Canadian Real Estate Magazine September 2011

HOTSPOT
Brantford beckons
Rachel Naud explores a southern Ontario city with tremendous
investment potential
L
ocated in southern Ontario on the banks of the historic Grand River, Brantford is
an ideal location for families, businesses and property investors, alike - directly
connected to Hwy 403 and only an hour’s drive from Toronto (88 km).
Designated as an urban growth centre in the
Provincial Growth Plan, Brantford is a hidden
gem that became a Census Metropolitan
Area (CMA) in 2006. Strong commercial,
institutional and industrial developments in
recent years have created a variety of new job
opportunities that have become the catalyst
for a diversified and prosperous economic
base. Last year (2010) proved to be one of the
highest years for total building permit values
at $167 million, second only to 2005, when
permit values reached $211.8 million.
“In the coming years, strong increases in
average incomes, in-migration and further
diversification of the local economy will
84
SEPTEMBER 2011
cement Brantford as an ideal investment
location for real estate endeavours,” says
Kevin Finney, information officer with the
City of Brantford Economic Development
and Tourism Department.
In fact, this year Brantford ranked ninth
in Ontario as a Top Real Estate Investment
Town by the Real Estate Investment
Network (REIN).
Historically, manufacturing has been
the biggest economic driver in Brantford.
In fact, today manufacturing still serves as
a vital pillar to the local economy and many
manufacturing companies still employ a
large number of local residents.
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HOTSPOT
One of its most notable employers,
Ferrero Canada Inc., Brantford’s largest
manufacturer, is currently undergoing
a $43-million expansion and employs
over 700 people in its 900,000 sq. ft.
food and confectionary facility. And it’s
not the only big business in town with
plans of expansion. Bell Mobility, recently
announced the opening of a 65,000 sq.
ft. customer service centre in Brantford’s
downtown, employing more than 500
people, OLG Brantford Casino is currently
undergoing a $38-million renovation/
expansion and the Wayne Gretzky Sports
Centre is also undergoing a $54-million
expansion that will include state-of-the-art
facilities for sports and leisure.
But manufacturing isn’t the only game
in town. Throughout the past five years,
Brantford is seeing development in a new
sector – all in the name of higher learning.
Post-secondary growth in the city’s
downtown has accounted as the largest
economic catalyst in the community. In
recent years, the expansion of the city’s
three post-secondary institutions (Laurier
Brantford, Nipissing University and Mohawk
College) has been a primary catalyst for
investment initiatives in the downtown core.
Collectively, these institutions have injected
millions of dollars into the local economy
and have created a new culture in the city’s
downtown. Currently, Laurier Brantford
University is completing a $52-million research
and academic centre slated for completion
later this year. In fact, the total economic
benefit from these institutional investments
exceeds $60 million and future projects
centred around these institutions could add
an additional $65 million in investment and
could create more than 600 jobs.
And the post-secondary schools are not
only injecting money into the economy but
are also helping to increase the population –
and potential tenants.
Over the next 12 years, Laurier Brantford
is expected to grow from its current base
of 2,500 students to 15,000 students.
“Partnerships with the post-secondary
institutions will play a key role in the
educational attainment and development
of the local workforce, which will not
only diversify the community’s economic
base, but enhance the ability of the city to
attract and retain residents, businesses and
students to service the new economy,” says
Finney.
Currently, the unemployment rate in
Brantford is 8.2%, which is higher than
both the provincial and national rates;
however the job market is looking up for
the coming years. Employment growth in
the Brantford CMA will be more subdued,
given the challenges in job recovery from
the recession. Several plant closures in
the Brantford CMA have led to job losses,
which had ripple effects in the overall
economy. However, infrastructure projects
such as research and innovation centres
and business parks in Brantford will boost
2011 job growth in the non-residential
construction industry, and once completed,
will generate employment in the region.
And as more jobs become available, more
We are seeing a
larger number
of out-of-town
buyers moving to
Brantford as people
realize they can
afford more home
for their money
in comparison to
surrounding areas
people will come to the area to work and live.
Brantford’s current population is
approximately 93,000, however, in the
next 20 years, the population of Brantford
is forecasted to grow 29% (from 93,000 to
120,000). In the Brantford CMA, the bulk of
migration growth will continue to be
drawn from people moving to the area from
other parts of the province.
Many of them will be students moving to
the area to attend school at the expanding
Laurier Brantford campus. Young people
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GROWTH
PROJECTIONS
Based on sales data from the previous
year, the cash flow for particular
properties are as follows:
DUPLEX: 8.98%
TRIPLEX: 9.92%
FOUR-PLEX: 10.87%
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hotspot
POPULATION
FORECASTS 2008-2031
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2008
2014
2018
2024
2031
EMPLOYMENT
FORECASTS 2008-2031
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2008
2014
2018
2024
2031
CITY OF BRANTFORD
COUNTY OF BRANT
moving to the Brantford CMA will continue
supporting the rental market, and place
downward pressure on the vacancy rate.
The housing market
Brantford’s housing market activity has
been quite positive over the last several
years. Market trend data indicates that
the City of Brantford had a strong year of
development in 2010 compared to 2009.
In 2010, there were 504 new units started,
compared to 317 in 2009. Last year also
86 September 2011 showed signs of residential growth due to
infill and intensification projects.
The number of homes sold through the
MLS system of the Brantford Regional Real
Estate Association was up in May 2011,
compared to April sales. “Brantford’s market
did rebound as sales this May were up 39%
compared to April sales, marking this the
largest increase on record for the April to
May period (and) making May the strongest
month for sales activity so far this year,” says
Tony Pucci, sales representative for Royal
LePage Action Realty in Brantford.
The average price of detached homes in
Brantford has increased in each of the past
10 years with the exception of 2009 when
the average price was down .82% from the
previous year. The biggest increases occurred
in 2005 (10.04%) and 2006 (10.48%).
Today, the average selling price of a home
is at its highest ever at $250,000, up from
$235,000 in 2010. A good price to pay for a
detached home in Brantford is $220,082,
which is up from 1.69% from 2010.
“We are seeing a larger number of out-oftown buyers moving to Brantford as people
realize they can afford more home for their
money in comparison to surrounding
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HOTSPOT
month. The average rent in Brantford sits at
$748 per month.
WHERE TO BUY
HOTSPOT
 Brantford ranked ninth in Ontario as a Top
Real Estate Investment Town by the Real
Estate Investment Network (REIN)
 In the next 20 years, the population of
Brantford is forecasted to grow 29%
 The total economic benefit from postsecondary investments exceeds $60
million and future projects centred around
these institutions could add an additional
$65 million in investment and could create
more than 600 jobs.
MARKET
 The average selling price of a home is
at its highest ever at $250,000, up from
$235,000 in 2010
 The vacancy rate in Brantford is 3.6%.
 The average rent in Brantford is $748 per
month.
HOT BUYS
 Properties in the University area (called
North Ward and part of East Ward) can be
purchased for less than the area’s average
price and reap a substantial cash flow.
 Student property rents range from $400
per month to $550 per month per student.
 An investor who purchases a fourbedroom home in the University area for
$175,000 and rents each room for $425 a
month, can earn $20,400 in annual rental
income.
areas,” says Terry Summerhays, sales
representative for Re/Max Twin City
Realty Inc. “Brantford also gives people the
opportunity to live in a smaller community
with great schools, parks and all of the
amenities that go with living in the larger
cities, but without the hustle-and-bustle
found in larger cities.”
THE RENTAL MARKET
The rental market in Brantford is
substantial. To give a comparison, the
number of owned dwellings in Brantford
is 24,540 and number of rental dwellings
is 11,070. Vacancy rates in Brantford
range, depending on the type of property.
According to the CMHC, one-bedroom
vacancy rates is 4.2%, two-bedrooms are
harder to find at 3.5% and three-bedroom
units are even tighter at 1.7%. Overall, for
Brantford, the vacancy rate is 3.6%.
Rents also range in the area, depending
on the type of property. According to the
CMHC, one-bedrooms fetch $692 in rent,
two-bedrooms garner approximately $778 in
rent and three-bedrooms bring in $856 per
Both Pucci and Summerhays point to the
University area (called North Ward and part
of East Ward) as a sound investment area.
Not only is there an influx of tenants with
the abundance of students in the area, but
property investors can purchase a property for
less than the area’s average price and reap a
substantial cash flow.
“An investor can expect an average of an 8%
capitalization rate based on their purchase
price,” says Pucci. “The capitalization rate
can be affected based on the condition of the
property, if utilities are separately metered
and, of course, its location.”
Duplexes in the area typically sell for around
$150,000 to $175,000 and four-unit rentals
can be found for $250,000 to $325,000.
Still, according to Summerhays, of the 28
homes sold in the North Ward area in 2011, 14
of them sold for less than $200,000.
Student property rents range from $400 per
month to $550 per month per student.
“The University area is desirable because
of the cash flow that can be realized,”
says Summerhays. “For example, if you
purchase a four-bedroom home in the
University area for $175,000 and rent each
room for $425 a month, which is $20,400
in annual rental income.”
THE OUTLOOK
With the continuing expansion of many of
Brantford’s top businesses in combination
with the area’s burgeoning post-secondary
sector, the future is looking bright for
Brantford and its investors.
“It’s refreshing to see that new businesses
and families alike are recognizing the
investment opportunities and value
that Brantford has to offer,” says Pucci.
“Brantford’s revitalization of the downtown
core is having a positive rippling effect to
the surrounding area and is proving to be
a success for the city and investors alike.
Brantford’s future looks very promising as it’s
destined for continued growth.”
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