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July 2012 B.C. Economic Fundamentals

Ally

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New Vancouver office towers to spur action from existing landlords





Vancouver, July 3, 2012
` Although Metro Vancouver`s office market remained relatively stable during the second quarter of the year with average vacancy rates inching marginally lower from 7.7 per cent at the beginning of the year to the current 7.6 per cent, the impending arrival of new buildings in the market is a signal for landlords to act now in an effort to retain existing clients and attract new ones. New developments under construction in downtown Vancouver ` Telus Garden, 745 Thurlow and MNP Tower ` will create a more competitive environment, warranting landlords to meet shifting tenant demands to maintain occupancy levels.



`The office market is steady right now, but landlords need to avoid complacency,` says Maury Dubuque, Manager of Sales Development, Tenant Advisory Services with Colliers International in Vancouver. `With new buildings being added to the office inventory in a couple years, now is the time for landlords to re-invest in their properties and focus on meeting tenants` evolving requirements. The last thing a landlord wants to be doing is major building work like fixing elevators after the new buildings come online.`





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New Fort St. John hospital open




FORT ST. JOHN - Premier Christy Clark today officially opened the Fort St. John Hospital and Peace Villa, which will provide families and seniors expanded hospital and residential-care services inside a new $301.8-million facility.




"This new and modern state-of-the-art facility shows our commitment to making smart investments in patient care for the growing number of families and seniors in the North," said Premier Clark. "With its new birthing centre, the hospital will give new moms and babies the best start. Peace Villa will provide seniors with the care and supports they need to age with dignity and respect. "





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Signs of real estate recovery shift to B.C.'s interior



The real estate market in Vancouver may be slowing, but there are signs of strength in the Okanagan and in northern B.C., the British Columbia Real Estate Association`s latest report shows.





B.C. residential sales fell nine per cent to 38,312 units during the first six months of 2012 and the average price was 8.9 per cent lower at $533,681, compared to the same period last year, the report shows.






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Vancouver: Canada's richest city in 2011, but will it last?




Vancouver was the wealthiest city in Canada last year, according to data from Environics Analytics WealthScapes published in the Globe and Mail:

An average Vancouver household had a net worth around $612,000, compared to $541,000 for Calgary and $542,000 for Toronto. Net worth is defined as the sum of a household's assets, such as real estate and savings, minus their debts, like mortgages and credit cards.



But households in Vancouver, alongside their island counterparts in Victoria, spent the most on debt financing in the entire country, which, as the Globe and Mail points out, leaves people vulnerable to interest rate increases.





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Victoria Capital City Centre forges ahead




Huge sheets of metal jut out of the ground and excavation equipment doing what it does best as work moves along on the $1 billion Capital City Centre project.










Site cleanup has been completed at the Colwood Corners property on Sooke Road and large metal shoring has been installed around the border of the site to prepare for excavation. Digging will go two stories down for underground parking. The shoring will be on two and a half sides of the property, providing stability to the ground.





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Waterfront pitch for Fort Haney




A proposed waterfront development for Port Haney could transform Maple Ridge`s downtown, connecting it to the Fraser River.










Maple Ridge council was presented a proposal Monday to develop the 600-metre stretch of waterfront south of the Haney Bypass, where the Northview Enterprises log sort has operated for the past 40 years.





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Financing advantages



Something that goes somewhat unstated in the real estate discussions I read online and in print is how, in Canada, residential financing receives preferential rates over similar investments not only for owner-occupiers (aka "homeowners") but also investors ranging from the family renting out a basement suite to those who actively manage multiple properties and derive the lion's share of their income from these operations. The article that piqued my interest is one written by Martin Wolf last year:





According to a FT article last week, Lloyds` bank has a target return on equity of 14.5 per cent. Banks like to argue that this is the level of return on equity they need to earn, in order to gain funding from the markets. Naturally, remuneration is linked to achieving such objectives. The question, however, is whether such objectives make any sense. The brief answer is: no.


Forget banks, for the moment. What would you say if someone offered you an investment with a promised real return of close to 15 per cent? You might say: `How much can I buy?` Alternatively, you might say: `What is the catch?` Sensible people must take the latter view. If you thought that you were being offered a reliable real return at such an exalted level, you would buy as much as you could. This must be particularly true now when real returns on the bonds of relatively safe governments are close to zero.

So what is the catch? The obvious answer has to be that the real return in question is extremely risky, because it is volatile and offers a significant chance of total wipe-out.





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Vancouver approves three new highrise towers next to Roger's Arena





Rogers Arena is set to welcome hundreds of new neighbours after Vancouver city council Thursday night approved the development of three new highrise towers by Aquilini Developments and Construction, run by the same family that owns the Canucks.




According to the $300-million plan, which originally favoured condos in the mixed-used development, a total of 614 one-, two-and three-bedroom rental units would be built in stages over the next several years with the last of the towers ` between 23 and 32 storeys ` completed in the spring of 2016.






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New Evergreen stop announced







Against a backdrop of towers under construction and pile drivers echoing in the distance, representatives from all three levels of government announced the addition of a seventh stop on the Evergreen Line Thursday.




The new station will be situated at Lincoln Avenue and Pinetree Way in Coquitlam's City Centre, and represents a public-private partnership between the city and Pensionfund Realty Ltd., the firm that owns Coquitlam Centre shopping mall.






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Enbridge plans $500-million safety upgrade for Gateway





Facing widespread concern about the safety of oil pipelines, Enbridge Inc. promised to spend up to $500-million to reinforce its planned Northern Gateway pipeline to the British Columbia coast, while the Alberta government is launching a broad review of industry practices in the province.




Enbridge said Friday it plans to use thicker-walled steel for delicate sections of the planned project, including more than 100 important river crossings, and install about 50 additional remotely operable valves that it can shut in the event of an emergency. Together, those measures will add $400- to $500-million, or roughly 10 per cent, to the $5.5-billion twin-pipe project, which would haul Alberta crude for Pacific export at Kitimat, B.C.






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Climate shifts may strand weather-dependent ecosystems





Climate change is pushing British Columbia's ecosystems - and its productive forests - farther and farther out of sync with the weather conditions they need in order to thrive, new research suggests.




B.C.'s 16 major ecosystems - everything from coastal rainforest to alpine peaks - are getting left behind as precipitation and temperature patterns shift in response to global warming. The trend is expected to create challenges for commercial species such as lodgepole pine, which will have less moisture to sustain them through hotter, drier summers, and opportunities for frost-averse species, such as Douglas fir, to extend their range.






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B.C. releases requirements for new heavy oil pipelines





The British Columbia government has today outlined five requirements that must be met before it approves any new heavy-oil pipeline, such as the Enbridge Northern Gateway.




"Our government is committed to economic development that is balanced with environmental protection," Premier Christy Clark said in a news release.






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Pace of condo presales in Metro Vancouver slows





The number of new concrete condos launched in Metro Vancouver has been strong for the first six months of 2012, but not nearly as strong as earlier forecasts.




Real estate market firm MPC Intelligence had predicted in April that 7,800 new condos in concrete towers would be introduced to the market for sale in the first six months. That was down from an earlier prediction of 8,000.










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Vancouver ports accused of luring cargo away from U.S. courts





WASHINGTON ` A U.S. federal agency is poised to chastise Canada in an upcoming report to Congress, alleging Canadian ports on the West Coast are deliberately luring lucrative cargo business away from their American counterparts, say sources familiar with the findings.




The Federal Maritime Commission, assigned by Congress last year to probe allegations levelled by two Washington state senators, received more than 75 responses after asking interested parties on both sides of the border if Canada was diverting cargo away from U.S. ports.





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Resurgence in Victoria rental market





The Victoria rental market has been considered stable and secure for building owners and investors for several years. But even though it has softened of late, with more units available, and the economics remain far from ideal to spur on new rental development, renovation and new construction have picked up.




A major overhaul of rental housing is underway in the Quadra Village area, while rental units are in the works for locations around the city.




Ken Cloak, Colliers International Victoria's associate vice-president and multi-family specialist, said the market remains stable, but overall economic optimism, due in part to new life in the shipbuilding industry, could be behind the rental construction activity.






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Microsoft lays off Vancouver employees, cuts major projects





Vancouver`s video game industry has suffered another blow, as Microsoft shut down two of its major projects.




Development of two games, Microsoft Flight and Project Columbia, was stopped by the firm, which posted its first quarterly loss as a public company earlier this month.




`Microsoft Studios is always evaluating its portfolio of products to determine what is best for gamers, families and the company,` Microsoft`s public relations director Ryan James said in a statement. James said the decision to stop development on these two games, `was the result of the natural ebb and flow of our portfolio management. Many factors were considered in the difficult decision to stop development but we feel it will help us better align with our long-term goals and development plans.`





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$5.6 million to improve Highways 2 and 97




DAWSON CREEK - Two improvement projects on Highway 2 and Highway 97 in the Peace River area will improve safety for families, visitors and commercial traffic.




A $2.4-million contract has been awarded to Knelsen Rock Products Ltd. for a new two-kilometre northbound passing lane on Highway 97 at Mile 10, approximately 15 kilometres north of Dawson Creek. Improvements will be made to the intersection at Farmington Fairways, including left turn bays and enhanced lighting. These upgrades will improve safety and reduce delays along this busy corridor, which has seen an increase in oil and gas and tourism traffic over the past few years. Work is scheduled to begin this month and finish by late October.





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