Vacancies: 2.1% ↓
Rents: $925 ↑
Urban Centre Emerges From Recession to Deal With Excess Supply
London is a significant urban centre in southwestern Ontario, the largest city between Hamilton and Detroit. Although recently overshadowed by the growth of Waterloo Region, London’s population continues to grow at a rate of around 1% per year. It boasts a diverse economy based on skilled trades, health care, manufacturing and education. Its location at the junction of Highways 401 and 402 enhance the importance of the transportation sector on its economy.
London’s large manufacturing base was challenged by the 2008 recession, problems in the automotive sector and the high Canadian dollar, costing the city 8,000 jobs in the sector. In spite of this, its economic outlook improved in 2010, with new jobs and growth in the high-tech sector. After peaking at 11%, London’s unemployment rate at the end of 2010 stabilised at 8.8%, one of the lowest in Ontario.
For the apartments in London’s universe, the city’s emergence from its economic challenges bodes well for the future, although it has some way to go before it makes up for lost ground. London is currently the home of a number of active apartment developers, and its concentration of apartments is the highest in southwestern Ontario. This has led to a saturated market. Vacancy equilibrium continues to elude the market due to ongoing development.
Vacancy rates remain above the provincial average, and in 2010 the market responded by dropping average rents. In addition to this, new supply was added to the marketplace. These factors should keep rental rates down and vacancy rates up. High unemployment in the under-25 demographic may also depress rental activity.
It should be noted that vacancy rates are disproportionately high for the more expensive apartments than for average or lower priced apartments. It is possible that new apartment construction in this price range has reached a saturation point. Certainly, this saturation puts London’s high-end apartments in heavy competition with London’s mid-market stock, reducing returns for investors who spend in London’s mid-market. In other cities, owners renovate to raise rents, but in London, they renovate to keep tenants.
- Continuing oversupply will lead to low or flat rate increases.
- Continuing challenges in the mid-market due to competition from oversupplied upper market.
- Opportunities exist for repositioning for the seniors’ market; older buildings can add elevators to improve accessibility.
- Opportunities will materialise in the old south, especially around Wortley Village. Approach east of Adelaide and its older stock with caution.
- Opportunities exist in the student market, especially around Western University, but be aware of local bylaw restrictions.
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Global Director Buildings
Mansoor Kazerouni is an Architect with over 27 years of experience and a significant portfolio of projects completed or underway across Canada, the United States, the UAE, Jordan and India. These include high density high-rise residential buildings, hotels, office, retail, institutional, and complex urban mixed-use developments. A number of these projects have been nominated for and received Urban Design and Architectural Design awards.
Mr. Kazerouni is the Global Director of Architecture at IBI Group, leading a team of over 1,400 Architects, designers and Engineers located in 60 offices worldwide.
Mr. Kazerouni has been a guest lecturer on the subject of architecture and mixed-use design at universities, conferences and various panels. He has also been interviewed on the subject by newspapers, architectural publications, television and other media.
Mr. Kazerouni's abilities and expertise in his field have been recognized by his appointment to the City of Mississauga's Urban Design Advisory Panel, the City of Markham’s Urban Design Advisory Panel and the City of Vaughan's Urban Design Advisory Panel. He is also a past Advisory Board Member of the Urban Land Institute, a member of the Ontario Association of Architects, the Alberta Association of Architects, the Nova Scotia Association of Architects, the Architects Licensing Board of Newfoundland and Labrador, and a member of the Royal Architectural Institute of Canada. He has testified as an expert witness at the Ontario Municipal Board and at Arbitration Hearings related to development sites.
Darryl McCullough CCIM SEC
Broker - Royal LePage Lakes of Muskoka Realty Inc., Brokerage
President - Crescent Equity Management Inc.
Since 1972, I have been given the opportunity to interact with seasoned partners and clients in structuring and organizing both simple and complex real estate transactions involving acquisition, disposition, finance, and consulting in Canada and throughout the United States. It has trained me to bring a unique, personal client-centered approach to each assignment, from simple to complex transactions and the diverse clientele who own them.
In 1984 I received the Certified Commercial Investment Member, CCIM, designation (www.ccim.com); an internationally recognized identity confirming amortized knowledge in the disciplines of investment, development etc.
Another prominent membership I thankfully am able to continue holding is with the U.S. based Society of Exchanges Counselors (www.secounselors.com). This organization shares my belief in pursuing and demonstrating problem solving techniques in the real estate industry based on proven principles of integrity, professionalism, and accountability. Through this organization I continue to dedicate myself to what is true in the discipline of real estate problem solving.
Technology coupled with a learned research and analytical skill set now allows me to carry out these functions with selected projects from my adopted Muskoka home.
I continue to maintain an ever changing “student” learning status not only related to the physical asset, but equal or more importantly, drawing out corporate/personal situations and objectives and then knitting together ultimate benefit packages based on creative solutions via time honoured formulas.