1. SPRING 2012 | MULTIFAMILY
mid-island british columbia
colliers international | REAL ESTATE report
UNITED
STATES
NORTHWEST
YUKON TERRITORY
TERRITORY
NUNAVUT
Mid-Island Apartment Investment Overview
CANADAMid Vancouver Island multi-residential market displayed a consistent level of activity
The
throughout 2011 with a total of 16 sales transactions, one transaction more than the year NEWFOU
previous. Notwithstanding the aforementioned, there was a significant increase in total sales& LABR
BRITISH
COLUMBIA
Hudson Bay
volume, $38.4M in 2011 compared to $19.4M in 2010. These figures may not include sales in
ALBERTA
the form of share transfers, acquisitions of bare trustees or non arm’s length transactions and,
Fortas a result, total numbers could be slightly higher.
SASKATCHEWAN
McMurray
Analyzing the 2011 market data in further detail reveals that there were increased levels of
QUEBEC
MANITOBA
acquisitions by REIT’s. Specifically, Northern Property REIT acquired three separate properties;
Edmonton of which are located in Nanaimo and one in Courtenay, for a total sales volume of $12.6M.
two
Vancouver ONTARIO
Comparing all Mid-Island markets, Nanaimo remains the most active multifamily market in the St
region with a total 2011 sales volume of $13.3M.
Calgary Saskatoon Montréal
Nanaimo Kelowna Ottawa
Winnipeg
The multifamily market has remained a “safe haven” for investors and as such, has seen an
Victoria increase in demand in recent years. This demand, combined with a limited supply of available
Regina Waterloo Region
Surrey product, has put downward pressure on capitalization rates. The recent sale of 1651 Dufferin
Toronto
Crescent epitomized this trend, selling for a 5.05% capitalization rate. However, we note that
BC MARKET: Colliers has five offices in British
Columbia: Vancouver, Kelowna, and Surrey on UNITED STATES capitalization rates associated with multi-residential, as well as all other
overall returns, or
the lower mainland, and Nanaimo and Victoria on investment grade real estate categories, is reaching the lower limits of market tolerances.
Vancouver Island. Burlington
2011 market indicators
VACANCY 6.3% 2011 Apartment Sale Breakdown by Total Dollar Volume
PRICE PER SUITE $82,000
SALES VOLUME $38.4M Campbell River
CAP RATES 6.0% Chemainus
Courtenay
Ladysmith
2011 highlights
Lake Cowichan
Nanaimo
> Higher sales volumes
Parksville
> Increased vacancy levels
Port Alberni
> Lack of available product Port Hardy
> Increase in demand
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2. real estate report | spring 2012 | multifamily | mid-island
Vacancy overview
CMHC, in its most recent Fall 2011 Rental Market Report released
in early December, states an overall apartment vacancy rate in the
Nanaimo Census Area (CA) of 6.3% overall, a marked increase from
the 3.3% vacancy level contained in the October 2010 CMHC report.
Most submarkets in the Mid-Island region experienced increased
vacancy, with the exception of Campbell River and Courtenay,
registering 6.9% and 3.4% vacancy rates respectively. The City of
Parksville had the lowest vacancy rate of 2.0% of all the submarkets
on Vancouver Island. Additionally, Duncan’s vacancy rate was 6.4%
and Port Alberni’s was 7.2%.
market rental rates
2011 market drivers
CMHC rental rate figures for each Mid-Island market can be obtained
Historically low interest rates continue to drive demand in the multi- upon request. Nanaimo figures are shown below. Average rentals for
residential market segment. The other significant market drivers for 1 Bdrm and 2 Bdrm units in 2011 are compared with 2010 increases
the multi-residential rental market segment are directly related to 3 in the Table below. Legislated rental increases for 2010 were 3.2%,
drivers manifested in this product segment, namely: 2.3% for 2011 and for this year, 4.3%.
1. Income predictability.
Average Rental Rates By Apartment Type
2. Market security and stability relative to other PERCENT
investment grade real estate options. APARTMENT TYPE 2010 RENTS 2011 RENTS INCREASE/DECREASE
Bachelor 519 538 3.5%
3. Liquidity – there is a significant level of capital in
1 Bedroom 648 661 2.0%
the hands of investors targeting this product category.
2 Bedroom 789 802 1.6%
Notwithstanding the current lending environment, this property 3 Bedroom + 957 955 -0.2%
category has proven to be a consistently popular investor target Source: Fall 2011 CMHC Rental Market Report
with a capable purchaser pool ready to pursue properties within the
acceptable market envelope.
Nanaimo Apartment Vacancy Rate Increases
7.0
6.0
5.0
4.0
Percent
3.0
2.0
1.0
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Year
Source: Canadian Mortgage & Housing Corporation
p. 2 | Colliers International

3. real estate report | spring 2012 | multifamily | mid-island
Market Transactions
PROPERTY # STREET CITY CLOSED SALE PRICE # OF SUITES CAP RATE SALE PRICE/SUITE
Evergreen Court 1085 Piercy Avenue Courtenay 1/6/2011 $800,000 10 - $80,000
The Highlands 2502 Highland Boulevard Nanaimo 2/9/2011 $2,440,000 21 6.29% $116,190
Riverbend Terrace 659 Rosehill Street Nanaimo 3/31/2011 $2,913,000 - - -
Regal Manor 600 South Island Highway Campbell River 4/14/2011 $2,360,000 - - -
Roselind Apartments 515 Hecate Street Nanaimo 4/29/2011 $500,000 6 - $83,333
Town Park Apartments 7205 Pine Drive Port Hardy 5/3/2011 $1,842,117 71 - $25,945
Cypress Gardens 265 Moilliet Street Parksville 5/4/2011 $2,500,000 31 5.69% $80,645
Dufferin Heights Apartments 1651 Dufferin Crescent Nanaimo 6/1/2011 $7,500,000 63 5.05% $119,048
$100,781*
Ascot Gardens 240 Back Road Courtenay 7/14/2011 $3,225,000 32 - additional SFD not
included
110 Esplanade Avenue Ladysmith 7/28/2011 $852,000 15 6.65% $56,800
Gulf View Estates 385 Davis Road Ladysmith 8/1/2011 $3,865,000 28 5.85% $138,036
Cathedral Place 3855 11th Avenue Port Alberni 8/1/2011 $4,852,500 50 5.36% $97,050
Chahalis Apartment 374 3rd Street Courtenay 9/29/2011 $875,000 8 - $109,375
Louval Apartments 9930 Daniel Street Chemainus 11/1/2011 $775,000 11 6.32% $70,455
The Pines Apartments 1055 10th Street Courtenay 11/15/2011 $2,201,494 33 6.17% $66,712
North Shore Manor 28 North Shore Road Lake Cowichan 11/30/2011 $850,000 14 - $60,714
16 Transactions $38,351,111
Source: Colliers Research. Please note that these totals may not include share transfer transactions and includes sales greater than $500,000.
Capital Markets & Mortgage Financing
As the global economy continues its slow recovery, we expect Colliers Capital Markets division is sourcing both conventional and
interest rates to increase into 2013. Positive economic news from the CMHC insured first mortgage apartment financing at the following
USA (improving unemployment rates and an increase in consumer interest rates (indication only):
spending), along with a calming in the Euro Debt storm in recent
First Mortgage Apartment Financing
weeks, has boosted investor confidence and created a surge in longer
Lender
term bond yields, resulting in a marginal increase in interest rates. Type of Financing Term Bond Yield Spread Interest Rate
It is important to note that although we forecast an increase, interest Conventional 5 1.65% 2.15 3.80%
rates will remain very low when compared to historical levels. These 10 2.14% 2.50 4.64%
sustained record-low rates, combined with liquid balance sheets, CMHC Insured 5 1.65% 1.05 2.70%
have investors on the sidelines ready to make strategic real estate 10 2.14% 1.13 3.27%
acquisitions, creating a continued demand for high quality, well-located
Canadian real estate. Please contact our Capital Markets team if you would like current
indication rates, or to discuss refinancing for the purpose of
Based on current Government of Canada Bond Yields (effective May
improving cash flow, making capital improvements, or additional
2, 2012) and recent quotes from a number of institutional lenders,
real estate acquisitions.
Colliers International | p. 3

4. real estate report | spring 2012 | multifamily | mid-island
512 offices in
61 countries on
six continents
United States: 125
Canada: 36
Latin America: 18
Asia Pacific: 32
EMEA: 117
Market Forecast 2012 •
•
$1.53 billion in annual revenue
978.6 million square feet
under management
Nanaimo’s rental pool will increase by approximately 146 total units, one of the first increases
• More than 12,500 professionals
in approximately 20 years. The Molnar Group will be finalizing their new 121 unit apartment
block, comprised of 1 to 3 bedroom units, located at 775 Terminal Avenue, just north of
downtown Nanaimo. Furthermore, Great West Developments Ltd. will be completing the
Nanaimo Student Housing project, located along Wakesiah Avenue comprising 25 units and 37 contact information
beds. Additionally, a mixed-use residential and commercial development at 560 Third Street
is currently in the rezoning stages and, once complete, will comprise a five storey student Dave Ganong
residence with 50 units. Overall student enrollment at Vancouver Island University has Managing Director | Victoria
DIRECT: +1 250 414 8388
increased to approximately 11,000 students and ample and available rental accommodations
dave.ganong@colliers.com
are becoming increasingly scarce. Growth in student population is expected to continue over
the long term and, as such, increased demand for rental housing in the University District, Brad Archibald
along with other regions in the City of Nanaimo is forecast. Associate Broker &
Multifamily Specialist | Victoria
We anticipate that demand for Nanaimo rental units will grow because of an increase in DIRECT: +1 250 740 1060 ext. 2224
employment opportunities associated with the awarding of the Federal Government ship brad.archibald@colliers.com
building contracts, a portion of the total $8B which will flow to the Nanaimo Shipyards Group.
However, as mentioned, there are two significant additions to purpose built rental that will be Jason Winton
delivered this year and could negate the economic impacts of the federally granted contracts. Managing Broker &
Multifamily Specialist | Victoria
That being said, we foresee the Nanaimo vacancy rate leveling out over the course of 2012.
DIRECT: +1 250 740 1060 ext. 2223
As far as investment activity, the market currently has a strong appetite for consistent jason.winton@colliers.com
income producing properties and, combined with continued low financing rates, this trend is
Tyler Dolan
projected to continue. As a result, capitalization rates will continue to compress slightly in Assistant Vice President
the Nanaimo and Mid-Island regions. Capital Markets | Victoria
DIRECT: +1 250 414 8378
Colliers Apartment Investment Division tyler.dolan@colliers.com
We invite apartment owners and investors alike to contact our Colliers Victoria and Nanaimo Christina Dhesi
Apartment Specialists Divisions. Our specialists, in the person of Ken Cloak in Victoria Research & Market Analyst | Victoria
DIRECT: +1 250 414 8371
and Jason Winton, and Brad Archibald in Nanaimo, will be pleased to apply our specialized
christina.dhesi@colliers.com
expertise to owners looking to maximize the value of their apartment assets.
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