18 minute read
The Home-Away-from-Home Boom
RECREATIONAL PROPERTIES ARE POST-COVID HOT
BY JOHN HARDY
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There’s no doubt about it, and the numbers don’t lie. Recreational properties, particularly within a reasonable commute from Calgary, are booming! The prices are spiking, mostly because demand is way up and availability is often limited. But it’s good news for buyers, sellers, builders and realtors.
Some real estate insiders credit evolving consumer and lifestyle trends. Others caution that the hot market popularity is, to a large part, COVID-consequence driven and it won’t last.
Short-lived or long term, the sudden popularity of recreational properties is undeniably impacted by the lifestyle adjustments and other changes triggered by the pandemic.
“Life during the pandemic has made cottage country and country living more desirable than ever, in every part of Canada,” says Phil Soper, Royal LePage president and CEO. “In many cases, younger buyers – those between 25 and 35 – are making up an increasing share of buyers trading in the big city for country life, with nearly half of buyers in that demographic (47 per cent) saying they would choose a small town or rural living. “Various recent surveys and reports show that affordability remains the top buying criteria for 41 per cent of Canadians who are in the market for a recreational property, followed by proximity to water or waterfront, amenities and the vital contemporary lifestyle factor of good WiFi.”
Soper adds that, given the world-class beauty found in many of the “cottage country” regions throughout Canada, not to mention pandemic-related concerns about high-density living, many are thinking about expanding their families and want their kids to grow up with a little more space to roam.
From coast to coast, the line between primary residence and recreational property is blurring. “The trend began last summer when, due to COVID, the option of traveling abroad was taken away, and continued to gain popularity as it became clear that with office lockdowns, access to high-speed internet was invaluable and many people could do their jobs from just about anywhere,” he says.
According to the most recent Royal LePage Recreational Property Report, which tracks insights, data and forecasts from 51 Canadian markets, 32 per cent of Albertans aged 25 to 35 say the pandemic has increased their desire to move to a
less dense area and another 60 per cent said it’s important to work for an employer that would allow them to work remotely.
“According to our research, access to high-speed internet and the ability to work remotely are among the top criteria for those seeking properties in Canada’s recreational regions, followed closely by four-season usability,” Soper adds.
Similar to conventional, urban real estate, price is not only a factor but a barometer of market trends. “The pandemic has resulted in increased demand for recreational properties. In a segment of the market that has historically low inventory, this has continued to put upward pressure on prices while inventory continues low,” explains the personable Brad Hawker, associate broker of Royal LePage Rocky Mountain Realty.
He notes that waterfront properties and access to water remain a top priority for buyers and because there is a limited amount of waterfront land available, waterfront or near-waterfront properties remain in high demand. “The pandemic has driven a desire for all things outdoors,” Hawker says. “There is low availability for campsites, resorts. People want to get away from the stress of city-life and enjoy the cottage lifestyle. Cottages bring families together.
As it shows in the LePage Report, this year the aggregate price of a house in Alberta’s recreational regions is forecast to increase six per cent, to $942,881. Last year, the aggregate price of a house in the province’s recreational markets increased 9.5 per cent year-over-year to $889,510, compared to 2019.”
A sign of the times and surprising as it may be for some, the Report stats also show that the most important consideration when purchasing a recreational property, “which some buyers overlook or take for granted,” Hawker says, “is cell phone reception and internet speed. One-third of national respondents said checking the quality of cell phone reception and internet connection, both inside the cottage and around the property, is a key consideration for first-time recreational property buyers.
“As more employers confirm a hybrid work-from-home policy, new buyers are gaining the confidence to purchase a recreational property where they can work from but can still make it into the office a couple days a week,” he says.
Recreational properties within a reasonable distance to Calgary – like Canmore and Sylvan Lake, and for Edmonton, Lac St. Anne and Wabamun Lake are popular options. The Central Alberta region (areas like Sylvan Lake, Gull Lake, Glennifer, Nordegg, Buck Lake and Buffalo
Lake) are recreational property hot spots, particularly for Calgarians and, according to Lindsay Olver, owner and broker at Coldwell Banker Ontrack Realty and chair of CARA (the Central Alberta REALTORS® Association), “Depending on the recreational property, there have been price increases from 20 per cent to double if not triple the price it was in 2019. “The main factors driving the increase in Central Alberta recreational properties are low interest rates, the disruption in office routines caused by the pandemic and the fact that travelling this year was ground to a halt. The buyers who normally would go south for the winter or travel in the summer were unable to so they bought locally. The ability to work remote has also given people more freedom to move and work from a location that they desire.”
When it comes to recreational property reputation and popularity, there is agreement that Canmore in a league of its own. “Canmore is seeing unparalleled demand from people wanting to accelerate their life plans and focus on their physical and mental health,” Brad Hawker says. “A growing segment of young and middle-aged buyers seeking primary residences in the area. If they can work remotely from anywhere, they want to live in a place that caters to their active and adventurous lifestyles.”
Recreational property professionals acknowledge that the sudden shift in buyer momentum has inflated the prices of some in-demand and high-end recreational properties. Earlier this year, one Canmore property sold for $4.2 million and by comparison, although out of range for a Calgary commute, current numbers show
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that while the market is sizzling in Canmore, it is not a unique situation. In Whistler, the iconic mountain town outside of Vancouver with a similar population to Canmore, has experienced a 29 per cent price increase since 2019 for chalets and a 34 per cent increase in duplexes and townhouses.
The Royal LePage Report tracks that 44 per cent of realtor respondents in Alberta reported an increase in the number of buyers from other provinces, compared to previous years.
Demand and prices continue to grow in recreational regions easily accessible from Edmonton and Calgary. The Alberta summary says 78 per cent of recreational markets have had a decline in inventory compared to what is typical for their areas.
“The market has started to slow down compared to earlier on in this year,” CARA’s Lindsay Olver says. “It’s tough to tell what may happen next year. Recreational properties will likely cool down going into 2022, especially if the travel restrictions lift.”
As inventory sags, the clutch of COVID disruptions slow down, offices return to routine or a hybrid routine, and the new normal lifestyles set in, some recreational property professionals suggest the market will stabilize, if it hasn’t already begun to cool.
21 OCTOBER 2021
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The Latium Group includes Latium Fleet Management, Latium Technologies, Latlogix, and Falco Consulting. Lori Pecorilli and her husband founded the group in 1996 to bring modernization, innovation, net-new services and novel technologies to the fleet and transportation industry.
Pecorilli shares, “The Latium Group is built on a shared passion for disruption. Combining hands-on consultancy and proprietary technologies, we challenge the status quo and inspire operational excellence. We serve as an end-toend solutions provider for the industrial and commercial sectors, combining consulting and outsourced management services with our smart job site technologies. From telemetry applications, advanced analytics, job site resourcing tools, and AI enhanced monitoring systems, Latium provides business leaders with the ultimate toolkit for ground-up transformation.
The draw to this field, for Pecorilli, was her love of problem solving. She says, “At my core, I’ve always been a problem solver. Dedicating my career to exploring new business models, technologies and services to help solve those challenges was extremely compelling to me. There is nothing more exciting for my team and I than innovating a client-driven technology and seeing it adopted by global and industry-leading companies. Personally, it makes me proud to see our small team take such massive strides within the industry.”
Latium Group sees a strong link between innovation and technology, and uses that combination to drive the company, and the industry, forward.
“For over a decade we have been developing software, hardware, mobile apps, and platforms,” says Pecorilli. Our innovation approach and journey are fundamentally based on needing the technology and data in order to solve our clients’ challenges. The introduction and continued evolution of technology, while ‘having our eye on the horizon’ has been a significant game changer in differentiating our business.
“To date, our greatest accomplishment with our innovation has been attracting PCL Construction, Canada’s largest construction company, and merging technologies, launching a best-in-class industrial IOT platform.”
Pecorilli’s advice to other entrepreneurs and women in business is, “Always build only what clients and industry want, what they need, and what they will pay for. Never develop just because you are in love with your project or idea; just because you love it, don’t assume everyone else will as well. For women in business, the most important piece of advice I can offer is to not let other people determine your value. Don’t be afraid to get uncomfortable and take those risks. It’s the only way people will be able to see what you’re truly capable of. Growing a supportive network is critical – always expand your network, outside of your normal group and really push yourself to meet new people in different industries and different countries.
Lori Pecorilli
President, The Latium Group
Listen to our podcast here: primeforgrowthpodcast.buzzsprout.com
Irene Payne
Leasing Executive, Ferrum
Leasing executive Irene Payne has 40 years of experience in the financing industry and has successfully closed $500 million in transactions to date. In 2018 she cofounded Ferrum with her son, Simon, to develop a blockchain enabled marketplace for all types of equipment financing.
Payne knows that adaptation is a strength in any business, and she leans into that with confidence, by developing a new and innovative platform for leasing clients that were finding the standard methods to be slow and cumbersome.
Clients praising the Ferrum platform range from retail giant Canadian Tire to new small businesses just starting out, demonstrating an 80 per cent reduction in administration time when using Ferrum over traditional processes.
“We decided to explore how technology could be used to innovate our industry, and once we looked at technologies such as blockchain, artificial intelligence, and data analytics, it didn’t take long to decide to develop our own platform.” says Payne.
She continues, “Ferrum captures the end-to-end financing process in a single platform. From origination to completing a transaction to delivery of the equipment – every step in the process, each exchange of information and every interaction among the different parties is all captured in one central place, with technology streamlining and automating the process at each step.”
Payne continues, “Innovation is at the heart of everything we do at Ferrum. Traditionally the equipment finance industry does not share information or business strategy. We started our journey with Ferrum in a collaborative manner, bringing in clients, lenders, equipment vendors and legal to provide input and assist in the development of our vision. I like that I am making a difference, pushing boundaries and working with good people. By doing so, I am constantly challenging myself and motivating the team, which is very rewarding from a personal perspective.
“My objective is to bring people together to make a difference. [As for Ferrum], creating an innovative platform has been very challenging, especially in an industry that hasn’t changed in 40 years, but the most rewarding aspect is when you align yourself with partners that share your vision and are willing to contribute to its success. We are a Canadian company with a global vision. That to me is very exciting.”
What is her advice for other entrepreneurs and women in business? “Believe in yourself, believe in your vision, be tenacious, and surround yourself with the best people in the industry.”
LONGSHORE RESOURCES:
A JUNIOR BUILT TO SURVIVE
Longshore Resources is a private oil and gas exploration and production company with a fresh, new approach on how to best operate and be profitable in North America’s volatile energy sector. Longshore takes the view that capital constraints on the oil sector requires that every company be financially secure and survivable throughout the commodity cycle. In addition to innovative operations, Longshore leads the way in environmental stewardship, safety, and community building.
President and CEO Byron Nodwell founded Longshore in 2015 and is also a member of the Board of Governors of the Canadian Association of Petroleum Producers (CAPP) and the Explorers and Producers Association of Canada (EPAC).
“I wanted to take advantage of the 2014 price crash to form a company that married high-quality assets with high-quality, next-generation talent,” says Nodwell. “With the 10+ years of experience I had working with junior oil companies, I knew that only very carefully crafted companies could survive and thrive.”
Longshore raised capital from ARC Financial and opened in 2015. Growth was immediate and rapid. Between May and October of that year, Nodwell was able to hire the founding team members.
He continues, “We acquired assets in June 2016, chasing a new exploration target in Alberta and drilled initial wells with success. In 2017 Longshore accumulated large acreage blocks, and further drilling with technological improvements increased productivity of the lower Charlie Lake.”
The pace continued. In 2018 Longshore acquired Shiningstar Energy. In 2020 there was a four-way merger with Rife Shot Oil Corp., Steelhead Petroleum Ltd., and Primavera Resources Corp.
Nodwell explains, “In 2015 I was a 38-year-old first-time CEO attempting a startup. I was introduced to ARC Financial by our independent director and it has been a very fruitful relationship ever since. Despite my lack of experience, they saw something they liked in me and have been very supportive. The four other companies we merged with were also backed by ARC, which to me, shows their high level of trust in myself and the Longshore team.
TOP: DRILLING OPERATIONS ON A CHARLIE LAKE WELL NEAR GRANDE PRAIRIE. LONGSHORE MAINTAINS AN ACTIVE CAPITAL INVESTMENT PROGRAM UNLOCKING ALBERTA’S RESOURCES AND CONTRIBUTING TO THE ECONOMY. MIDDLE: LONGSHORE’S FIELD TEAMS ARE A KEY COMPONENT TO OUR SUCCESS AND ARE THE FACE OF THE COMPANY IN THE COMMUNITIES WHERE WE OPERATE. BOTTOM: LONGSHORE’S HEAD OFFICE TEAM BUILDING A SCHOOL PLAYGROUND IN 2017. SUPPORTING LOCAL CHARITIES WHERE WE WORK AND LIVE IS A HIGH PRIORITY FOR THE COMPANY.
ARC Financial is Canada’s largest energy-focused private equity manager; working with their team has been a great benefit to the success of Longshore.”
The innovation in how Longshore does business has carried them through the dark days of the oil crash and pandemic.
“Many junior oil companies have a tendency to only look at the upside and seek investment capital in the event of difficulties. Longshore is different in that we strive to ensure that we thrive during good times but also are protected in case of bad times. Our balance sheet is clean, and our revenues are protected by a rigorous hedging program. This served us very well over the last 18 months,” says Nodwell. “The last year has brought unprecedented challenges to energy companies, but this sector has been very challenging for years, I would argue since around 2008 or 2009. I got into start-up junior oil companies at around that time, so I have only ever lived in difficult times. This is why we set up Longshore to survive. We had a clean balance sheet and were well hedged going into the COVID pandemic. That served to protect the company for the duration of the crisis. Over the past year we have seen oil prices range from $30 to $70. During that time period our assets, team and financial strength ensured the company was never at risk, even during the darkest days.”
Longshore was able to use its financial strength to assist the communities where they operate during the depths of the pandemic. “With so many people out of work across western Canada we felt it was our duty to provide financial assistance to various crisis and community assistance organizations that support our local communities. All members of our head office and field teams were asked to help prioritize our donations and we gave charitable support to over 30 organizations across B.C., Alberta and Saskatchewan.”
For everyone at Longshore, environmental responsibility is a top priority.
“We take environmental responsibility very seriously,” confirms Nodwell. “Our operations have an impact on the environment and we ensure that when operations on a Longshore site cease that the land is returned to its original state. During the pandemic, Longshore stopped all development capital activity but we did not stop our well abandonment and site reclamation activity.
“Longshore is actively reducing our Greenhouse Gas (GHG) intensity during all of our activities. Our financial sponsor (ARC Financial) has been tracking the GHG intensity of all of their investments for over 15 years and requires that their investment companies reduce emissions. This is something that I think most quality oil companies do, and yet may be overlooked by the general public. The Canadian oil and gas industry is the number one spender on environmental initiatives and technology in the country.” Innovative operations and environmental sustainability are two things that set Longshore apart; Nodwell also credits the team.
“We have great people! I know this sounds cliché, but we deliberately ensure we have a high-performing and collaborative work culture.”
ATB is also a part of Longshore’s success story.
“ATB has banked Longshore since our founding,” says Nodwell. “We have had a great relationship with Clayton Martin since 2015 and he has worked closely with Longshore to understand our business, our capital needs and the services that will contribute to our success. We do all of our day-to-day banking through ATB, and ATB has contributed capital to the business through a reserve-based-lending product.”
He continues, “ATB is local to Alberta and this means that it is strongly incented to ensure the success of Alberta-based businesses. More than that, the people at ATB understand the local business environment intimately. Alberta has its own style and business culture and having that local knowledge is very helpful. Good business is about good relationships.”
The future is bright for Longshore Resources and Nodwell is excited about what comes next for his company, and for the industry.
“Longshore is profitable at $40/barrel, so at $70 we are thriving. We are currently executing a growth plan to get our production to 20,000 BOEPD by early 2022. After that growth phase, the company will be well positioned with abundant free cash flow and a clean balance sheet. At that time, we will likely start returning capital to our shareholders to make good on our promise to them, when they entrusted us with their money, that we would make them a return.”
Nodwell concludes, “Canadian oil and gas is the best regulated, most environmentally sound oil industry in the world. Amongst oil exporting countries in the world, we (along with Norway) are considered the gold-standard in this regard. Canadians should know that they have a world champion industry right here at home.”
ATB is pleased to present a 2021 profile series on the businesses and people who are facing challenges head-on to build a strong Alberta.
