years, according to a forecast from Canada Mortgage and Housing Corp. (CMHC).

Rental demand is driven by a trio of tenant pools: students, employees in the high-tech sector and seniors. Net migration for people aged 16 to 25 has added 18,000 since 2006, the largest single cohort of migrants to the capital region. Many of these are post-secondary students or are workers in the city’s burgeoning tech sector, which now employs 23,000 people. Layered on that is demand from seniors in Canada’s most popular retirement destination. 

The downside is the high cost for rental apartment buildings, currently in the $185,000-per-door range and trending upwards. Also, capitalization rates for multi-family properties average 4 per cent, among B.C.’s lowest.


Forecast: rental vacancy rate of 1.5 per cent through 2017

Average two-bedroom rental in 2017: $1,050

With the completion of Kelowna’s Okanagan Centre for Innovation, the Okanagan’s biggest city has emerged as a top city for what is known as the TAMI sector – technology, advertising, media and information – and the hundreds of millennials it employs. There are now 140 TAMI firms in Kelowna, driving a forecast of employment growth of 2.2 per cent into 2017. The rental vacancy, now at 0.5 per cent, is expected to inch up next year but remain among the lowest in Canada. 

Investors can find older rental apartment buildings in the $85,000- $90,000- per-door range with capitalization rates of 6 per cent. Also, Kelowna’s Rental Housing Grants program provides up to $320,000 in annual grants for purpose-built rental housing projects. 

Seniors, a strong rental sector, now make up 20.6 per cent of Kelowna’s population. That’s well above the national average.

East Vancouver

Forecast: rental vacancy rate of 0.8 per cent through 2017

Average two-bedroom rental in 2017: $1,460

East Vancouver is a landlord’s heaven, despite the high cost of entry. Government intervention has driven condominium sales down 40 per cent from the spring peak, which is keeping a lot of tenants as renters. Meanwhile, an eastern shift will see a new Emily Carr College, a new hospital and a rapidly expanding tech sector creating higher rental demand. 

Even old rental apartments in East Vancouver are selling for north of $250,000 per door, but that is offset by the availability of CMHC-insured mortgages at 2.1 per cent, the cheapest money available.Cap rates are in the 2.5 per cent range, but that could be offset by price appreciation. 

New Westminster

Forecast: rental vacancy rate of 1 per cent through 2017

Average two-bedroom rental in 2017: $1,300

With three SkyTrain stations and a new rapid transit link into Coquitlam, the Royal City is a hub for rental demand in the geographical heart of Metro Vancouver. It also has a growing economy, fired by a $1 billion expansion of medical facilities and a city-wide makeover that has created a new waterfront park and other quality amenities. 

Older apartment buildings sell for an average of $153,600 per door, up 10 per cent from 2015, but the lowest price of any Metro municipality north of the Fraser River, aside from Maple Ridge.


Forecast: Rental vacancy rate of  1 per cent through 2017

Average two bedroom rental in 2017: $895

Abbotsford is the best mid-range rental market in B.C.’s Lower Mainland, according to Bob Dhillon, founder and president of Mainstreet Equity Corp., one of the largest landlords in Western Canada. 

Abbotsford has a strong public sector and industrial employment base.

There is a low inventory, but older apartment buildings often sell for less than $90,000 per door, with capitalization rates in the 5.5 per cent range. 

Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
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