As most Yellowknife renters know, the apartment vacancy rate in our city tends to be very low. In the spring of 2011 it dipped as low as 0.7%. It real terms this meant that of the 2,119 rental apartments and town houses in Yellowknife, only 14 were vacant at the time of the spring 2011 survey by the Canada Housing and Mortgage Corporation (CMHC). For aspiring renters this meant fierce competition for the few vacant spaces. It also meant rents were likely to keep rising.
|Vacancy Rate||Vacant Units||Total Units|
(Source: CMHC Rental Market Statistics)
For condo developers it meant something entirely different; with a vacancy rate near 1% since early in 2010, they were receiving a strong signal that the time was right to build. And build they did. Highstreet Ventures, a Western Canadian condominium developer, negotiated the purchase of a piece of land at the top of School Draw Avenue and built 120 apartment-style, villa and town house units. The project, named Copper Sky, is just a stone's throw away from one of Yellowknife's most beloved green spaces, Tin Can Hill. The units quickly sold out and Highstreet began making plans for their second Yellowknife project, Niven Heights. With an equal number of units, and an equally impressive location, Niven Heights seems to be meeting with the same success as Copper Sky.
To put the importance of these two projects in perspective, let's revisit the statistics for a brief moment. With 2103 apartment and townhouse units in the entire city (Fall 2011), 1% of vacancy represents 21.03 units. 240 new condo units, if they were to draw buyers directly from the existing pool of renters, would boost the vacancy rate by 11.4%.
Of course, that's not exactly the way the rental market works. Yes, some of the condos were undoubtedly purchased by renters who will be vacating their units, but there are many other sources of condo buyers: young adults moving out of their parents' homes, people moving to Yellowknife for the first time, and folks who were co-locating with other renters waiting to buy a space of their own. It could be that the available condos will be snapped up from sources like these without raising the vacancy rate for long, as was the case in 2009 following the addition of 135 units to the rental market.
But 240 units in two years is bound to have an impact. And of course, Highstreet Ventures is not the only developer in town - there are several other projects underway. Northern Property REIT should be starting construction of their 28-unit apartment building this summer. And two new local developers, Toro Ventures and Redcliff Developments are close to completing 24 condos and apartments between them. With several other smaller projects around town, the number of new units tops 300 in just over two years.
And there are more to come. The City is currently in the process of negotiating the purchase of the long-dormant Bayview Estates land on Niven Drive (City Aims to Purchase Bayview Estates, Simon Whitehouse, Northern News Services, March 23, 2012). Bayview estates can accommodate more than 100 units. And given the stunning views of Great Slave Lake and Old Town from the Bayview property, it's hard to imagine that it will stay undeveloped for long.
In a city that has been known for wild swings in land development, it certainly seems as though things have swung back towards rapid growth.
What does all this mean for Yellowknife homeowners? For those in detached homes, it likely won't make much of a difference; the vast majority of the units under construction are two-bedroom condominiums. But for those who own Yellowknife condos, the new projects signal a tide change. The vacancy rate is about to ease substantially and renters will have more options than they have had in years. For the first time in a long time, the Yellowknife condo market will move from a strong seller's market to a more balanced one.
Corrections: Copper Sky has 81 units, not 120, and Niven Heights has 118. I also failed to take in to consideration the possibility that some Niven Heights town house purchasers are down-sizing from single-family homes. This could lead to an increase of single-family-homes listings this summer as folks prepare to move in to their new town houses.