A Strategic Focus On Workforce Housing
Avenue Living Asset Management has strategically aligned its multi-family rental assets to cater to a niche market – called workforce housing – that is growing across Western Canada.
Workforce Housing is geared to a city’s “essential workers,” who are the backbone of every city, and make up close to 40 per cent of the Canadian population.
“Workforce housing isn’t a term we coined or created, but our business model is focused on it,” says Jason Jogia, Chief Investment Officer for Avenue Living, which owns and operates more than 8,000 multi-family rental residences across many Western Canadian markets.
“Renting is becoming increasingly attractive, as home ownership becomes less affordable due to rising interest rates and tightened mortgage rules. Therefore we are seeing strong demand for workforce housing from the essential workers demographic. Essential workers include anybody working at Tim Hortons, or Canadian Tire, or at a hospital – the worker that is making at or above minimum wage, who is looking for quality, safe housing and will respect and treat the housing well.”
Avenue Living is Western Canada’s fastest growing private multi-family building owner and operator with units in Alberta, Saskatchewan, and Manitoba. Over the years, it has strategically positioned itself to be the premier owner/operator of B and C Class buildings, catering to this workforce housing group. The company strategically invests in locations that are supported by strong macro fundamentals – population growth, income growth, and affordable rents.
Jogia forecasts a stable to increased demand for workforce housing, which Avenue Living offers in 18 markets across the Prairies.
“The type of asset that a workforce housing tenant lives in is what we call a B and C type apartment building. They’re typically low-rise, older inventory that has an affordable rent because we purchase it as the owner, at lower than replacement costs. Then we renovate, while offering a level of rent that’s much more affordable than a new build. That type of product exists everywhere. If you look at the type of product that we buy – the product that’s most abundantly available – we see that there is a lot more road to run in terms of opportunity there”
In a recent White Paper, Avenue Living has identified a highly-fragmented rental ownership market in the Prairie provinces which provides the company with consistent deal flow to grow through acquisitions. The paper highlights how the purpose-built multi-family market in Canada consists of primarily older properties. Canada Mortgage and Housing Corporation has identified 75 per cent of these as being built before 1979.
For Avenue Living, this older vintage stock is on its radar and presents an opportunity for further growth to meet the growing need and demand from the workforce housing population.
The White Paper explains that Avenue Living targets the older vintage stock as these rental properties typically have the following characteristics:
- Larger unit sizes: older properties on average have 100-150 square feet of more space in units compared to newer properties
- Affordable rents: older vintage units rent at a significant discount to newer properties which also leads to a larger renter pool to choose from
- Opportunity to drive stronger returns: through identifying mismanaged assets, spending capital to improve quality and bringing rents up to market value
- Great locations: close to schools, community amenities, retail, and transit.