Renewed economic optimism and surging interest in real estate from Lower Mainland and Albertan buyers are giving a boost to development in Nanaimo.
The good news comes on the heels of a year of “hesitation and slow sales,” says Jason Winton, managing broker for commercial sales and leasing at Colliers International’s Nanaimo office.
“2010 was a record year for the Colliers mid-island office,” Winton says, adding that the potential of Nanaimo is still being discovered by off-Island investors.
With a population of approximately 87,000, Nanaimo is the Island’s second-largest city.
Its early economic foundation was built on
coal mining, in the mid-1800s, but by World
War II, increasing demand for forest products pushed logging, pulp, paper, and timber milling to the fore.
These days, Nanaimo — or the Harbour City, as the tourism brochures tout — boasts a few notable bright spots in an otherwise moribund Vancouver Island forest products manufacturing sector. Locally owned Coastland Wood Industries, which peels logs and makes engineered wood products from veneer, has proven to be an innovative survivor in a volatile industry. In 2008, the 60-year-old Harmac-Pacific pulp mill was rescued from demolition by a cooperative ownership bailout that saw 220 members of the Pulp, Paper, and Woodworkers of Canada each throw in $25,000 along with new management headed up by Vancouver’s Sampson Group; now the mill, renamed Nanaimo Forest Products, is riding high on a bullish pulp market and operating at capacity with 300 employees.
However, the city’s eight per cent population growth over the past five years has been driven less by resource workers, who account for less than five percent of regional employment, and more by retirees, lifestyle migrants, and other buyers attracted by relatively affordable housing and a climate that allows year-round golf. In turn, this influx is driving growth in the retail, health, social services, accommodation, and food sectors, which together employ more than 35 per cent of the Nanaimo workforce.
As developers overcome financial market meltdown jitters, commercial property is moving again in Nanaimo and that has buoyed the business community. In 2010, Colliers’ Nanaimo operation, which services the Harbour City and points north on Vancouver Island, closed 91 commercial real estate deals worth more than $500,000 — 35 per cent of them in Nanaimo. Of particular significance were the $6.5-million sale to Vancouver’s Pacific Capital Real Estate Group of a 19-acre property near Nanaimo Regional General Hospital, primarily zoned multi-family with a five-acre portion that is being rezoned to commercial, and the $6.8-million sale to Edmonton’s family-run auto dealing chain Wheaton Investments of a 10.5-acre site destined for a new dealership showroom and adjacent retail space.
Topping last year’s sales was an $11-million deal that saw the 55,000-square-foot Wellington Court retail complex sold to a private Lower Mainland investor; according to Winton, it was the largest commercial transaction in Nanaimo since 2007. Colliers is so confident in the resurgent real estate market that the firm has boosted its Nanaimo staff to meet the demand.
{advertisement} Guarded Optimism
Doug Bromage is president of Nanaimo-based InSight Developments. The company is behind the funky Hawthorne Corner development, 12 blocks from downtown, and the 50-acre, baby-boomer-oriented Longwood community recognized by the Canadian Home Builders’ Association as project of the year in 1997, 1999, and 2006. Bromage shares Winton’s optimism but believes the local development market isn’t back to normal yet.
In 2009, InSight turned its attention to the historic downtown waterfront of Nanaimo, breaking ground on Seawalk, a 24-storey condo tower overlooking the harbour. However, the company felt the sting of the 2008 meltdown when squeamish financial markets forced it to halt construction midstream until markets improved.
“There’s still a bit of hangover from the downturn, but I’m far more optimistic than I was a year ago. With Seawalk, we’re waiting to catch the next wave,” Bromage says.
Seawalk is aimed at empty-nesters and younger families fleeing what Bromage says are “out of control” prices on the Lower Mainland, where “people are paying $1.3 million for homes and knocking them down.”
But Nanaimo bears a reputation for suburban sprawl and shopping malls; the historic downtown core, with its brick buildings and narrow winding streets, often gets overlooked by outsiders. Yet developers like Bromage believe the city centre has a natural charm similar to downtown Victoria, albeit on a smaller scale. The classy Port Theatre and the 38,000-square-foot Vancouver Island Conference Centre, which opened in 2008, have helped boost the potential of downtown that Bromage hopes will add to Seawalk’s appeal when construction resumes.
While realtors welcome the positive sales numbers following a few tough years in the wake of the U.S. financial meltdown, changes within Nanaimo city government are also creating a buzz. For years, the business community has criticized city bureaucrats for not doing enough to generate economic activity and attract new business. Criticism centred on the city’s clunky economic development office.
“The old model was too tightly linked to the political and bureaucratic body,” says Ian Howat, Nanaimo’s director of strategic relationships. “For example, it’s tough for a body to remain objective over land-use issues and at the same time advocate for development. The business community suggested to us that business needs to be more involved in the strategic planning and guiding of economic development.”
Another problem was the overlapping and confusing responsibilities between Tourism Nanaimo and Destination Nanaimo; the former was a non-profit society that received $310,000 annually from the city and provided support for visitors after arriving in Nanaimo, the latter a city function with a $650,000 annual budget targeted at external marketing.
City staff and politicians took the feedback to heart and acted quickly. With the departure last April of economic development officer Marilyn Hutchinson, Nanaimo set in motion the framework for a new arm’s-length economic development corporation to replace the old in-house model (at press time, the city was still searching for a new economic development officer to replace Hutchinson).
Following in the footsteps of cities such as Abottsford and Kamloops, Nanaimo hopes the new approach will streamline development and reduce the redundancies and overlapping responsibilities that have irked the business community. The once separate tourism entities will now be housed under the same roof at the economic development corporation, Howat says. A recently completed economic development strategy identified five focus areas for the new EDC: logistics and distribution; professional, scientific, and technology sectors; tourism; business and professional services; and green industries.
On paper, the change looks positive; however, Colliers’ Jason Winton says it’s too early to judge the initiative a success. Bromage welcomes the new economic development approach as a vast improvement over the past when he says there were too many people “pulling on the same oar.”
“This will tell us what the city’s goals are,” Bromage says. “It will be like one-stop shopping to tell us where the city is going instead of running around all over the place.”
