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Winnipeg Free Press - PRINT EDITION

Investors snap up infill lots for condos

By: Murray McNeill

Posted: 10/18/2012 1:00 AM | Comments: 0

HUNGRY real estate investors who can't find an apartment block to buy are getting creative -- they're snapping up infill lots and building their own multi-unit complexes instead, according to one local agent.

Mark Thiessen, a commercial sales and leasing agent with Re/Max Professionals, estimates 10 to 20 infill properties have been purchased in the city this year for redevelopment.

"Three or four years ago, you might have had one here or one there," Thiessen said. "But now you're seeing more investors exploring things outside their comfort zone."

He said the infill lots are usually in older, established neighbourhoods that already have some multi-family buildings. And in most cases, the investors are building condominium complexes rather than apartment buildings because they're easier to sell.

"A lot of people are looking to get their money in and get their money out... " he said. "And the economics are such that the payback on a (newly built) apartment building is so far down the road because of high construction costs."

He said a good example of the kind of transaction he is talking about were three infill lots at the corner of River Avenue and Bole Street that were purchased in 2010. The houses on the properties were demolished to make way for a new 26-unit condo development called the Oz.

Thiessen said he expects to see more of these kinds of transactions over the next few years because there are still a plethora of investors looking to invest in the Winnipeg market and a limited supply of investment properties for sale.

Thiessen was commenting after Re/Max Real Estate services released a new Commercial Investor Report Tuesday that said there continues to be a strong demand for commercial real estate properties in Winnipeg.

And some of the most sought-after properties are multi-unit residential buildings and larger, multi-tenant retail and industrial.

However, it notes, there continues to be a limited supply of multi-unit residential buildings for sale here. And when one does become available, it's usually snapped up immediately, often for a premium price.

"The price per door has risen exponentially. (And) prices have not appeared to reached their peak and... the momentum is expected to continue unabated in the near term," it said.

Wayne Johnson, a Royal LePage Dynamic agent who publishes a twice-yearly report on commercial real estate transactions in Winnipeg, said in his latest report the price per suite has more than doubled since 2005, going from an average of $35,562 to an average of $89,318 in 2011.

Johnson agrees the demand for apartment buildings remains as strong as ever, but the number of available properties continues to shrink.

He said 32 apartment buildings changed hands last year, but fewer than 10 in the first eight months of this year.

"There just aren't that many (buildings) available," he added.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition October 18, 2012 B6

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