5.77% Average Cap Rate (2013 – 2016)
$87,773 Average Price Per Unit (2016)
2.7% Vacancy Rate (Oct 2015)
77,936 Chilliwack Population (2011)
100,000 Projected Population by 2021
40.3% of Tenants are Aged 25 – 44
$1.32 Per SF Average Rent (2016)
Chilliwack apartment buildings remain a strong investment in Fraser Valley. Healthy population growth and employment create a solid base of tenants. Housing supply is balanced and slowly growing. Rising rents may make purpose-built rentals more feasible.
Price per unit is on a solid upward trend while average cap rates vary due to differing ages of buildings sold and a small number of sales each year. Dollar volume of sales is on track to reach highs previously seen in 2013.
Click to jump directly to Population, Employment, Housing Supply and Investment Demand.
The City of Chilliwack has a population of 77,936, with a year-over-year growth rate of 12.6% (2011 Census). This is greater than the growth rate of the region (8%) and neighbouring communities (Abbotsford: 7%, Mission: 5.6%; Hope: -3.5%).
Considering continued steady growth, the city’s projected population is expected to surpass 100,000 by 2021.
The median age in the City of Chilliwack is 39.8, with almost 80% of people under the age of 59. Chilliwack also has a significantly higher percentage of children up to 19 years at 26.5% compared to 22% in BC. The City of Chilliwack’s population of seniors aged 65+ is comparable to the BC average at 16%.
Age of tenants closely mirrors age of residents in Chilliwack. People who are most likely to rent are between the ages of 25-44 years old, making up over 40% of all renters in town.
Employment in Chilliwack remains strong with unemployment rate of just 6.7%. This is slightly less than the provincial average of 7.8% (2011 Census). More recently, unemployment estimates have improved to 5.6% for the region as of January 2015.
Full-time employment is most common, with 79% employed full- time. About 13% of full-time workers are self-employed. The Labour Market outlook for the next decade shows that about 40% of new jobs will be attributed to new growth, while about 60% will be attributed to the replacement of retiring workers. (Source: WorkBC.ca).
Compared to provincial averages, Chilliwack has more people working in trades (18.8%) and manufacturing (3.9%). Management occupations make up 10.6% of the workforce. There is also a notable number of management occupations making up 10.6% of the workforce, as well as workers in business, finance, and administration making up 13% of the workforce.
Average household income in Chilliwack is $79,891 (Source: City of Chilliwack).
As a result of the strong employment base, landlords have a diverse base of tenants to choose from. No single industry, sector or employer is weighted too heavily, lowering multifamily investor market risk. Chilliwack apartment buildings tenants come from a range of backgrounds, many with strong income potential.
Bottom line: Chilliwack multifamily investment is underpinned with strong growth and tenant demographics.
Rental Housing Supply
While Chilliwack continues to grow cyclically, building permit growth averages about 12% per year over the last 30 years. Residential development averages $75 million per year with about 750 housing starts per year.
Current rental development projects include Alder Park, a 49 unit rental building in Sardis expected to receive occupancy permits this fall. Another 56 unit building is currently under construction in Sardis. According to the zoning and development permits, half the units are “micro-suites” with sizes around 600 square feet or less.
Rezoning of the old Safeway site downtown may lead to a substantial project in the downtown core.
All told, Chilliwack is home to about 7,690 rented dwellings. Of these, 3,810 are rental apartment building units. Buildings with at least 10 units worth $1 million or more are divided by size as shown in the following graph.
Average monthly rent for Chilliwack apartment buildings is $856 per month compared to $1,089 in Vancouver. Rents are rising rapidly with a severe lack of available rental units and low vacancy.
A Multifamily Real Estate Services survey in June 2016 showed that newer rental buildings (built 2008 to 2015) are renting for an average of $1.32 per square foot.
Chilliwack apartment buildings vacancy rates have plummeted over the past few years. The last CMHC Rental Market Report put vacancy at 2.7%. This is comparable to neighbouring communities including Abbotsford.
Vacancy rates have dropped an average of 21.5% per year for each of the past three years. As a result, Multifamily Real Estate Services forecasts vacancy rates of around 2.0% (or less) in the next CMHC Rental Market Report coming Q4 2016.
Given that Chilliwack is a smaller market, the year-by-year investment in multifamily properties varies widely. As you’ll see in the following graph, both number of sales and dollar volumes are variable and may not necessarily reflect a trend in the market. Trend can be determined by looking at regional statistics for Fraser Valley.
Here is a graph of Chilliwack apartment building sales over the past few years. You’ll see dollar volume and number of sales.
2016 is on track to be an excellent year for investment in Chilliwack. In addition to six sales so far this year, two new rental buildings are under construction. One 49 unit building is ready for occupancy this fall. The other, a 56 unit rental/condo building, is likely set for spring 2017 completion.
Price Per Unit
Price per unit trend for Chilliwack apartment buildings is undoubtedly up. Price have rose from an average or $81,217 per unit in 2013 to $87,774 per unit in 2016 (year-to-date).
Chilliwack apartment buildings cap rates have not followed the price-per-unit trend, bouncing up and down over the past few years. The small number of transactions make individual deals have a large influence on averages. Age of building, above or below market rents and a host of other expense-related variable affect cap rate’s accuracy as a primary investment metric.
To smooth out those bumps, here are the most important Chilliwack Cap Rates:
6.22% Average Cap Rate YTD 2016
5.77% Average Cap Rate from 2013 to 2016
Gross Rent Multiplier
Gross rent multiplier (GRM) is another important market indicator, comparing the ratio of rental income to sale price. GRM is an excellent comparison for local investment buildings (not as much for inter-city or regional). GRM doesn’t include additional income (laundry, parking, etc) and shows the relationship between rents and sale prices.
GRM is relatively stable over the past 4 years with only a slight downward trend. Downward trend means higher sales price in relation to rent. Most important GRM metrics:
10.99 Average GRM in 2016
11.21 Average GRM from 2013 to 2016