Vancouver Commercial Real Estate Podcast

Providing real-time insight into today's commercial real estate industry.

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April 20, 2022
VCREP #47: Vancouver Island’s Development Market Uncovered with Mike Kozakowski

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In an era where the most valuable asset might be data, this week’s guest has more behind-the-scenes data on the Greater Victoria development market than anyone else.

This week, Cory welcomes Mike Kozakowski, founder of Citified Media and, a comprehensive resource for researching new-build homes and commercial spaces on Vancouver Island.

Mike gives us a glimpse into the years and years of new construction data Citified has tracked in the Greater Victoria area and provides his insight on the areas that are booming and the areas that are about to boom. He also gives his thoughts on why the Vancouver Island market has been so robust through COVID and why the time is now if you’re looking to invest in Victoria or Nanaimo.

This isn’t the Vancouver “Island” Commercial Real Estate Podcast… yet! It’s sure heading that way with the booming island market!

What is Citified Media?

Citified Media tracks the construction of multi-family projects and other commercial projects and is based out of Victoria. We track projects through proposal to construction and completion. On the residential side, we help developers to market their projects and find tenants. So what we do is quite comprehensive. We’re fairly off the radar but stay busy with what’s happening on the Island.

Why is Citified Media in Victoria and not Vancouver or the Lower Mainland?

I live here in Victoria and I understand this market better than others. I have a background in building data, mostly skyscrapers around the world. I got out of that business and started Citified because I had those tools in my toolbox. I decided to focus on my local market because I had relationships with developers here. The progression wasn’t linear but I did decide to focus on Victoria. It’s been so busy that maybe the time has come to expand.

What has been the biggest change in Victoria in the last 5 years?

The maturity of the market has been the biggest change in Victoria real estate in the last five years. That maturity has brought in a lot of big players from Toronto, Vancouver and the US. Victoria has emerged on people’s radars. It used to be a third tier market with only a small group of local developers. But more players have taken a run at opportunities on the South Island in recent years.

The complexity of development in the Victoria area has also changed. Some of the projects are larger and more complex with the bigger players behind them. We’re seeing a lot of Vancouver-like development and that is a nice change. It’s interesting to see how it’s done on a big scale in our local community.

What big development projects in Victoria have caught your eye?

Starlight Developments purchased two blocks downtown, among many others, and are proposing what would be the tallest building on the Island at 32 storeys with 1500 units and lots of retail space. That is big city stuff that we don’t see here. And to have it materialize so quickly and be one of quite a few big projects is very interesting for us.

What areas in and around Victoria are seeing an increase of development activity?

Vic West, west of the downtown core, is continuing its huge increase in density. That transition started 20 years ago but has really ramped up with Bosa from Vancouver coming in. We’re seeing significant changes to the skyline in that neighbourhood.

We’re also seeing a significant number of high rises coming into the suburbs of Victoria, which we don’t usually see in small cities. Langford is seeing towers of 20-30 storeys and developing a skyline of their own.

Are developers from Victoria now looking further afield into Langford and Nanaimo?

100%. A lot of developers who have never left the City of Victoria are now looking towards the West Shore suburbs. A lot of that has to do with Mayor Stewart Young of Langford changing his municipality and Langford emerging as a community people are choosing to live in. For anyone interested in city building, they need to look at the transformation of Langford. It was known as a dog patch 20 years ago and now they have 20-storey towers.

How did Langford grow and become such a hot spot for development?

The mayor of Langford created his own process for how the municipality would tackle development. He got to define the vision for the Langford community. It all started when Costco wanted to come to Southern Vancouver Island. They faced a lot of opposition until Mayor Young brought them to Langford. After welcoming Costco with open arms, Langford began to take off.

What is real estate development like in Nanaimo? Is Nanaimo a good place for developers?

Yes, Nanaimo is becoming a prosperous marketplace for developers. There’s a demand equation in Nanaimo now. The price of real estate in Nanaimo is now on par with Victoria. That’s because the purchaser isn’t as concerned about where on Vancouver Island they are, just that they’re on the Island. These newcomers are ready to retire and are looking for liveability.

The mills that used to pepper the east coast of the Island are closing down. As they shut down, that changes the real estate equation as well. More people are willing to move to places like Nanaimo because there’s less of the stigma and signs of that industry.

Are smaller towns like Parksville and Campbell River gaining momentum and seeing development and growth like Nanaimo and Langford?

Absolutely! When Victoria began to draw these big companies, those companies started to find opportunities in these secondary markets on the Island. We’re seeing these companies popping up all across the Island. Ten years ago, there’s no way these companies would have come over.

Prices have increased in Victoria real estate, likely due to increased demand. What is spurring housing demand in Victoria?

Victoria is predominantly a government town and that hasn’t changed. But what has changed is more retirees making the decision to come to Vancouver Island and settle on the South Island, near Victoria, for access to amenities and healthcare. The deep pockets of those people are driving this demand.

A third of sales on the residential side in any given month are to out of town purchasers. Those out of towners, as well as first time buyers, aren’t selling anything to put back into the market. So that’s 30-40% of sales that don’t increase housing stock, which will inevitably drive up prices since we’re undersupplied.

Quality of life is bringing a lot of people to Vancouver Island. People have realized they don’t need to be in an office to do their job, so they come to the Island. And if they have money, they can beat out the local buyers for real estate. There’s difficulty there as local people are getting outbid 15-20 times. We do have more supply coming to Victoria but there are challenges there with construction costs and shortages. But I do think we’ll see some more balance in the market in the next 24 months.

It used to be that projects would come to market in Victoria with 15-25% of their units still left to sell but that isn’t the case anymore. For example, Nest by Chard only has six units left and they’re only starting construction now. The sales cycle in Victoria is changing.

Why has the Victoria real estate sales cycle changed so much in the last few years? Why is there so much activity in the presale market in Victoria?

There are four reasons why we’re seeing so much presale activity in Victoria, which has contributed to the current sales cycle:

1. We have more people coming into the marketplace but with plans to move here in a few years. Presales are perfect because they give you time to plan.

2. There’s so much competition for existing real estate in Victoria that unless you can outbid everyone else, the presale market is more of a sure thing. It’s less stressful when you don’t have to compete with 20-30 other buyers for the same unit in the resale market.

3. There’s a real lack of alternatives for people to get into the market. It’s not Vancouver pricing but it’s still over $1 million to get into a single family home in Victoria. So first time buyers have to turn to condos, which brings a lot of them to presale offerings.

4. We saw how values went bananas in the last couple of years. A lot of buyers are thinking, “If we don’t get in now, we may never get in.”

All of those factors have helped presale projects see sale volumes we haven’t seen in many years.

We’re seeing a lot of success for developers like Chard with their project, Nest. They have another project, Haven, with a BC Housing component for social housing that is also selling quite well. Of the 211 units between those two projects, they only have 10 units left to sell. And we’re seeing that same story across many presale projects around the South Island.

We saw sky-high pricing on the luxury Customs House project. Who is buying at Customs House?

Customs House saw a mix of purchasers. The penthouse, which is over 4000 square feet, sold for a record breaking $11 million a few years ago. And it’s probably worth more now. I believe those were purchasers from Seattle in the tech industry. Some of the sub-penthouse units have gone to Lower Mainland buyers.

But quite a few units in Customs House have been sold locally. There’s a lot of wealth in Victoria and “old money” that the city runs on. Individuals who are downsizing or “rightsizing” from wealthy neighbourhoods want to put their money into a project with that status they’re looking for. Because the Customs House project was so unique, it’s hard to make generalizations about the market. The quality was so impressive and it’s really something to see.

What Victoria real estate projects are you excited about?

Starlight’s arrival on the development field in Victoria has been huge. They’re about to start construction on 600 units in Langford and that’s just step one; they have projects coming to Victoria and Saanich too. It’s not something we’ve seen on this scale so I’m really following their progress. They’re doing big city stuff and it’s very exciting to watch.

What advice do you have for someone looking to enter the Victoria real estate market?

If a guy like me can get into this industry, anyone can. It’s a fulfilling industry and the opportunities are what you make of them. It’s an industry where we all rely on each other and your character will precede you. You not only need to be good at what you do, but you have to ensure what you do helps those around you.

It’s a small community but there’s a place for everyone in the real estate industry. I highly encourage young people to look into real estate; there’s something for everyone here.

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Vancouver Commercial Real Estate Podcast

For all the curious minds interested in commercial real estate investing, grab a coffee and pull up a chair because we have exclusive stories and tips from commercial real estate brokers, investors, developers, economists, urban planners, and everyone in-between. From the successes and failures to the motivations and lessons learned, the Vancouver Commercial Real Estate Podcast is your insight into commercial real estate in Vancouver, Victoria, Kelowna, and beyond.

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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.