Q&A on Victoria's rental housing market with Devon Properties COO Renee St. Germaine
Ten on the 10th
Published August 10, 2022
Citified's Ten on the 10th is a monthly question-and-answer segment connecting our readers with the insight and knowledge of Victoria's top real-estate and business professionals.
Ten on the Tenth's August, 2022 segment features Renee St. Germaine, newly promoted Chief Operating Officer at Devon Properties. As the largest rental apartment property management firm in British Columbia, Devon Properties' exposure to purpose-built and traditional rental product across the province gives its management team a unique perspective into the multi-family rental industry and its future.
Asking the questions is Ross Marshall, Senior Vice President of the Victoria offices of commercial real-estate brokerage CBRE. As a leader in facilitating large-scale commercial real-estate transactions throughout the Capital Region – which include apartment complexes, industrial retail and office properties, and land/development opportunities – Ross and his team are at the forefront of market-leading real-estate transactions on Vancouver Island.
Would you like to be featured as part of a future Ten on the 10th Q&A? We'd like to hear from you.
Welcome to Citified’s Ten on the 10th Q&A, Renee! As the newly promoted Chief Operating Officer at Devon Properties, can you introduce your professional background to our readers?
I’m a real-estate professional with more than 20 years of accomplishment and industry experience specializing in all aspects of property management and leasing for the residential and commercial sectors. In the role of COO at Devon Properties, I lead our Property Management, HR and Administration departments and facilitate the resolution of complex issues for our clients and employees. In addition to this, I lead our Diversity & Inclusion and Environmental, Social and Governance committees.
You’ve been at Devon Properties for almost two years now. Tell us about your initial experience and outlook for the next two years.
Being part of Devon Properties has been a great experience overall. The past year and-a-half has not been without its challenges with the continued impact of COVID-19 and tremendous business growth we’ve experienced. That being said, I am proud of our team for working together strategically and collaboratively to produce best-in-class service and results for our clients and key stakeholders.
Over the next two years, we are committed to continuing to enhance and expand our business model and service offering through continued investment in technology, our people and key stakeholders.
I understand you have been instrumental in rolling out new initiatives and internal committees at Devon Properties. Can you tell us a little more about some of these initiatives?
Yes, thank you. Upon joining Devon Properties, I initiated three new committees which are as follows: Environmental, Social & Governance (ESG), Diversity & Inclusion and Social committees.
ESG and Diversity & Inclusion are very important to Devon Properties. The committees were formed to create impactful mission, vision, values and initiatives that are meaningful to all clients and key stakeholders.
We interviewed Devon Properties’ CEO, Reed Kipp, in 2018 and the business was at 125 properties under management. Can you update us on your current portfolio of managed properties?
As of August 1, 2022, Devon Properties manages approximately 11,000 units of multi-family rental apartment product and approximately 750,000 square feet of commercial space throughout British Columbia.
This totals over 200 properties under management across multiple markets, including: Greater Victoria, Vancouver, Nanaimo, Parksville, Comox Valley, Campbell River, Kelowna, West Kelowna, Vernon and Penticton.
In the most recent Canadian Apartment Magazine published June 2022 titled “WHO’S WHO 2022”, Devon Properties was ranked as the #7 largest multi-family apartment manager in Canada – which is an accomplishment we are very proud of.
We are hearing that rental housing is serving the needs of residents for longer periods of time than before. What are you seeing in terms of the length of time individuals stay as renters, compared to a decade or two decades ago?
Our rentals department and market data team track select resident demographic information, including the average age of our residents. In general, the largest demographic of residents (approx. 65.0% of residents) includes individuals who have recently graduated high school or university and extends to such time these individuals transition to first-time home buyers. Given the increased housing values experienced in the British Columbia markets over the last five years, it takes first-time home buyers longer and longer to save up to purchase their first home.
From our resident demographic data, we have seen a trend where the high-end of this initial demographic’s average age threshold is increasing: from 32 to 35 years old in 2012, to 33 to 36 years old in 2017 and to 35 to 38 years old in 2022. These data points align well with the fact individuals and couples are extending their initial experience as renters and delaying the formation of new households to continue saving for their first home purchase.
What is the industry doing to entice renters to remain in one building longer? Are there amenities being incorporated into new projects that perhaps were not available ten or 20-years-ago, and could you speak to them?
Amenities in new multi-family rental development projects are a big deal and are quickly becoming an expected offering from a new multi-family apartment building. Amenities are typically in alignment with the anticipated resident demographics within a new development project, supported by the expected lifestyle of a renter in a specific geographic region. Given British Columbia’s outdoor amenity offerings and the emphasis on work-life balance in today’s society, amenity offerings are focused on building a residential community environment and providing value add services and experiences to residents.
Have rising interest rates and inflation put more pressure on rental housing? In what ways?
Rising interest rates and inflation have absolutely put more pressure on multi-family rental housing, and as a result has impacted all key stakeholders across the broader rental ecosystem, including owners and developers, residents, property managers and service providers.
From a resident standpoint, rising interest rates make it more challenging to qualify for a mortgage to purchase a home, resulting in individuals and couples extending their initial experience as renters and delaying the formation of new households to continue saving for their first home purchase. As a result, turnover decreases and the supply of multi-family rental apartment units continue to be a constrained resource.
Let’s talk vacancy rates – things are pretty tight out there for people looking to rent an apartment.
The Greater Victoria rental market continues to operate at all time low vacancy rates. There are approximately 28,000 purpose-built rental apartment units in Greater Victoria, and in 2021 the Canadian Mortgage and Housing Corporation (“CMHC”) reported a 1.0% average vacancy rate in Greater Victoria – so 280 vacant purpose-built rental units in the region in 2021.
From Devon Properties’ perspective, things have become even tighter in 2022. Through the first seven months of 2022, Devon Properties finished with a 0.65% average vacancy rate and closed July 2022 with 43 rental units available out of approx. 7,500 units under management in the region.
For our managed properties outside of Greater Victoria, totalling approx. 3,500 units spread across Vancouver, Vancouver Island and the Okanagan, the vacancy rate is equally as low – with many properties experiencing consistent turnover but re-leasing quickly at increased rent levels.
What is your rental housing industry outlook for Greater Victoria and more broadly in British Columbia?
In every market across British Columbia, housing is a very polarizing and important topic – as people will always need a place to live, raise families and grow old.
From Devon Properties’ point of view, we believe the rental housing industry plays a big part in providing housing solutions for British Columbians, and in turn Devon Properties plays an important role within the rental housing ecosystem. With rising interest rates and cost of living inflation, we see more and more people continuing to rent, even if they can afford a single-family home and accompanying mortgage, which will continue to put pressure on vacancy rates despite additional rental units coming to market.
For the rental housing industry outlook, the biggest challenge will be our ability as an industry to meet the demand in the market with the correct level of supply.
From a Devon Properties standpoint, we have to ensure our quality control, consistency and level of service continues to be strong and focused – not only to service our property owner clients, but also in order to attract and retain residents.
What’s some advice you’d give to someone entering the real-estate business today?
My first piece of advice: build strong relationships in the industry and practice great communication skills with everyone. Relationships should be meaningful, impactful and respectful throughout our careers.
My second piece of advice: ask a lot of questions and never be afraid to ask questions. None of us knows everything and asking questions is the best way to learn and allow industry peers and mentors to teach one another.
My final piece of advice: be humble and kind. This business demands that we be strategic, methodical, sometimes even demanding but I have found the best approach, results and success is through being humble and kind. C
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