Headwater Projects assembles two multifamily sites in Fairfield

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Headwater Projects, a Vancouver based multi-family investment group has recently acquired two neighbouring buildings in the coveted Fairfield neighbourhood.

two parcel land assembly. 575 Vancouver Street and 1009 Fairfield Road.
Civic AddressLot Size (sqft)# UnitsPurchase Price
1009 Fairfield Road10,79718$3,075,000
575 Vancouver St10,82016$3,175,000
Total21,617 34$6,250,000

The combined site yields approx. 121×178′ corner lot on two neighbourhood collector roads only 10 minutes from Victoria inner harbour, and a short stroll to vibrant Cook Street Village retail area. Both parcels are zoned R3-AM-1 which bases density based on the total number of storeys. For example, a 3-storey building (which currently exists on subject sites) offers a FSR of 0.9. While a 4 storey building would allow for an FSR of 1.2.

Acquisition Overview Stats:

Price/door: $183,824  (far below that of Victoria’s avg of $214,000)
Price/sqft land: $289

In 2016, the Vancouver based investment group made its first foray in Victoria with the acquisition of 2626 Cook Street, a 33-unit four-storey woodframe building. Nonalee Mansions transacted for $4,400,000 and subsequently underwent significant renovations. The ‘reno-victions’ of tenants generated some media attention. Furthermore, the popularity of multifamily investors who acquire, evict, and renovate has stirred up larger concerns at Victoria City Hall, leading to a 6 month moratorium on apartment building demolitions. City Councillors unanimously approved a resolution not to accept applications to demolish existing residential rental buildings containing more than four units when the rental vacancy rate is below four per cent “to the greatest extent possible within the city’s legal authority.”

Headwater Projects investment style is to buy and improve older wood-frame buildings in central neighbourhood’s. They aim to provide condo like amenities to renters.

This is a clear example of mainland investors seeking higher returns in Victoria. The lower mainland continues to have constrained inventory, compressed cap rates, and heavy competition leading investors to seriously look at Victoria, which shares many of the same market fundamentals.

1009 Fairfield Road, 3 storey wood frame building with 18 units

Update: Headwater acquires a fourth multifamily property, 1255 Grant Street.

Ask:  $3,690,000
Sold: $3,880,000

Price/door: $155,200
NOI: $130,000
Cap: 3.35%

 

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