The effects of rising home prices in Canada are reducing the affordability of almost every housing segment, including a part of the market that has long been under-appreciated: trailer parks.
From recreation-only RV parks and campgrounds to those for all-year-round retirement or family living, prices have been rising, spaces are booked solid and real estate investors are bringing new capital and concepts.
Joe Accardi, chief executive of Forge and Foster – a real estate development fund that has in the past focused on commercial properties in the Hamilton area – recently announced he had acquired three land-lease sites in Ontario with more to come.
“We’re definitely ramping up. We want to get to another three this year,” he said. “Everyone knows apartment vacancy is really tight. These RV parks … their occupation history is pretty much the same; some of them are 100-per-cent occupied for the past 20 years. These things are very resilient in good times and bad. They are really loved and enjoyed.”
Mr. Accardi hopes to attract new users to the parks through updated branding, with plans to do new types of landscaping and appeals to tiny home enthusiasts looking for a place to park their boutique living spaces (“We call them tiny cottages,” he said). The parks purchased by Forge and Foster in Ontario also offer a mix of overnight and more permanent stays: Jordan Valley near St. Catherines and Pilgrim’s Rest near Lakefield in the Kawartha Lakes are not open year-round, though Bluewater (formerly known as Princess Huron Trailer Park) is year-round.
In his view, people priced out of the cottage market, which has seen price jumps of 70 per cent since 2019, will increasingly turn to cheaper options.
“A lot of people see that for the next generation it’s unattainable. We are a very good option for a lot of people, at fifth or a tenth of the cost,” Mr. Accardi said.
Some of the existing players are also seeing new demand for trailer parks.
“We’ve definitely seen a spike in interest through the pandemic,” said Lachlan MacLean. He is the senior vice-president property operations with Parkbridge Lifestyle Communities Inc., the largest operator in Canada with 59 residential sites (31 retirement and 28 family that host more than 25,000 residents) and 37 RV camping/cottage resorts with more than 53,000 seasonal customers. They are spread across British Columbia, Alberta, Ontario, Quebec, New Brunswick and Nova Scotia.
“Prepandemic our seasonal occupancy was high 90s – 97-98 per cent,” he said. “This year, we’re full.”
Industry insiders tend to avoid even saying the words “trailer” or “park” when referring to their business model, preferring the term land-lease, calling trailers “manufactured homes” and calling parks communities. Part of the reason for that is the traditional model of what kind of home you’d find in one of these parks is evolving.
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 also placed bets on trailer parks, with major rental market acquirers like Realstar Management Partnership, CAPREIT, and Boardwalk REIT announcing investments over the years. But according to Mr. MacLean, the ownership is still very fragmented, with the largest players owning less than 10 per cent of the sites in a province.
“It’s a more recent trend than in multifamily housing, but it’s not so different than the firms that are consolidating ownership in single-family homes as rentals – it’s just a different type of single-family home,” said Martine August, assistant professor at the University of Waterloo’s School of Planning and an expert in the financialization of housing.
“In every sort of sub-asset class of real estate, the financial firms are just trickling in to try to access everything: self-storage, student housing, seniors housing, land-lease, whatever. They are going everywhere. They are moving across the spectrum from very low-cost options to luxury housing and extracting a value from everyone. Everybody needs a place to live, so it’s got strong fundamentals, to use their language.”
In recent years, Parkbridge has begun to evolve beyond manufactured homes in its parks and now builds townhouse and detached homes on rental lots in retirement communities such as The Villas at Wasaga Meadows in Wasaga Beach, Ont., and The Bluffs at Huron in Goderich, Ont. These are the same kind of stick-built houses with a basement you’d find in a suburb, but buyers only own the house – not the land. Not paying for the land makes it more affordable for those who “don’t want to tie up their entire retirement savings in dirt,” Mr. MacLean said.
At one of Parkbridge’s largest trailer parks in Ontario, Sandycove Acres in Innisfil, it has plans to build 2,000 of these homes on land it owns nearby, with deliveries hopefully starting as soon as 2022.
With more permanent homes in some of its parks, residents are seeing the kinds of rapid valuation rises seen elsewhere in the housing market.
“We’ve got a couple retirement communities in and around the GTA – rural setting, single-family homes – [with] one called Antrim Glen another one called Tecumseth Pines. There are homes in those communities trading in and around the $500,000 mark, where two years ago they might have been trading at $300,000,” Mr. MacLean said.
Unlike Forge and Foster, these days Parkbridge is less focused on buying existing parks – which are often family-owned and may require substantial upgrades to water and sewage plants when they go up for sale – and is looking to greenfield building for its future growth.
“The bet is this asset class is not going to depreciate,” Mr. MacLean said. “And we really like our space because we think there are some benefits on both sides. It’s a really stable investment, but also we think it has huge growth as people come to understand the benefits of land-lease.”
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