Why We See Opportunity in the Workforce Housing Market

Why We See Opportunity in the Workforce Housing Market

With climbing inflation and rising interest rates dominating headlines, the housing market has become top-of-mind for Canadians from coast to coast. Ensuring adequate affordable supply is a complex problem with no easy solution, and tackling it requires input and action from all areas of the housing industry, as well as various levels of government. From our inception, Avenue Living has focused on providing safe, well-managed housing at affordable prices — a focus that has allowed us to weather several economic challenges, and one that we know is a key part of the housing spectrum, now and in the future.  

For investors, there is potential opportunity in existing supply, especially in assets that serve the workforce housing demographic — the focus of our Core Trust. This group, which makes up approximately 40 per cent of the private rental market, is anticipated to seek more affordable solutions as inflation and rising interest rates delay or disincentivize homeownership. Several external factors continue to bolster the strength of the workforce housing market, from population growth to the geopolitical and economic environment. Here, we explore those factors and their impact on our model. 

Inflation 

The conversation around housing supply often raises the need for new builds. But with inflation at 6.8 per cent in April, and supply chain challenges making project plans unpredictable, construction of new buildings is not an immediate answer to the housing affordability problem. Avenue Living is in a unique position, as we acquire and refurbish existing housing stock to create safe, comfortable, and affordable homes for renters. As the cost of new builds continues to rise — and take rents with them — renovating existing property becomes a quicker, more efficient way to inject appealing inventory into the market at a reasonable price point. Renovations require an investment of approximately 10 to 15 per cent of the asset value, mitigating the risk of rising costs and allowing us to continue to provide safe, comfortable homes at an affordable rent, on a shorter timeline — and to potentially generate more immediate returns for our investors. 

Affordability 

Housing affordability is top-of-mind for residents, as the cost of home ownership has risen out of reach for many. The Canadian Mortgage and Housing Commission (CMHC) dictates that for housing to be considered “affordable,” a household must “spend less than 30 per cent of pre-tax income on adequate shelter.” Avenue Living residents, on average, earn $56,000 per year and spend roughly 23 per cent of their income on rent — which is significantly lower than the affordability construct from CMHC. 

Immigration 

The government of Canada has an ongoing plan to increase immigration levels, as a way to increase our workforce and help the country recover from the economic challenges of the pandemic. This plan aims to attract over 400,000 people to Canada a year through 2024. In 2021, we welcomed a record number of newcomers — 401,000 people made Canada their home, the largest influx ever. Alberta is consistently one of their top destinations with Calgary and Edmonton as the fourth and fifth most popular cities among newcomers to Canada. Many newcomers rent when they arrive in Canada and fit into our target demographic, with the median pay for those arriving in Canada in 2018 sitting at $31,800. 

Changing Resident Preferences 

The pandemic changed how individuals view their homes, but beyond that, people are making space a priority, a trend that is becoming increasingly evident in rental patterns. We have seen more interest in suburban locations with larger floor plans — especially townhomes — across our portfolio, as inflation and rising interest rates cause people to put off home ownership and opt for more spacious rentals. Our experience as active property managers also tells us residents are seeking institutional-quality service, something rarely paired with affordability, but that we are committed to delivering.  

Labour Market Shortages 

The construction industry has been struggling with labour shortages for several years, and in the past year, those shortages have become more extreme. The 2021 BuildForce Canada report suggests the construction industry could be short as many as 81,000 workers by 2030 as it tries to keep up with retirements and increased demand — especially for housing. Avenue Living’s strategy of purchasing built assets and making capital improvements shields us from much of the risk that comes with that labour shortage.  

Opportunity in the Workforce Housing Market

Our focus on multi-family residential, and particularly the workforce housing demographic, has historically shown opportunity for investors interested in real estate; a trend we believe will continue. As inflation and interest rates compel people to consider renting long-term, Avenue Living continues to set itself apart through strategic acquisitions, value-add capital improvements, and an unparalleled focus on the resident experience.  

 

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://avenuelivingam.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

Diverse Voices Drive Growth, Innovation, and Success

Since Avenue Living’s inception, inclusion and diversity have been values that drive our organization. Strong, talented women help fuel our continued growth, and we are proud to say that more than 40 per cent of our C-suite is female (which we proudly featured last year). We believe different viewpoints, perspectives, and levels of experience help us achieve our goals and make our company better. This year’s International Women’s Day aims to #BreakTheBias — which encourages us to envision a world free of bias, discrimination, and stereotypes, and to create one that is both diverse and inclusive. This year, we want to take the opportunity to highlight and celebrate even more talented women at Avenue Living who are taking us to new heights. We asked them to share the professional experiences and insights that guide them.

 

Showcasing a few of the women on our team  

Faye Garlitos, Regional Vice President, has been with the Avenue Living team for three years. Throughout that time, she has gained a deep understanding of our customer journey. 

Kathleen Cowick, Senior Counsel and Director of Legal Operations, brings more than 20 years of legal experience in a range of industries to Avenue Living’s various business segments. 

Marina Post, Chief Accounting Officer, joined Avenue Living in 2018, with many years’ experience working in accounting, finance, and leadership roles for national organizations. 

Tammy Cho, SVP, Marketing, joined the team early in 2022 with 15 years’ experience in leading corporate marketing and communications strategies for technology companies in energy, manufacturing, life sciences, aerospace and defense, and wholesale distribution. 

Vanessa Prosser, Director, Supply Chain and Procurement, has worked in supply chain management since her teenage years, broadening her experience across all facets of the industry. 

Wendy Ell, Director, Public and Government Relations, joined the team in 2021 and brought with her three decades of experience in energy, finance, real estate, and technology.  

 

What inspires you professionally and personally?  

Marina Post is inspired by “being surrounded by ambitious, driven, enthusiastic, and engaged individuals; the opportunity for growth and development; making a positive impact with my team and organization, as well as my family.” 

Personally, and professionally, Vanessa Prosser is inspired by new challenges, growth, and life-long learning. “I love problem-solving, finding solutions, building things, and developing new skills, and I try to seize any opportunity to do so.”   

Team success inspires Kathleen Cowick. “As a lawyer, your work is usually behind the scenes, so you take your inspiration from the success of your clients and their business. Personally, and professionally, I strive for new experiences that keep things fresh.”   

“My parents have inspired me since I was little,” says Tammy Cho. “They immigrated to Canada in the early 1980s with a positive outlook, limited financial means, and minimal understanding of the English language. They persevered through difficult times to ensure a better life for our family.” 

How did you get into your current line of work? 

“Through another woman, I highly look up to,” says Faye Garlitos. “Had she not given me a chance and opening to venture into the property management business, I highly doubt I would ever be part of this industry.” 

“I knew in grade school if I ever wanted to succeed in life, I would have to put myself out there — in jobs that had me working on the front lines, monitoring and tracking the ever-evolving wants, needs, perceptions, and actions of different groups of people,” says Wendy Ell. 

“I was a lawyer for many years at a large firm before joining Avenue Living, focusing on operations,” says Kathleen Cowick. “I followed the highest needs within our group and focused on the things I thought would provide the most value to the organization.” 

“I’ve had a passion for communications and marketing since I was in university because it’s an ever-evolving and changing discipline,” says Tammy Cho. “I enjoy understanding customer pain points, working across various teams to bring solutions to life, and using tools to persuade buyers as to why our offering is the best option available.” 

What challenges have you experienced as a woman in the workplace?  

“I’m fortunate to say that being a woman in the workplace has not in any way impeded my career development,” says Marina Post. “I would attribute that to being part of the right teams with the right culture, with leaders who value input from all individuals, regardless of gender, race, religion, etc.” 

Vanessa Prosser has worked in male-dominated industries — and male-dominated departments — for years. “In general, the men I have worked with have been phenomenal and we have been able to build strong, supportive teams together,” she says, “but there have certainly been times where people have made assumptions about my role, authority, knowledge, and qualifications that they didn’t make regarding my male colleagues.” 

“There is sometimes an assumption that as a young woman, you are not the expert in the room,” says Kathleen Cowick of her own career experiences.  

“Having worked three decades in energy, finance, real estate, and technology, I firmly believe I’ve had to work at least twice as hard to make myself heard,” says Wendy Ell. 

How have you overcome the challenges you’ve experienced?  

Marina Post says she has “been fortunate enough to be in workplaces where there are largely opportunities rather than challenges when it comes to women in leadership positions. I have also seen massive shifts in the overall atmosphere around the removal of the proverbial glass ceiling. I think employers and leaders are much more focused on an individual’s contributions rather than their gender.” 

“I work hard and try to make sure my performance is beyond reproach,” says Vanessa Prosser. “I research and educate myself on the industries I work in to build a strong background and knowledge base. I also actively try to build great relationships with colleagues at all levels so we can all support each other in our growth and professional goals.” 

“I’ve been lucky to have some strong female role models, even in what is still a male-dominated industry and a city where the majority of business leaders are still male,” says Kathleen Cowick. “Having the confidence to understand that you’re at the table for a reason and that there is value in your opinion is important.” 

“In my 20’s, 30’s, and 40’s I had the great honour of having some outstanding mentors – successful individuals each with national/international acclaim,” says Wendy Ell. “With their guidance, I learned to observe the non-verbal, listen intently, and trust in my well-earned knowledge.” 

What’s the best advice you’ve received?  

“Be curious and ask questions. Don’t be afraid to make mistakes. Be a lifelong learner,” says Marina Post. 

“Keep moving forward,” says Faye Garlitos.  

Vanessa Prosser looks to the words of one of her university professors: Dare to know. “That’s how I try to live my life, and it’s been great advice so far.” 

“To trust my own knowledge,” says Wendy Ell. “It’s less about trusting ‘the gut,’ but more about knowing that as I put in the hard work to listen, monitor, track and relate, then I am generally not only on par with others, but in most cases, one or two steps ahead.” 

Kathleen Cowick was advised early in her career to always find multiple paths to a goal. “There may be challenges or obstacles in your path, be it in life or in respect of a client’s objective, and if you have more than one way to get to your destination, you are more likely to be successful.”  

Tammy Cho’s mentors have given her advice that she uses in her decision making, “Don’t live life with regrets and walk towards, not away from. At the end of the day, you’re accountable to yourself.”  

 What would you tell a younger version of yourself? 

“When one door closes, another door opens,” says Marina Post. “So much of what happens in our lives can seem quite challenging or negative in the moment but can be, in retrospect, the opportunity for growth, improvement, and a path to something better.” 

“Set reasonable expectations and exceed them rather than trying to be all things to all people. And invest early,” says Kathleen Cowick. 

“Slow down and smell the flowers. You’re doing it right,” says Wendy Ell. 

Tammy Cho has found it valuable to “trust your gut, take more risks, and know your worth.”  

 

As we benefit from the insight of different women across Avenue Living, we continue to appreciate our diverse team and the manner in which our female leaders contribute to our ongoing success. We are always looking for dynamic people to join our team. Take a look at our career opportunities.  

 

 

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.alamstg.wpenginepowered.com for additional information regarding forward-looking statements and certain risks associated with them. 

2021: A Year of Growth for Avenue Living Asset Management

Avenue Living’s strategic approach and milestones from the past year continue to support our business expansion across North America. 

Avenue Living Asset Management reached a number of significant milestones in 2021. Despite the ongoing pandemic and challenges facing the world today, our robust investments in workforce housing, self-storage, and agricultural properties — on both sides of the border — grew our total assets under management to over $3.1 billion, more than doubling in value in under 1.5 years.

Throughout the year, Avenue Living focused strategically on two key areas of our business to drive greater customer satisfaction — our platform and our service model. “Like healthy soil, when you start with a solid foundation, anything you plant in it will grow,” says Anthony Giuffre, CEO of Avenue Living. “This is why we focus on investing in our people while optimizing and refining our end-to-end customer service model. For us, it was vital to have these two important elements in place before expanding our assets under management.”

“During the last two years we’ve had to navigate numerous waves of COVID-19 and changing public health restrictions — and through that process, we’ve constantly adapted,” says Anthony. “When housing 30,000 people and serving a diverse set of customers, it’s essential to understand their specific needs. To cater to these unique needs, we had to make our operations as fluid and functional as possible to ensure a high level of customer satisfaction. I would say our team did that exceptionally well in 2021.”

With the addition of more than 2,800 multi-family apartment units, 6,600 acres of farmland, and 1,750,000 square feet of storage units last year alone, Avenue Living continued to fortify our position as a leading multi-family owner/operator in Canada, along with a growing presence in the self-storage, agriculture, and U.S. multi-family spaces.

Avenue Living’s portfolio now includes over 13,000 multi-residential units, over 2 million square feet of self-storage property space and 48,000 acres of agricultural real estate — and we anticipate significant growth in 2022 with our Core Trust’s acquisition of our U.S. Real Estate Trust, moving us towards a more holistic North American investment focus with a large pipeline of potential assets.

“We’ve now created a more institutionalized and robust platform for our business,” says Anthony. “Our well-defined processes, technological advancement, and clear objectives differentiate us. In addition to having a laser-focused acquisition strategy for workforce housing assets, we have prioritized our overall customer experience, which is key to our continued success.”

Below are some of our most important milestones and achievements from last year, all of which set us up for a strong start to 2022.

The Avenue Living Team Passes 750 Employees Strong

Our team welcomed a record number of new colleagues last year; now totaling 750 employees within the company and across North America. These experts are the backbone of our platform and one of the main reasons we have been able to achieve such sustained growth.

Assets Under Management Grow to $3.1 Billion

Avenue Living reached a major benchmark earlier this year as the company surpassed more than $3.1 billion in assets under management. This is a significant achievement and shows incredible growth as the total amount of AUM doubled from $1.5 billion to $3.1 billion in less than 1.5 years.

Avenue Living Joins Principles for Responsible Investment

We were honoured and proud to announce that Avenue Living became a signatory of the Principles for Responsible Investment (PRI), the world’s leading proponent of responsible investment. The PRI framework encourages investors to use responsible investment to enhance returns and better manage risks and is supported by the United Nations. We are pleased to be among the 218 global organizations that became new signatories in 2021. The PRI now has 4,375 signatories, representing US$121 trillion of AUM. As PRI signatories, we ensure that as we grow, we do so responsibly.

MMSP Trust Establishes U.S. Footprint

Mini Mall Storage Properties Trust acquired its first storage property south of the border in December 2021. Located in Arkansas, this property is the beginning of an expansion into the American Heartland, where we will continue to move into attractive secondary markets under the leadership of our new President of U.S. Operations.

Avenue Living Creates First North American Workforce Housing Fund

Our U.S.-focused Trust, which was established in February 2020 and exclusively held multi-family properties in the United States, reached the $100 million AUM mark in 2021. The Trust’s success demonstrates the defensibility of our investment strategy and the value our U.S. expansion brought to the Avenue Living portfolio. On the strength of this growth, Avenue Living Core Trust acquired 100 per cent ownership of the U.S. Real Estate Trust, and its U.S. assets. This alignment created the first North American Workforce Housing Fund, offering further diversification to investors by operating across a broader geographic platform while continuing to specialize in what we do best.

Poised for Continued Growth in 2022

With a clear focus on Avenue Living’s pillars of success and key investment strategies, we have achieved many pivotal milestones in 2021. These foundational elements have become the framework for us to continue our expansion and growth into 2022.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.alamstg.wpenginepowered.com for additional information regarding forward-looking statements and certain risks associated with them.

Our Top Three: The Most Read Posts of 2021

As we enter a new year, we recognize the importance of looking back on all the factors that brought us to where we are today. Thanks to our holistic investment approach and an exceptionally resilient team, Avenue Living rose to new heights in 2021, turning the uncertainties of another year of restrictions into opportunities to establish best-in-class practices across our organization. Reaching $3 billion in AUM and seeing Mini Mall Storage Properties expand their operations into the U.S. are just two milestones we reported in 2021.

Below is a quick recap of our most read stories from the past year — a year we are grateful to have shared with you.

Canadian Real Estate & Farmland a Hedge Against Inflation

An inflation hedge is an investment that is expected to maintain or appreciate in an inflationary period. Real estate has long been considered a hedge against inflation, as rent and property values tend to increase with inflation. Our white paper by Dr. Wilson of the University of Saskatchewan explores how farmland can also be included as a real estate hedge opportunity.

Investing in the Long Term: Capital Expenditures Create Benefits for Everyone

Sometimes, the things that make the biggest difference in the quality of a home are the invisible upgrades, not the flashy finishes. These keep residents happy and comfortable and, when done well, make sure capital expenditures benefit everyone in the long run. In this article, we show how our approach differs from other owner-operators — and supports our role as stewards of capital.

Mini Mall Storage Properties Expands Operations to the U.S.

When we launched our Mini Mall Storage Properties (MMSP) Trust in 2020, the COVID-19 pandemic was just around the corner. However, our focus on fundamentals, investing methodically, and sticking to what we do best led to not only rapid growth for MMSP in Canada, but a successful expansion into the United States. This expansion is a continuation of the overall plan to acquire self-storage properties in attractive secondary markets on both sides of the border throughout the North American Heartland.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.alamstg.wpenginepowered.com for additional information regarding forward-looking statements and certain risks associated with them

Mini Mall Storage Properties Expands Operations to the U.S.

We are pleased to announce that our Mini Mall Storage Properties Trust (MMSP Trust) will expand into the United States. The expansion is a continuation of the overall plan to position MMSP Trust to acquire self-storage properties in attractive secondary markets across North America.

Through the fund’s strategic acquisitions in Canada, and extensive market research, the MMSP Trust team has determined the time is right to also focus efforts on the U.S., where similar risk-return opportunities exist.

“Based on our success here in Canada, we feel the time is right to expand our scope to include the U.S. self-storage market. When it comes to geography, we’re agnostic,” says Adam Villard, Chief Executive Officer, MMSP Trust.

MMSP Trust has always had its sights set on the U.S. market.

“We felt it was important as a new fund to first deliver on what we set out to do, which was to generate success here in Canada. Given that success, we can enter the U.S. market with confidence,” Villard says, adding that MMSP Trust will continue to seek out opportunities in Canada.

From inception, the Trust went from $4 million to $458 million in assets under management (AUM), which played an integral part in Avenue Living reaching $3 billion AUM. MMSP Trust has expanded into six provinces so far and amassed over 2 million square feet in storage. “We were able to enter the Canadian market at the perfect time and acquire assets at rates that were favourable to the fund,” Villard says.

“Through leveraging Avenue Living’s Canadian platform and U.S. presence, partnerships and learnings, and expertise, we believe the U.S. to be a desirable market that represents substantial room and opportunity for growth. We’re going to follow the lead of and build on Avenue Living’s successful expansion into the U.S.,” Villard says.

By using Avenue Living’s proprietary approach to market research and extensive knowledge of the U.S. market, MMSP Trust has identified key regions within the United States to target as entry points. These markets exhibit strong storage demographic trends, such as aging population, and a low supply scenario with a favourable square-foot-per-capita metric.

“By emulating how we’ve identified opportunities, minimized risk and effectively entered new markets in Canada, MMSP Trust’s U.S. entry is designed around acquiring anchor assets in markets with similar success profiles that also demonstrate that opportunity for growth. We closely monitor local trends through both in-depth research and the management of close ties to a collection of independent ownership groups,” Villard says.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.alamstg.wpenginepowered.com for additional information regarding forward-looking statements and certain risks associated with them.

How Reverse Urbanization has Changed the Real Estate Market

The COVID-19 pandemic has uprooted our way of life, from the way we work to the way we socialize. Many of us began working from home, blending our personal and professional lives in ways we never expected. And while some of us have happily migrated back to the office as restrictions eased, others have embraced the opportunities that can come with remote work. This new way of life has also made many of us view our homes differently — recognizing a need for more space as we spend more time there — which in turn has had a major impact on the real estate market.

The shift to remote working has provided people the opportunity to migrate to less urban centres (secondary and tertiary markets) and enjoy a more affordable cost of living. This trend, more commonly known as ‘reverse urbanization,’ has changed what people look for in a home — more space, affordability — and has caught the attention of Avenue Living. Reverse urbanization is a trend that sees people place greater importance on their home space, often leaving inner-city locations to seek cheaper rents and larger living areas in secondary markets. Larger Canadian cities such as Vancouver, Toronto, and Montreal have seen thousands leave, experiencing record population losses.

Due to higher rents, living in Eastern Canadian cities and markets does not make economic sense for many. Avenue Living is seeing a trend where people are moving west to take advantage of the space the Prairie provinces offer as well as the increased affordability.

We are seeing population growth within our areas of focus — secondary and tertiary markets — and because we have been operating and performing in these markets for the past 15 years, Avenue Living is well situated to take advantage of this demographic shift.

People like flexibility, affordability, and space

Will people become full-time work-from-home employees? Will there be a balanced return-to-work program with some work from home sprinkled in? These factors ultimately play a part in where people decide to live, as does the affordability of smaller markets compared to larger centres.

Avenue Living aims to provide comfortable living spaces and affordability for our residents, and reverse urbanization has been beneficial for us. We have experienced strong occupancy from residents, with occupancy the highest it’s ever been, as our older assets tend to have larger floor plans than newer builds.

Avenue Living’s one-bedroom apartments are generally 600-650 sq. ft., whereas new builds are closer to 450 sq. ft., and our two-bedroom units can exceed 1,000 sq. ft.. The larger square footage offers greater potential for home-office setups, making our living spaces more desirable.

A trend within the real estate industry is to have buildings with lavish amenities, such as brand-new gyms and common areas. While those were formerly great selling points, they became obsolete when closed due to COVID-19, and people were confined to the smaller spaces in the new builds.

Renters are now placing a premium on more space over additional amenities.

Positive resident experience important for reverse urbanization

Now that they are home more, our residents expect a more complete experience from their property manager. They also expect open lines of communication and quick response times.

As active managers, we are proactive in finding out what our residents like and what they care about, and through prop-tech investments, we have helped drive efficiencies and streamline processes for us and our residents. We focus on operational efficiency, which helps drive retention, and optimizes length-of-stay for our residents, providing them with a better living experience.

Positive resident experiences are at the heart of Avenue Living’s operations as we work to consistently exceed expectations and create a sense of community and belonging. Gathering regular feedback from residents — at move-in, or after a maintenance request, for example — helps inform our practices and inspires us to continually improve.

For Avenue Living, reverse urbanization is a trend to watch closely. If it continues on its trajectory, we could continue seeing strong rent growth and demand for many of the regions we operate in with little competition, and our platform and business strategy has us well positioned to take further advantage of this trend.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.alamstg.wpenginepowered.com for additional information regarding forward-looking statements and certain risks associated with them.