The housing crunch has bumped up the appeal of modular housing in many quarters, with the rapid pace of delivery making it ideal for temporary worker housing, urban centres grappling with homelessness, and – in an upscale version – hotels.

Some of the same factors are driving the appeal of manufactured housing parks, a low-cost housing option for close to 60,000 households in B.C. and the asset of choice for many new investors.

A case in point is Lakeview Terrace, a 22-pad manufactured home park overlooking Okanagan Lake in Summerland, which sold in May for just over $2 million. Geared to seniors, the park has changed hands on a regular basis as owners have stepped in, enjoyed the cash flow and traded up.

“Lakeview sold two years ago for $1.6 million, now it’s $2,050,000,” said Bill Summers of Lighthouse Realty Ltd. in Abbotsford. “It’s making $100,000 a year, so [the owners] were doing really well but now they figure all their relatives have huge parks so they’re going to go big, too.”

The gain in value is attributable to the steady revenue the parks generate and the upside in rents through turnover, especially in those geared to residents 55 years and older.

Lakeview’s lowest rent is $456 a month for a pad, but incoming tenants face rents of $650, an indication of how the market is changing.

The parks usually pay for themselves in 10 to 15 years but with rent increases, Summers says anyone who holds onto them will see “pure cash flow.”

Yet the affordable price versus multifamily units in town makes them an appealing housing option.

“The way housing is right now, parks are just a really good opportunity,” said Alan Johnson, vice-president with the Unique Properties Group at Colliers. “That’s why guys buy them; they’re just good long-term investments.”

But investors don’t have to buy the whole property. Some simply buy a unit, rent the pad, and lease them.

The park in Fernie had a model that sold for $290,000 and rents for $2,500 a month, including the $400 pad rental.

The landscape of campgrounds and recreational vehicle (RV) parks across B.C. continues to evolve in 2024 as investors eye these properties for their recreational value and redevelopment opportunities.

Listed for about $7.5 million, Beachcomber RV Resort in Central Saanich on Vancouver Island is a waterfront RV park and campground on nearly 10 acres in two land titles. The property—listed last summer at $8 million—includes 60 seasonal RV sites and a walkable beach. Its upper level, partially in the Agricultural Land Reserve (ALR), features a 1,176-square-foot house on a bluff with potential for single-family home redevelopment. The forested bluff rises from sea level to the upper bench, transitioning to agricultural land.

“There’s a corner of the upper property that’s in the ALR,” said Mark Lester, senior vice-president with the Unique Properties Group at Colliers International. “It shouldn’t affect the development of that upper portion because residential is permitted in the ALR.”

The RV park is on a lower terrace at sea level near a swimmable area. It’s not in the ALR. The site includes a 1,223-square-foot, two-bedroom caretaker’s home and resort office.

“There’s a huge opportunity for somebody to acquire it and actively work it, market it, and put some investment into it,” Lester told Western Investor. “What makes it unique is its waterfront.”

Beachcomber has operated seasonally for years under a renewable temporary use permit. Designated destination commercial in Central Saanich’s official community plan (OCP), the property can be rezoned to accommodate tourist commercial development, such as cabins or a boutique resort, per the OCP. Current zoning allows for luxury residential development.

Lester said RV park and campground sellers have higher expectations of values based on sales activity before and during the pandemic.

“Values went up during COVID and expectations haven’t fallen in a manner that corresponds to rising interest rates since then,” he explained.

As interest rates rose, the market softened, prices fell and sales slowed. According to Lester, higher interest rates, inflation, and ongoing global geopolitical issues have affected buyer perceptions and real estate risk profiles.

“We haven’t really seen the market turn back,” he explained. “A lot of people are sitting on their hands waiting for something to happen. I think expectations with the RV parks that I’ve seen are still up there. They’re harder to leverage.”

Agassiz-based Re/Max Nyda managing broker Freddy Marks said real estate deals are rare but more remote properties like Escott Bay Resort at Anahim Lake, which sold April 26 for $1.2 million, are “smoking deals” that have much to offer buyers.

“If they look at resorts and RV properties, there are great deals out there if you compare that to residential or other kinds of investments,” said Marks.

Located 325 kms west of Williams Lake, the 6.4-acre property features a 6,000-square-foot log lodge with a licensed dining room. The property includes 14 campsites spread over two service campgrounds, more than 1,000 feet of shoreline, a four-bedroom log chalet, several cabins, an equestrian area, boat dock, two RVs, boats and paddle board rentals.

Developing a pipeline of parks

Pathfinder Ventures Inc. (TSX-V:RV), a publicly listed company which launched Pathfinder Camp Resorts in 2021, has locations in Parksville, Fort Langley and Agassiz. The Fort Langley-based company recently announced plans to develop an RV park in Osoyoos with about 120 RV sites on six hectares (15 acres) of leased land on Osoyoos Lake. Currently working toward profitability, Pathfinder plans to offer pre-sales of new RVs and seasonally leased sites in Osoyoos this summer and be fully operational in 2025.

“This is going to be an opportunity for an RV owner to have more of a cottage-like experience,” said Pathfinder founder and CEO Joe Bleackley.

Pathfinder also recently announced plans to expand east with the right of first refusal and an agreement to manage four RV parks in Ontario and one in Nova Scotia. The resorts are mainly seasonal vacation properties with a short-term tourist component.

“By the end of this year, we hope to be operating at least nine RV parks,” Bleackley said, noting that Pathfinder is also eyeing Alberta resorts. “We’re looking at taking over management of specific parks where there is an opportunity to own in the future.”

Bleackley said there’s a shortage of RV parks in Canada, and he’s optimistic about growing demand.

“Because we have multiple locations, we’re creating a brand and an experience,” he said. “One day, we hope to be the Hilton of the campground space.”

Diversified approach

Located near Kelowna on Ellison Lake, Holiday Park Resort has 570 fully serviced leasehold and rental RV sites and 117 condos, both leasehold and timeshare. The 26-hectare (64-acre) resort doesn’t allow camping, but it has full-time security, pools, hot tubs, a recreation centre, equipment rentals, laundry facilities, a library, pickleball courts, a gym and a sauna. It’s also working on adding new amenities, including charging stations for electric vehicles (EVs) and e-bikes.

“We’ve got a big combination of people that have subleases here, we’ve got time share usage, we hotel out our condos,” according to the resort’s president and new owner Dawn McLaughlin.

Raging Okanagan wildfires were a major challenge last summer for the resort, which turned 40 in 2023.

“We had to basically close the resort down to any external people because the fires came within about a kilometre of us,” recalled McLaughlin, who has worked at the resort for 18 years, most recently as controller.

The resort was not part of a nearby evacuation but has taken precautions such as replacing combustible cedar hedges with metal fencing.

Falling outside of B.C.’s new provincial short-term rental restrictions, the resort has recently seen more customers staying longer term, largely due to the housing crisis and affordability issues.

“There’s a lot of people that have tried to downsize and purchase RVs to live in themselves or for rental purposes,” said McLaughlin.

“Softer season” predicted

Joss Penny, executive director of the British Columbia Lodging and Campgrounds Association (BCLCA), predicts a “slightly softer season” compared to summers during the pandemic. About 60 per cent of bookings comes from British Columbians.

“We’re seeing a definite change in booking patterns,” explained Penny. “Those booking patterns are a wait and see because of the wildfire seasons we’ve had.”

While BCLCA members currently report about 65 per cent booking—a decrease of about nine percentage point versus last year—Penny expects an increase to a typical 75 per cent occupancy this summer, but that will depend on wildfires.

Potential floods, cooler weather, inflation and fuel prices have also led to lower bookings, according to Penny, who added that the Bank of Canada’s recent interest rate cuts need time to take effect.

“We anticipate that in ’25 and ’26 we might see more of the same as what we’re seeing now,” he said.

During the pandemic, BCLCA members saw business increase about eight per cent over previous years, with most customers from B.C. and Alberta.

Changing demographics and expectations, such as more EV usage, are some of the new challenges, according to Penny.

“We’re seeing a move away from baby boomers being the largest group and moving toward Gen Z and millennials being the largest group of people that are camping. Their expectations are totally different when it comes to connectivity on Wi-Fi,” he said.

Recreational property prices on Vancouver Island and across Western Canada will likely rise this year as many owners hang on to properties despite interest rates, short-term rental restrictions and a proposed capital gains tax increase, according to two key reports.

Royal LePage’s spring recreational property report predicts the average recreational home price to rise five per cent this year — with the median price for a single-family recreational home in B.C. at around $1.1 million.

According to Re/Max Canada’s cottage trends report, Canada’s recreational property market hasn’t seen a flood of listings. Re/Max predicts Western Canadian recreational properties could increase between five and 10 per cent in 2024.

Despite these predictions, new provincial short-term rental restrictions effective as of May 1 could cause some investors to offload their properties in B.C.

“The short-term rental regulation has affected the market a lot,” according to Judy Gray, owner of Re/Max Mid-Island Realty, who recently sold one property for $1.35 million, two units for $485,000 and $520,000, and a cottage for $540,000.

“There’s still a lot of interest here. People are a little bit nervous because they’re not sure about the changes of the short-term rentals and how that’s going to affect things moving forward,” she added.

Tofino and Ucluelet have divergent price trends related to the short-term rental restrictions and the planned federal capital gains increase, but according to Re/Max, both communities have shifted from a balanced to a buyer’s market.

Although exempt as a resort municipality, Tofino has opted into the provincial legislation, affecting two residential buildings. Ucluelet has opted out but is amending bylaws to ensure short-term rentals conform.

“Most short-term rental properties in Ucluelet are already zoned nightly rental and are not affected by the new legislation,” Gray told Western Investor. “Only nightly rental units attached to homes have had administrative fixes by (District of Ucluelet) council to continue to operate.”

A Leger survey commissioned by Re/Max found the short-term rental bans have not swayed recreational property owners to sell, and 58 per cent are holding onto their properties while about 29 per cent are looking to sell.

Proposed tax increases from 50 per cent to nearly 67 per cent on capital gains over $250,000 aren’t expected to spark a widespread flood of sales, Gray added, but she said six properties were recently listed for sale to beat the change, expected to take effect June 25.

“People are still putting their properties on the market to avoid the capital gains increase because they expect that it’s going to come back,” she said.

An uncertain climate

In the Comox Valley, buyers are often looking for active lifestyles — from mountain biking in Cumberland to winter sports at Mt. Washington. This trend grew during the pandemic, but Mt. Washington recreational property sales have since been declining due to interest rates.

Ryan Williams, owner of Ocean Pacific Realty, said recreational property sales in the region face another challenge — climate change. Global warming has been impacting winter sports while forest fires have affected summer recreation. These factors — and their associated fire hazards — are also increasing insurance rates on Mt. Washington, which has been experiencing low snow levels.

“The drying in the summer and warmer conditions in the winter are two major environmental issues for recreational property,” said Williams.

As far as capital gains changes, Williams said the effect on recreational properties depends on when a purchase was made.

“If they bought two, three, four years ago, they’re not going to see big gains,” he explained. “They’re going to see losses, probably, on Mt. Washington if it stays warm and we don’t get much snow.”

Metro Vancouver hotels in May had the highest occupancy rate among large Canadian metropolises, at 83.9 per cent, with hoteliers in the region able to charge the highest average daily room rate in Canada: $317.41.

The city's hotel occupancy rate in May was also higher than the 82.9-per-cent rate seen last May, according to CoStar, a global provider of real estate data, analytics and news. CoStar in May 2023 pinned the average daily room rate in Metro Vancouver at $226.21, meaning that the average daily room rate in the region in May jumped 40.3 per cent year-over-year.

"There just have not been many hotels built over the last decade, and actually supply and inventory have contracted in the past decade [in Metro Vancouver,]" CoStar's national director of hospitality analytics, Laura Baxter, told BIV this afternoon.

May is the first month this year that CoStar's data shows a higher occupancy rate in Vancouver than in the same month in 2023, and it was also for the first full month in which new provincial rules for short-term rentals came into effect. 

The B.C. government's legislation, which took effect May 1, holds that short-term rentals are only allowed in the principal homes of hosts in 60 new B.C. communities. Another 17 communities newly chose to adopt those regulations even though they were exempt from the provincial legislation.

Rules for short-term rentals did not change in the City of Vancouver because that city since 2018 has limited short-term rentals to the principal residences of hosts, and charged licence fees. The B.C. government's new short-term rental rules do newly apply in many Metro Vancouver municipalities, such as Burnaby, New Westminster, Delta, North Vancouver, West Vancouver and Surrey.

The aim of B.C.'s legislation was to free up housing units for longer-term rentals to limit the rise in the average rental rates in the region for residents.

The Metro Vancouver hotel data for May includes information from 195 hotels that combine to have nearly 26,000 rooms across the Lower Mainland and into the Fraser Valley, Baxter said.

"I think it is too early to tell whether all of that growth [in the region's occupancy rate] is related to the new regulations on short-term rentals," she added.

Tighter vacancy at Metro Vancouver hotels in May has been a trend, given that in May 2022, the region's occupancy rate was only 76.5 per cent. 

Occupancy rates and average daily room rates in other major metropolises in Canada in May included, in order of highest occupancy:

• Ottawa's 78.3-per-cent occupancy rate and $223.53 average daily room rate;

• Toronto's 76.4-per-cent occupancy rate and $254.88 average daily room rate;

• Montreal's 76-per-cent occupancy rate and $233.68 average daily room rate;

• Edmonton's 67.3-per-cent occupancy rate and $152.98 average daily room rate; and

• Calgary's 67-per-cent occupancy rate and $168.49 average daily room rate, according to CoStar.

Baxter said Vancouver's anticipated record-breaking cruise season for passengers is likely a contributing factor in the higher occupancy and room rates. 

Indeed, B.C.'s tourism economy blooms when spring arrives. The Vancouver Canucks' playoff run may also have prompted out-of-towners to visit Vancouver to attend games, and then stay in hotels. 

In July 2023, Vancouver hotel rooms charged an average $347.08 daily rate, which was the highest figure that CoStar had ever recorded for a major city in Canada. 

Baxter said there is "every possibility" that Metro Vancouver this summer will set a new record for the highest-ever average daily room rate for a city in Canada within a calendar month.

A precipitous decline in Metro Vancouver land sales last year could turn around this year, but developers are taking a long-term view with any purchases as market uncertainties continue.

“Developers need to replenish some of their inventory; that’s starting to happen,” said Justin Mitchell, an investment and development land broker with Goodman Commercial Inc. “The larger, experienced developers have been doing transactions and putting properties under contract.”

This marks a shift from last year, thanks in part to higher financing costs and land values that saw sellers reticent to lower price expectations in the wake of the post-pandemic surge in 2021.

A total of $3.3 billion worth of land changed hand in Metro Vancouver last year, according to Altus Group, including $1.9 billion transacted worth of residential land and $1.5 billion worth of ICI land.

Residential land sales slowed more sharply than commercial deals, falling 66 per cent versus a 55 per cent drop in ICI deals.

“There still pretty strong demand from industrial users to purchase and develop their own facilities, and a lot of that is driven by the fact that there’s still really good financing available to them from the banks,” Mitchell said. “[Residential] bank financing is still very difficult to get.”

Provincial pressure on municipalities to draft plans that show how they’re going to meet their housing targets underpin developer interest, with transit-oriented areas seeing a pick-up in activity.

But pricing is key.

While there’s been significant activity along the route of the Surrey-Langley SkyTrain line, the higher densities mandated for transit-oriented areas isn’t necessarily attractive to developers or the buyers they supply.

“When the transit line was announced, it freed up a lot of land,” said Neil Chrystal, president and CEO of Polygon Realty Ltd., a Vancouver developer with sites in the Fraser Highway corridor near the planned Fleetwood and Langley City Centre stations.

“[But] we’re focusing a lot on the woodframe as opposed to the highrise. Mostly we’re focused on the more attractive entry point for home buyers,” he said. “In today’s climate of higher rates, affordability becomes more of a challenge.”

With costs on concrete highrises typically about 15 to 20 per cent higher than for woodframe construction, the numbers don’t pencil out. This has pushed Polygon to seek opportunities beyond Metro Vancouver, such as a 1,400-acre tract in the Silverdale area of Mission it acquired in partnership with Madison Development Corp. in 2017.

Partnerships are also key to Vancouver-based Townline Homes Inc., which says high costs mean many sites aren’t viable even if land costs are nil.

“Our appetite is good, but cautious,” Townline president Daryl Simpson said. “But even with land at zero today, there’s a number of projects and a number of markets that simply don’t make sense given the significant environment of increasing costs that we operate in.”

These costs include government levies, as well as high prices for materials, labour and debt.

Townline hasn’t acquired any land recently, despite carefully scouting opportunities, but it is working with partners – both institutional groups and First Nations – to feed its development pipeline.

“In Metro Vancouver, South Vancouver Island and the Interior, you have institutional partners with a very low cost of capital that have land holdings and are looking for executional partners, and that’s an opportunity for someone like ourselves,” he said.

The challenges are familiar to Mitchell, who said developers are pursuing several strategies to make deals work.

“You can’t over-pay for a site at the moment,” he said. “Developers are definitely interested in purchasing properties if they’re priced really well – not just priced to market, but I think they need to feel like there’s a cushion if things are more difficult for longer.”

Some of the options include seeking out deals with longer completion timelines as well as distress sales that offer a hedge against future cost increases. A low price today promises to offset upward cost pressures down the road.

There are currently a lot of troubled sites on the market, said Tom Huang, managing partner with Tera West Properties Ltd. in Richmond, in part because of speculative buying by developers who now find themselves in a changed business environment.

On one hand, financing costs have increased significantly over the past two years, not only increasing developer costs but pushing residential buyers to the sidelines.

“With a market softening combined with record high interest rates for a record high duration, it’s been a deadly combination that together have killed a lot of developers,” Huang said.

Tera has been able to pick up several properties as a result. Earlier this year, for example, it picked up a site at West 28th Avenue in the Cambie corridor for $18 million. The previous developer had paid $23 million.

“The last developer paid so much for it, but that doesn’t mean we got a really good deal,” Huang said. “We simply got a project that works.”

And it will only work if the buyer demand doesn’t soften in the next couple of years.

The market today can bear a cost of about $1,400 per square foot for townhomes, Huang said, and if construction costs rise or the residential market softens, then the model breaks.

“We will very quickly be losing money,” he said.

Yet land remains in demand, simply because of the constraints facing the Lower Mainland. This has brought developers like Tera back, knowing that opportunities today are not likely to last.

“We know the market is likely near the bottom, so we’ve been active for almost a year now,” he said.

Signs of life are also being seen on Vancouver Island, thanks to a steady influx of buyers seeking more affordable housing options in a temperate climate.

While land is relatively plenty east of the Rockies, there is also optimism given the anticipated drop in interest rates.

This holds true for developments of all stripes, both residential as well as commercial.

“Rates have stabilized at or near the top, but as soon as we get a little bit of relaxation in rates, I think the buying activity will pick up quite a bit,” Chrystal said. “That will drive our purchase decisions.”

BMO Financial Group reported April 30 that 72 per cent of aspiring homeowners are waiting for the Bank of Canada to cut interest rates before buying, up four percentage points from a similar survey last year.

A drop in interest rates is also expected to drive investment in industrial properties in markets such as Lethbridge, where a conservative attitude has constrained construction.

“Land is going to notch up in its absorption here in the next couple of years,” said Josh Marti, a principal and senior associate in Avison Young’s Lethbridge office focused on industrial.

Lethbridge industrial vacancies are steady in the 4.1 per cent range, due in part to a lack of new construction and low appetite for the product that remains. New space is needed, but there was nothing to give tenants options. The only deals being done were for owner-occupiers.

Marti said that’s going to change, especially as interest rates start to edge down – something expected this summer, with the Bank of Canada’s next policy rate announcement due June 5. A lower financing cost will make it more economical for developers to move ahead, and help pull land deals forward.

“Pricing was getting more expensive, financing was more expensive … but those excuses are no longer there anymore,” Marti said. “There’s no inventory to be had, so you’re forced to build.”

(Port-related uses alone require an additional 1,000 acres of land over the next 10 years)

Metro Vancouver’s industrial land squeeze is no secret, but the pain it is expected to cause is becoming harder to manage.

With no simple fixes in sight, the stakes are rising for Canada’s largest port – and the local and national economies it supports.

The Port of Vancouver – the most-diversified port in North America – is struggling to acquire the land it needs to support trade, a growing population and economic activity. The consequences are already manifesting in businesses looking to other provinces for industrial land, and in inefficient supply chains at a time when job action also threatens the expeditious movement of goods.

“How that manifests in terms of inefficiency is a container that would arrive at the Port of Vancouver today, with goods that are destined for the local market, are actually being put onto a train and transported outside of the province to markets such as Calgary,” said Jennifer Natland, vice-president of real estate at the Vancouver Fraser Port Authority, the organization that manages federal lands and waters within the Port of Vancouver. 

“[The goods] are then sorted and trucked back to the region before their final distribution within [Metro Vancouver].” 

Natland said that this type of activity will only increase if land isn’t allocated for warehouses and distribution centres in the region. 

Metro Vancouver as a whole needs 404.7 hectares (1,000 acres) of land over the next 10 years to properly support trade to Canada through the Port of Vancouver, she said. 

Natland would not indicate how many acres of land the Vancouver Fraser Port Authority needs. 

Chris MacCauley, executive vice-president at commercial real estate company CBRE, estimates that the port itself needs 607 hectares (1,500 acres) of land over the next decade.

“We simply don't have 1,500 acres of industrial land in Vancouver,” said MacCauley.

“And that's just what the port needs, that doesn't even take into account what our local industrial needs are, other things that are not port related, new entrants coming to the market or existing companies that need to expand. You have many stakeholders at the table looking for a piece of the pie and there's no pie.” 

The Port of Vancouver borders 16 municipalities and encompasses roughly 16,000 hectares of water, 1,500 hectares of land and hundreds of kilometres of shoreline.

A potential solution to the land squeeze – albeit a controversial one – may lie in B.C.’s agricultural land reserve (ALR), MacCauley said.

“We've been talking about [multi-storey and stacked industrial] for years now and it's been proven across North America that it is not the answer. That is a solution for certain problems, but it's not a solution when we're talking about trade enabling lands,” said MacCauley. 

Instead of constructing new industrial parks, MacCauley proposes adding ALR land to existing industrial parks. He emphasized that the focus would be on land that is not being utilized for agricultural purposes but is still protected under the ALR designation. 

“I'm not saying that we have to give up food security or pave over good agricultural land that is currently producing,” he said. “I think what we really have to do is revisit a 50-year-old charter and find a balance of what is needed for the agricultural community and what is needed for the industrial community.” 

Kim Grout, CEO at the provincial Agricultural Land Commission, said that she understands the need for more industrial land, but acknowledged that agricultural land is also in short supply. 

“There's lots of ALR that's owned by people who intend to hold it, in some cases for a generation in the hopes that it'll be something else in the future.… There's no restriction on ownership in the ALR, which sometimes is the challenge,” she said.

The agricultural land commission would not support the ALR being bought by the port for industrial uses, said Grout.

(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.

In July 2021, the Residential Tenancy Act was amended to encourage more environmentally sustainable housing developments. Landlords who incurred a capital expenditure to reduce energy consumption at their property or reduce greenhouse gas emissions became eligable to obtain a higher than standard rent increase.

Given the strict limitaitons placed on increasing the rent for residential properties in B.C. over the last serveral years, this legislative amendment opened the door for more thoughtful building design and ultimately, offered a critical financial incentive to construct more modernized and sustanable retan housing stock.

To learn more about the additional rent increase available for capital expenditures, read the news release from the B.C. Residential Tenancy Branch.