Nanaimo Commercial Real Estate: Is Now the Time to Invest?

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Want to know why VCREP picked Nanaimo as the best investment market for 2023?

This week Cory and Melissa welcome Connor Braid of William Wright Commercial and Managing Director for Vancouver Island to share the inside stats on why the Central Island region is an investment market you want to know.

From developments to population growth to thriving industries Connor breaks down it all and why you want to make sure Greater Nanaimo is on your search criteria for your next commercial real estate investment.

Is now the time to invest in the Nanaimo commercial real estate market? We sit down with William Wright Commercial Managing Director Connor Braid to learn why everyone is moving to Central Vancouver Island and how you can get in on VCREP’s #1 commercial investment market for 2023!

Who is Connor Braid?

I’m the Managing Director for Vancouver Island for William Wright Commercial. I’ve been with the company for three years now. I was born and raised on Vancouver Island, spent some time in the UK and then came back here. I was working as a commercial appraiser and then decided to go into the brokerage game with Cory and run operations here.

In my past life, I was a professional rugby player and played for Canada at the Tokyo 2020 Olympics.

Why are you excited about the Nanaimo commercial real estate market?

It’s the increasing lease rates, upside in rents, and cap rate compression in a growing marketplace that has me excited about Nanaimo.

Nanaimo is located in a really great area geographically with the ocean to one side and mountains on the other. There are tons of provincial parks around and highways, which means you don’t have a lot of land and have to densify. Construction is a huge part of the Central Island right now.

Cory: By 2040, Nanaimo could be out of zoned industrial land, which just goes to show the demand and land constraints. Lease rates are $14-18/foot for an industrial space, which is similar pricing to Coquitlam or Burnaby.

Let’s talk about the Vancouver to Nanaimo fast ferry. What’s happening with that and when?

The Vancouver Island Ferry Company is launching a downtown to downtown passenger ferry from the Vancouver Convention Centre to the Nanaimo Cruise Terminal in just 70 minutes. It’ll hold 354 people with multiple daily sailings. Sailing schedules and pricing should be released in the coming months with ferry service starting this summer.

Throughout covid, people really started to take stock of where they were living and how they were living their lives. It pushed people outside of the core to places like Nanaimo. Not only does the fast ferry make Nanaimo more accessible but they’re also hiring up to many Islanders for their Nanaimo operations.

Having the ability to work in downtown Vanvouer and get there in 70 minutes while still living in Nanaimo with a better and lower cost of living is a great prospect.

Why are investors attracted to the Nanaimo commercial market and Central Island?

There is a bit of what I like to call the Mainland Mindset: Investors looking for “unicorn farms” on Vancouver Island. It is a fantastic place to invest but you’re no longer finding places for pennies on the dollar like you might have a few decades ago. Incredible investment opportunities do exist but you have to dig for them.

People need to look at medium to long term investments; this is not a two year play where you’ll get massive returns. There are lots of opportunities at the 4.5-5.5% cap rate or with good upsides on rents. That’s the mindset you need to come in with.

There is a lot of opportunity and growth in the Central Island region. But it’s not for the short term. It’s about buying into the Island for the medium or long term.

Cory: Investors may find similar assets on the mainland for a 3.5% cap rate. But on the Island, they can get a 4.5-5.5% cap rate with similar vacancy rates. They don’t have to sacrifice vacancy and their lease rates have more runway. If cap rates compress, prices go up, giving investors more options to make money. You can make money from your tenant paying down your mortgage, income on the property, and higher pricing when demand goes up.

What’s the population of Nanaimo? How does population growth affect commercial real estate?

Commercial real estate always lags behind population growth. The population of the City of Nanaimo increased 10.3% from 2016 to 2021. It was estimated to be at 103,000 people last year and by 2046 is estimated to reach 140,000 people. Between 2014 and 2021, 46,000 people moved to Nanaimo from other parts of BC and 37,000 moved here from the rest of Canada. There’s huge demand to live, work and invest here!

All of these people need places to work, places for consumption, public and private amenities, etc. That’s where commercial real estate comes in. We’re now seeing that construction to add the space to meet the demand.

What are the major business sectors in Nanaimo?

The major business sectors in Nanaimo are:

• Construction
• Professional services
• Retail trade
• Public administration
• Healthcare<

There’s also Vancouver Island University and lots of other exciting prospects and drivers in the Central Island area.

Can you tell us about some exciting projects in the Central Island and Nanaimo commercial markets?

The Duke Point expansion is very exciting. That’s going to bring in 1000 new jobs and hopefully reduce congestion at the Vancouver Port.
There’s also the Sandstone development, which is a 726-acre master planned community of 2200 residential units with commercial, industrial and retail uses. It’ll be massive!

The Harbourside Hotel revampis another exciting one. It’s a mixed-use development with 760 units over eight buildings. It will have a hotel, conference centre and over 10,000 square feet of commercial space.

1 Commercial Street is a new project bringing 20,000 square feet of office and retail space to market. It’s a retrofit and revamp of the A&B Sound building that people are very excited about. People want to see densification in the city centre.

Have you seen a population shift where people are getting priced out of Victoria and now heading to the Central Island?

That’s definitely happening in the mid-Island market. Lots of young families are coming from Victoria and the South Island, and even from Vancouver, to the mid-Island. When you factor in the fast ferry and ability to work from home, it’s very attractive. You get more bang for your buck here, even though prices have risen.

Are there a lot of institutional buyers and mainland developers working in Nanaimo now?

There is a ton of interest in this region and mainland money is here. But a lot of the larger developments are mid-Island based. A lot of the land has been owned for a long time by people who knew Nanaimo was going to boom one day. Right now, it’s a good mix.

One thing mainland developers have had to learn is that business is done a little bit differently on the Island. There’s not the same volume of trades here and competition is fierce. Developers who understand that are able to build the right teams and get projects up.

What asset class in the Central Island and Nanaimo commercial markets would you be buying right now?

I like the idea of small bay, multi-tenantindustrialor well-located, retail strip malls with under-market rent. The cap rate may not be great at first but if you’re proactive, you can get rates up to market.

Any medical office building is a great buy. We have an aging demographic on the Island so those medical amenities are a staple.

The 6 Pack: Getting to Know William Wright Commercial Managing Director for Vancouver Island, Connor Braid

What would your last meal be on death row?

Tomahawk steak and garlic mash. Maybe a scotch and a cigar too?

Favourite vacation spot?

I always love Mexico – and not all of Mexico is Cabo. I’d like to spend more time in South America; I’ve been to Argentina once and it was amazing. Latin countries have great weather, great food and great culture.

Favourite bar or restaurant?

In Victoria, I’m a big fan of II Terrazzo. It’s a family-run Italian restaurant and you can’t get much better than that.

Go-to karaoke song?

Livin’ on a Prayer. You need to go with something that will get the crowd going so you’re not singing by yourself.

Favourite band?

I honestly can’t say I have a favourite. I listen to everything and choose a genre based on what I’m doing.

What advice do you have for listeners wanting to make a commercial investment in 2023?

Expand your outlook and timeline. Real estate is not a get rich quick scheme. Find an area and stake your claim for the medium to long term. Don’t go looking for a home run deal – take the single or the double. The best “unicorn farm,” especially on the central island, is the future.

• William Wright