A thriving commercial and development real estate market in Kelowna shows no sign of slowing down, says a local commercial and investment broker.
Terse Cairns of Faith Wilson – Christie’s International Real Estate describes the Kelowna marketplace as “very vibrant and extremely competitive” as investors are drawn here from across Canada and Europe.
“Demand for investment in Kelowna is growing because it is increasingly being viewed as a desirable place to live and smaller investors who manage their own portfolios like to be close to where they invest their money. So they’re moving here and trying to buy commercial real estate at the same time,” Cairns said.
Cairns said Kelowna has traditionally been viewed as a secondary market alongside Vancouver, Edmonton, Calgary or Toronto among larger pension and wealth management fund investors, but our status has been bolstered by population growth and the business potential it brings.
She says this is reflected in her own firm, which decides to open a brokerage office in downtown Kelowna next month.
“Since COVID there is much more competition in the market. I have a smaller investor client that I’ve been writing double digit real estate bids for. I estimate we’ve had around 10 to 12 bids now and have been consistently outbid each time, although in many cases we’ve bid the asking price,” Cairns said.
“It’s very difficult for me to advise someone and suggest they overbid when the property value doesn’t justify it, but it just goes to show that the competition has gotten very, very tough.”
Cairns believes that the active global promotion of the Okanagan lifestyle over the past 15 to 20 years, the affordability of real estate compared to larger urban centers and the temperate climate is fueling the investment real estate enthusiasm.
While post-COVID residential property prices have skyrocketed, making residential property purchases financially unaffordable for local residents, Cairns says the degree of affordability is different for people who are selling their larger properties in urban centers and moving to the Okanagan.
“And here is an opportunity. Kelowna is still seen as a thriving city where this is an opportunity for entrepreneurs to come here and open businesses that we haven’t had access to before.”
She said the opportunity is being reflected in the growth of the food and beverage industry and the growing cottage industry of craft beer breweries, wineries and distilleries.
“Things like that are starting to emerge and are helping to make Kelowna a much more vibrant city now,” she said.
“It matters less if people come, companies will follow. These people bring businesses with them… and help the economy thrive here.”
And with the wealth coming to Kelowna, she expects more luxury brand retailers to pop up here.
“I think that’s something to keep in mind because right now luxury brand shopping is either done online or traveled to Calgary or Vancouver. But I think as the city grows, the demand for high quality luxury products will grow with it.”
Sustainable growth, she says, will continue to be dictated by population growth and the perceived return on value for a dollar of investment.
“It will definitely be sustainable because a lot of people want to come here and a lot more people stay here. In 2021, we had two million room nights in Kelowna, and that was up 20 percent year-on-year, which bodes well for the hospitality industry, which has been really hard hit by COVID.
“Things have slowed down a bit on the housing side, with sales down 35 per cent last month, but that’s due to rising interest rates and people being a little more cautious about waiting a bit more rather than jumping around every available option.
“But demand for commercial real estate will remain strong and there will definitely be more interest in this market than ever before.”
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Commercial Real EstateKelowna