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October 25, 2023
VCREP #114: The 5 Best Cities to Invest In for 2024 with Frank O’Brien

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As we step into the fall, anticipation builds for the unveiling of the Western Investor's top five cities to invest in for the year ahead. We're excited to welcome back Frank O'Brien from the BIV Media Group, the editor behind the insightful Western Investor reports.

Cory and Melisa tap into Frank's wealth of expertise to present the prime cities for commercial real estate in 2024. This year's list brings some intriguing newcomers, offering a diverse range of opportunities.

Listen in for an engaging discussion on the future of commercial real estate investment, guided by one of the industry's most trusted voices. Let's go!

Frank O’Brien from Western Investor is back again to share the top 5 best cities to invest in for 2024 across Western Canada. How do the picks for 2024 stack up against last year’s picks? Are there any surprises on the list? And where’s the best place to put your money in the new year?

Who is Frank O’Brien?

I’ve been involved in business writing for a number of years, writing for publications like The Globe & Mail, National Post and Macleans.

I took over as editor of the Western Investor 19 years ago now! We cover the real estate and business sectors across Western Canada and are going strong.

Every year the Western Investor picks the top 5 cities to invest in. Can you tell us about the list for 2024?

In the last couple of years, there was so much going on and so many hot, unique markets. It was fun to choose our top five because it was such an exciting time. That’s why places like Penticton and Calgary made the list because people were interested in them.

This year, it’s a completely different scene, especially in BC. The province is predicting a 0.08% GDP growth, which is virtually non-existent. We’ve had forest fires, port strikes and it’s not looking good for 2024.

So for this year’s list, we’re looking at pragmatic markets. They’re not flashy; they’re steady and we think they’ll do exceptionally well in 2024 because of their foundational strength.

The top 5 cities in Western Canada to invest in for 2024

#5: Lethbridge, Alberta

Lethbridge doesn’t have the deep oil and gas industry that other places in Alberta do, which has proven to be a strength.

Mega agricultural players, like Cavendish Farms, are building multi-billion dollar processing plants in Lethbridge because they have the land. There’s over 3000 acres of industrial land ready to rock.

And these big companies are creating lots of high paying jobs; the average income in Lethbridge is $111,000 per year. But you can buy a house for just $340,000 or rent a one bedroom apartment for $1200/month.

Lethbridge is on the list because of high job growth, low housing costs and projected rapid population growth.

Lethbridge also has a strong retail sector. They’ve broken records and there’s no sign of slowing down. Lethbridge has been solid for years and is set to become a major food producer in 2024.

#4: Saskatoon, Saskatchewan

Saskatoon has steady demand, affordable prices and projected returns in commercial real estate.

Saskatoon is predicting the highest provincial GDP growth in 2024 and has foundational strength in agriculture and mining. The biggest potash mine on the planet, creating 2,500 jobs, just started north of Saskatoon.

The industrial sector in Saskatoon has the third lowest vacancy rate in Canada at 1.6% with rising demand. We expect industrial real estate to hit an all time high of $15/square foot in 2024, compared to $9/square foot just two years ago.

Household income is high in Saskatoon and the average home price is $378,000, while a one bedroom rents for $1075 per month. There’s an active cultural scene, a university and a beautiful river flowing through the city. It’s a sophisticated and attractive city that people overlook.

You can buy a nice house for $400,000 and get a high-paying job. So if you can survive the winters, Saskatoon is a great place to raise a family.

#3: South Delta, BC

I know South Delta isn’t a city but rather includes the cities of Ladner and Tsawwassen. It’s going to be transformed in the next few years so 2024 is the time to get in. A huge expansion is coming to the Delta port terminal, as well as an eight-lane road with the new Massey Tunnel.

Prices are fairly high right now but not compared to what they’ll be once the tunnel gets rocking. The Southlands project in Tsawwassen is an amazing project with hundreds of homes and nearby retail opportunities. There are great schools and great public safety.

South Delta has great schools, great job prospects and great transit links with the incoming tunnel. It’s going to be a major growth market and it all starts in 2024.

The tunnel doesn’t come in until 2030 but if you wait until then, it’s going to be too late. Especially as a developer, you want to get in now. A lot of transformation is happening in Ladner and in the South Delta region.

Delta has all the land and infrastructure it needs to become an urban centre in the Lower Mainland.

#2: Terrace, BC

Terrace is 30 minutes from Kitimat, which is the only livable community in Northwest BC. They’ve been putting the final touches on a natural gas project in Kitimat but Kitimat isn’t really a place you want to live. Terrace is different.

There’s not a great infrastructure in Terrace yet, but that’s where developers come in. The population is expected to double in the next five years and billions of dollars of development are coming in.

Natural gas is going to be a huge national play in 2024 with the war in Ukraine and issues in the Middle East. The world is looking for natural gas and they’re going to be looking at BC.

Terrace is where all of the natural gas money that’s coming in will be spent because it’s the only liveable community within a short distance of Kitimat.

For example, Swiss Real is building a 21 unit detached house project in Terrace, aimed at investors. They’ll sell you a brand new four bedroom house for $670,000 and guarantee a corporate rent of $6000/month for two years.

House prices went down all across the north last year, except in Terrace. The average house price in Terrace is just over $500,000. Terrace has the land and great new housing projects coming in. It would be a really solid investment play for 2024.

#1: Edmonton, Alberta

Last year we chose Calgary as our top city and it went berserk in 2023. Now it’s starting to get overpriced. So this year, the switch is on to Edmonton. Edmonton is a pivot for the oil and gas industry. Multi-billion dollar deals are happening in Edmonton.

It’s the most affordable city in the country because of the high incomes and low house prices. The average home in Edmonton costs $374,000, which is 57% below the national average.

There’s great employment in Edmonton and lots of opportunities for multi-family investors. The vacancy rate is 5%, which is very healthy. It is seeing record levels of immigration, both internationally and across Canada.

The boom is back in Alberta and Edmonton is where you’ll see the big growth in jobs and real estate in 2024. I think it will outperform Calgary.

The weather isn’t as good as in Vancouver but it’s a young, vibrant city with a great sports centre and library system. Investors are heading to Edmonton and I think homeowners will follow.

In the Edmonton industrial market, they’ve seen positive absorption for 12 straight quarters with no sign of a slow down. There’s 2 million square feet of industrial under construction with a vacancy rate of 4.3%. Lease rates are $10.57/square foot, which is the second lowest in Canada.

Recap: The top 5 investment cities in Western Canada in 2024

  1. Edmonton, AB
  2. Terrace, BC
  3. South Delta, BC
  4. Saskatoon, SK
  5. Lethbridge, AB

If money was no issue, where would you invest in 2024?

I’d pick Terrace, BC. You have to find a good property manager. But it’s inexpensive to get into and the guaranteed corporate rents are great.

The 6 Pack: Getting to Know the Editor of Western Investor, Frank O’Brien

Favourite restaurant or bar?

I like Charles Bar in Gastown.

What would your last meal be on death row?

Steak and fries from The Keg, of course!

Favourite band or musician?

Mick Jagger and The Rolling Stones.

What’s your go-to karaoke song?

I’d do a Kinky Friedman song because no one has ever heard of him before.

A book recommendation for our listeners

Anything by Philip Kerr. He wrote great books set in Berlin.

What is something you’ve purchased for under $1500 that has had a positive impact on your life?

I said this last year but I still will go with it, my e-bike.

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This communication is not intended to cause or induce breach of an existing agency agreement. E&OE: All information contained herein is from sources deemed reliable, and have no reason to doubt its accuracy; however, no guarantee or responsibility is assumed thereof, and it shall not form any part of future contracts. Properties are submitted subject to errors and omissions and all information should be carefully verified. All measurements quoted herein are approximate.