The Canadian multi-family rental landscape is changing. What has been the domain of senior levels of government is being replaced by real estate investment entities. The West Bay Residents Association has asked Beth Burton-Krahn to provide comment on this changing phenomenon and the implications of where we appear to be headed.
Hello Neighbours! My name is Beth Burton-Krahn and I’m an Esquimalt resident and former councillor. I was asked to write a brief piece on an interesting and concerning change in the development industry that I’ve noticed recently.
Over the past couple of years it appears that there has been a shift from developers building condominiums towards building rentals.
At first glance this may seem like much needed good news. Of course we could use more rentals, there has been a rental crisis in housing for decades! However, we need to also explore a bit more about what this all might mean.
Property developers include the range from 1) local land developers that purchase properties and build purpose built rentals as single entity private developers to 2) large real estate investment trusts that build purpose built rentals and are beholden to shareholders.
The real estate investment trusts are known by the acronym REIT- and they are publicly traded investment firms that sell shares on the stock exchange. It is this second group of developers that I’ll be commenting on in this column.
Historically REITs were in the business of owning commercial real estate; malls and business centres but more recently they’ve moved into the residential real estate market and most notably into the rental real estate market.
The following quote from Starlight CEO is a good insight as to why the focus on private investment real estate trusts (REITs) shifting towards including more residential rental alongside of its historic focus on commercial rental should certainly cause us all to pause.
Speaking at a commercial real estate executive seminar at Queen’s University in 2019, Starlight CEO Daniel Drimmer remarked:
“We think there is a definite housing shortage, at almost a crisis level in Canada....and that good news for investors is there is no easy solution in sight.”
He added, “This is not good news for consumers (renters).”
Another REIT, Minto, in their 2020 Annual Report noted:
“The favourable fundamentals that existed pre-COVID-19 will return, - we are forecasting that the housing crisis that existed prior to COVID will reassert itself and that the housing affordability gap will continue to grow and ultimately benefit the multi-residential sector (REITs) shareholder.”
All of the private investment REITs or ‘Real Estate Investment Trusts’ that are adding residential rental to their publicly traded stock options have one goal: to maximize profits for their investors. Not to provide quality, affordable rental housing.
The main issue is that we seem to be abdicating our federal and provincial responsibility to create and maintain affordable rental housing to the private sector, at a very fast pace without much deeper analysis because the word ‘rental’ has us believing that this can be nothing but good news.
The REITs have access to lower mortgage rates through the Federal Housing Strategy. In short, public funds are subsidizing the private industry to help shareholders earn larger profits, all the while, home ownership continues to move out of reach.
We should lobby our provincial and federal government officials for more safeguards around public funds into the housing development industry.
What we really need is purpose-built publicly held, true affordable housing. We don’t need private REITs- selling shares on the stock exchange-monopolizing the rental housing market with the promise of great returns for their investors based on a housing crisis.
I’ve included a number of links below if you’d like to read and watch to learn more about this issue:
"Starlight buys a portfolio of eight apartment buildings", Times Colonist
"Major rental project proposed for centre of Esquimalt", Times Colonist