Work is well under way on this new 12-unit apartment building, which is going up on Lansdowne Street in Sackville. TOWER PHOTO
SACKVILLE, NB – More than a dozen apartment buildings have gone up in the town of Sackville over the last five years but the multi-unit residential market still has plenty of potential, according to local real estate analyst Tim Smith.
Smith, a senior analyst and researcher with Altus Group, said multi-unit development has been booming in recent years with the construction of 15 apartment buildings from 2007 to 2011, with more on the way over the next few years. So understandably, concern has been growing over whether the local market can handle the increased development.
“A lot of developers were worried there would be an oversupply,” he said.
But that’s simply not the case, said Smith, who pointed out that recent research he conducted for an Apartment Market Overview report on Sackville, indicates there is still a fairly high demand for apartment units – with a low overall vacancy rate of 3.18 per cent.
“If anything, there’s room to grow.”
Comparably, Moncton’s vacancy rate sits at just over four per cent, said Smith. And developers should only start getting concerned when that level hits between seven and 10 per cent.
“Vacancy is a good indicator of the demand in a community,” he said.
And that’s good news for Sackville, which is expected to see another strong year of construction in 2012. With an additional four or five buildings (with a total of 50 to 60 units) anticipated to be built this year alone, developers seem to be confident in the growing market for multi-unit housing – most of which has been aimed at students and seniors.
Smith, a native of Sackville who returned to his hometown several years ago and has been working for the Moncton-based Altus Group, said he often does real estate appraisals in the town and so he had already established a number of contacts that helped him out as he began the research phase of his market overview study. He contacted several apartment owners and also reviewed other local studies on housing in Sackville.
Smith’s report – which aims to be a source of information for landlords, developers, real estate professionals and residents on the multi-unit market – gives an overview of the major forces behind apartment construction, the general market rates, trends, as well as recent and proposed developments.
One of the biggest driving factors behind apartment development in Sackville over the past few years can be attributed to Mount Allison University – both for its rising enrolment and the increasing cost to live in residence. Mount A has seen its enrolment increase by 17 per cent since 2007, resulting in an extra 400 students coming to Sackville.
And with the university stating they have no immediate plans to increase housing on campus, the supply for students has become somewhat limited, said Smith.
“So the developers saw there was real opportunity there.”
Thus, a market began to appear for larger-sized apartment buildings geared towards students.
It should be noted, however, that this building boom comes following a bit of a slow-down in multi-unit development during the 1990s and early 2000s when nine of those years didn’t see any apartment buildings constructed.
But the market has picked up considerably in the last five to six years, with 15 to 20 buildings going up and more than 200 units becoming available.
And although about 75 per cent of these newer units are being aimed at the student market, developers have also been working hard to fill the gap for seniors housing.
With an aging population in Sackville, that has become another driving force behind apartment construction in Sackville.
Smith said the new seniors complexes built in the last few years have a zero per cent vacancy rate – including a 12-unit development on King Street, a 32-unit development on Charlotte and a 12-unit in Middle Sackville.
“Given the zero vacancy, increasing average age and limited available seniors’ apartment units, it appears there is a need and demand for the development of more seniors’ housing in the Sackville market.”
Another factor influencing apartment development, but to a lesser extent, is young professionals who either work in the town or live in Sackville and travel outside the town for work. So that’s another potential market that could be tapped, said Smith.
The Apartment Market report is the first in a series of overviews that Altus Group intends to publish for the Sackville development community, said Smith.
“My hope is to do an annual study . . . to see where vacancies are going.”