October 27, 2022

Real Estate Investors Find Opportunity in Value-Add Properties

The multi-family rental market across North America has never been as strong as it is today with various economic factors giving support to that real estate asset class.

Growing economies with the addition of jobs are key foundations for propping up housing markets, particularly rental. Natural population growth supported by increased immigration levels are also important.

The multi-residential market today is also gaining steam from the fact that homeownership is increasingly becoming less affordable in many major centres as the cost of living and rising interest rates cut back on demand.

And of course, in many markets, there is a continued huge lack of housing supply.

In this environment, many of the big real estate players, real estate investment trusts and investors are seeing a grand opportunity.

They’re scooping up available properties like never before.

And one of the key things they’re doing is taking an older asset, adding value to it by injecting some capital investment for improvements and therefore not only increasing the value of the property but also making it more attractive for potential residents as well as for existing tenants so they decide to stay for longer periods of time.

As we all know, today is all about the environment. Companies that are paying attention to environmental issues and doing what they can to reduce their carbon footprint, for example, are ones that are succeeding in a marketplace where people are demanding that.

So it’s not surprising that landlords and property owners are doing their part. It just makes good business sense.

A perfect example of this is the announcement earlier this year of a partnership between the Canada Infrastructure Bank and Avenue Living Asset Management. Together, the two said they will commit $150 million towards sustainable retrofit projects in low-density residential buildings across Western Canada.

“Under the agreement, the CIB’s investment will represent 80 per cent of the overall capital value of the work. The timing of this investment coincides with Avenue Living’s corporate commitment to reduce greenhouse gas emissions while collectively addressing the prairie’s aging housing supply. The funds will improve the living conditions for thousands of Canadians.

Avenue Living’s multi-family residential business serves a significant segment of Canada’s lower- and middle-income workforce, known as the workforce housing rental segment,” said the two organizations in a news release.

Avenue Living is one of those big players in the multi-residential rental game across North America. Since its inception in 2006, it has grown to more than 15,000 units.

Officials said the goals of the sustainable retrofit projects include optimizing building performance, decreasing GHG emissions by more than 49 per cent, and enhancing functionality and comfort for occupants.

“Projects will be delivered simultaneously and focus on renewable energy generation on-site, low carbon heating and cooling, sensors and smart thermostats, optimized air filtration, water and vapour management, and energy consumption strategies to effectively reduce in-suite utility costs for lower-income renters.”

“With over 90 per cent of Canada’s rental universe built before 2000, Avenue Living is excited to be a pioneer in retrofitting these older units. We are eager to set a new standard and enhance green infrastructure programs for the entire industry – for years to come. The work that we are doing with CIB represents nearly 50 per cent of Avenue Living’s overall portfolio. By 2027, we have the vision of completing 100 per cent of our growing Canadian portfolio, continuing to positively impact the communities we serve,” said Anthony Giuffre, CEO, Avenue Living, in a press release.

It’s becoming more evident today that more and more companies like Avenue Living are following this trend of investing in multi-residential assets by retrofitting older units to a new, and more environmentally-friendly, standard.

Chris Chornohos has a passion for real estate and helping his clients reach their business goals by providing Real Estate Investors and Owners with the first class valuation and advisory services to close more deals. Chris is also an investor, builder and developer. Reach out to Chris today to help with your Real Estate needs. 

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Chris Chornohos is a leading real estate consultant, investor and developer with extensive experience within the commercial real estate industry. Contact me today.

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