NEW RENTALS IN METRO VANCOUVER TO BE USED AS 800 STUDENT HOUSING BEDS
Brand new secured purpose-built rental housing in Metro Vancouver that will soon reach completion will be turned into much-needed dedicated student residences.
Over the past decade, Global Education Communities Corporation (GECC), previously known as CIBT Education Group, has grown into one of British Columbia’s single largest developers and operators of purpose-built, off-campus student housing.
For further expansion, the company announced this week it is in the process of discussing with several developers to master-lease newly constructed buildings in Metro Vancouver with a combined total floor area of 250,000 sq ft of secured purpose-built rental residential.
At this time, GEC did not specify the developers it is engaged with nor the precise location of the projects it will take over for operations.
However, they have noted that these projects will add up to about 800 student housing beds to GECC’s student housing portfolio. The properties being considered will be ready for the company’s possession in less than six months, which likely pegs actual tenancy by students sometime in 2024. The master lease for these properties will be for a term period of between five and 10 years.
This adds to GECC’s existing portfolio of 1,500 beds in buildings that they own, including two locations in downtown Vancouver, one location in Burnaby Heights, and three locations near a SkyTrain Canada Line station within Vancouver’s Cambie Corridor.
GECC’s suites are fully furnished with furniture and equipment, along with in-building shared amenities and services that can be expected for student residence uses.
Early this summer, the company opened the brand new King Edward student residence, located just half a block east of King Edward Station. Its combined total of 188 student beds across 44 units are achieved by GECC’s previous acquisition of the property and approved plans for a secured market rental housing building project from a residential developer.
GEC’s total project cost for the acquisition and construction of the 48,000 sq ft, five-storey King Edward building reached $52 million. It is now forecasting gross annual revenue of about $3.2 million from the building’s student leases.
But the new strategy of engaging in master leases for the expansion of its student housing portfolio, called the Master Lease Partnership Program (MLPP), is in response to local market changes. According to GECC, the developers the company is in discussion with began developing and building rental buildings several years ago and are no longer interested in operating rental properties in today’s market conditions.
Toby Chu, president, CEO, and chairman of GECC, says this comes as an opportunity for his company, and it allows the developers to focus on their core business of construction and development instead of overseeing the daily operations of a rental property after completion.
“In recent years, developers have been discouraged by rent control policies disproportionate to the rising construction, inflation and interest costs, prompting developers to dispose of their rental inventory at a discount,” said Chu.
“At the same time, potential buyers are scarce due to rising interest rates and underwhelming investment returns. GECC offers developers a solution which allows them to defer their need to sell and instead collect reasonable rents.”
All the while, Metro Vancouver is facing a worsening rental housing shortage, with the shortage of on-campus student housing at post-secondary institutions spilling over into the region’s general rental housing market. The University of British Columbia alone is expected to have a student housing wait list of up to over 8,000 students for the new school year that just began.
GECC also has new student housing projects that it owns in the pipeline, but its new additional MLPP business is as turnkey as it can be with relatively limited investment, as opposed to the lengthy design, application, review, and construction process for a new-build project on a property it has acquired. New construction projects can take up to seven years.
“GECC is well-positioned to fill the rental property expeditiously and manage the student rental operations efficiently,” added Chu.
Major future student housing projects by GECC are planned for Oakridge, Richmond City Centre, and Surrey City Centre — all adjacent or within a short walking distance of a SkyTrain station. The company’s total portfolio and future development budget is worth nearly $1.3 billion.
In addition to student housing, GECC’s other major businesses include Sprott Shaw College and Sprott Shaw Language College, which educate 11,000 students annually.
Story by: Daily Hive