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White Rock Apartment Buildings – Market Analysis

White Rock apartment buildings are a highly desirable and scarce commodity in 2017.  The key areas of opportunity for White Rock multifamily investors and developers are:

  • Retrofitting and/or renovation of existing buildings
  • Increasing density of buildings located in Town Centre or Lower Town Centre areas (as defined by new White Rock Community Plan)
  • Increase rental rates for existing apartments
  • Development of new large-scale rental housing developments

Population Growth

White Rock and neighbouring South Surrey grew from 94,678 people in 2011 to 104,051 people in 2016, an average growth rate of close to 2.0% per year. Population in the City of White Rock has an average growth rate of 0.6% per year for the same period.  City of White Rock population increased from 19,339 to 19,952 between 2011 and 2016.

The long term population trend shows that White Rock has grown at a moderate rate. Based on recent and long term trends, as well as BC Stats projections, the population of the City of White Rock is expected to reach between 23,900 and 27,300 people by 2045. (White Rock OCP, Accessed Jul 27, 2017)

Increasing population supports increased rental rates and the development of new rental housing product. New or retrofitted rental buildings appeal to high-earning demographics willing to pay top dollar for quality rental suites.

Housing Growth

White Rock housing starts averaged 164 new housing units per year between 2006 and 2016. Of new construction, 76% of housing starts were strata apartment units, close to 4% of new homes were duplexes or rowhomes, and the remaining 20% were single-family detached houses.

The total number of private dwellings in White Rock grew from 9,870 in 2011 to 10,856 in 2016, an increase of 10.0%.  The total number of dwellings which are rental apartment units is just 1,377 in 2016.

Projections are that between 4,320 and 5,110 new units will be constructed in White Rock between now and 2045. The City of White Rock expects that an average of 5-10 new duplex/rowhome units and 145-170 new apartment units will be constructed, every year from now until 2045.

As a result, we can expect up to 240 new townhome style units and as many as 5,000 new apartment units to be built in White Rock in the next 30 years. No significant net increase in single-detached homes is expected.

Employment Projections

White Rock’s employed labour force grew 15.6% between 2001 to 2011. As a result of consistent population growth, the City of White Rock anticipates that employment growth will be follow suit. Projections are for total employment in the City to increase to 9,300 by 2045.

Employment is not the most essential indicator for rental housing as locals may work elsewhere in the region.  However, it does indicate a moderately strong local economy and increased services for residents of the City of White Rock.

White Rock Apartment Buildings

White Rock apartment buildings remain in high demand.  The market is characterized by low vacancy rates, rising prices, falling cap rates and flat housing supply.

The White Rock apartment buildings vacancy rate has stayed consistently low over the past few years.  As vacancy has been compressed in past years, White Rock has followed suit.  Current White Rock vacancy rate sits at 0.5% (White Rock Affordable Housing Strategy, July 2017).

According to CMHC, there are 1,377 private rental units in White Rock.  The number of rental units has not changed significantly over the past five years.  (CMHC Rental Market Report, July 2017)  Static housing supply may be changed with the recent approval of the White Rock Official Community Plan.

Low vacancy and static supply creates excellent opportunities for development of new rental housing product. Older buildings in Town Centre or Lower Town Centre areas of the city may be eligible for rezoning and increased density. Others may benefit from retrofitting older buildings with upgrade suites and common areas.

Apartment Building Cap Rate and Price Per Unit

White Rock cap rates have steadily lowered over the past 4 years.  In 2014, average sold cap rates in White Rock was 4.14%. In 2015, White Rock multifamily cap rates sank below 4% for the first time in recorded history. The lowering trend has continued through 2016 and into 2017.  Average cap rate for White Rock apartment buildings sold in Q1 or Q2 of 2017 was 2.94%.

Price per unit for rental apartment buildings in White Rock has increased from $173,850 in 2012 to $234,221 in 2016.  This represents a 35% increase in just 2 years.  Price per unit in 2017 has leveled off at $222,414 per unit with just 2 transactions year to date.

White Rock remains a bit of an outlier in the Fraser Valley real estate market, perhaps not getting the attention it should. A small geographical area when compared to other Fraser Valley communities, White Rock contains a good number of medium density buildings, excellent waterfront services and a highly desirable lifestyle for tenants.

Multifamily Home Price Index

Strata condominium sales have followed an even more dramatic increase over the past three years.  In June 2014, the MLS Home Price Index (HPI) for all White Rock condos was $229,900.  Fast forward to June 2017, and we find HPI has increased to $372,800, a staggering 62% increase in three years.

The MLS HPI is the most accurate indicator available for residential multifamily market trends.  Read more about the MLS HPI HERE.  The following is an excerpt from the Real Estate Board of Greater Vancouver explaining the HPI’s efficacy.

The MLS Home Price Index is modelled on the Consumer Price Index which measures the rate of price change for a basket of goods and services including food, clothing, shelter, and transportation.

Instead of measuring goods and services, the HPI measures the change in the price of housing features. Thus, the HPI measures typical, pure price change (inflation or deflation).

The HPI shows the general trend of the market and may educate investors looking for an area with value-add opportunities.

 

 

Condo Price Per Square Foot

Housing demand has pushed the average price per square foot for White Rock condos to record high levels.

Average price per square foot for White Rock condos in June 2015 was at $251 per square foot. Over the past 2 years, prices rose sharply to $410 per square foot in June 2017.

Demand continues to remain near all-time highs and the trend over the past 36 months is clearly visible in the following graph. Condos make up a part of the rental market through individual owners renting their strata units.

 

 

Multifamily Condo Dollar Volume

Dollar volume of condo sales in White Rock spiked last year, increased 72% from 2015 to 2016. Volume of sales has remained at elevated levels throughout 2017.

June 2017 volume was down just 16% from the all time high of $193M in dollar volume rolling average for the previous 12 months. Using a rolling 12-month average smooths out single-month spikes and shows a more accurate picture of market trends.

The following graph shows the dollar volume of  multifamily condos sales in White Rock over the past 10 years.

 

 

Multifamily Apartment Building Dollar Volume

Apartment building sales have been relatively consistent when compared with multifamily condos. Number of sales are much lower, causing large increases when one or two buildings transact. An increase in 2016 and strong 1st and 2nd quarter in 2017 are on pace to set records as the highest years in White Rock.

As a result of being a smaller market, White Rock present opportunities for small to mid size investor or development groups with a focus on increasing property values and cash-flows.

White Rock Official Community Plan

The new White Rock Official Community Plan creates opportunities for rezoning and adding as many as 5,000 new multifamily housing units to the City of White Rock in the next 28 years. New rental construction will certainly be a large part of the encouraged development centred around the town centre and lower town centre.

Additional density for Town Centre and Lower Town Centre areas will drive development for decades to come. High demand for rentals and strong demographics create excellent opportunities for value-add investors.

The following is an excerpt from the White Rock Official Community Plan.  Download the entire plan HERE.

White Rock is made up of distinct character areas, each with its own unique urban design qualities. These areas include the Town Centre, the Lower Town Centre, Waterfront Village, North Bluff Road, Urban Neighbourhoods, and Mature Neighbourhoods.

The mixed-use Town Centre and Lower Town Centre have strong character in areas where there are continuous small-scale storefronts, public realm amenities, and mature street trees.Views to the ocean are rst experienced along Johnston Road in the Lower Town Centre, which helps reinforce a strong sense of place and identity for White Rock as a seaside community.

The Waterfront Village along Marine Drive, and the waterfront itself, are unique assets and part of the de ning qualities of White Rock as a seaside community.

The mixed-use areas on Marine Drive create destinations and activate the public realm, while a promenade along the waterfront reinforces this area as a regional draw. The steep topography provides clear waterfront views while also creating a physical barrier to and from the rest of the city.

North Bluff Road is the boundary between White Rock and Surrey. The character is diverse along this transit corridor, ranging from low-to-high density residential environments to larger format retail environments.

The Urban Neighbourhoods, areas around the Town Centre and Lower Town Centre, include mainly low-rise residential buildings with generous setbacks and varying amounts of tree canopy. These areas are diverse in terms of its views and public realm treatments.

Mature Neighbourhoods re ect the historic settling of White Rock with small single detached lots. Occupying both higher and lower grounds, these neighbourhoods have variable physical and visual access to the waterfront.

White Rock Apartment Buildings Land Use

White Rock Apartment Buildings Summary

In conclusions, White Rock provides a strong blend of high demand and low supply.  Investors with a penchant for upside and investor/developers with skills to redevelop should take a close look at the market drivers which continue to make White Rock a good place to invest.