A series of cuts in lending rates has led to a sudden surge in demand for multi-family buildings in Metro Vancouver, according to a leading commercial broker.
Mark Goodman, a principal with Goodman Commercial Inc., said the dramatic reduction in interest rates, part of a federal stimulus package meant to battle the economic hit from the coronavirus pandemic, has made all the difference.
An ebullient Goodman contacted Western Investor after he returned from a meeting of potential investors on March 13, the day the Bank of Canada slashed its lending rate to 0.75 per cent.
“It is crazy now. I iust got back from Toronto – majors players have insatiable appetite. I have been receiving calls last 48 hours from multiple [real estate investment trusts] urgently wanting to place money in Vancouver now. We have multiple full-price offers on major deals right now. It is unbelievable what’s happening. Interest rates are dropping with no end in sight, which is fuelling the real estate market [as well as the tanking stock market]. “
Goodman said investor interest has been primarily on large investment offerings, including development sites. These investors are not interested in older rental buildings, he said.
“The majority of our deals we have going on now are in the $40 to 60 million range and there are many of them. We have had multiple offers on multiple listings within a matter of days.”
As an example, Goodman pointed to a new 75-unit rental building by Polygon in North Vancouver that is currently under construction. “We have multiple offers that have been submitted in the last five days, with more coming in from investors in Toronto,” he said.All the offers are in the $50 million range, he said.
“This is counter to the weeks prior, when we were hearing that developers were done with Vancouver because of bad policies discouraging rental development,” Goodman noted.
