In anticipating the growth potential of the commercial real estate market in Nanaimo, the following indicators should be considered:
- Population - Population growth rates reflect the economic health of a region. Sustained population growth creates demand for services and housing which leads to expansion of these sectors. Nanaimo's population has grown by an annual average of .8 percent since 2009. Nanaimo is in second place in terms of population growth among comparably sized BC cities.
- Business incorporations - Over the past 10 years, Nanaimo's business incorporations have followed the overall provincial trend. After declining sharply in 2009 due to the global recession, annual business incorporations have risen and are close to their pre-2009 levels.
- Need for services - Nanaimo's location has helped the city develop as an important retail, service, transportation and distribution centre for central and northern Vancouver Island. The city has about 57% of the Nanaimo Regional District population, but has 75% of the region's retail and service floor space.
- Business start-ups – In the first quarter of 2016, 224 new businesses obtained a City of Nanaimo business licence. This is a 26.6% increase over the same quarter in 2015. This number also reflects a 36% increase from the fourth quarter of 2015.
Source: Nanaimo Economic Development
All of the above markers seem to indicate there is and should continue to be solid growth potential for the commercial market.
We are now half way through the year 2016 which makes it the perfect time to have a look back at what happened in the commercial real estate market over the past 12 months here in Nanaimo.
Using the stats supplied by VIREB we are able to get a strong feel for the current state of the commercial market by looking at current stats and comparing them to the same time last year.
The following data compares the market stats as of the month of May 2016 against stats for the month of May 2015:
- 31% more units listed for sale May 2016 than May 2015
- Identical number of unit sales in both years
- Sell to list ratio was down by 4% May 2016 as compared to May 2015
- Average sale price was up 24% in May 2016 compared to May 2015
- Sell price/list price was 94% in May 2016 and 90% in May 2015
Current Absorption Rate
Absorption rate is one of the key indicators on how the Nanaimo commercial real estate market is faring. It tells us the rate at which properties are selling.
The definition of absorption rates is the number of months it takes to sell the current real estate inventory in Nanaimo at the present rate of sales.
May 2016 – The current absorption rate is 36.95 months to sell the inventory that is presently on hand
|Months of Inventory|
|Seller's Market||under 4 months|
|Balanced Market||4 - 6 months|
|Buyer's Market||over 6 months|
The definition of a Buyers’ Market, according to the Real Estate Board of Greater Vancouver is a market that has 6 months or more of inventory available.