Great for renters, not so much for landlords


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December 8, 2016 12:00 AM

Lloydminster apartments rentals have seen almost a 12 per cent increase in availability from last October to October 2016.
In total, according to a recent rental market report from the Canada Mortgage and Housing Corporation (CMHC),  apartment availability last year jumped from 17.9 per cent to 29 per cent this year, figures that have forced many landlords to decrease rental rates.
Though increases in availability have impacted units right across the board, from bachelors right up to three-bedroom apartments, Brad Gilbert, broker and owner of Coldwell Banker City Side Realty, said the increase largely stems from one bedroom units, often rented by transient workers coming to town for work in the energy sector.
“Now in the one bedroom apartments, those are the ones that are the most severely impacted in the market place, and I would say they’re (numbers) are probably fairly close (to ours); I think our numbers are a little less than that,” Gilbert said.
“We’re probably sitting about, overall, maybe about 18 per cent vacancy rate; that’s for one bedrooms.”
The CMHC report shows a 19.5 availability rate for one-bedroom units last year.
To be more specific, the reason for the widened gap in one-room apartment availability is mostly because the perpetual layoffs in the oilfield, as well as lack of hiring for new positions, that sent a lot of workers, many of whom are single, back to their home towns and provinces.
Gilbert said when those workers saw the likelihood of going back to the drilling rigs was limited, they simply moved out and went home, leaving the one bedroom apartments empty. 
Another factor, which has a cause and effect scenario, saw those who stayed in Lloydminster take advantage of the resulting rental decreases that came with the high vacancy rates, and move up from one and two bedroom apartments, to the recently cheaper and more spacious units.
“With the reductions in rents, yes, we had a number tenants move up in size and other accommodations, to either townhouses or single family homes,” said Gilbert.
This amount of vacancies and the ensuing rental decreases have caused some stress for local landlords, Gilbert said, but because of the many good years in recent history where income was much greater, most property owners knew to save for rainy days, like the ones the Border City has been enduring for the last while.
Gilbert added he doesn’t anticipate the situation to continue much longer, believing a slow, but steady increase of prosperity for the city as oil prices rebound.
“Things, especially in the last few days, have started to turnaround, and even if you look back over the course of the last three or four months, there’s been a sense of stability in the oil industry,” he said.
“Yes oil dropped below $50 (per barrel), but it didn’t drop below $40, it kind of stuck in that $44—$45 range and so you know, oil companies need that sense of stability so they can budget for their projects and if they aren’t comfortable with the feeling that oil is not going to go below $45, then they’re just going to put their projects on hold, and if they have a fear that it’s going to go down to $25 or $30 again, but I think we’re over that fear.”
And with rumours of a turnaround at the Husky refinery, one that’s expected by some to bring 3,000 new workers to town next year, Gilbert said relief for landlords could be on the horizon.
Ward Read, CEO of Lloydminster Economic Development, agrees the number of increased rental availability is largely from workers in the energy sector leaving town due to lack of employment, but points to some other factors that might also account for the abundance of vacant apartments.
He said a couple years back Lloydminster saw a jump in the number of units in the community when two fairly significant local rental companies put up four new buildings with roughly 75 apartments apiece.
This put about 300 new units on the market, which went up when demand was started to dwindle, and in turn, has an impact on the amount of available apartments.
“If I’m looking at my numbers right, it looks to me that (new apartments) probably first began being able to be rented in early 2015 or so,” said Read. 
“Looking at the October 2014 numbers, it looks like our total number of units then was 2,041 and we’re somewhere around 2,343, I think the report says, so probably around early 2015 is when we saw that jump in supply.”
New apartments aside, the number of renters is still undeniably low and is likely having indirect adverse effects across all sectors in the economy.
It may not be all doom and gloom, however, at least not for too much longer, as Read echoed Gilbert’s confidence in a slow but steady rebound in the energy sector.
“I’m hoping, of course, next October won’t be quite to this level; I think we’ll probably stay fairly stable in the next, say half a year, and I don’t think that there’s too much more room to slide downwards—what I’ve heard from other economists, such as ATB’s Todd Hirsch, is that his feeling is we’ve gone past the low point price of oil and that we’re maybe going to be starting a slow creep upward,” Read said.
“The unfortunate thing is, as that price goes upwards, it’s going to take a little bit longer, a little bit of a lag before companies start hiring back, and that hiring back is when we’re going to start to see movement in improving apartment rental rates.”
He’s also heard news of the 3,000 or so workers expected to come to town next year for the Husky project, and said if it happens, it’ll provide a healthy boost for landlords and all other sectors of the local economy.

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