Corona Virus May Help Urban Development

The COVID-19 world-wide outbreak has led to a strong instability in the stock market. Some $12 TRILLION has navigated away from the equities markets over the last few weeks amid fears that the virus pandemic will weaken the economy.

The underlying economic conditions remain solid in the US with low unemployment, strong jobs activity, and up until just recently, excellent consumer demand.

It is important to remember that the money that exited the US equities market did NOT go away entirely. Investors simply sold off shares of stock and exchanged it for cash. The first week of the sell-off exchanged about $6.5 trillion in market value for probably around $5.5 trillion in cash. As the stock prices tumbled some of that market value is gone but I would estimate that 80% of it was exchanged for cash value. Full disclosure, I am guessing on the cash percentage based on the current value of the market versus the value before the sell off, could be higher or lower depending on exactly how many shares were exchanged before prices fell.

That cash has to go somewhere. Cash investments in the last decade have not paid well at all. So those panicked investors have to park the cash somewhere they feel comfortable. Mortgages and bonds are the typical landing spot for cashed out equities in an uncertain market. Strangely, much of this cash did NOT end up in those traditional spots. Even gold went soft. So where is all that money?

Some of it went to cover margin calls for investors that borrow against stock portfolio value. But some of it is quite possibly in private equity. That suggests money is available to borrow for big projects like what we have on the Waterfront here in Vancouver. Now could be an excellent time to tap that cash. Developers like Gramor, Summit, Cascadia, Hurley, and Killian Pacific may have an opportunity to get some of these proposed projects funded. I’d love to see Killian Pacific do something with the vacant Library Square. The Carr Cadillac dealer left near 20 years ago and that spot remains unused. Perhaps Summit can pull the trigger on Timberhouse for Block 3.

This week we had a few new listings for urban condos and a few that went pending or closed. It was a neutral week. Jackson Square properties got the tower crane up and operating for the Block 20 project, “The Columbia.” Things continue to move along nicely.

We Need More Urban Condos! There is Plenty of Money!

There is a robust level of construction activity in the urban core these days and so far it shows no signs of slowing down. Much of the residential construction is focused on high density apartments rather than adding to our tight supply of urban condos. As of this morning, there are no active listings for condos in the Downtown area. Not one! They are all pending sale or sold. We need more units for homeowners. Of course the Kirkland Tower will be complete sometime Q4 this year or Q1 next. That will only bring 40 units to bear and those are going to be rather pricey. Something along the lines of Parkview would be amazing for Downtown and maybe even the waterfront.

Dow Jones Year To Date

I mentioned in the title there is plenty of money. Well my friends there is plenty of investment cash in play right now. Much more today than two weeks ago. Investors, spooked by the Corona Virus last week and further exasperated by an oil war between the Saudis and Russia, have liquidated nearly 18% of the stock market since the first of the month. With a nationwide market capitalization at the end of February being around $38 TRILLION, this past 6 days produced about $6.5 trillion in invest-able assets.  Stock market losses are caused by a sell off, that means stock investors CASHED OUT of stocks and that money is sitting around waiting to be reinvested elsewhere. Investors detest idle cash. Real Estate has often been the beneficiary of the market sell off scenario. Local developers should be on the phone calling every capital improvement financier in the Rolodex. ‘Thar be money to be lent’ if you’ll pardon the pirate parlance, developers ought to be pillaging that fresh cash.

Gramor has plans for an 80 unit, 14 story condominium tower on block 16 at the waterfront but this project is just a plan at the moment and no pre-app submittal has appeared at city hall yet. These will likely be spendy as well, since the tower will be right on the water.

Even higher end condo units in the city center tend to move quickly. There is a strong demand for the sustainable and walk-able lifestyle that is available in urban cores areas like Portland’s Pearl District and Vancouver’s Downtown.

What if Summit Development could have a wing of condominiums in the Timberhouse project slated for block 3? That project will be off the water and have some partially blocked views due to the size and scale of the Kirkland Tower and Indigo Hotel buildings. That means there is room for some affordable units on the lower levels.

Vancouver’s new Waterfront Gateway district nestled between City Hall and the Waterfront could also be a candidate for owner occupied properties. Builders should consider getting ahead of the curve on millennial buyers. That generation was a little late to the housing market eschewing ownership responsibilities for the flexibility of rentals. But now that the economy has seen some muscle flexing and millennials are reaching the “stable years” they are flocking to real estate in larger numbers. Many of them still like the urban lifestyle, but now they want to own that lifestyle.

Vancouver USA is much tighter on mid-rise and high-rise condo inventory than Portland. The Pearl District currently has 102 active condo listings in the MLS ranging from a 527 SF studio unit at $215k to a 2700 SF 21st floor penthouse unit listed at $3.2 million. They have had 20 closings in the last 30 days along with 27 current pending transactions so the market is healthy but not real tight.

Vancouver’s Esther Short neighborhood which encompasses the entire Downtown and the new Waterfront has ZERO active listings, 3 pending sales, and 2 closed in the last 30 days. But those little numbers are due to a lack of inventory not low demand.

So let’s get cracking local developers, and grab that idle cash before someone else does!

How does Vancouver Compare?

How is all this new ‘urbanity’ in Vancouver elevating our ‘city’ status against other Washington cities? The skyline of our fair city has definitely seen a tremendous transformation. It is not so much how tall the buildings are as much as it is about a sheer volume of new projects. As of now in Downtown, Smith Tower remains the building with the most floors at 15 and 805 Broadway remains the tallest building at 165 feet. There has been no change in the rankings of the tallest, yet the skyline has quite literally doubled in size from the perspective of view west of the interstate bridge across the river from Terminal One. A couple of months ago I showed a comparison of Vancouver on my ‘Couv’ Life blog showing this transformation over just two years.

There is a massive change. Several more mid rise structures are going to be topped out in 2020 and a few high rise projects will likely break ground topping out sometime next year. If you follow the link to ‘Urban Pipeline’ you can see that much more is on the way. There is only one building proposed that might change the status of tallest and that is the “Trestle” project for Block 14 which is planned at 16 floors and 185 feet tall. But tall isn’t necessarily the thing that is making Vancouver look and feel more urban, it is volume of projects. Our downtown and the new waterfront are filling in the density. The more people and services in the Downtown core the more walkable and sustainable it becomes.

Comparing Vancouver USA to any city in Oregon not named Portland leads to a crushing defeat of the Beaver state challengers. Eugene has a great walkable Downtown, but Vancouver USA with that shiny new waterfront is just too cool 😉

How about the Evergreen State? Washington has 4 cities with more than 150,000 population and Bellevue is just shy of that. Clearly #4 Vancouver isn’t in the same weight category as #1 Seattle, but #2 Spokane, #3 Tacoma, and #5 Bellevue are.

Spokane is the center of influence for the “Inland Empire” and as such it feels bigger than it is. It is the regional heavyweight. Spokane however lacks the close connection to a major city like Seattle or Portland. if you can’t find it in Spokane you got a 400 mile ride ahead of you! Vancouver is a more of a cross between Tacoma and Bellevue.

Bellevue has a ridiculously huge urban skyline with 40 story skyscrapers. I wouldn’t be surprised if Bellevue is the king of mid-sized cities as far as urban skylines are concerned. Seriously, there are MAJOR American cities with inferior skylines to Bellevue a city of just 145,000 people! But Bellevue’s urban high rises are all newer structures. You won’t find a high rise built in the 1960s like you will in Tacoma and Vancouver. Bellevue lacks of historical buildings. It’s core area is also a bit bland. It is however, very nice, super clean, and even quite ‘ritzy’. You can eat of sidewalk in Bellevue. It’s just not really very exciting. Bellevue is a bit stuffy what with all that Microsoft cash in the local economy. Bellevue is only a 10 mile drive to Downtown Seattle, which is nearly as close as Vancouver is to Downtown Portland (7 miles). Another negative in the Bellevue equation is the need for billionaire grade levels of cash to live there.

Tacoma is only marginally larger in population than Vancouver but it is the seat of government for the second largest county in the entire Northwestern US. Pierce County (Tacoma) has a larger  population than Multnomah County (Portland). Tacoma has somewhat steep streets in the Downtown area so that impacts the walkabilty a bit despite Tacoma’s efforts to bring residential and retail to the core. Tacoma is a city that feels much larger than it is. It also has a bit of a reputation as a “tough” city and that can be a hindrance to attracting quality businesses to their waterfront. Tacoma is also a bit of a haul to get to the “big city” as Seattle is 34 miles away on the notoriously congested I-5. In fact Tacoma’s local traffic is awful compared to Vancouver.

The bottom line is this: Vancouver is one of the best urban living opportunities in the Northwest, providing a city centered walkable lifestyle with some of the best city traffic around, decent parking, and very close proximity to a major city and the associated services such as airport, transit, events, etc.

Urban Development Update

The local urban condo market saw a mix of status changes nearly equally spread between new listings, pending sales, and closed sales over the last week. Overall the market remains a tight inventory downtown, but a tad more to choose from at Columbia Shores, particular in Northwynd. Those looking for the modern sustainable and walk-able lifestyle will find the selection slim Downtown but units in Parkview remain reasonably priced.

Last week the City Center Redevelopment Authority had a longish meeting, perhaps due to the fact they did not meet in January. The Port had a lengthy update on the Terminal One project primarily center around the landscaping for the connection of the Renaissance Trail from the Interstate Bridge through the Terminal One project to the new waterfront. Notable that the replacement of the 108 year old Terminal One dock was discussed with costs estimated in the $50-$60 million. Funding will potentially be a limiting factor and the time estimate for the dock and public market is out around 5 years. The port does intend to have the remains of the Red Lion Hotel that currently sits atop the dock early next year. After that is cleared they intend to make use of the dock for events, food carts, and other public uses while the funding for the new dock is secured.

The city went over the parking ideas for the new Waterfront Gateway development zone between City Hall and the BNSF railway. They went over options for parking to support upcoming development, including a future expansion of the Convention Center. There are continued discussions about connecting this new development zone to the Terminal One project via a bridge over the BNSF right of way.

On the Waterfront, Block 20 is about to erect the tower crane that will support the project as it rises up out of the giant “hole in the ground.” At this point they are likely waiting for the concrete slab to cure then a tall crane will go up. You can see the steel base already in place.

2020 should see a flurry of new cranes to support several new projects nearing the end of the permitting process.

Angelo continues to push upwards on their new building at Mill Plain and C Street. Our city is chugging along with new urban development across the use spectrum from Residential to Commercial.

 

Entry Level Downtown Condos are HOT!

Vancouver has a short supply of urban condos in the downtown core across the broad range of pricing. The entry level price ranges under $300k are in desolate supply. Parkview and Academy Square are about the only affordable buildings, those units sell instantly in this tight market. Locally the inventory tightened again this week for urban condos Downtown and along the Columbia River. A 1 bedroom unit came online yesterday in Parkview and instantly went pending.

I would love to see a developer pickup one of the available under-used lots downtown and build a new mid-rise affordable condo tower. There are two parcels at Columbia and West 9th just across the street from Riverview Tower that are currently privately held and used as surface parking. One or both of these could easily be developed into a project similar to the one Cascadia Development Partners is building on West 6th called Aria. Aria is an apartment building but I believe a similar sized condo project with smaller and modestly equipped units in the $250-$350k range would sell well and as long as the project stays in the 5-6 floor height range it can be built cheaply enough to be profitable.

There is an increasing demand for a downtown sustainable living style where the need for a car is marginalized and a walk-able lifestyle is possible. Over the last several years millennial buyers have been transitioning from a rental mentality to a more traditional ownership mentality at least locally. With interest rates near historic lows, the ability to buy an urban condo for a median income earner continues to improve. Millennials have been a little late coming to the home owner market, but they have definitely become a force in the real estate market recently.

A few years ago many reports showed that potential home buyers in the Millennial generation preferred the flexibility and mobility of renting versus the seemingly restrictive ownership path. Some of that hesitation to buy was attributed by economists as fear generated by the recessional housing conditions in 2009-2012. Whatever the reasons, they are coming around and many of them still want the same urban lifestyle they sought when renting apartments.

Vancouver has a fair number of parcels that are no where near the highest and best use and could easily be used to build middle class market rate affordable condo units. The Waterfront will bring condos in reasonable numbers over the next few years but those Waterfront properties are expensive and not likely to produce affordable units. Bringing a mass of middle income earners Downtown is good for local businesses that rely on consumer spending as well as businesses looking to hire entry level and mid level employees.

Vancouver has shown a willingness to streamline the bureaucratic process for urban infill developments, so I’d like to see more developers proposing condo buildings in the Downtown area on some of the more affordable under used parcels. How about it? Cascadia, Prestige, Holland, Hurley, Kirkland, Gramor, anybody… Bueller 😉 I have a map showing potential building sites in the Downtown area right here. Let’s do this!

2020 Construction Boom 2.0

The urban condo market has remained tight on inventory with little change over the past week.

After a rampage of steel, concrete, and tower cranes roared through Vancouver over the last four years is 2020 poised to continue the construction boom? Well according to Barry Cain at Gramor the answer is “yes.” Mr. Cain made comments in an interview with the Vancouver Business Journal last month that five blocks in the Waterfront are now in preliminary government review. He mentioned blocks 3,7,17,18, and 21. I am aware of all but block 21, I have not seen any information or pre-app submittal for block 21.

I am very interested in what may go on 21 because that block has the least amount of height resistance from the FAA. Block 21 should be a tall structure and any shorter structure proposals ought to be moved to one of the eastern blocks subjected to lower heights by the FAA.

In any case there is likely to be as VBJ suggested, “a new flock of cranes” at the Vancouver Waterfront in 2020. All of this construction bodes well for Vancouver’s greater downtown. Businesses will benefit from the arrival of new residents, the workers in the area, and the general buzz of exciting bringing visitors from around the metro area. Yesterday the sun popped out in the afternoon and there was a flurry of activity almost like it was springtime. The pier was loaded with people and the park was full of walkers, skaters, and bikers.

Vancouver’s Waterfront is a roaring success and developers shouldn’t have problems securing investors or financing. The hard part is done. I’d really like to know why Summit Development hasn’t started on Timberhouse or made any significant announcements. That is a cool project and it should get started soon. Barry Cain seems to think it will break ground soon as he mentioned block 3 in that interview with VBJ. He hasn’t commented much on the details or why there has been so little information on the project, it seems to be shrouded in mystery.

Downtown at the Academy site Marathon should break ground in the spring with the first phase of the Aegis project which will likely include a tower crane to support the two mid-rise towers. It is also very likely the Holland Partners will break ground on Block Ten now that Vancouver Center 4 is topped out. I’d imagine they will start as soon as VC4 is clad in siding. That will require yet another tower crane.

2020 certainly appears to be “Construction Boom 2.0.”

Is it Time to List Your Urban Condo?

There’s a loaded question for the denizens of our rising star Downtown. The answer depends on the owner’s specific needs. I think Vancouver’s condo scene is getting tight and there are plenty of buyers looking to get in on our urban revolution. If a condo owner is looking to upgrade, downsize, or move to another area then the answer to the query is YES, it IS time to list your condo. If a condo owner is happy in their unit, then they should hang on to it. It is likely to see some appreciation over the next few years especially if it is in the under $600k price range.

Higher end units are about to get some competition in the market place. Kirkland Tower will bring 40 brand new luxury units right on the water at the end of this year. Gramor has plans for an 80 unit 14 story tower right on the water as well. That tower is still early in the planning process. Kirkland also has preliminary plans to redevelop the waterfront just east of the interstate bridge and condos are in the mix there as well.

Where the action is right now in the urban condo market, particularly downtown, are the more affordable units. Parkview, Heritage Place, and even Frontier Block at 500 Broadway. Right now every single unit in Parkview has sold, there has been a great amount of activity in that building. Heritage has only had a few units recently listed, and all but one are sold. Frontier Block has no units for sale either. Viewpoint is a bit spendy but those units offer that sky high perch over the city, so they tend to sell fast.

Owners in any of these four buildings thinking about a move are sitting in the catbird seat, because this hungry market has gobbled up nearly every unit. Condo owners are well advised to seek out a local condo real estate pro and get an evaluation. Now is the time to sell because the market has buyers in abundance but a real shortage of units listed.

Condo sellers looking for a real estate pro that understands Vancouver’s unique urban market can reach out to Rod Sager for a no obligation market analysis. Rod has a landing page right here on Urban Living in the ‘Couv’; visit it here.

Vancouver’s urban living is on a roll.

Urban Living Keeps Improving in the ‘Couv’

Once again the urban condo market locally improved with sales and pendings outstripping new listings. For buyers thinking about a condo, now could be the ideal time.

The best prices on urban condos are usually those in awkward locations within a building. The prime example is the east facing units in Parkview at Vancouver Center. Parkview is named primarily for the west facing units that overlook Esther Short Park. The east facing units have always had the disadvantage of looking directly into the windows of the much taller Vancouver Center 3 tower literally right next door.

View from 6th floor looking southeast

Up until just recently, there was a clear opening to the southeast and the north east between the buildings.  The southeast lot now contains a topped out tower nearly equal in height to Parkview, which blocks some light and most of the river views as well. Later this year, two new mid-rise towers will go up on the Block Ten taking the light and peek-a-boo urban views away from the northeast as well. This activity is applying some downward pressure on pricing on the east facing units.

Looking northeast from 6th floor, 2 new towers will go up on the lot across the street in 2020

For would be sellers this is a bit of a conundrum, but one that was well known in advance as all of these projects have been on the books for years and years. For buyers this is an opportunity to own an urban condo in a mid-rise tower at a really affordable price. Parvkiew offers a fully secure access and optional gated under ground parking. There is of course, immediate access to Esther Short Park and all the amenities of the ever improving downtown area. I am seeing units with 2 beds and 2 baths on the east side of Parkview for under $250k and smaller one bed units are in the high 100’s to low 200’s. Two studio units closed in December under $160k. The blocked views and or perceived privacy issues are easily remedied with blinds.

I also published a new article in the ‘Couv’ Life; “Main Street Brews and Bars” about the brew and bar scene in the greater downtown area. There is no doubt, a great many opportunities to sample the fine craft brews locally and around the Northwest. One can also choose from a variety of fun spots to hang out across the broad spectrum of tastes.

Here is a map showing the locations of popular watering holes from Uptown Village all they way down to the new Waterfront.

2020 Looking Good!

The year is off to a robust start with urban condo pending sales and closings out pacing new listings by a 3:1 margin. Prices however are holding mostly steady which is what the broader market is doing. This is a nice healthy and sustainable marketplace in Downtown Vancouver.

The forecast for greater Downtown is excellent. I am referring to Columbia Shores, the Waterfront, Downtown, and Uptown. There are some reports in local media suggesting that the waterfront has drawn some business away from established restaurants in the Downtown and Uptown areas. This was predictable since the restaurants and other retail services went in first before the apartment and condos were completed. But the shear volume of construction happening right now and the slate of new projects set to break ground this year will bring quite literally THOUSANDS of new residents to greater Downtown. Restaurateurs concerned about declining volume should try their best to ride it out, because the swarming masses are coming.

Here is a list of new residential units in the pipeline for greater Downtown:

Under construction now:

  • Our Heroes Place, Downtown, 49 units now leasing
  • Vancouver Center 4, Downtown, 124 apartment units mid 2020
  • Numerous projects in Uptown, 180 plus units 2020-21
  • The Aria, Downtown, 128 units, late 2020
  • Kirkland Tower, 40 luxury condo units, late 2020
  • The Columbia, Waterfront, 248 units, mid 2021
  • Mill Plain II, Midtown, mixed use 44 units, 2021

Breaking ground soon:

  • Aegis Phase I, Downtown, 134 units, start Q1, 2020
  • Jefferson Street Apartments, Downtown, 89 units, start mid 2020
  • Block Ten, Downtown, 110 units, start Q2, 2020
  • Smaller projects Downtown/Uptown 70-80 units start 2020
  • Timberhouse, Waterfront 251 units, start mid 2020
  • The Springs Living, Waterfront, 215 units, start mid 2020

Proposals likely to start in 2021:

  • Terminal 1 Blocks A and C, mixed use, @300 units
  • Block 17, Waterfront, apartments, @200 units
  • Block 16, Waterfront, condos, 80 units
  • Waterfront East, Columbia Way, 100 units
  • Aegis Phase II, Downtown, @150 units

Patience is the word of the day. There are more than 800 units under construction right now, and double that in the immediate pipeline. Downtown and Uptown are already benefiting from the effects of the Waterfront. One only look at this list above to see where much of the $3 billion in local construction is targeted and underway. Yes, Downtown and Uptown. These new residents are choosing these areas because they want to have that live-walk lifestyle and that will translate into revenue for local businesses. The Waterfront is only a temporary drain on established restaurants Downtown and Uptown.

2020 is looking good.

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’.