How will new apartments effect condos?

There are a great many dynamic forces at work on the local housing economy and a striking contrast between the two cities straddling the Columbia River. Vancouver currently has a significantly higher median rent than neighboring Portland, OR. According to a recent article in The Columbian, median rent in Vancouver for a two bedroom unit is $1678 compared to Portland at $1320. Vancouver is nearly on par with Seattle in fact which has a median two bedroom rent of $1690! This flies in the face of reason since Portland’s median home price is quite a bit higher than Vancouver. Seattle’s median home price is more than DOUBLE Vancouver’s.

Portland had skyrocketing rents a few years ago and the city decided to do something about it. Rip City added some 15000 new rental units over a period of a couple of years. Many people protested the high cost of the new units as being ineffective at lowering local rents, but they were unaware of market dynamics. The new fancy units stole renters from overpriced lesser units which forced those landlords to lower rents and thus down the line. The results are irrefutable as Portland now is a bargain for rent versus much more expensive Vancouver.

Vancouver is on a similar track building quite literally thousands of new apartment units every year. There is no reason the same result experienced in Portland will not happen here as well. Many people show up at city council meetings bemoaning the fact the new apartments are so expensive. New stuff is always more expensive and will almost always fetch higher rents. But that will put downward pressure on older, less modern, overpriced existing units in the local area. It just happened in Portland for heaven’s sake it will happen here.

But what of the local condo market? Will all these expensive apartments act as a drag on local condo sales? Not likely; I believe that all these mid level to high end apartments are bringing new residents to Vancouver that will see the relative value in local condos. This is particularly likely to be the case downtown and on the waterfront where rental units outnumber condominium units by at least 10 to 1.

The median rent in Vancouver is $1678 city wide, but on the waterfront and downtown that figure is much closer to $2500-$3000. People that qualify for rents in that bracket qualify to buy condos priced in the $500k-$600k range. Those that decide they want to stay downtown, become qualified buyers for our rather limited inventory of condominium units Downtown.

Right now on the fantastic new waterfront there is already 275 apartment units built and ZERO condo units built. There are another 248 units under construction on the waterfront against just 40 condo units underway. That will leave a 13:1 ratio of rental units versus condo units on the waterfront. Additionally there is at least another 500 rental units on the waterfront working their way through the permitting process and only another 80-100 condos doing the same. Downtown has no new condos proposed but more than a 1000 new apartments units under construction or working through the permitting process, in addition to the aforementioned 500 on the waterfront.

In this truncated market with the Corona Virus, Vancouver’s higher rents will attract money away from Portland as our units can yield a higher income to build cost. Translation: higher profits for investors. This will take the squeezed investment money pool and pour more into our local economy quite possibly at the expense of Portland.

I think the local urban condo market should be a great shape so long as we can keep the COVID-19 from train wrecking the greater economy.

Activity Picking Up.

The local urban condo market saw a bit of a gain in listings adding to the inventory at plus one unit. Four new listings against three new pending sales and a closed sale. This is good activity across the broad spectrum of pricing from the entry level at $210,000 up to the higher end in seven figures. Units are selling and new units are arriving to replace them.

Northwynd at Columbia Shores has the most units listed and the activity in that complex seems to favor buyers. Just about everywhere else in the Vancouver urban condo market, sellers hold a slight advantage.

Kirkland Tower (left) and Indigo Hotel (right)

Kirkland continues its work on the two building complex at Block 4 on the waterfront. It appears that the emphasis is on the completion of the 8 story Indigo Hotel project rather than the 12 story condo tower. This would make sense because the Kirkland Tower condos are going to rely on the hotel for some of the HOA amenities. The Indigo Hotel is nearly done with the glass siding and they are only needing to finish up exterior trim facades before the interior gets finished out. Even with the COVID-19 delays it does appear this project will complete close to the scheduled time of late Q4 perhaps pushing into mid Q1, 2021. The condo tower may be delayed completing late Q1, or early Q2, 2021. These timelines are based on observations and not any official report from Kirkland Development. These will be the first brand new condominium units in Downtown Vancouver in many years.

Block 16 proposal, Gramor Development

The success at Kirkland Tower is very important to the rest of the Vancouver waterfront project. There are multiple condo projects in the pipeline including Gramor Development’s 14 story 80 unit proposal for Block 16. Kaiser+Path in Portland has proposed a 16 story CLT condo tower on Block 14 as well. I would imagine those two groups are waiting to see how Kirkland does with its smaller but likely more luxurious 40 unit 12 story tower.

Kirkland is also pursuing an shorter 8 story project east of the Interstate Bridge near the current Who, Song, and Larry’s restaurant. This project may include condos as well.

The Springs Living, proposal, Block 18

The Springs Living proposed a 12 story senior living tower for Block 18, offering a wide variety of amenities geared towards the needs of elderly citizens. The city seemed rather pleased with the project proposal on the pre-app submission based on comments published in VBJ and the Columbian. Senior facilities do have their hands full with COVID-19 issues so I am not sure if the timelines for this proposal will be negatively impacted.

The global slowdown due to COVID-19 could translate to some of the waterfront projects being pushed back on start dates. Although that does not seem to be the case right now it could be at least part of why Summit Development Group has not broken ground yet on the Timberhouse project for Block 2.

Hopefully we can get through this economic turbulence and return to positive growth in the second half of 2020 leading into 2021.

 

All Quiet on the Urban Front

The governor issued a stay at home order last week reversing his position from the previous week. Although it may turn out to be a wise decision it does lead us to some difficulty in transaction real estate. The initial order stayed realtors but exempted construction. The governor clarified the order a few days later and limited construction work to essential projects only but allowing real estate transactions some flexibility to operate. This is good news for buyers and sellers of real estate.

The urban condo market was very quiet this past week with one failed sale back on market at Shorewood and a new listing in Northwynd. With no new pending sales or closings, the week ends up at +2 inventory. Downtown had no change in inventory.

Inventory is still rather tight for those looking to be downtown but for those looking for an urban condo along the riverfront to the east, things are looking good from the buyer’s perspective. Northwynd is a series of townhouse style condominiums at Columbia Shores. This neighborhood features McMenemins on the Columbia and Beaches restaurant right on the Columbia River. Northwynd has a fair number of units listed right now and with a general slowdown in showing activity, sellers are likely to be anxious and willing to cut a deal to get sold.

Columbia Shores is less than a mile to the new waterfront and the drive or walk is short with no cross traffic or stop lights between the two neighborhoods. Just a lovely stroll or cruise along the riverfront park.

For people already living in Vancouver’s urban core you have the advantage of close proximity to a variety of restaurants and pubs that are still offering walk up take out or delivery so the urban living does still have its perks even in this COVID-19 lock-down environment we find ourselves in.

This is a good time for buyers to assert themselves as sellers may be more anxious due tot he uncertainty of the sales environment. Is this a 30 day deal or longer? Unknowns always tend to create anxiety in the market but savvy buyers can capitalize.

The Latest Urban Buzz

Today is chilly with the threat of snow looming, but the urban condo market is seeing more tightening of inventory with 3 pendings and one closing against just one fresh new listing. Now this is not that unusual during the winter as typically listing activity is quiet this time of year. The real test will be the spring time when the normal listing bump happens. Will the buyers soak up the new inventory? I think they will.

The Columbian had an article last week about a pre-app submittal by a Seattle architecture firm on behalf of Alliance Residential in McMinneville, OR. The proposal would include 172 apartment units in a large 6 story building on Block 17 of the Waterfront. 6 stories is the minimum number allowable in the Waterfront. MINIMUM, not maximum. I was figuring that the back side (North) blocks at the west end of the development would house taller structures that could see over the shorter buildings along the water. These west side blocks are the only blocks that are far enough west to clear FAA height restrictions and allow the city height restrictions to take precedent. Vancouver will allow buildings up to 200 feet tall in that area which works out to a 15-20 story residential tower. Of course apartments in a taller tower that offers views over the nearby shorter buildings would come at a premium rent.

I am fully aware that buildings taller than 6-7 floors become increasingly expensive to build. This is a motivating factor the article discusses. However if cost is the reason for building a larger floor plate mid-rise versus a smaller floor plate high-rise I would expect the city to ensure the units are priced more affordable than what has been put in thus far. I’m not suggesting they build low-income housing on a block that costs as much as these blocks sell for, but something a little more in reach of a middle income earner would be nice. Perhaps the owner could pass on the construction savings to future renters. Buildings like these are likely to remain for many decades maybe as long as 100 years. What ever goes in is going to be there essentially forever.

This proposed 6 story tower will not be able to see over the top of any of the buildings in front it. Block 8 is Riverwest at 7 stories, Block 11 is currently surface parking but once the proposed parking garage is built on block 7, block 11 is expected to have a high rise. Block 16 is planned for a 14 story condo tower, Block 18 has a proposal in the permitting process for a 12 story residential tower, and block 20 has a 7 story apartment building under construction.

I am delighted that another block in the Waterfront is getting some interest, I hope that the company proposing this project will give us a middle class apartment option since they are foregoing the “luxury tower” option.

There can be no doubt the Waterfront is a smashing success. Phase 1 is already completely built out or topped out and several projects for Phase 2 are in the planning stages and Block 20 is already under construction. Block 20 and Block 17 are actually part of Phase 3!

I would love to see some followup from Gramor on the projects that have been proposed but seem to be stalled. Timberhouse on Block 3 and the Trestle on Block 14. These two are taller projects with some real gravitas, both being CLT projects from sustainable timber. Timberhouse looks fantastic in the drawings with a modern cross laminated timber build and classic architectural elements featuring three wings of varying heights.

2020 is looking good for urban dwellers in the ‘Couv’.

Excellent Sales Activity!

This week saw a pretty nice run of Pending and Closed sale son urban condos across a broad range of pricing. Several units in Northwynd at Columbia Shores either closed or went pending this week. A couple of pending sales in Shorewood as well as Parkview at Vancouver Center. In the upper range a unit went pending at Tidewater in the $1 million range and two nice units at Viewpoint $699k and $950k went pending this week.

Things are looking strong for Vancouver USA and the urban condo market. If the economy can continue to push favorably forward this summer should bode well as the Waterfront project continues to bring more exciting restaurants, services and development to the area.

Positive Changes to Washington’s Condo Laws

The Columbian reported last week that there have been some positive changes to Washington’s 30 year old laws on Condominiums. Senate Bill 5334 passed unanimously in both chambers of the state legislature and has been signed into law by the governor. The law makes some much needed amendments to the Washington Condominium Act of 1989.

The original law created a great deal of “gray area” with regards to implied warranties and defects that often led to lawsuits against the builder. Although some suits are unavoidable, much of this litigation over the years has turned out to be frivolous and damaging to the public interest.

It seems that our state government is out to ease the problems while maintaining safety and consumer protections. Holy cow, did our government just get something right? WOW! That rarely happens and to have unanimous support is truly remarkable. Now if we could only export some of that cooperation to Washington DC, that would be awesome.

We shall see how it all shakes out, the law goes into effect on July 28th. I would imagine that the waterfront will benefit greatly from this new legislation. Many builders have been shy to build condos especially in the affordable price ranges because of the inability to get financing. That lack of financing was often due to investor fear of lawsuits.

Perhaps now some of these proposed condo towers for the waterfront will get started.

Activity Up, Prices Steady

Downtown Vancouver is seeing some robust activity in the low to middle priced urban condo market right now. New units have come online over the last couple of weeks but units are selling as well. There has been a sizable load of activity in the Parkview Condo Tower at 701 Columbia this year.

Parkview is in the unique position of offering relatively affordable units that can be purchased for less than or very near to the price of a rental unit. In fact the building just south of Parkview is a nearly identical but slightly shorter tower with all rental units.

I believe the excitement over the waterfront and the local tight rental market has put positive pressure on the entry-level to mid-priced condos and Parkview is where most of those are located in the downtown core area.

In other urban living news, Riverwest Apartments are very near complete. I would imagine they will start leasing soon with delivery sometime in the late spring.

High End Condos are Moving!

Generally the higher end of the market is slower than the entry level or middle, but in the Urban Condo scene it seems that the plush units are selling very well. Two of five listed units at the very expensive Tidewater project have sold and in a reasonable time frame for both.

Meanwhile in Parkview it seems the more expensive units with premium upgrades and higher prices are more desirable than the more modestly equipped units as well. The exception is the one bed and studio units which are hard to find, reasonably priced and sell quickly.

The action in the $750k plus condo market indicates a market demand for these units and bodes well for the upcoming Kirkland Tower project on the waterfront which will have units ranging from $1 million to $5 million. Kirkland is expected to be ready next year.

What’s up at Northwynd?

There has been a surge in activity at Northwynd Condos at Columbia Shores. Quite a few units are now listed. There doesn’t seem to be any real negative issue, just a lot of people making a move. Recently the association at Northwynd had a small assessment that led to a $100 increase in HOA dues, but that is really not a big enough deal to produce an exodus.

I spoke to one Realtor® privately that has a few listings in that complex; she thinks people are excited about the new waterfront and some may be capitalizing on the “buzz” surrounding the waterfront. Although there is some merit to the idea that some homeowners could be ‘taking profits’ like investors do in the stock market when values are high, it seems a bit more complicated than that. I’ll be sniffing around to see if there is more to the story over the next few weeks.

This Week in Urban Vancouver

It seems like there has been a bit of an inventory bump at Northwynd Condos in the Columbia Shores area. Several Northwynd units have been listed this past week while one went pending. Meanwhile other units in the Columbia Shores neighborhood have remained steady, the waterfront unit at the Village closed they got 99.5% of full price. Also in Columbia Shores, a Meriwether unit that was withdrawn is now back on the market this two-story condo has a waterfront patio and spectacular views. 3105 SF listed at $2.45 million.

Downtown high-rise developments saw no new inventory this week and no new pending units. The recent snowy weather has no doubt softened the number of showings on these and other housing units in the area. Buyers willing the brave the elements can have an advantage sometimes as the perception for sellers is different when fewer showings are happening, even when the cause is likely only temporary.

Parkview at Vancouver Center continues to offer a relative value in Downtown Vancouver. These units in general are a little less “plush” than the luxury units in Viewpoint, but the west-facing units feature a nice view of Esther Short Park. They suffer a little from higher HOA fees than nearby Viewpoint, but the units themselves tend to be 30-50% less expensive making Parkview an attractive proposition for Downtown urban condos.

Meanwhile on the new waterfront; Kirkland has erected the first crane to help build the Hotel Indigo and the Kirkland Tower Condos. The Kirkland Tower is a 12 story building that just scrapes the bottom of the FAA height limit due to its close proximity to the Pearson Airfield. The Tower crane will need to be raised an additional 50-70 feet to 250 feet, in the summer with a special permit from the FAA. Kirkland will need to remove the crane by autumn to remain in compliance with regulations.

At this point there is no indication of an expected delay in the scheduled 2020 opening of both facilities. These units have no ‘official’ pricing, but the local rumor mill is producing figures in the $1 million to $4 million range depending on size and view.

Rediviva is actively filling up their beautiful new mid-rise apartment building on the waterfront and the much larger Riverwest building should start leasing this spring. So long as demand for both rental and sale units remains solid, the waterfront and downtown construction boom should boost activity for resale condos in the area.