Margins remain tight as wages rise even as other costs fall

Alberta hotel markets are shining bright, according to speakers at the Western Canadian Lodging Conference in Vancouver on Oct. 30.

Calgary will lead the West in revenue growth next year, with revenue per available room (RevPAR) forecast to grow 7.1 per cent to $123, on top of 6.1 per cent growth this year.

“With the opening of the new BMO Centre and some good convention and event activity, along with economic growth in Calgary I think next year we’ll see almost 7 per cent, a large portion driven by occupancy,” Carrie Russell, senior managing partner, HVS Canada, said in her review of hotel performance across the region.

However, additional rooms are needed.

“BMO is now a Class A convention centre; unfortunately, they need a minimum of a 300-room hotel,” said co-presenter Greg Kwong, managing director in Calgary for CBRE Ltd. “They’re having very good success attracting [events] of 1,000, 1,500 people or less but to get to 2,000, every event organizer says, ‘No, ain’t coming.’”

Two projects totalling 377 rooms are on the go, including a conversion of the former Canadian Centre office block at 833 4 Avenue SW to an Elements Hotel by Westin by PBA Group under the city’s Downtown Calgary Development Incentive Program. They’ll be added to the inventory by 2026, but in the meantime a massive conference of 30,000 Rotarians next spring will max out existing room capacity.

An hour west, the Banff market is also establishing new benchmarks.

While average occupancy softened marginally to 65 per cent in the first nine months of this year, guests saw the average daily rate climb 11 per cent to $410 while RevPAR increased 7.8 per cent to $266.

“Banff is a little superstar in this country,” Russell said. “Demand didn’t quite keep pace with [new supply] … but the ADR growth is phenomenal – 11 per cent growth, translating to RevPAR being up almost 8 per cent.”

That’s set to continue, with Kwong challenging his audience to try booking a room in Banff for the holidays.

“Just for fun, and to instil a little envy in all you hotel owners, call and try to book a room at Christmastime, the Banff Springs or any of the other hotels, and take a picture of your face,” he said.

“Hoteliers know better than to go to Banff; they’re going to Canmore,” Russell quipped, but investors have shown an appetite for local properties.

InnVest made its third purchase in Banff this past June with the $43 million acquisition of the 101-room Banff Inn. It followed the 2022 purchase of a leasehold interest in the 99-room Royal Canadian Lodge and 65-room Charltons Banff

Oxford Property Group also spent $170 million on its purchase of the 330-room Rimrock Resort Hotel, citing its confidence in Canada’s luxury resort hotel market.

CoStar data bears this out, according to data Ingrid Jarrett, CEO of the BC Hotel Association, presented.

While consumer bemoan higher rates, luxury hotels are seeing some of the best performance right now.

“The luxury sector is leading profitability in Canada right now,” she said

While rate and revenue growth in Banff will pull back to 4 per cent next year, it remains respectable while pointing to limited room to run for top-end rates.

Victoria, described as B.C.’s answer to Banff, has also seen significant growth in rates, up 7.5 per cent this year to $262 a night, while RevPAR has soared 13.4 per cent to $191.

But that’s unsustainable, Russell said.

“Much like Banff, Victoria has had a really strong growth year,” Russell said. “I don’t think we can sustain that pace of growth in 2025.”

Projections call for rate growth slowing to 3.5 per cent in 2025 while revenue growth will fall to 4.5 per cent.

But the revenue is needed. While consumers don’t want to pay more, workers are asking to be paid more after the pandemic put the brakes on traffic and wage increases.

“We need the topline to be growing in hotels, because we’re seeing significant increases in labour. It’s time to pay the piper in terms of labour rates,” Russell said.

This means that slower revenue growth will serve to cover higher costs rather than boosting margins.

While other costs are coming down, many operators at the conference said they’re continuing to look for savings on labour, property taxes and other costs.

Some budgets are eyeing a two or three per cent reduction in staffing costs, for example, through measures like autonomous vacuums.

Strong job growth, new construction bearing fruit

The largest capital investment in the history of McCain Foods Ltd. is attracting new businesses and residents to Lethbridge, but the city’s industrial and office markets continue to chart their own course as conditions normalize following the upheavals of the past four years.

“Lethbridge sits at the heart of what we call Canada’s premier food corridor,” said Trevor Lewington, CEO with Economic Development Lethbridge. "Recent investments in the region like the $600 million expansion by McCain as well as the $220 million investment by NewCold underscore the importance of agrifood to our city as well as the bright prospects driving growth for the future.”

NewCold, a company from Europe that specializes in frozen storage and logistics, represents international diversification in a region whose manufacturing base also includes a Pratt & Whitney jet engine plant and Kawneer Co. Canada Ltd. aluminum plant among other ventures.

The breadth of activity has helped push unemployment down to five per cent even as the workforce has expanded by 15,000 people over the past two years.

“We’ve seen both the participation rate increase and total employment increase,” he said. “We’ve been able to absorb those 15,000 workers into the economy.”

There remain about 4,000 job vacancies in the region, primarily in the skilled trades.

While the 14,000 students at the University of Lethbridge and Fairview College fill most of the service-sector jobs, many leave on graduation as entry-level roles for graduates are rare.

Yet skilled workers are most in demand to keep the economy humming – instrumentation trades, electricians and heavy equipment operators.

They’ll be even more in need as industrial development ramps up after a lull following the sharp rise in construction and financing costs in 2021-22.

An owner-user has purchased two of the three lots available at Northpointe, a venture of Lethbridge-based Sumus Property Group within the 350-acre Sherring Business and Industrial Park, and will soon commence a 250,000-square-foot development.

Yet high servicing costs within the city have focused Sumus itself on 63 acres it acquired earlier this year in Frontier Business Park, a few minutes away in Lethbridge County.

Most of the space will likely be built to order for tenants with lower site servicing requirements attracted by the tax incentives in the county.

Stabilizing demand and a lower volume of industrial construction is narrowing the gap in price for serviced and unserviced industrial land in the Calgary market.

While overall prices per acre have risen, the gap between serviced and unserviced industrial land as closed in the past four years, commercial brokerage Avison Young reported on August 16.

Serviced industrial land is currently trading at approximately $650,000 an acre, up from $500,000 in mid 2021.

Unserviced industrial land, located primarily outside city limits, is approaching $600,000 an acre, up from $400,000 an acre in mid 2021.

Demand for industrial land is high in the Calgary market, with the majority of supply located northeast of the city in Balzac in Rocky View County as well as surrounding county lands on Calgary’s eastern flank.

Strong demand from owner-occupiers for properties to meet their outside storage needs, including oil service and manufacturing as well as trucking companies, have helped narrow the gap, Avison Young.

“We anticipate the price gap will further narrow as more users absorb more space and as servicing costs continue to increase, pointing to the desirability of both serviced and unserviced land,” Avison Young said.

Constraints on Calgary’s industrial land supply are underscored by Avison Young’s second-quarter report on the city’s industrial market, which indicates that just 65 industrial land sales with an aggregate value of $185 million occurred in the first half of the year.

Barring the pandemic year 2020, this was the lowest tally in a decade.

Yet the demand for industrial space, serviced or unserviced, is underscored by a recent report for brokerage JLL.

JLL data indicates Calgary bucked the trend of rising vacancies seen in many markets this year as the pace of new construction slowed.

“Construction deliveries significantly reduced to 179,967 square feet compared to 2.2 million square feet in Q1 2024,” JLL reported August 8. “Steady demand and a reduction of new vacant space delivered to the market in Q2 resulted in downward pressure on vacancy.”

Vacancies marketwide averaged 3.5 per cent in the second quarter, while availability sat at 5.3 per cent.

Balzac continues to have the highest vacancy rate of 5.5 per cent due to significant recent deliveries. The situation is likely to remain unchanged for the foreseeable future as 64 per cent of the 2.7 million square feet under construction in the Calgary market is happening in the Balzac submarket.

However, the volume of industrial space under construction in Calgary has declined by more than 60 per cent over the past year, promising better times ahead as deliveries decline and demand stabilizes.

“Demand remains strongest among mid and small bay users and developers are expected to respond with more projects geared towards these users,” JLL reported.

温哥华的酒店入住率在6月下降，但客房价位继续上涨，使大温区域连续第二个月成为加拿大最昂贵的酒店房间市场。

根据全球房地产新数据，6月的温哥华酒店房间平均价格为$336.53，比2023年6月的$318.92上涨了5.5%以上。这是大温地区有史以来第三高的平均每晚酒店房价，仅比9月份的$336.78低0.25加元，后者是大温地区第二高的酒店房价。温哥华在去年7月创下的$347.15加元的平均每晚房价是该地区历史最高纪录，也是加拿大任何大都市在任何月份的历史最高纪录。

高昂的酒店房价可能会阻碍潜在游客的到来。

与去年一样，蒙特利尔在6月成为加拿大第二贵的酒店市场，仅次于温哥华，超过了排名第三的多伦多。蒙特利尔游客在6月每晚支付了$304.14加元，比2023年6月的$302.71价元上涨了不到0.5%。而选择在Hogtown（多伦多）住宿的游客则每晚支付$286.44加元，比一年前相同月份的$288.44下降了不到0.7%。

6月酒店房价涨幅最大的城市是阿尔伯塔省会Edmonton，这可能与动态定价以及对国家冰球联盟埃德蒙顿Oilers的兴趣有关，该队在该月进行了四场主场比赛。随后在Florida洲的Stanley Cup决赛第七场比赛中输给了Florida美洲豹队。

然而，埃德蒙顿的游客仍然享受了相对便宜的房价，整个月的房价平均为$150.68，是加拿大主要大都市中最低的。不过，这比2023年6月游客支付的$136.76上涨了10.2%。

如果将市中心区域单独比较，温哥华的市中心酒店房间价格在6月以$407.46加元位居加拿大之首，超过了多伦多的$388.29加元。温哥华的价格比2023年6月上涨了4.7%，而多伦多市中心的酒店房价则比去年6月的$390.82下降了0.6%。

对于温哥华旅游业来说，令人欣慰的是6月的酒店房间供应量比2023年6月有所增加。2024年上半年与2023年同期相比情况也是如此。

今年前六个月，我们看到大温哥华地区的供应增加了1.5%，而需求下降了1.4%（以总住宿晚数计算），所以总体来看，这导致了不到3%的入住率下降。然而，在6月份，大温哥华地区的酒店入住率下降幅度更大：从2023年6月的89%下降了5.4个百分点，降至83.6%。

在大温区域中，对区域酒店入住率影响最大的是温哥华机场的子区域。该区域围绕温哥华国际机场，包括了Fairmont Vancouver Airport hotel以及许多位于列治文的酒店。

其中的388间房的Radisson Blu Vancouver Airport hotel就在这一组酒店中，它在2023年6月进行了翻修。Radisson hotel在去年7月重新开业，并保持开放，这意味着今年该子区域的酒店房间数量明显比去年更多。与此同时，当地还有40余酒店工人罢工，这可能使一些潜在客人不愿预订这家大型酒店。因此，温哥华机场酒店区域在6月的入住率比2023年6月下降了12.4%。

Fraser Valley的酒店入住率趋势与温哥华机场酒店子市场类似，6月份同比下降了12.4个百分点。68间房的Holiday Inn Express & Suites Chilliwack East今年开放，而去年没有对外开放。

与2023年6月相比，游客在6月购买的大温区域酒店房晚减少的一个原因是疫情后的强烈旅行需求趋势已经消退。这种现象，也就是有人称之为‘报复性旅行’的趋势，现在正在减退。 现在的情况正好相反，在过去几年里，很多人花了很多钱用于旅行，因此当人们开始收紧开支时，他们不得不重新调整优先级，减少了旅行支出。

Alberta is expected to lead Canada's growth this year, according to TD Economics, which is forecasting an increase of 1.9 per cent in the province’s economy this year.

This is the largest of any province in Western Canada, exceeding last year’s tepid growth rate of 1.5 per cent.

A slowdown in the construction sector due to uncertain economic conditions and high costs contributed to last year’s slow growth, as well as contraction in the agricultural sector linked to drought.

“An expected surge of activity in the oil patch this year will return Alberta to the upper end of provincial growth charts, counteracting early signs of a flagging household sector,” TD Economics forecasted. “Oil output is on pace to record its strongest year since 2018 as the Trans Mountain Pipeline completion boosts overall capacity.”

High costs will continue to dog the construction sector, but real estate investment is on the upswing, particularly in the multifamily sector as the province continues to record strong in-migration.

However, TD says this is also driving up the province’s unemployment rate because hiring simply isn’t expanding fast enough to find places for all those workers.

“The unemployment rate has jumped to 7.2 per cent, the highest in nearly three years,” TD reported. “Population growth at current rates [is] unsustainable and will likely slow over the coming quarters, helping to ease pressure on the unemployment rate.”

It will also ease pressure on the housing supply, though the province continues to see strong growth in rents due to a constrained supply of units.

High interest rates are also keeping some buyers in rented accommodation for longer.

TD’s positive outlook is consistent with the latest quarterly update from ATB Financial, released June 18.

ATB Financial is more bullish than TD, forecasting real GDP growth for the province of 2.5 per cent in 2024 and 2.7 per cent in 2025, outpacing the national growth rates of 1.2 per cent and 1.8 per cent, respectively.

Similar to other observers, ATB Financial believes 2024 will be a “breakout year” for the province’s energy sector after a decade of challenges.

“Oil producers finally have additional pipeline egress as the Trans Mountain Pipeline Expansion (TMX) entered commercial operations in May,” it reported. “Coastal GasLink provides egress for natural gas producers. We see significant improvements to energy production over the next two years, propelling GDP growth.”

A shift towards lower interest rates will also support investment and economic growth, it said, benefitting the province’s housing supply.

“The resurgence in home construction stands as a pivotal driver of Alberta's economic improvement in 2024,” the forecast noted.

The breadth of economic drivers points to the diversification and maturation of the provincial economy into a better-rounded creature than in the past, it noted.

“Despite recent challenges, the provincial economy has been resilient,” ATB Financial chief economist Mark Parsons said. “Looking ahead, Alberta's growth is expected to improve over the next two years, driven by improved market access for energy, increased construction activity, and a broadening economic base.”

Steady job growth and strong in-migration have made Alberta among the most robust of Western Canada’s economies, but the impacts on real estate have been mixed.

Downtown office vacancies are stuck in the high double digits despite marked improvement relative to the rest of Canada. While broad tenant demand is strong, the right-sizing of space requirements to the hybrid work environment means older space will take time to lease up.

On the industrial side, a flight to quality has meant a rise in industrial vacancy rates as tenants move from older lease space into purpose-built facilities. While demand for space is steady, the uptick in vacancies points to a shift in the market.

Calgary saw industrial vacancies hit 3.5 per cent in the first quarter, nearly double the 1.8 per cent seen a year earlier, according to Colliers Canada statistics. In Edmonton, 15 quarters of positive absorption hasn’t stopped vacancies from rising to 4.5 per cent over the past year from 3.8 per cent a year ago.

A good example of how things have shifted is Amazon Canada, which recently capped a wave of construction with the opening of YYC 4, its new fulfilment centre in Calgary’s East Shepard industrial area.

Robotics play a central role at the 2.8 million-square-foot facility, where more than 1,500 staff work alongside automated systems to ship upwards of 950,000 units a day.

The facility follows on the February 2023 opening of YEG 2 in Edmonton’s Acheson industrial precinct. Then the company’s largest fulfilment centre in Western Canada at 635,000 square feet, it employed 1,000 workers alongside a reported 5,000 robots.

The new Calgary centre trumps it, the culmination of more than $40 billion worth of investments Amazon has made in Canada since 2010. (The cost of the new Calgary facility was reportedly $400 million, or 1 per cent of the total.)

“[It] allows us to ramp up our overall operations in Alberta, and obviously that supports the Canadian network as a whole,” Sushant Jha, general manager of YYC 4, told Western Investor.

The new Calgary facility incorporates roles from YYC 1, which Jha said continues to employ about 500 staff as it enters a retrofit period. Approximately 500 employees still work there.

“That facility has outlived the technology,” Jha said. “They’re going to go back inside it, retrofit and then go from there.”

The retrofit complete by the holiday shipping season, limiting any disruption to Amazon’s fulfilment operations.

Amazon currently operates two fulfilment centres in Calgary and three fulfilment centres in Edmonton, as well as five delivery stations and a sortation centre. Calgary is also home to a datacentre for Amazon Web Services.

Calgary’s workforce is an asset to the company, which has plans to grow employment in the province to 6,000 from 4,000 a year ago, but its location is also ideal for serving destinations across Western Canada.

“Having this facility in Calgary, it allows us to serve first and foremost the city of Calgary and within the province of Alberta but then extend … that speed logistically to B.C. and the Prairies overall,” Jha said.

While YYC 4 is the final new project of the current wave of construction, Amazon continues to invest in its facilities top keep pace with industrial space requirements.

“While the retrofit [at YYC1] is happening, Amazon as a business is also looking at what else the customer needs in the geographical location and how best to support that,” Jha said.

Canmore is set to be one of the best markets in Western Canada for price appreciation this year when it comes to recreational properties, thanks in part to steady demand that’s outstripping supply.

Re/Max Canada’s annual cottage report, released April 30, forecasts a 10 per cent increase in the average price of recreational properties in Canmore to an average of $1,144,464, placing it firmly ahead of all other recreational markets surveyed except for Whistler.

“Buyer demand has dropped from the pandemic,” said Richard Greaves, owner and managing broker at Re/Max Alpine Realty in Canmore, but the town remains just an hour’s drive from Calgary and its international airport, and minutes from ski hills and trails within provincial and national parks.

This has supported buyer demand, which hasn’t diminished even as listings have dwindled and high construction costs have limited new supply.

“We have a lot of demand and it just doesn’t seem to be waning at all,” Greaves said. “We don’t have a lot of buildings to increase that supply any time soon. … The lack of supply is what’s keeping prices high.”

Buyers have shown a willingness to pay higher prices.

Canmore saw its most expensive residential transaction ever in mid-April with the $7.5 million sale of 147 Cairns Landing, a six-bedroom home on a half-acre lot in the Three Sisters Mountain Village area.

“We’ve never seen prices like that,” Greaves said.

It easily trumped the previous record, set in December, when one of the agents in Greaves’ office sold a four-bedroom home at 113 Spring Creek Lane for $6.2 million. The previous record of $5.5 million was also set last year, underscoring the importance of top-end buyers in keeping Canmore’s recreational market moving.

Canmore’s strength stands in contrast to other Alberta markets, which generally outpaced it last year.

Re/Max reported that Canmore prices gained just 8 per cent last year, well below destinations such as Edmonton Lakes (up 22.7 per cent to $477,104) and Sylvan Lake (up 14.9 per cent to $666,949). Both markets will see increases of just 5 per cent this year, and at much more affordable price levels.

Canmore’s lead in pricing is cemented by a drop in the second priciest market outside Whistler, Tofino, where waterfront properties are set to decline 10 per cent to $901,004 thanks to limits on short-term rentals.

Ucluelet will see prices appreciate by 10 per cent on par with Canmore but off a lower base that will see prices end the year in the range of $744,373.

Re/Max doesn’t provide a forecast for Whistler, noting that “market conditions evolve throughout the year based on a variety of factors.” However, similar to Canmore, top-end buyers remain active there, with the resort municipality reporting its most expensive condo sale ever March 20 with the $9.3 million sale of a 3.5-bedroom corner unit at the Four Seasons Private Residences.

Despite concerns about the impact of federal policies, including the ongoing moratorium on foreign purchases as well as changes to the capital gains threshold, Greaves doesn’t see things changing much this year.

Buyers are primarily from Alberta, with an uptick in interest from Ontario buyers.

Vendors are primarily those who haven’t been using their properties as much as in the past, especially older owners who are now thinking about downsizing.

Canmore has a large short-term rental market, but the post-pandemic revival in international tourism has meant that those units are once again generating healthy cash flows that offset concerns about changes to capital gains exemptions announced in last month’s federal budget and expected to take effect in June.

“We’ve had a few calls,” Greaves said of the changes to capital gains exemptions. “Some people have probably brought their timeline up to sell who were already thinking about selling this year, but we haven’t seen an influx of inventory.”

That lack of additional inventory means that capital gains are likely to continue on second homes in the Canmore market for the foreseeable future.

DEAL | Boardwalk REIT closed its purchase of The Circle, a 295-suite multifamily rental property in Calgary, Alberta on Jan. 24 for $77.8 million. The property has multiple addresses: 1100-1122, 1074-1096, 1126, 1130, and 1134 Seton Circle SE. The price works out to $263,729 per door.  A conditional agreement for the property was struck in May 2022, and an agreement for the transaction announced Dec. 14, 2023. The property is strategically located near two existing Boardwalk properties, The Level and Auburn Landing, providing operational efficiencies. The Circle is approximately 85% occupied.

PRICE | $77,800,000

CALGARY — No community anywhere would willingly choose to have a nearly 30 per cent office vacancy rate in its downtown core. 

But faced with that problem, one Canadian city came up with a plan that is now being held up as a model for the rest of the country amid an ongoing national housing crisis.

Calgary has been busily working to convert underused office towers to residential housing, thanks to the city's one-of-a-kind incentive program for developers.

In just two years, the program has resulted in the approval of 13 office-to-residential conversion projects, with four more still under review.

The first project, the $38-million conversion of an underused 10-storey office building into 112 residential apartment units, is nearly complete and expected to open early this year. Several more projects are currently under construction.

Proponents say the early success of the program has shown that office-to-residential conversions can work, and that the idea can be part of the solution in a country facing a massive shortfall in housing inventory.

“I think this can work in any major city. Especially any major Canadian city, because in my point of view, we’re all struggling with providing enough homes," said Walsh Mannas, a principal with commercial real estate firm Avison Young, of Calgary's downtown development incentive program.

"Any market where municipalities are going to incentivize residential development, I think could have success with this in various degrees."

Calgary's downtown development incentive program, which offers $75 per square foot to building owners willing to convert underused office space to residential apartments, is unique to North America.

It was launched in 2021, at a time when the city — home to more corporate head offices per capita than anywhere else in Canada — was reeling in the wake of an extended downturn in oil prices and the COVID-19 pandemic. 

Commercial property values in the city's core had collapsed due to a wave of energy sector layoffs and consolidation that had left close to a third of Calgary's downtown office space empty. 

Desperate to fill nearly 13.5 million square feet of unoccupied space and boost its dwindling tax base, Calgary launched the incentive program with the goal of removing six million square feet of empty offices from the city's downtown by 2031.

Sheryl McMullen, who manages the program for the City of Calgary, said it was unclear at the time what the reception would be.

But the program turned out to be so popular that in October 2023, the city was forced to press pause after reaching its $253-million funding threshold.

"When we launched the program, we didn't know if we were going to get one application or 10," she said.

"We ended up getting 15 in just the first round. So we knew we'd done something right when we had that number of building owners interested."

Canada is in the midst of a housing crisis. One estimate from the Canada Mortgage and Housing Corp. suggests an additional 3.5 million new units must be built by the end of the decade to supply affordable housing to the people who need it.

Office-to-residential conversions aren't a silver bullet, said Greg Kwong, Alberta managing director for commercial real estate firm CBRE, but they can be a piece of the puzzle.

He pointed out many cities are grappling with an excess of downtown office space in the wake of the pandemic and the work-from-home trend.

"It's not the overall panacea, it's just one of the many levers that we have to be pulling to get our downtown cores more vibrant and alive again," Kwong said.

"This is a problem that will affect more cities than just Calgary."

In the third quarter of 2023, Avison Young statistics show Vancouver and Toronto both had downtown commercial vacancy rates of 12.5 per cent, while Ottawa had a downtown vacancy rate of 14.7 per cent. 

In both Edmonton and Montreal, more than 20 per cent of available downtown office space sits empty.

"The office market in Toronto, Vancouver and Montreal is still in a much better place than Calgary, but these cities are also struggling through the post-COVID office market," Mannas said.

"I think it will take time to work through what the new reality of vacancies is, and depending on how much those vacancies grow, office-to-residential becomes an even better opportunity."

Ken Toews is senior vice-president of development with Calgary-based Strategic Group, a developer that has previously completed three office-to-residential projects in Alberta without the help of an incentive program. 

While he is an unequivocal fan of the model, Toews said most prospective conversion projects require some kind of government support to make financial sense.

"Office buildings were never intended to be developed into apartments," said Toews, whose company is now in the process of converting an empty heritage office tower in Calgary called the Barron Building into residential rental suites. 

"There are a lot of design issues, and a lot of developers won't touch them because they're just too challenging."

Turning an office tower into an apartment building requires getting creative and finding solutions for oddly shaped floorplates, unusually situated elevators and in some cases, a lack of windows, Toews said. 

But while these complications can make office conversions costly, they still take far less time than constructing a new building from the ground up. 

Toews added they also have a far smaller carbon footprint than new builds, and have the added benefit of bringing new life and vibrancy to tired downtown areas.

As more conversions are completed and developers and architects get more experience, a wider variety of buildings will become viable candidates, Toews said. 

He said he's already been approached by developers from across Canada who are looking to take lessons from Calgary's experience.

"We know this is part of the solution for the housing crisis, and it can probably work in any city if the city is willing to put in an incentive," Toews said.

"We have a big challenge in this country with housing and you know, I think we have to really dig in and make sure we get as many people working on it as possible and be creative with our solutions."

This report by The Canadian Press was first published Jan. 7, 2024.

Amanda Stephenson, The Canadian Press

(Conversion of five floors of office space to 55 residential units at 825 8th Avenue SW in Calgary contributed to the property's successful sale this month.)

This month’s sale of a downtown Calgary highrise is showing the benefits of converting office space to residential in the city’s core.

Westview Heights, a 343-unit apartment tower at 825 8th Avenue SW, sold August 1 for $83.4 million, or $243,149 a door. This works out to blended price of $370 per square foot, compared to the current range of $50 to $100 per square foot for straight office space.

“You’d probably get very little value for the commercial space,” said Samuel Dean, senior vice-president, capital markets, JLL Canada.

The property is not among the 10 projects participating in Calgary’s Downtown Development Incentive Program, which aims to remove 6 million square feet of office space from the market by 2031.

The former owner, Mayflower Ventures LP, acquired the property in September 2007 and began the conversion process prior to the city initiative, recognizing the value that could be gained through residential space. A total of five floors were converted, yielding an additional 55 residential units.

This means the office conversion alone added in excess of $13 million to the value of the property, on top of the natural increase in value since acquisition.

Mayflower decided to sell now as it refocuses on new development opportunities. With strong demand for housing from new arrivals, it saw an opportunity to present the building as rents march northwards. Close to a third of units were vacant at the time of the sale, meaning Westbow Capital has plenty of room to lease them up at market rates.

“The ability to go in there and take advantage of where the Calgary market currently is definitely played a big part in the transaction,” Dean said. “Historically, you wouldn’t really have someone looking to take on that much lease-up risk, whereas in this situation it was actually a positive to have that vacancy.”

According to Rentals.ca, the average one-bedroom rent in Calgary in July was $1,718 a month, up 17.2 per cent from a year ago.

Canada Mortgage and Housing Corp. statistics for purpose-built rental units peg vacancies in Calgary at 2.8 per cent as of October 2022.

Close to 80 per cent of units at Westview Heights are one-bedroom apartments fetching in the range of $1,600 a month. The high rates for the market are creating demand for smaller units within the property.

The deal is the largest multifamily sale in Calgary in the past 12 months, and the second largest in Alberta following the sale of a new 396-unit purpose-built rental building in Edmonton on August 8 for $91.6 million or $231,313 a door.

The new owner, Westbow Capital of Chilliwack, will rebrand the building as District. The property is its first acquisition in Calgary. It currently owns properties in Edmonton, Red Deer and Saskatoon as well as B.C., meaning Calgary fills a geographic gap in its portfolio.

Westbow claims to have $550 million in assets under management. Residential rental units are held through Westbow Real Estate Properties Trust, which targets annual returns in the range of 9 to 12 per cent.

Westbow’s purchase occupies the same block as 805 8th Avenue SW, where another B.C. company, Cressey Development Corp., is converting approximately 64,000 sq. ft. to 85 residential units under Calgary’s conversion incentive program.

Cressey plans to retain its project on completion, holding it as an income-producing asset.

Government funding is driving a boom in daycare operations that’s adding youthful vigour to Alberta’s retail sector.

A mid-year review of national retail markets by CBRE Ltd. notes that daycare operators are booming in Calgary, even as financing for tenant improvements comes under greater scrutiny from lenders.

“It used to be they’d have all their ducks in a row beforehand, but now they’re doing more detailed costing, heavier review of business plans, and it’s just taking longer,” said Alistair Corbett, senior vice-president with CBRE Ltd. specializing in retail properties.

But that hasn’t dampened the appetite of daycare operators, who are crowding the market thanks to federal-provincial funding under the Canada-Alberta Canada-Wide Early Learning and Child Care Agreement.

A For-Profit Expansion Plan launched in February will see up to 22,500 private child care spaces eligible for funding in addition to the 42,500 non-profit child care spaces the province aims to create by 2025-26.

“We had a space come back,” Corbett said. “We put it out for an RFP and we had 14 responses. We got deluged with them. It was just crazy.”

Operator demand is transforming spaces that were otherwise hard to lease, such as restaurants that were shuttered during the pandemic and remain too large for current market demand.

“Very few people want to go and lease 8,000, 9,000-square-foot old restaurants,” Corbett said. “Who’s busy and who’s willing to pay? Right now, it’s daycares.”

(Banff's Rimrock Resort Hotel sold to Oxford Property Group in June for $170 million, or $515,200 a room -- Western Canada's biggest hotel transaction of the year.)

Record-high rates and revenue are attracting investor interest in Western Canada’s hotels.

The region saw $431 million worth of assets trade in the first half of 2023, or 41% of the national total, according to Colliers' second-quarter review of the hotel sector.

The second quarter some exceptional pricing for properties including the Rimrock Resort Hotel in Banff for $170 million, $515,200 a room, a price that reflected Oxford Property Group’s plans for a $100 million renovation.

Aldesta Hotel Group picked up Fairmont Hot Springs Resort in BC for $40 million, or $264,900 a room, in June. The deal included three golf courses, a 14-run ski hill, RV park, and more than 650 acres of excess lands.

The two properties ranked second and third after The Hazelton, a Toronto property that commanded an outlier price of $110 million or $1,428,000 a room thanks to the inclusion of 11,250 square feet of retail space, an underground parkade and a 50 per cent interest in the on-site restaurant.

Colliers cited strong growth in average daily rates, the resurgence of domestic travel and small to mid-size group activity as contributing the return of investor interest.

“Hoteliers are reaping substantial top-line gains driven by remarkable increases in average daily rates,” Colliers reported.

Canada’s hotel industry reported its highest average daily rate (ADR) and revenue per available room (RevPAR) on record, according June data from CoStar Group.

ADR soared 12 per cent to $221.86 a room while RevPAR increased 16.1 per cent to $164.97.

The increases came as average national occupancy rates rose 3.6 per cent versus last year to 74.4 per cent – the highest level since last August. With the increase coming ahead of the peak summer travel season, the prospects are good for new records being set in the third quarter.

“Canada’s hotel industry is benefitting from elevated spending on discretionary services,” said Laura Baxter director of hospitality analytics for Canada with CoStar.

Occupancies were highest at limited-service hotels, pointing to a trading down in activity, but group activity was up versus a year ago as this segment of demand continued its recovery from pandemic-era lows.

According to Colliers, full-service hotels accounted for 60 per cent of investor activity in the first half of the year. Limited-service-properties ranked second, at 26 per cent of transaction value.

But when the data was smoothed to account for the large number of high-value transactions, average sale price per room showed that investors were still willing to spend on limited-service properties as well as full-service hotels with equal enthusiasm.

The normalized price per room for all transactions in the first half of the year was $192,100, up 32 per cent from a year ago.

Plans for a new hotel in Chilliwack will help address a deepening shortage of rooms in the region as travel recovers from the damper imposed by COVID-19.

“There was a return to travel and tourism across British Columbia in 2022 and a resulting resurgence in the demand for hotel rooms,” says Jeff Krivoshen, CEO of P.R. Hotels Ltd. in announcing plans for a dual-branded Fairfield Inn and Suites & Town and Towne Place Suites by Marriott off Highway 1 at Lickman Road in Chilliwack. “Building a hotel is a significant investment. We chose this location because we see promise in Chilliwack and are committed to growing with the community for the long term.”

Built and operated by P.R. Hotels and Meridian Development Corp. of Saskatoon, the hotel is part of Fraser Gateway Centre, a new mixed-use development Denciti Development Corp. is undertaking on the 12.4-acre site, which it acquired in 2021.

The southern portion of the site will be commercial, with plans calling for a service station and family restaurant in addition to the existing Tim Hortons and private liquor store. The northern portion will feature a light-industrial business park with up to 25 small and large bay warehouse units.

While the warehouse units will address a shortage of industrial space at one the last major undeveloped intersections in the Fraser Valley, the hotel space is also much needed.

Speakers at the Western Canadian Lodging Conference last fall called out the Fraser Valley as an area that could benefit from new construction.

“There are markets in the Fraser Valley that are just dying for some new product,” said Carrie Russell, senior managing partner with advisory services firm HVS Canada in Vancouver.

Chilliwack was among the markets she identified, thanks to the acquisition and conversion of several older properties to alternative uses such as low-income housing, and Hope, which has plenty of older motels but lacks modern, mid-tier product.

More recently, a report accounting firm MNP prepared for Destination Vancouver this spring noted a diminishing supply of hotel rooms in Metro Vancouver, jeopardizing growth of the region’s tourism sector, and in turn, the provincial economy.

While the city of Vancouver has lost approximately 2,000 rooms over the past 20 years, the pace of loss has been greater throughout the region.

MNP reported that Metro Vancouver’s stock of hotel rooms peaked in 2011 at 14,424 rooms across 94 properties, but that was down to 10,002 rooms across 85 properties in 2022.

“Metro Vancouver’s infrastructure is not keeping up in delivering on our global profile,” Royce Chwin, Destination Vancouver’s president and CEO said when the report was released, noting that cities of a comparable profile have been steadily building their hotels stock.

“[The] lack of available hotel rooms will make visiting Vancouver even more expensive, and the city will be less competitive in attracting major conferences, large sporting events and leisure group travel,” Chwin said, noting that the city and region is set to play host to major international events including the Invictus Games, Grey Cup and, in 2026, the FIFA World Cup – the world’s largest single sporting event.

Business travel is also on the rise, with many observers expecting a normalization of conditions by 2024.

While not a silver bullet, the 150-room hotel will be the largest in Chilliwack when it opens in 2025. It represents an upgrade from the Best Western-flagged hotel that formerly stood on the site but closed during the pandemic.

“[It] will bring extended stay into the Chilliwack market that doesn’t exist currently, and will bring a Marriott to the Fraser Valley,” Krivoshen said, describing the dual-branded format as “very efficient.”

The property’s 150 rooms will see 90 allocated to the Fairfield brand, which will focus on serving the short-term and leisure market, while 60 rooms will be allocated to the Towne Place Suites banner, an extended-stay brand that features in-room kitchenettes.

“We can market as two independent hotels gives the travelling public a couple of different options to go with,” Krivoshen said. “We can still use the same employee base, same housekeeping core, same front desk, just service [the market] with two hotels, one general manager, one sales department.”

The project in Chilliwack follows P.R. Hotels’ and Meridian’s completion last December of a 124-room Delta-branded hotel attached to the Cascades Casino Delta on the former Delta Town & Country Inn site.

Vancouver-based Optima Living and Axium Infrastructure of Montreal, via a Yarrow joint venture, have added more than 1,200 beds to the venture's Alberta portfolio.

Vancouver-based Optima Living and Axium Infrastructure have paid $440 million for seven seniors' residential projects in Alberta, with a total of 1,200 beds.

The strategic acquisition expands the duo’s Yarrow joint venture’s footprint in Alberta and positions it among top operators by bed count in the Edmonton region.

“This acquisition deepens our collaboration with Axium and demonstrates our ability to create value through acquiring, integrating, and managing a sizeable and varied portfolio of seniors living communities, which significantly solidifies Optima's presence in Western Canada,” said Karim Kassam, Optima Living’s co-founder and principal in a statement.

“We believe there are strong tailwinds ahead for seniors housing due to sector demographics and a shortage of seniors living options creating long wait lists, especially for government funded beds,” he added.

Optima has operated independent and assisted-living care facilities in Alberta and B.C. since 2006 and has a portfolio of 33 assets and more than 3,400 beds.

Montreal-headquartered Axium Infrastructure is an independent portfolio management firm with offices in Canada, the U.S. and the U.K. It had over $10 billion in assets under management as of the end of 2022, as well as $1.7 billion in co-investments, according to the Real Estate News Exchange.

Four of the assets are in Edmonton: the 169-suite Laurel Heights Retirement Residence, the 174-suite Lewis Estates, MacTaggart Place with 180 suites and the 172-suite Rutherford Heights.

The deal also includes the St. Albert Retirement Residence in St. Albert, which opened in 2016, and Summerwood Village in Sherwood Park, Alberta.

The only Calgary asset is Sage Hill Retirement Residence, which was opened in 2016.

Dentons and National Bank Financial acted as legal and financial advisors, respectively, to the joint venture for the acquisition.

The 391,000-square-foot building was bought by U-Haul Canada, which also purchased the Calgary Sun building in 2020. It will be used as a storage facility and truck rentals.

roperty type: Office building

Location: 215, 16 Street S.W., Calgary

Size of building: 391,000 square feet

Sale price: $17.25 million

Date of sale: January 18, 2023 (announcement).

Alberta’s biggest city – tops in Western Canada and third place in the country – lauded for its economic potential

Annual Resonance Consultancy ranking lists five Canadian cities among the 100 best metro regions on the planet in its annual report released November 28.

Resonance is a leading advisor in tourism, real estate and economic development, and its Best Cities rankings quantify the relative quality of place, reputation and competitive identity for the world's principal cities with metropolitan populations of 1 million or more,

Bloomberg calls it “the most comprehensive study of its kind; it identifies cities that are most desirable for locals, visitors, and business people alike, rather than simply looking at livability or tourism appeal.”

In Canada, Toronto is ranked No. 24; Montreal is No. 57; Calgary is No. 65, Vancouver is No. 69 and Ottawa came in near the bottom, ranked at No. 96, just ahead of Hanoi.

Calgary, the top-ranked city in Western Canada, topped Vancouver due to the Alberta city's business acumen, according to Resonance.

A wildly successful tourism season has Western Canadian hoteliers looking to build on the lessons of the past three years as a recession looms.

Occupancies rose 60 per cent nationally in the nine months ended September versus a year ago, pushing average daily room rates to $183.76, or 34 per cent above last year. This boosted revenue per available room (RevPAR) to $110.11, up 113 per cent versus a year ago.

“It’s been a remarkable recovery, and for us it’s been right across the country,” said Brian Leon, CEO of Choice Hotels Canada, speaking at the Western Canada Lodging Conference in Vancouver on October 25. “We’re going to end this year with RevPAR probably a little more than 10 per cent higher than it was in 2019. We would never have expected that.”

Vancouver led the country, with an average occupancy rate of 70.3 per cent in the period. Room rates followed suit, rising 49 per cent to a nation-leading $243.72 a night. RevPAR increased a stunning 153 per cent to $171.34 from just $67.69 a year earlier despite ongoing border closures.

“This market has really seen great recovery over the past year,” said Jim Chu, executive vice-president and chief growth officer of Hyatt Hotels Corp. “And that’s without China.”

The strength of demand in Vancouver stands out next to Calgary, where hotel performance continues to lag Western Canada. Occupancies averaged 57.1 per cent in the first nine months of 2022 while room rates are also below average at $153.63 a night. This compares to 62.5 per cent occupancy in the same period of 2019 when rates averaged $145.92.

RevPAR in most major markets has yet to return to pre-pandemic levels but hoteliers have also reopened with an eye to keeping costs in check. Shorter wine lists, smaller menus, and offerings tailored to visitors  – primarily leisure and group stays – have been critical.

“A lot of job-sharing, a lot of engineering of processes and tasks” took place, said Jiri Rumlena, president of SilverBirch Hotels & Resorts, which saw its workforce fall to 18 per cent of normal during the pandemic. It rebuilt its staff to 80 per cent of normal this summer, but guest experiences took longer to recover. “Standards didn’t come back in certain areas as they normally should have,” Rumlena acknowledged.

Labour woes

While consolidation of roles has helped address the labour shortage, and cutbacks in housekeeping helped control costs, Cindy Schoenauer, vice-president, hospitality and gaming with Cushman & Wakefield, isn’t sure it’s a strategy for long-term success.

“I don’t know if that’s something hotels want to keep doing because at the same time you’re talking about really rapid [room rate] growth,” she said. “There needs to be value to what you’re paying as well.”

The sector’s revival should be good news for workers after two years of turmoil.

“We’re not blind to the fact that the entire hospitality industry, ski included, have been in the forefront of media over the past two years and the basic narrative has been lack of stability,” said Christopher Nicolson, CEO of the Canada West Ski Areas Association, based in Kelowna. “As stability returns, that will definitely help recruiting as well.”

It won’t be easy, though. The sector was down 400,000 workers during the pandemic but recouped about 200,000 people this summer before returning to a deficit of 300,000 workers this fall.

While the federal Temporary Foreign Workers program has been tweaked to allow the sector to bring in up to 30 per cent of the workers it needs, the sector needs to continue working to secure domestic workers.

“We have to get out and tell our story,” said Susie Grynol, president and CEO of the Hotels Association of Canada.

Part of that story is that 90 per cent of hoteliers increased wages this past summer to attract workers.

“We want to be the sector people want to work in,” she said.

“We’ve seen leisure recover, but we have yet to see corporate [incentive travel] and meeting, conference group demand recover,” Schoenauer added. “It’s started, it’s just taking a little longer.”

Asset sales

Leon believes this year’s recovery will support fresh investment in properties that will improve the guest experience and position hotels for the future.

“Our hotels this summer, from a financial perspective, are in a lot better shape than they were a year ago,” he said.

The market is also benefitting from the removal of 6,800 rooms, primarily older product, since 2020, when governments stepped in at the onset of the pandemic to snap up properties for alternative uses, primarily social housing.

“You have rooms coming out that’s going to help our recovery,” McCluskie said.

However, with urban hotel markets still challenged by a lack of business travel, many of the 15 sales seen in B.C. this year have been in smaller, secondary markets outside the main centres. An example is the Kanata Hotel & Conference Centre in Kelowna, which sold this year for what is said to be highest price paid for a hotel in the region.

Just one hotel property changed hands in Vancouver, that was not purchased for redevelopment or an alternative use.

(Looking for Hotel for sale BC , we are happy to help.)

Western Investor's picks for the top towns in Western Canada for real estate investors in 2023

No. 1, Calgary: With 2,600 new high-paying jobs pledged in September alone, real estate prices a fraction of Vancouver, no rent controls and oil prices flirting with US$100, Alberta's biggest city is ripe for real estate investors right now.

In late September, De Havilland Aircraft of Canada said it plans to build a manufacturing and maintenance facility on a 3,700-acre site it bought in Wheatland County, just east of Calgary, that will employ 1,500 people.

That brilliant news was followed just days later by the announcement that India-based global tech giant Infosys is bringing 1,000 jobs to downtown Calgary.

Infosys, a leader in next-generation digital systems, has doubled its original hiring commitment from when the company first expanded into Canada in 2021.

“Today is the beginning of our next chapter in Canada,” said Ravi Kumar, president, Infosys. “Calgary’s IT innovation potential is unlimited, and we are delighted to be a part of its future.”

Infosys officially opened its new Digital Centre in Calgary Centre on September 26 and will take an estimated 200,000 square feet of office space, analysts say.

Calgary is the top Canadian city for real estate investors now and into 2023. The price of oil hit US$130 per barrel this spring and though it has retreated to the US$89 range as of October, it is twice as high as its bottom in 2014 and will continue to transform the Alberta economy next year.

Calgary real GDP is forecast to expand by 6.3 per cent in 2022 and grow by 3.8 per cent in 2023, according to the Conference Board of Canada, far ahead of Canada’s projected 1.2 per cent growth.

The commercial real estate market is led by the industrial sector, with a tight vacancy rate of 2.2 per cent and average lease rates of $11.65 per square foot, about half the price of Vancouver, which is attracting B.C. players to Calgary.

Investors are also piling into Calgary’s retail sector, drawn by consistent consumer spending of $8 billion per month; and to the multiple-family residential market, where prices are a fraction of Vancouver or Toronto.

With strong job creation, lower provincial taxes, high immigration and a business-friendly environment, Calgary is the place to be in 2023.

No. 2, East Vancouver. The Broadway Subway and Millennium SkyTrain line extensions; the new $2 billion St. Paul's Hospital; detached houses less costly than in the suburbs and half that of Vancouver’s West Side; and a government pledge for higher density. If a real estate investor can't make money here next year they should get into another business.

A detached house price in East Vancouver is now $1.5 million, which is lower than in Burnaby, Richmond or the North Shore suburbs and half the price of the neighbouring West Side of Vancouver. It also represents perhaps the top residential real estate play in Canada.

East Vancouver includes the 450-acre False Creek Flats, where 17-acre St. Paul’s Hospital campus is now under construction, along with other job-generating commercial buildings. But the Flats is not zoned for housing: that will be served by surrounding East Vancouver.  At the same time, the $3 billion extension of the SkyTrain system, which pivots from East Vancouver, has convinced the city to massively boost density around planned stations. Rents in Vancouver are the highest in Canada and East Vancouver will be the most in-demand rental market in the country next year.

As for other commercial sectors, before a new 102,000-square-foot strata office building was about to launch marketing last month in the Flats, a U.S. medical firm bought the entire building. Industrial land in East Vancouver is selling for $13 million an acre; multi-family land at $19 million per acre; and retail sites at more than $1,000 per square foot. Get in now and these prices will seem a bargain in a year or two.

No. 3, Bamfield: The first highway into this tiny Pacific Rim town is now open and completes early in 2023. Land and home prices have shot in the past year in a hamlet with raw freehold land and massive sandy beaches that is being called "the next Tofino.”

What if you could have bought in Whistler or Tofino 30 ago? That is the type of opportunity we see for recreational property in Bamfield on the West Coast of Vancouver Island.

This year a 76-kilometre “sealed” and partly paved highway replaced a rough logging road linking Bamfield with Port Alberni and the rest of Vancouver Island. The highway will officially open in 2023, but pioneers have already bid prices higher.

“There were major increases in housing prices of about 50 per cent to 75 per cent once the road announcement was made in 2020,” Craig Filipchuk of Remax Mid Island Realty told the local Ha-Shilth-Sa newspaper.

The average cost of a home in Bamfield was $261,391 a decade ago. In 2022, the average home price is $644,300. REW.CA had four Bamfield listings in mid-October, priced from $549,000 up to a five-bedroom waterfront house at $1.3 million, which is less than the price of a bungalow in Vancouver and perhaps a third of the cost of Tofino waterfront.

Bamfield is a quaint place reminiscent of an Atlantic fishing village, but we believe it is about to experience the West Coast real estate experience.

No. 4, Penticton and the South Okanagan:   Penticton is challenging Kelowna as the hot spot in the Okanagan. Facing two lakes, it is the centre of the South Okanagan which will lead B.C.'s recreational market in 2023, drawing investors from the Lower Mainland and Alberta.

Best investment: waterfront. This year 23 waterfront homes have sold in the South Okanagan, with average prices down 47 per cent from a year earlier to $1.57 million as of September 2022. This compares with an average waterfront home price of $4.5 million in the Central Okanagan, which is further away from the Lower Mainland. Detached house prices in the South Okanagan, which includes the popular lakefront town of Osoyoos, are now $779,500, the lowest price in the entire Okanagan. Penticton also has a near-zero rental vacancy rate and REW.CA had a dozen condos in the town listed at $275,000 or less in mid-October.

Buy the dip. Penticton is the best recreational and resort residential market in B.C.’s Interior for 2023.

No. 5, Nanaimo: Multi-family​ land is now selling for $3 million an acre; there is huge expansion at Nanaimo's container port; major employers are recession-resistant hospital, medical services and universities – and there is a large influx of people from across Canada. 

Nanaimo has a population north of 100,000 and, according to the 2021 census, is among the fastest-growing cities in Canada, tied for third place with Kamloops, B.C.

Of the record $319 million in building permit values through the first six months of 2022, residential projects account for $238 million.

A recent project includes a hotel and about 700 homes planned for the northern edge of downtown Nanaimo on a seven-acre site near the Millstone River.

The buy here is rental properties, residential – price of both are well below that of Victoria – plus industrial land and industrial strata.

A $100 million-dollar expansion of Nanaimo’s container port led by DP World, a Dubai-based global leader in ­shipping and port logistics, will be a game-changer for the local economy. It is estimated the site’s 30 acres will create about 1,000 new jobs.

The Port Authority has industrial land for lease for industrial, but surrounding land is already in the hands of two major landholders: Harmac Pacific, which owns more than 1,250 acres at Duke Point that it purchased in 2008; and Seacliff Properties which bought 726 acres four years ago and is planning a massive mixed-use development.

Colliers International in Nanaimo estimates that serviced industrial land at Duke Point could eventually be valued at a $1 million per acre, up from around $400,000 per acre today.

Newcomers and a tight commercial real estate market are forcing prices higher, but we feel Vancouver Island’s Harbour City is just beginning its real estate ascension.

Well located and well-maintained apartment building, built in 1949, with stunning ocean views along desirable Crescent Road, Victoria, B.C.

Type of property; Multi-family

Location: 1860 Crescent, Victoria, B.C.

Number of units: 8

Property size: 14,857 square feet (approx.)

Sale price: $3.6 million

Among the latest signs of a recovery in B.C.’s hotel sector, Victoria International Airport is considering a proposal for a new 129-room Marriott hotel.

Proposed by Kothari Group as its first B.C. project, the hotel will be a TownePlace Suites project by Marriott. The TownePlace brand is described as “an all-suite extended stay upper midscale hotel experience.”

“We see the addition of a hotel at this location as a logical fit and a great new amenity for the airport and community,” said Victoria Airport Authority’s president and CEO Geoff Dickson. “It is an opportunity for Victoria International Airport to further diversify its revenue base which has been dramatically impacted by the pandemic. We look forward to working with the Kothari Group to hopefully see this exciting proposal come to fruition.”

The Kothari Group was established in Canada in 1996 with a focus in real estate related investments. Kothari’s hotel group works with international brands such as Marriott, Hilton, and Hyatt to develop and manage hotels across Canada.

“We are excited to work with Victoria Airport Authority and Marriott International to bring the first true extended stay hotel in this growing tourist and business market. This project is our group’s first of what we hope are many investments in British Columbia and the Greater Victoria region,” said Anupam Kothari, president of Kothari Group, in a statement.

The proposal is on federal land within the Town of Sidney’s boundaries. Sidney’s staff and council will have the opportunity to review and provide comment on the proposal.

If approved, construction could begin in early 2023. It is expected to take 18 to 24 months to complete the hotel with plans that call for a restaurant, 1,500 square feet of meeting space, a swimming pool, and a fitness center.

There are currently more than 400 TownePlace Suites properties across the United States and Canada.