Case Study: Fraser Valley Purpose-Built Rental
December 22nd, 2015
Examining a multi-family development property in South Surrey, as a potential purpose-built rental site.
- 15436 31 Avenue, Surrey
- Located in the Rosemary Heights neighbourhood of South Surrey
- 1.427 acre site
- Development permit ready for 86 condominium units
- Backs onto greenbelt with park-like setting
- Designated live and work in official community plan
What we noticed when developing the proforma is that there is approximately a 30% differential between the rental rates that CMHC quotes for rental apartments and what renters are willing to pay to rent new product – and that difference jumps to over 50% when you isolate just two bedroom suites.
Developers and their financiers tend to use the CMHC rates in their proformas. This differential shows up as a gross underestimation of revenue and when translated to the residual land value, can make a great investment opportunity appear unfeasible.
This differential is likely a key reason why we see so few purpose-built rentals being built in the Fraser Valley despite a sub 2% vacancy rate.
For more information regarding developing purpose-built rentals in the Fraser Valley contact Owen Yates at 604-583-2500
Market rental rate data was collected in October and November 2015 from:
Hugh McKinnon Realty
Homelife Peninsula Property Management
The CMHC data is taken directly from the following reports:
CMHC Rental Market Statistics Spring 2015
CMHC Rental Market Report Vancouver and Abbotsford-Mission CMAs Fall 2014 (most up to date data set available)
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