The City of Mission is located in the Central Fraser Valley along the north bank of the Fraser River approximately 70 km east of Vancouver and approximately 15 km north of Abbotsford. Maple Ridge borders Mission on the west, and Hatzic Lake and Hatzic Prairie on the east. The south is bounded by the Fraser River, and Stave Lake to the north. The subject property is located Downtown Mission, north of the Lougheed Highway and west of the Downtown commercial core. The immediate area comprises a mix of commercial retail, single and multi-family residential and industrial. Further to the east is the downtown commercial area improved with commercial retail and office buildings, single family residences and mixed-use retail/residential multiple family buildings.
To the east of the subject property is the Mission City Station the eastern terminus station on the West Coast Express commuter rail line connecting Vancouver to Mission. The Canadian Pacific Railway tracks are also just south of the subject property. Lougheed Highway connects with both 1st Avenue and North Railway Avenue which runs just south of the subject property. Lougheed Highway runs east/west and extends as far west as Vancouver through Mission and past Hope to the east. This is a major transportation highway for both passenger vehicles and trucks for the transportation of goods. The Cedar Valley Connector situated to the west of the subject, extends south turning into the Abbotsford-Mission Highway (Highway 11) through Abbotsford and connecting with the Trans-Canada Highway further south.
In Fall 2012, the District of Mission undertook an integrated planning process for the downtown that resulted in the Downtown Action Plan. This plan includes design and planning policies, priority capital investments, and tools and incentives for supporting existing businesses and attracting future downtown investment.
According to the Downtown Action Plan, “The vision for Downtown Mission is premised on significant changes to the existing transportation infrastructure, most notably, the reconfiguration of the one-way couplet and the removal of the highway function from 1st Avenue – the District’s Retail High Street. This vision is further premised on capitalizing on the enormous opportunity associated with Mission City Station and commuter rail service between Vancouver and Downtown Mission. Downtown Mission is the heart of the community and a place for people to come together, gather and enjoy a strong sense of community. As such, the downtown must be a place for people first and vehicles second. The mobility
system must balance and integrate the various (and sometimes competing) needs of pedestrians, cyclists, transit users, automobile users and the movement of goods to ensure that mobility adds to, instead of detracts from, the quality and vitality of the downtown.”
Directly west of the subject is a site proposed to be developed with a multifamily rental project.
BC Real Estate Market
According to Marcus & Millichap’s McEvay Blair Multifamily Group’s Q1 2023 Report, British Columbia saw 21 transactions in Q1, 2023 at a total dollar volume of approximately $129 Million. The average cap rate is 3.75% an increase from past quarters in 2022 as rising interest rates increased borrowing costs. Low interest rates coupled with strong demand fueled first half sales in 2022 as many of the early-2022 deals were negotiated in late-2021. Sales activity slowed substantially in Q3 and Q4, 2022.
Following a sharp decline in immigration due to pandemic-related border restrictions in 2020 and 2021, Canada welcomed 437,000 new permanent residents in 2022, the highest level recorded in history. Immigrants now make up 23% of Canada’s population, topping the previous 1921 record of 22%. Today, over 80% of Canada’s labour force growth stems from immigration, which plays a key role in driving the nation’s economic expansion. Furthermore, the federal government’s new immigration target aims to welcome another 1.5 million permanent residents by the end of 2025, which is an over 9% increase from the previous target. As Canada’s population continues to age and the birth rate remains low, immigration will fuel most of the nation’s population growth. It is projected that immigrants will represent between 29 and 34% of Canada’s population by 2041.
Within the Lower Mainland, Greater Victoria and the BC Interior, the rising cost of home ownership continues to play a huge part on residents in BC, which places upward pressure on rents as demand for rental housing continues to boom. Coupled with low vacancy rates and little supply coming to market, rents are expected to remain high and continue to increase. Rental rates in the Province of BC including the secondary markets across the province are skyrocketing as the cost of home ownership, along with aggressive inflation, are keeping upward pressure on housing costs, all the while making renting the most viable option for most British Columbians. Institutional investors accounted for 31 of the province’s total transactions. Low Interest Rates were prevalent throughout 2021 and 2022, but in Q4, 2022 and Q1, 2023 we now see conventional bank lending rates in the mid-4% range for CMHC insured mortgages and over 5% for conventional mortgages with the bond market fluctuating daily.
Construction costs have risen dramatically over the last couple of years and now with financing for construction projects looking very different than even several months ago, this will play in to how many new condo and rental projects are built in the province. Margins on these projects were already razor thin and we predict many projects will be put on hold, if not shelved altogether, leading to less new supply and more pressure on existing rentals.
The multi-family market fundamentals remain strong amidst the decline in market activity in 2022 and early 2023 as the substantial increase in interest rates have increased lending costs. While 2022 experienced rapidly rising interest rates, which helped cause a reduction in both the number of sales and sales volume for multi-family assets, rental rates continued to appreciate in 2022 and stabilizing interest rates in the beginning of 2023 provide optimism for the multi-family market. Within the Lower Mainland, the rising cost of home ownership continues to play a huge part on residents in BC, which places upward pressure on rents as demand for rental housing continues to boom. Coupled with low vacancy rates and little supply coming to market, rents are expected to remain high. The multi-family investment market has strong fundaments, and although interest rates have risen, this was to be expected. Construction costs have risen dramatically over the last couple of years and now with financing for construction projects looking very different than even several months ago, this will play in to how many new condo and rental projects are built in the Lower Mainland and throughout the province. Margins on these projects were already razor-thin and we predict many projects will be put on hold, if not shelved altogether, leading to less new supply and more pressure on existing rentals.