Northern British Columbia Commercial Real Estate: Opportunities and Risks ( June 2025)

My clients like you are always looking for the best opportunities with the lowest risk. My goal is to help you find those potential gems. Currently I am working on closing approximately 10 deals and have a number of clients who are attempting to get into the market to purchase or lease buildings and businesses that make sense.  As a result I thought it would be prudent to provide an update of what I am seeing in the market 

Market Opportunities:

1. Resource Sector Expansion: 

• Mining Growth: Renewed activity and higher commodity prices (copper, gold, molybdenum) are  driving demand for industrial and commercial properties, particularly around exploration hubs like Prince George and even some of the smaller outlying areas such as Smithers

• Pipeline Infrastructure: Major pipeline proposals (e.g., Northern Gateway, Coastal GasLink) could boost demand for staging grounds, logistics facilities, and temporary commercial spaces around key locations like Terrace, Kitimat, and Fort St. John.

2. Strategic Investment Areas:

• Industrial and Logistics Real Estate: Heightened demand driven by mining and pipeline projects. Facilities providing flexible spaces for storage, operations, and logistics support are particularly attractive. We have seen several industrial properties sell as the demand for newer facilities that are customized to the use of the proponents needs are moving forward.

• Multi-family and Seniors Housing: Increasing employment from infrastructure projects creates demand for housing developments and mixed-use residential-commercial properties, especially near resource and pipeline hubs. There are a number of apartment buildings and low cost housing in the works in Prince George. Also there are at least two major seniors housing units under construction in Prince George. I would be a bit cautious in this area not to over pay as there are several older units on the market with low cap rates.

3. Economic Indicators Supporting Recovery:

• Interest Rate Environment: Stabilization and gradual reductions in interest rates could lower financing costs, encouraging property transactions and developments through late 2025 and beyond.

Market Risks:

1. Financing and Interest Rates:

• Elevated borrowing costs remain a significant challenge, impacting refinancing capabilities and reducing investor enthusiasm. Ongoing financial strain may persist despite gradually improving economic conditions. I have seen a number of banks move slowly on financing of both buildings and businesses at the moment while there is at least one who seems quite proactive. Reach out if you need more information or an introduction.

2. Resource Sector Volatility due to Tariffs:

• Commodity price fluctuations pose a persistent risk, potentially disrupting exploration and infrastructure projects, causing periodic demand uncertainty for industrial and logistics spaces. Tariff uncertainty has also caused concern among some manufacturers of resources.

3. Regulatory and Project Approval Uncertainties:

• Pipeline and mining projects face prolonged permitting, environmental scrutiny, and Indigenous consultation processes. Delays or cancellations create risk for adjacent real estate investments reliant on timely project developments. While the BC government has said that it is supporting the forest industry, my contacts in the industry suggest that things are still moving slower than with past governments.

Strategic Recommendations:

• Diversify Property Portfolios and demand higher cap rates: Investors should balance exposure by targeting robust sectors like industrial/logistics and cautiously pursuing multi-family residential opportunities. Many of my clients are demanding higher returns on investments and cap rates

• Flexible Leasing Terms: Lease flexibility and contingency plans can mitigate risks associated with project delays and economic fluctuations. I have worked with several clients who are looking at lease to own options with their leases.

• Proactive Risk Management: Stress-test financial models for higher interest rates, secure robust insurance policies, and incorporate resilience in construction and site selection to safeguard investments. It does come down to due diligence in making your investments and I am happy to help you with some of that. 

Let me know if you need any help navigating the current investment opportunities that you are seeing out there at the moment. I am happy to sit down with you and discuss the market over a coffee. Dave Fuller, MBA, Realtor Team Powerhouse Realty 250-617-7467