Dec 16, 2009 - Brantford, Ont. is one of those cities that, much like its neighbour Hamilton, many outsiders unfairly discount due to its past. This reputation stems from the 1980s and 1990s, when manufacturers such as White Farm Equipment, Massey-Ferguson, Koering-Waterous, Harding Carpets, and others went bankrupt. The subsequent plant closures left thousands of people unemployed and created one of the most economically depressed areas in the country.
But the city has since undergone a renaissance led by a $20 million revival of its downtown. In 1999, Laurier University established a campus in the city's core, followed by Nipissing University in 2002. The schools added a young, vibrant energy to downtown Brantford. Brantford also enticed private interests through incentives to establish a new hotel and top quality restaurants. The highest profile undertaking in the downtown resurgence thus far has been Harmony Square, a landscaped social space in the heart of the city that opened last year.
Brantford's revival helped attract large employers to the city, such as Procter & Gamble and Ferrero SpA in 2004. These employers have helped diversify Brantford's economy away from its traditional manufacturing base. The city has also benefited from the success of nearby regions such as Hamilton, Kitchener-Waterloo, and Woodstock, which fairly recently welcomed a Toyota plant. Many people who work in these cities are choosing to commute from Brantford due to its affordability advantage.
While speculators have driven up home prices in neighbouring cities, Brantford's resurgence has flown largely under the radar. In fact, the average home price declined $20,000 from June 2008 to $198,476 in June 2009 due to its exposure to the beleaguered manufacturing sector. But experts agree it's only a matter of time before investors take notice of the city's revival and drive up property prices. In the meantime, the average single family home sells for just under $250,000 and older homes ripe for a refurbishing can be found for around $200,000. Brantford's significant property value upside, low vacancy rate, expanding economy and postsecondary institutions, combined with planned infrastructure improvements, make it a wise long-term investment choice.
About three years ago, Ed Freeza visited Brantford after reading it was a solid place for long-term investments. But when he arrived in the downtown core, it felt like a rundown ghost town. "I had to recheck my research," he says. He purchased two triplexes, one of which he suspected was a crack house, around the university district in 2007 for $135,000 each and sunk $55,000 into renovations.
Freeza was pleasantly surprised by the demand for housing from the area's student population, which was not his originally target. The investor has had no problem finding tenants and the former crack house now houses five students who pay $400 per month in rent. Though he's heard stories of the troubles student renters can cause landlords, Freeza's tenants have exceeded his expectations. He suggests this may be because Brantford's bar scene is still undeveloped compared to some other school districts. "I think bar owners are saying maybe there's not the economy of scale there yet," he says.
The investor says downtown Brantford now looks like a different city thanks to revitalization. If the market is any indicator, these improvements have already netted Freeza a healthy profit on his properties as similar homes in the area now go for over $200,000. But the investor has no doubt there's still a big upside ahead for the city's core as the schools have still not fulfilled their growth plans. Laurier Brantford, for example, is expected to grow from 2,200 students to 4,000 by 2012 with the construction of a research and academic centre on Dalhousie Street. Though the school is providing more housing, those units go for $600 compared to Freeza's $400.
Furthermore, city council released a five-year redevelopment plan for downtown, which the province designated an "Urban Growth Centre" per the Places to Grow Act, 2005. This act states that 40 per cent of development must occur within existing urbran boundaries. This is projected to result in more high rises, townhouses and smaller single-family units. Keys to the city's plan include: pursuing two-way conversions of Dalhousie and Colborne streets; attracting Mohawk College to a downtown site; re-instating an Investment Incentive Programme; expanding and possibly relocating the Farmer's Market; refurbishing the Market Street Parkade and more.
Ramon Forgiel chose to invest in properties around Wayne Gretzky Pkwy between Henry and Grey streets. He chose this location to be near the new Lowe's, which opened in December 2007, and other new commercial developments. The area is also close to Mohawk College and the 403 highway. Forgiel picked up two single family homes a few years ago for about $100,000, and put $10,000 to $15,000 into renovations. These properties now earn him $950 to $1,000 in monthly rent. Though similar properties would get $1,200 in Hamilton, Brantford's affordability makes for better cash flow.
The area could get a boost in value if a new highway linking Brantford with Cambridge goes ahead. The two cities are currently linked by King's Highway 24. However, as business in the Great Golden Horseshoe moves from a Toronto Central Business District-based condition to an economy of multiple centres, the cities are challenged with reducing commute time. The province has proposed a new transportation corridor to link the 403 and 401 highways between Brantford and Cambridge. The Garden Avenue exit is one of two possible connection points for the new highway, the other being Wayne Gretsky Parkway. When these projects eventually go forward, expect properties in nearby areas to see a significant premium over the rest of the market.
From the November 2009 issue of CRE