One company that is investing big – and we mean, really big – in the Burnaby neighbourhoods of Brentwood and Lougheed Town Centre is Shape Properties. This developer is in the process of building not one but two massive, transit-oriented, master-planned communities within just five SkyTrain stops of each other.
Slightly closer to downtown Vancouver, the Brentwood master plan is already well under way, and when complete will add 6,000 new homes in 11 high-rise towers along with a spectacular new retail mall, public plazas, two flagship Cineplex complexes, plus extensive commercial and office space. At least 1,400 of those new homes, in the three tallest towers, are already sold out. The master plan is financially backed by Healthcare of Ontario Pension Plan and L Catterton Real Estate, the global private equity group behind such master-planned projects as Miami Design District and Tokyo’s Ginza SIX district – so we’re talking big money too.
Brentwood’s sister project is Shape Properties’ The City of Lougheed. Located right on the eastern boundary of Burnaby, this is an even larger project than Brentwood, with nearly 11,000 new homes in 23 new towers of varying heights. Like Brentwood, the homes are centred around a swanky new retail and commercial mall, with public plazas, high streets and carefully designed “neighbourhoods”, all well connected to the SkyTrain station. As Lougheed Town Centre station has already become something of a new transit hub, with its Evergreen line offshoot, this district is tipped as a new central point for those living and working anywhere in the Burnaby/TriCities/New West region.
Residential prices rising
Certainly, any neighbourhood located on a SkyTrain line is going to see massive ripple effects coming out of downtown Vancouver, in terms of home price growth – if it hasn’t already. And Brentwood and Lougheed Town Centres, which now feel a little more central with the eastern extension of the SkyTrain, are no exceptions to this rule.
Combining MLS resales in Burnaby East and Burnaby North, the median sale price of an attached home – condos, townhomes, duplexes, etc – was $560,000 in July 2017. That has increased by more than 13 per cent over the past year, and 34 per cent in two years since July 2015. If you had invested in an attached residential unit five years ago, in July 2012, you would typically have seen a 68.5 per cent increase in its value since then.
Huge influx of housing supply
Both north and east Burnaby – and not just Brentwood and Lougheed specifically, but also areas on the SkyTrain line around them, from Gilmore to Production Way – could be put into the same investment category as last edition’s spotlight area, Port Moody. That is to say, speculators looking to make a fast buck may or may not see success in Burnaby East or North over the next five years. After all, we’re talking about 16,000 new homes coming on stream over the next decade. That’s great news for home buyers trying to get into the market, especially with prices out at Lougheed starting in the low $300,000s. But whether all that supply will be absorbed quickly enough to see home prices rise as quickly as they have been doing – well, that’s another matter entirely.
However, with the massive investment taking place in both those Burnaby regions, including extensive new commercial and retail opportunities creating a steady stream of jobs, a buy-and-hold investor likely can’t go wrong. There will always be demand for rentals in an area with great transit connections, and current vacancy rates are only a smidge higher than downtown Vancouver’s, at 1 per cent. Sure, this might loosen up a bit as all those new homes come on stream over the next few years. But in the long run – once all the new homes are absorbed, the communities are getting established and the average renter is priced right out of downtown Vancouver – it is vibrant, convenient places like Brentwood and Lougheed that they’ll likely turn to.
Cash-flow considerations
Right now, if you spent that median $560,000 on a chic, two-bedroom, 820-square-foot Brentwood condo close to the SkyTrain, you could rent it out for $2,100 a month. That means you’d need just over $200K in capital (around 35% down payment, plus fees) to cash flow positive with your $1,680 monthly mortgage payments plus strata fees and property tax. That’s a pretty solid deal, with rental mortgages usually requiring 35% down at any rate.
For patient investors who have the capital, Burnaby North and East are a good long term bet – otherwise, those pension funds and private equity firms wouldn’t be betting on them. Just make sure that your investment unit is close to a SkyTrain station – everybody else’s will be.
