The effects of rising house prices in Canada are reducing the affordability of nearly every segment of housing, including a part of the market that has long been underestimated: trailer parks.
From RV parks and campgrounds for recreation to those for year round retirement or family life, prices have gone up, spaces are being reserved and real estate investors are bringing in new capital and new concepts.
Joe Accardi, Managing Director of Forge and Foster – a real estate development fund that has in the past focused on commercial properties in the Hamilton area – recently announced that it has acquired three land rental sites in Ontario and more to come.
“We are definitely gaining momentum. We want to reach three more this year, ”he said. “Everyone knows that the vacancy for apartments is really tight. These motorhome parks… their occupation history is more or less the same; some of them have been 100 percent occupied for 20 years. These things are very resilient in good times as well as in bad times. They are truly loved and appreciated.
Mr Accardi hopes to attract new users to the parks through an updated branding, with plans to do new types of landscaping and to attract small home enthusiasts looking for a place to park. their boutique living spaces (“We call them tiny cottages,” he said). Parks purchased by Forge and Foster in Ontario also offer a mix of overnight stays and more permanent stays: Jordan Valley near St. Catherines and Pilgrim’s Rest near Lakefield in Kawartha Lakes are not open year round, although Bluewater (formerly known as Princess Huron Trailer Park) is open year round.
In his view, those excluded from the cottage market, which has seen price increases of 70% since 2019, will increasingly turn to cheaper options.
“A lot of people see that for the next generation, it’s inaccessible. We’re a very good option for a lot of people, at one-fifth or one-tenth the cost, ”said Mr. Accardi.
Some of the existing players are also seeing a new demand for trailer parks.
“We have certainly seen a spike in interest during the pandemic,” said Lachlan MacLean. He is the Senior Vice President of Real Estate Operations at Parkbridge Lifestyle Communities Inc., the largest operator in Canada with 59 residential sites (31 for retirees and 28 for families with over 25,000 residents) and 37 resorts. for motor homes and chalets with more than 53,000 seasonal residences. customers. They are distributed in British Columbia, Alberta, Ontario, Quebec, New Brunswick and Nova Scotia.
“Before the pandemic, our seasonal occupancy rate was high in the 1990s – 97 to 98%,” he said. “This year, we are full.
Industry insiders tend to avoid even saying the words “trailer” or “park” when referring to their business model, preferring the term land rental, calling the trailers “manufactured homes” and calling park communities. This is partly due to the evolution of the traditional model of the type of house found in one of these parks.
In 2020, Parkbridge was acquired by British Columbia Investment Management Corporation (the province’s largest public sector pension fund manager) for $ 790 million. Other institutional investors have bet on trailer parks as well, with major rental market acquirers like Realstar Management Partnership, CAPREIT and Boardwalk REIT announcing investments over the years. But according to MacLean, ownership is still very fragmented, with the biggest players owning less than 10 percent of a province’s sites.
“It’s a more recent trend than in multi-family housing, but it’s not that different from companies that bundle ownership into single-family rental homes – it’s just a different type of single-family home,” Martine said. August, Assistant Professor in the School of Urban Planning at the University of Waterloo and an expert in the financialization of housing.
“In all kinds of sub-classes of real estate assets, financial companies are just trying to access everything: self-storage, student housing, senior housing, land rentals, whatever. They go everywhere. They move across the spectrum from very cheap options to luxury homes and extract value from everyone. Everyone needs a place to live, so there is a solid foundation for using their language.
In recent years, Parkbridge has started to evolve beyond manufactured homes in its parks and is now building townhouses and single-family homes on rental land in retirement communities such as The Villas at Wasaga Meadows in Wasaga Beach. , Ontario, and The Bluffs at Huron in Goderich, Ont. These are the same kind of wooden houses with a basement that you find in a suburb, but the buyers only own the house, not the land. Not paying for land makes it more affordable for those who “don’t want to tie up all of their retirement savings in the dirt,” MacLean said.
At one of Parkbridge’s largest trailer parks in Ontario, Sandycove Acres in Innisfil, he plans to build 2,000 of these homes on land he owns nearby, with deliveries hopefully starting as early as 2022.
With more permanent housing in some of its parks, residents are seeing the kinds of rapid increases in valuations seen elsewhere in the housing market.
“We have a few retiree communities in and around the GTA – rural, single family homes – [with] one called Antrim Glen another called Tecumseth Pines. There are houses in these communities that are trading around $ 500,000, whereas two years ago they could have been trading at $ 300,000, ”said Mr. MacLean.
Unlike Forge and Foster, these days Parkbridge is less focused on purchasing existing parks – which are often family owned and may require substantial upgrades to water and wastewater treatment plants when ‘they are on sale – and plans to create new spaces for its future growth.
“The bet is that this asset class is not going to depreciate,” said Mr. MacLean. “And we really like our space because we think there are advantages on both sides. It’s a really stable investment, but we also think it’s growing tremendously as people understand the benefits of land leasing.
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