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Chilliwack Chilliwack

www.reincanada.com $9.99

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Released: November 2014

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Chilliwack is a hidden gem. The breathtaking mountains, valleys, lakes, and rivers draw hundreds of visitors every year. The affordable housing, lower cost of living, and lower taxes convince them to stay. The economic growth of the City has been above-average since the global recession in 2008. In fact, Chilliwack was one of only two BC communities to record positive job growth during this period of time. The city offers affordable housing prices when compared to the vast majority of Metro Vancouver towns, which has led to an increased rate of population growth over the last decade. With lower property taxes and access to Vancouver, BC’s interior region, and the United States via the Trans-Canada Highway, businesses have increasingly seen the benefits of setting down roots in Chilliwack. Agriculture is one of Chilliwack’s largest economic sectors, accounting for 6% of the city’s GDP. Approximately 64% (17,051 hectares) of the city’s land base is dedicated to agriculture and the sector brings $252 million in local revenues annually. However, crops and livestock are not the only job and income creators; the city also sees substantial economic activity through spin-off agriculture industries such as fertilizer, machinery, feed, and food processing. These spin-off industries continue to grow, contributing to the city’s economy and continuing to provide more jobs for Chilliwack residents. As part of BC’s Lower Mainland Economic Region (with a population of over 2.5 million), Chilliwack enjoys many of the same benefits as Vancouver: 20 minutes to the United States and Abbotsford International Airport, proximity to major markets along the Pacific Rim, and easy access to a variety of amenities. This accessibility is important not only for those who live in the area, but also for businesses looking for a place to locate. Having excellent access to move their goods and people around increases their market competitiveness. When you combine these excellent transportation links with Chilliwack’s lower land prices, and Industrial Revitalization Tax Exemption Bylaw, it’s easy to see why the city’s industrial sector has grown exponentially over the last few years. In the last several

years, the city has seen four new business parks developed, creating an additional 300 acres of industrial lands for the City of Chilliwack

1.

Chilliwack’s retail and service sector is also a major source of economic activity for the city. Major retailers have experienced sales that exceed their projections, leading them to expand their commercial inventory. The strong sales growth has also drawn new retailers to the region. In 2010, the first stores opened at Chilliwack’s 700,000 square foot new commercial development, Eagle Landing. Current tenants include Galaxy Cinemas, Walmart Supercentre, and Home Depot. Construction at the Landing is still underway and new tenants are announced every couple of months. Chilliwack is home to three separate University of the Fraser Valley (UFV) campuses located in North Chilliwack, South Chilliwack, and downtown Chilliwack. These campuses provide Chilliwack and other Fraser Valley community residents with the opportunity to receive a quality post-secondary education while remaining close to home. Post-secondary institutions also act as economic stabilizers for communities as in both good and bad economic times people continue to strive for higher education. Enrollment at UFV continues to increase every year, as the university expands the number of programs it offers. A bustling university provides landlords with ample student rental opportunities, especially since the University only offers on campus housing (and that minimal) at its Abbotsford campus.

While Chilliwack’s economic strength has historically been based on the success of established sectors such as forestry, agriculture, and food processing, the City is beginning to shift towards other industries which will provide even more economic stability. Chilliwack has seen dramatic growth in knowledge-based industries in recent years, bringing diversity to the city’s economy and creating new business and investment opportunities

2. We will also

see the city’s retail and industrial sectors continue to grow as the lower taxes entice new businesses. The completion of the Gateway Program, along with the creation of the

Economy

Outlook

Source: Heather Harvey

©The Real Estate Investment Network Ltd. 4

Evans Road Connector, has increased accessibility to the region and shortened commute times for both residents and businesses – attracting even more people to the region. The economy will also be bolstered by continued growth in the post-secondary education sector. The completion of the University of the Fraser Valley’s Trades and Technology building (South Chilliwack campus) is projected to see over 18,000 full-time students by 2020, a 260% increase from enrollment levels in 2007

3. This

means an influx of students looking for rentals, particularly in areas south of the freeway. With several major projects completed in the city in the last few years, including two new business parks, Canada Education Park, hospital renovations, and the Eagle Landing retail area, it is clear that Chilliwack is poised to witness major population growth over the next two decades. The city will inevitably witness some growing pains that come with rapid population growth, but a focused city council and economic development team will succeed in putting Chilliwack on the map. Rectifying the city’s non-connectedness to other cities would be game-changing for Chilliwack.

Population Growth According to the 2011 Federal Census, the population of Chilliwack was 77,936, a 12.6% increase from 69,217 in 2006

4. To put this in perspective, the province of British

Columbia saw a growth rate of only 7% between the last two federal censuses (2006 and 2011). And the population of Chilliwack is expected to keep growing. The city estimates that Chilliwack will experience an annual population growth rate of 2.73% annually, leading to a total population count of 100,000 by 2021

5. New employment

opportunities have and will continue to draw people to the area, people who need a place to live. In turn, housing values and rents will continue to climb. Immigration Chilliwack has the strongest migration rate of any community in the Lower Mainland. Affordable housing prices (about half the price of homes in western areas of Metro Vancouver) have attracted residents from Metro Vancouver and an attractive lifestyle and gorgeous scenery have caused them to stay. Median Age As of the 2011 Federal Census, the median age of Chilliwack residents is 39.8, lower than the median age of the province at 41.9

7. Chilliwack’s median age is pushed

down by the city’s high percentage of children up to 19 years, but because of the low cost of living and proximity to Vancouver, the city also has a slightly higher population of seniors aged 65 and over. A young population means good things for a city: there are more services geared to the young and young families, which attracts even more

young families to the area. Younger age groups have more movement in the housing sector, meaning they move in and out of homes – renting, buying, and selling – as their life stages change. They are more apt to rent, a great thing for investors, and the buying and selling usually means a stimulated housing market. Working age residents create more money in income taxes and younger people often consume more than older cohorts; the purchase of furniture, vehicles, electronics, more food, eating out etc. means more local economic stimulation.

Rental Market According to CMHC, vacancy rates in Chilliwack were down to 3.8% from 4.5% the previous year. Two bedroom units had the lowest vacancy rate of 2.8%. In addition to this, the availability rate decreased by 0.9% to 5.4% for private apartments

8.

The following table outlines the average rental rate by the housing type and number of bedrooms. While housing in Chilliwack may be more affordable than in Metro Vancouver, many residents are still unable to or don’t wish to purchase their own homes. There are approximately 8,000 rented dwellings in Chilliwack, which includes about 3,000 licensed rental apartments

9. Landlords tend to

experience a tougher tenant profile on the north side of Chilliwack, particularly around the downtown (five-corners) area. The Sardis side, although also quite diverse, tends to accommodate more families (particularly in the Jinkerson, Promontory Heights and Garrison neighbourhoods). Close proximity to law enforcement and emergency service training at Canada Education Park and the nearness to the Abbotsford International Airport means that many law enforcement, airline personnel and general shift workers reside here.

Demographics

Housing

Average Rents in Chilliwack

# of Bedrooms

Lowest Price

Highest Price

Average Price

House

2 $1,000 $1,450 $1,175

3 $1,175 $2,600 $1,550

4 $1,350 $2,000 $1,633

Basement Suite

1 $700 $800 $744

2 $750 $1,200 $871

Townhouse

2 $2,300 $2,300 $2,300

3 $1,400 $1,550 $1,475

Condo/Apartment

1 $525 $725 $667

2 $725 $1,150 $966

Source: www.kijiji.com, www.craigslist.com (Nov. 2014).

©The Real Estate Investment Network Ltd. 5

An investor gets higher rents on the south (Sardis) side of the city due to the attractiveness of the area compared to frequent complaints of property crime and incivilities around downtown. However, it is very difficult to find condos and townhouses that allow rentals on the Sardis side. The Fairfield area is also extremely attractive to families and command more rent than similar properties on the north side but property values are higher, making it tougher to cash flow. The areas around the hospital and recreation centre (Mary Street and Corbould Street are) are attractive to seniors. Investors state that there are many “arm-chair” investors in the city – homeowners renting out a suite in their personal residence or people with one property who do not consider themselves professional investors. These property owners have not kept up with market rents and are keeping the rents down. It is possible to get cash flow but you must first have a great ad that communicates the advantage of your property so you stand out from all the underpriced rentals. Sales Activity Chilliwack continues to provide an affordable housing option for those commuting to other municipalities in the Lower Mainland. According to the Chilliwack Economic Development Corporation, the average cost of a single-family home in Chilliwack is approximately 60% less than Vancouver and 30% less than Abbotsford

10. Because

of this significant price difference, Chilliwack residents enjoy a much lower cost of living than the average Lower Mainland resident. It also means landlords will have an easier time finding a cash-flowing property. According to the Chilliwack and District Real Estate Board (CADRB), the average price for a single detached home in Chilliwack was $304,662 as of August 2014, an increase of 3.6% from August 2013.The year-to-date average sale price for the city was $305,297, up 0.9% from the same time period in 2013. New residential listings numbered 324

units in August, down 2% from August 2013. However, the number of residential sales has increased significantly over the past year. In August 2013, Chilliwack saw a total of 230 sales, an increase of 25% from August 2013. This represented the fifth consecutive double digit year-over-year increase

11.

Residential Development Residential building activity in Chilliwack has trended up in recent years, as people come to realize the city is one of the most affordable in the Lower Mainland. Redevelopment and multi-family construction is rampant in Chilliwack. In 2013, the city witnessed 443 homes begin construction, with 216 single-family homes started and 227 multi-family units started

12. As of August 2014, the city has already

witnessed 320 residential units begin construction, an increase of 96.3% over the same time period in 2013

13.

New residential projects in Chilliwack include the 1,700-unit Garrison Crossing housing, condo and townhouse project, currently under construction at Vedder Road and Keith Wilson Road. The community is scheduled for completion in 2015. The community has a total of 1700 units. Construction began in Promontory in the early 1990s and has a planned capacity of 10,000 people when all the buildout is complete. Chilliwack’s Eastern Hillside is the city’s next planned area of growth, with an expected capacity of 13,000 people when construction is complete

14.

The City has also commissioned The Downtown Plan Implementation Committee to research ways in which to increase residential density in Downtown Chilliwack. The Committee’s concepts include residential apartments above commercial space. According to their projections, downtown Chilliwack is set to see 9,620 apartment units by 2037 and a population of 23,552

15. If you can weather the

process of revitalization, the downtown side will bring tremendous financial upside through rent and value increases. With tax incentives for new development and lower property prices, the north side is attractive if you can handle a tougher tenant profile and lower rents.

As Chilliwack’s population continues to grow, the city’s leadership must ensure that the city’s infrastructure keeps up with resident demands. Infrastructure is important to meet the needs of the residents. People will leave a city that does not have the capacity to educate its children, mend its ill-stricken, or manage its crime. Hospitals, schools, emergency services, as well as water, sewer, and roads are of paramount importance. We have outlined a list of important infrastructure projects that were recently completed or are currently under construction in Chilliwack:

Chilliwack Leisure Centre upgrades to meet the need of the city’s growing population – $9 million (2010)

16

Construction of Chilliwack Cultural Centre to provide a theatre, music rooms, and meeting rooms for Chilliwack residents – (2010)

17

Infrastructure

Source: Tim Gage

©The Real Estate Investment Network Ltd. 6

Chilliwack Regional Hospital redevelopment including a new emergency department to meet the needs of a growing population - $35 million (February 2011)

18

Brand new Sardis Library to meet growing population demands – (May 2013)

19

New High School (G.W. Graham Secondary School) – (2013)

New High School (Chilliwack Senior Secondary School) – (2013)

The University of the Fraser Valley (UFV) is a public post-secondary institution that enrolls over 15,000 students a year and has campuses located in Abbotsford, Mission, and Chilliwack. UFV recently opened a new 85-acre campus in Canada’s Education Park, located off Caen Avenue and Vedder Road. The first UFV facility to open at the Park was a 2-acre Trades & Technology Centre. A second $40 million structure to house the Faculty of Health Sciences, was completed in 2012, increasing the University’s Chilliwack enrolment capacity to 5,000 full-time students. Transportation Traffic between the Sardis and Chilliwack side has increased exponentially with the population increase. Vedder/Yale Road experiences congestion at peak commuting times and on the weekends as residents access the highway or prime commercial areas. The new developments in the south end of the city have created pinch points in traffic movement. In order to address the increase of traffic from the Jinkerson Development, the City has plans to widen Prest Road (a main artery to Highway 1) and widen and add a through-road at the three-way intersection at Chilliwack Lake Road and Promontory Road (one of two access/egress roads for the entire developments of Promontory Heights and Jinkerson). Although quite far removed from the immediate Gateway Program components, Chilliwack has felt the impact both in residential and commercial/industrial. Reduced congestion on Highway 1 and access to the South Fraser Perimeter Road (SFPR) has made this outlying area more desirable to both commuters and commercial enterprises. With the creation of the SFPR, commute time to Vancouver International Airport is as little as 75 minutes; Abbotsford International Airport is as little as 25 minutes away. Property values here are lower than in most regions in southwestern B.C., making this area a magnet for first-time home-buyers seeking ground-oriented properties instead of condominiums. The majority of the commuters living here will be traveling to other outlying regions such as Langley, Abbotsford or Surrey, rather than all the way into the downtown Vancouver CBD. Public Transit What Chilliwack benefits from in development it lacks in public transportation, with only nine bus routes to service the community. The city has been working on a Transit Future Plan, revealed in 2012, that presents short, mid,

and long term goals to the future of transit by 203620

. Currently, there are few options to leave Chilliwack using public transportation other than Greyhound. In 2015, the first public bus between Chilliwack and Abbotsford will begin running to connect people to other public transportation westward. With the expectancy of a growing population, especially in regards to education, public transportation needs to be a high priority, as the current transportation, particularly out of the city, is wanting at best.

Rental Rules Chilliwack is of course bound by the Province of British Columbia’s rent control guidelines. Rent can only be increased once per year, and properties are subject to the province’s annual rental increase cap. The rental increase cap is set at 2.2% for 2014 and 2.5% in 2015

21.

Secondary suites are not permitted in most of the City of Chilliwack. From discussions with the city, it was communicated that by legalizing suites, control was given up to the provincial Residential Tenancy Office and the city would be handcuffed when dealing with problematic suites. Presently, the city takes a fairly lenient approach to secondary suites unless there are registered complaints. Still, it is important for investors to make sure a property cash flows WITHOUT second suite income, so as to avoid dire financial hardship if a suite must be removed. The City made a conscious effort to increase secondary suites in the new Garrison development to cater to the nearness of UFV and provide affordable housing for students. Many units have either a basement suite or a coach house out back. Business Incentives To encourage the redevelopment of the downtown core, the city has a tax exemption through its Downtown Revitalization Zone bylaw. This tax exemption applies to the construction of a new improvement (multi-family residential, commercial and institutional properties) or the alteration of an existing improvement where the alteration has a value in excess of $200,000. Assessments are frozen for five years in the core area, increasing by 50% in year six and full assessment in year seven

22.

In a recent examination of the costs and approval times for new developments, Chilliwack was the only city to appear at, or near the top, for its municipal fees, timing and property tax (mill) rates. It was named the quickest at issuing building permits, reporting a 90-day period from application to permit issuance, and was also listed as the municipality with the lowest tax (mill) rates, at a 2.02 commercial-to-residential ratio. (NAIOP cites the ideal me-dian commercial-to-residential tax ratio as three-to-one)

23.

Political Climate

©The Real Estate Investment Network Ltd. 7

Economic Risk 9/12

Yield Growth Potential 7/12

Local Politics Conducive to Business 7/8

Access to Transportation 7/8

Investors’ Insights 7/10

Total 34/50

Investment Rating

Economic Development This is a key consideration for investors. If the Economic Development office is difficult to deal with, you can often assume that they will be the same for potential employers looking to move into the region. The city’s website is fantastic, and investors should have no problem locating the data and statistics they need. The Chilliwack Maps portion of the City’s website is an interactive addition that is second to none. The Economic Development Office, as well as CEPCO (Chilliwack Economic Partners Corporation) is a proactive, business-orientated entity responsible for the City of Chilli-wack's economic growth and marketing through a made-in-Chilliwack economic strategy. This business focused collaborative organization is truly a boon to the develop-ment of Chilliwack, and other cities have sought to repli-cate it. Chilliwack is a solid contender for real estate investing in BC; it is one of the very few markets in which you can find cash flow, although you still have to dig deep. Purchase prices here are low comparatively but rents remain below market due to the deluge of rookie investor/home owners. Tenants tend to remain in suites for longer than average, many of whom are seniors or are lifetime renters. This can impact the ability to raise rents, as landlords are bound by BC rent controls (2.5% for 2015).

You must know your market in Chilliwack. Although the downtown side of Chilliwack can, but not always, provide lower purchase prices, the perception (and reality) of high property crime creates a lot of tenant turnover. It is very important (like most markets) to be an active property manager here right from the marketing stage to rent collection. It is a slow and steady, and somewhat boring market. Investors do not see the spikes in rent; however, nor do they see them plummet as economic fundamentals shift. Investors in the game for the long term like this market – gradual value increases with little stress.

©The Real Estate Investment Network Ltd. 8

1. City of Chilliwack. (2012). Community profile. http://s3.media.squarespace.com/production/754727/8853783/CmtyProfile_2012.pdf AWSAccess-KeyId=0ENGV10E9K9QDNSJ5C82&Signature=RJnVJ0brpyAUGDNRlRUpZVIrdPA%3D&Expires=1368050003

2. Ibid. 3. Ibid. 4. http://www.chilliwackeconomicpartners.com/canada-education-park/ Retrieved on September 19, 2014 5. Statistics Canada. 2012. Chilliwack, British Columbia (Code 5909020) and Fraser Valley, British Columbia (Code 5909) (table). Census Profile.

2011 Census. Statistics Canada Catalogue no. 98-316-XWE. Ottawa. Released October 24, 2012. http://www12.statcan.gc.ca/census-recensement/2011/dp-pd/prof/index.cfm?Lang=E

6. City of Chilliwack. (2012). Community profile. http://s3.media.squarespace.com/production/754727/8853783/CmtyProfile_2012.pdf?AWSAccessKeyId=0ENGV10E9K9QDNSJ5C82&Signature=RJnVJ0brpyAUGDNRlRUpZVIrdPA%3D&Expires=1368050003

7. Ibid. 8. Statistics Canada. (2011). Chilliwack, British Columbia (Code 5909020) and British Columbia (Code 59) (table). 2011 Census. http://

www12.statcan.gc.ca/census-recensement/2011/dp-pd/prof/details/page.cfm Lang=E&Geo1=CSD&Code1=5909020&Geo2=PR&Code2=59&Data=Count&SearchText=british%20columbia&SearchType=Begins&SearchPR=01&B1=All&Custom=&TABID=1

9. http://www.cmhc-schl.gc.ca/odpub/esub/64487/64487_2014_B01.pdf Retrieved on September 19, 2014 10. CMHC. (Fall 2012 and April 2013). Rental Market Report – British Columbia Highlights. http://www.cmhc-schl.gc.ca/odpub/

esub/64487/64487_2012_B02.pdf?fr=1369346938281 11. City of Chilliwack. (2012). Community profile. http://s3.media.squarespace.com/production/754727/8853783/CmtyProfile_2012.pdf?

AWSAccessKeyId=0ENGV10E9K9QDNSJ5C82&Signature=RJnVJ0brpyAUGDNRlRUpZVIrdPA%3D&Expires=1368050003 12. Chilliwack & District Real Estate Board. (September 2014). Chilliwack home sales remain strong in August. Retrieved from Canadian Real Estate

Association online http://creastats.crea.ca/chil/ 13. CMHC. (Q1 2014). Housing Now – Vancouver and Abbotsford CMAs. Retrieved from CMHC online https://www03.cmhc-schl.gc.ca/catalog/

productDetail.cfm?lang=en&cat=70&itm=59&fr=1411504862947 14. CMHC. (Q3 2014). Housing Now – Vancouver and Abbotsford CMAs. Retrieved from CMHC online https://www03.cmhc-schl.gc.ca/catalog/

productDetail.cfm?lang=en&cat=70&itm=59&fr=1411504862947 15. City of Chilliwack. (2012). Community profile. http://s3.media.squarespace.com/production/754727/8853783/CmtyProfile_2012.pdf?

AWSAccessKeyId=0ENGV10E9K9QDNSJ5C82&Signature=RJnVJ0brpyAUGDNRlRUpZVIrdPA%3D&Expires=1368050003 16. http://www.chilliwackdowntownplan.ca/about/ Retrieved September 19, 2014 17. City of Chilliwack. (2010). 2010 Annual Municipal Report. Retrieved from http://www.lgpi.ca/sites/default/files/reports/Chilliwack%202010.pdf 18. Chilliwack Cultural Centre. (2013). About. Retrieved from http://www.chilliwackculturalcentre.ca/extras/about/ 19. Fraser Health. (February 2011). Chilliwack celebrates hospital completion. Retrieved from http://www.fraserhealth.ca/?

section_id=6052&section_copy_id=3556&tpid=110& 20. City of Chilliwack. (May 2013). Sardis Library. Retrieved from http://www.gov.chilliwack.bc.ca/main/page.cfm?id=2240 21. http://www.chilliwack.ca/main/attachments/Files/25/Chilliwack%20Future%20Plan%20Final.pdf Retrieved on September 19, 2014 22. Government of British Columbia. (2014). Residential Tenancies. Retrieved from the Government of BC online http://www2.gov.bc.ca/gov/

topic.page?id=FE38AA18AC2B437A8C274E030254B3DD 23. Chilliwack Economic Partners Corporation (2011). Economic Profile. http://s3.media.squarespace.com/production/754727/8853783/

CmtyProfile_2012.pdf?AWSAccessKeyId=0ENGV10E9K9QDNSJ5C82&Signature=bOa%2BWMhJXRikF4J%2FwaHA9UVacsc%3D&Expires=1371766475

24. Duggan, Evan. (Oct. 28, 2014). Chilliwack is tops for commercial developments in the Lower Mainland, Vancouver Sun. http://www.chilliwacktimes.com/news/280712772.html

Sources