The rental apartment vacancy rate in Metro Vancouver has increased marginally to 1.8 per cent, according to Canada Mortgage and Housing Corp.'s Fall Rental Market Survey.
The slight increase, from 1.4 per cent a year earlier, will do nothing to cool the red-hot apartment building market, however, realtors say.
Terry Harding says the market will stay strong through next year
"I expect things to remain much like they are now going into 2013," said the apartment building specialist with NAI Commercial, Vancouver.
This year won't be without drama, however, he said. Watch for increased, perhaps frantic, bidding for sites around Burnaby's Metrotown area where higher-density zoning has added value to older apartment buildings.
Harding said Metro's notoriously low capitalization rates are not the deal killer some claim. "If you look at cash-on-cash returns, it is around 6 per cent which is not bad for investments today," he said.
That is one of the reasons why real estate investment trusts are now major players in the apartment market, he said, especially in northern BC where companies like Northern Properties REIT are snapping properties and portfolios in anticipation of a resource boom.
Back in the Lower Mainland, it is transit access that will dictate the hot markets for this year and next, Harding suggests. New Westminster close to Skytrain and Coquitlam sites close to the upcoming Evergreen Line will be likely candidates. Expect to pay north of $115,000 per door in either city this year.
North Vancouver, however, is so much in demand that it is "very tough to get product", Harding said, even with prices averaging $200,000 per suite.
Basically, if those selling an apartment building this year price sensibly the buildings will sell very quickly, he said.
CMHC adds that the average rents in Metro Vancouver have increased 2.3 per cent this year, compared to 2011. The average two-bedroom apartment rents for about $1,210 per month.
