While multifamily remained one of the bright spots in an otherwise quiet investment market last year, tough comparisons to the peaks of 2021 and 2022 meant Metro Vancouver multifamily deals pointed to 2023 being “a challenging year,” says one prominent Vancouver brokerage.
“With a bit of a late push, total transactions for Metro Vancouver actually ended up not too far off where we were in 2019-2020,” said Ian Brackett of Goodman Commercial Inc. “It perhaps felt much worse than the final numbers suggest because we were coming off the highs of 2021, early 2022.”
Sales of purpose-built rental buildings across Metro Vancouver in 2021 totalled 161 with an aggregate value of nearly $2.6 billion. This was the second-highest tally of the past decade, outpaced only by the $3 billion in transactions seen in 2018.
These numbers overshadowed 2023 as sales posted their second straight decline from 2021 with 73 deals valued at just over $1 billion. This marked the lowest value since 2014 and the smallest number of deals since 2009.
“That being said, there were some bright spots as buyers and sellers adjusted to new market conditions and were able to come together, particularly in the second half of the year,” Brackett said. “For example, East Vancouver sales volumes were up year-over-year and the City of Vancouver as a whole finished with a very strong second half.”
Sales in East Vancouver were up 30 per cent versus the previous year, while activity in the suburbs increased 60 per cent when the three hottest suburban markets of 2021 – Burnaby, North Vancouver and Surrey, which saw just six sales last year – were factored out.
Coquitlam was the most active suburban market, with four properties comprising 334 units trading for a total of $178.1 million, or $533,296 per unit – the highest of any market outside Vancouver except for Delta, where just one 34-unit property traded for an average of $696,361 per door.
Similar to a year ago, the turn of the year has brought renewed buyer interest as the Bank of Canada has signalled it intends to hold the course on interest rates and markets begin to factor in the prospect of mid-year rate cuts.
“Since the start of the new year, we have had a number of clients reach out to list their properties for sale, and we have noticed a definite uptick in the number of buyers looking for product,” Bracket says.
A case in point is the strong interest shown in 408 East Columbia Street, a four-storey multifamily property with 72 units above street-level shops in New Westminster. The two-year-old property was listed at $31 million and drew multiple offers. The property now has a firm offer set to close this summer.
“With fixed interest rates already coming down and sentiment being that the Bank of Canada will follow later this spring, there is much more stability in the market,” Brackett said. “While we don’t expect to return to the feverish pace we saw in 2021, all signs are pointing to 2024 being a solid recovery year.”
