Development Across Windsor-Essex - Summarizing The Projects in The Works (Part 3

Even as we get deeper into Fall and the temperatures are starting to drop, the development in Windsor-Essex is still red hot! The previous two parts of this series have garnered solid feedback, so much so that we decided to add a part three!

Starbucks - Leamington & Lakeshore

Everyone loves a good Starbucks! And they are clearly expanding in Windsor-Essex. Nearing completion is the new location in the South End of the County, in Leamington at 291 Erie St. South. They are supposed to be open sometime this fall and the developer is Brotto Family Holdings. You can see more info on this one here.

The Starbucks that's in the same building as Indigo (off County Rd 22, just east of Manning) is going into a standalone building across the street. Just west of the CIBC on the massive site of the St Clair Shores Plaza, construction has just begun and should be open next year. The developer is the Valente Group. The address of the site is 25 Amy Croft Drive.

Both sites are the standard Starbucks 2000’ building layout with a drive through.

Hotel Coming to Tecumseh

On the site of the old Tecumseh Golf, a hotel development is coming to Tecumseh. This is the first hotel development in several years in the area. Details on the hotel brand haven’t been disclosed yet.  The development is courtesy of Petretta Construction. Look for more details coming soon.

Metro Anchored Retail Plaza Coming to Tecumseh

Adjacent to the coming Hotel development, on the westside of Manning between Amy Croft and Lanoue, comes the area’s latest retail plaza. Look out Sobeys and Zehrs as Metro is coming to town.  There will be an approximate 8000’ of additional retail space to go along with the grocery store, with yet to be announced tenants. This development is a partnership between Petretta Construction and the Otis group. Site work has recently begun with construction starting soon.

Quicken Loans Opening an Office in Downtown Windsor - 156 Chatham St W

Hot off the presses! This one we have first hand knowledge of, as we represented Quicken Loans and Bedrock in securing their Windsor space! The company is opening a Windsor office to support their American operations; having this Canadian office will allow them to avoid more strict worker immigration rules that have come out of the US during the Trump administration. It will also allow them to recruit graduates from several Southern Ontario universities. The building is known as the “Fish Market” and was previously home to a couple different bars (Coach & Horses and The Loop). The building is owned by a partnership of local developers Dino and Anthony Maggio and also the Cypher Systems Group. Quicken Loans is taking 9000’, which encompasses the entire first floor of the building, with the right to expand to the second floor in the future. Construction has been ongoing at the property for several months and should be turned over to Quicken this fall for them to finish the office buildout and begin operations in 2019. 50 people are expected to make the move over initially and that number could grow to 100 in the near future.

A couple big ones for you guys to know about! Hopefully you find these posts informative as we love being your go-to guys for information. Readers: are you excited about these projects?

2017 Real Estate Trends: Bidding Wars – Part 3

For the last two weeks we've discussed several factors which are leading to the constant bidding wars in our real estate market.  This week we will wrap up the discussion with some factors you might not have thought of.  So without further ado…

Low Vacancy Rates

The Windsor-Essex area’s vacancy rate on rental units dropped to 2.9%, with CMHC’s latest report in the fall.  That is an amazing turnaround from 2008-09 with 12-14% rates.  With this decrease in vacancy comes a decrease in available rental supply and an increase in rental prices.  People in the area considering whether to rent or buy might be disappointed to see the available options for rent on the market and what that rent gets them.  Combine this with low interest rates and it can in many cases make it cheaper to own than rent.  This low rental supply and high rent price dynamic has definitely added to the demand from buyers in our market.

Sticker Shock On New Construction Prices

The cost of new construction in the area has really taken off in the last few years.  Part of that is based on increased demand.  But part of it also comes from increased soft and hard costs including building permits, increased building code, increased import prices due to the low Canadian dollar, etc.  Many people are no longer able to afford a new home so they are forced to settle for finding a suitable resale home, increasing demand of existing homes.  There is also a consideration that resale homes will tend to keep pace with increases in new construction prices, so the relative values don’t get out of whack.

A Period Of Depressed New Construction Before This Cycle

Approximately between the 2007-2011 period, there was a rough patch in the demand for new housing.  The auto industry was teetering on the brink of bankruptcy, unemployment was high and people were leaving the area.  Naturally, there wasn’t much building going on.  Now that things have turned around, the new supply hasn’t been able to keep up with the pent up demand due to that period of under-building.  To give an example, the condo market is extremely tight now for supply.  Hardly any condos were built in the area over the last 10 years.  But during those 10 years the population aged, the millennial segment of the population grew (with their admiration for condos) and the demographics were there for condos to be built.  However due to economic reasons, none were built.  Now we are in a period of catch up where there is a lag of new condo supply to meet that pent up demand.  Let's build some condos!

Upcoming Infrastructure Projects

Smart infrastructure has great spin off for the local economy and people are positioning themselves ahead of what’s to come.  We have some big projects coming to the area.  The new bridge crossing, the accompanying recently completed Herb Gray Parkway, the new Mega Hospital (even if the site is undetermined), the University of Windsor is moving downtown, and a new City Hall, just to name a few.  These sorts of projects if done correctly, increase economic activity and efficiency, lead to increased investment in the area, and trickles down to increased housing demand.  The future looks bright for the foreseeable future on this front.

This exhausts our discussions on the factors leading to bidding wars in our local real estate market.  We hope you found it insightful.  Do you agree or disagree with any of these factors.  Any you feel we missed?

More Real Estate & Related Predictions for 2017

Last week we made a few real estate and related predictions about 2017.  This week we will take a crack at a few more.  So without further ado…

New Construction of Rental Units

With the vacancy rate dropping again last year to a minuscule 2.9%, conditions are ripe for new construction of multi-family units.  Very little has been built in our area since the 70s.  Combine that with some incentives being offered, like no development fees in the downtown core area, and investment is sure to show up.

The Residential Vacancy Rate Flattens Out

After topping out north of 15% back in the recession of 2008-09, the local vacancy rate has continued to plummet in the last 7-8 years all the way to 2.9% in 2016.  As the law of small numbers would dictate, additional improvement will be small from here.  Combine that with an increased number of sales of condos and homes to investors and new construction coming online, the supply of rental units should increase to flatten excess demand.

New Construction Of Industrial Space

The vacancy rate for quality industrial space has really plummeted to near zero levels locally.  Suppliers are worried that they don’t have the floor space to produce enough to meet contracts.  The market might finally be ripe for a wave of new buildings being built.  Increases in rent prices are almost at the point to justify new construction costs for landlords.

Office Shows Modest Improvement But Still Too Much Supply

With the local economy being much improved, demand for office space is getting better everyday.  Having said that, there is still too much supply in the market.  We expect to sop up some of that inventory, but not materially so.

Windsor-Essex Real Estate Market Continues to Get Positive Media Exposure

Last year was the first year where local and national media really started to notice the renaissance going on in our local real estate market.  General inquires for real estate are rolling in everyday.  With continued migration, immigration and a buoyant local economy, things look rosy for 2017 and therefore we should see continued positive media.

There are some more predictions for 2017.  Hopefully we get some of them right!  Do you agree or disagree with any of them?

Real Estate & Related Predictions for 2017

Happy new year everyone!  Hope you all had a great holiday season and are rested up for a busy 2017.  While the year is still young, we wanted to consult our crystal ball and take a stab at making some real estate predictions.  Here goes.

Interest Rates Edge (Modestly) Higher

Since interest rates are near all time lows, common sense would dictate that they don’t have anywhere to go but up.  We think this year that happens, albeit in a limited fashion.  With the combination of higher bond yields, and some of the government mandates coming down on the financing industry to curb runaway real estate markets in parts of Canada, this will finally be the year for higher rates.

Buyers Get Multiple Offer Fatigue

During 2016, it seemed like every listing had 5-10 offers on it and bidding wars ensued.  While the market dynamics forcing this are still in place, we feel a segment of the market is growing tired of the constant competition.  This will result in a lesser number of the crazy bidding wars we saw over the past year (hello 31 offers!).

Cap Rates Flatten Out

We remember back 6-7 years ago when obtaining an apartment building with a cap rate of 10%+ was common place.  Those days are long gone and prices have been bid up consistently since then, compressing cap rates.  Today you have a hard time finding an apartment building with a cap rate over 6%.  This dynamic has also been seen in retail plazas, office buildings, and other commercial properties.  We don’t see much more room to run on cap rate compression going forward.

Continued Sticker Shock On New Construction Costs

With new construction going through a boom in the last few years in our local market, builders and related trades are very busy.  Combine that with increased prices for land and imported material costs rising because of the low Canadian dollar, buyers will find their price range won’t get them as much when considering a new build.  We don’t see this subsiding anytime soon and if anything expect further price increases.

New Condo Projects Coming Online to Meet Demand

Build it and they will come.  It wasn’t always this way in our local market, as condo ownership was slow in being generally attractive to buyers.  But times have changed and the condo market may be the tightest of them all.  The market can now support more condo developments and developers will respond to this demand with multiple new projects in our area that we expect to be met with brisk demand.

Those are some of our predictions for 2017.  Time will tell if our crystal ball was right.  What are your predictions?

2016 Local Real Estate Stats Examined

Last week we made a few general observations about our local real estate market from 2016.  This week we are going to dive a little deeper and look into some relevant statistics.  Note: Some of these statistics are based on the first 11 months of the year, as we still have a couple weeks left in December.  Also, these stats refer to our home market of Windsor, Ontario.

Units Sold Increased 10% Year Over Year

The headline is pretty self explanatory.  The number of units (houses) sold are on pace to top last year by 10%.  This is generally positive as more transactions are taking place so the market is more active.  Obviously this is a great thing for sellers.

Listings Increased 2% Year Over Year

Again a pretty straightforward headline.  The number of houses listed for sale are on track to increase by 2% compared to last year.  All other things being equal, this is positive for buyers as there is more inventory for sale and negative for sellers as there is more competition when selling your home.  When comparing the increase in listings with the increase in sales, sales have increased significantly more than listings, so one should expect to see an increase in prices during this period.

Average Sales Price Increased 13% Year Over Year

Good news for sellers!  Average Prices increased from $200,823 to $226,193.  After seeing sales up 10% and listings up only 2%, there was not enough supply to meet demand and there was upward pressure on prices.  Some of this gain can also be attributed to a higher share of high priced homes being sold this year compared to last year.  Obviously this is not so good for first time home buyers, or people who have been renting for the last year as it will be more expensive for them to find a home.

Housing Starts Increased 30% Year Over Year

This is great news all around.  Sales of new construction houses have really boomed this year.  This is also great for the local economy as the builders hire skilled trades which boosts local employment, the city or town expands its tax base, and additional services must be added (retail) to service this additional density and demography.  Hopefully this continues.

The Rental Vacancy Rate Decreased from 3.9% to 2.9% Year Over Year

This is another overwhelmingly positive statistic.  On a percentage basis this means there are 25.6% less vacant apartments in the area.  This continues the improving trend from 2009 when vacancy rates were 12%+.  Vacancy rate declines are generally indicative of economic growth and population growth (both province migration ie Alberta to Ontario, and immigration).  With an improving economy, robust sales activity and a tight rental market, it is clear people are moving to the area.  The area now seems ripe for new construction of rental units.

So after reviewing the stats it's clear to see that 2016 was a pretty healthy year for the real estate market.  Those are our takeaways from the stats.  What are yours?

*Sources WECAR & CMHC

2016 Year End Real Estate & Related Observations

 As the holidays draw closer we are going to do a few posts wrapping up the year.  And what a year it has been for our real estate market and many other markets in Canada and the US.  Today we are going to discuss some observations we’ve made throughout the year.

The Year of Multiple Offers

Multiple offers seemed to be a way of life this year.  Bidding wars were everywhere, in all parts of town and all price ranges.  This even spread to the commercial market as some retail, multifamily, and industrial buildings had multiple offers.

New Construction Is Back In A Big Way

New construction was a bit of a tough business since the recession of 2008 in our market.  That changed in a big way as sales of new construction boomed all over the area.  Clearly there was some pent up demand from the last several years and that translated into huge numbers.

The Local Economy Is Finally A Tailwind

We deal with lots of business owners, and so many of them talk about having way more business than they can handle.  This applies across all industries.  The local unemployment rate has plummeted from being one of the worst in Canada to below average.  This bodes well for a continued buoyant, local real estate market.

We Need to Build More Condos

There are not enough condos out there to meet demand.  With an aging demographic, mixed with the  acceptance of condo living by Millennials, the once stagnant demand for condos locally is long gone.  We expect to see more new condos being constructed in the next few years with brisk demand to meet them.

Downtown Is Still A Sore Spot

The downtown hasn’t really been able ride the coattails of the improvements in the local economy and real estate market as much as it was hoped for.  We still need more people living down there to change the demographics to support more retail and attractions that people like to speak about.  Hopefully the University opening in the near future will be a catalyst, but time will tell.

Those are some of our observations from 2016.  What were yours?