SAINT JOHN– A real estate investor from Western Canada is the latest to see the potential of Saint John’s Union Street, a long-neglected uptown thoroughfare that has seen a fresh round of development and investment over the last year.
Brock Rogerson has purchased 61-63 Union Street, a recently updated apartment complex which has been renamed “Harbour View Towers.” The acquisition means he now owns 133 units in Saint John.
Like with the other properties he owns throughout the city, Rogerson will have Harbour View Towers’ day-to-day maintenance managed by one of the local property management companies he works with. Though the units themselves have been recently renovated, minor work will be done on the property.
Rogerson, a Calgarian, bought his first investment property in 2009 in Winnipeg. He discovered the possibilities of real estate through his previous career as an investment banker. Saint John came on his radar after meeting Andrew Bruce and Matt Joyce from Joyce Trailer Rentals in Vancouver.
“They convinced me to take a look at Saint John,” says Rogerson. “I came out, they showed me around and I decided that Saint John would be one of the places that I would do business.”
Rogerson bought his first building, a property on Hazen Street, in 2010. He said what made investing in the city appeal to him was the fact that it can provide a stable cash flow, unlike more volatile and hot real estate markets in bigger cities.
“People can invest in Saint John with no expectations of any positive developments and still achieve materially higher returns than the equity market, bond market, especially this point in the cycle,” says Rogerson.
“What I’m getting at is, I don’t care about Energy East, the second oil refinery, the reopening of the shipyard, the elimination of double (property) taxation, or anything else people think might happen. I know I can invest today and get better numbers in Saint John than I can in Calgary, Toronto, Vancouver or any other major markets.”
Despite the opportunity, Rogerson says many outside investors overlook Saint John due to its lack of population growth. Population growth typically signals a stabilized market, but he argues Saint John is achieving this another way: By demolishing unsafe inventory and focusing development in the city’s centre.
“What’s probably the untold story that surprises a lot of people from Alberta when I talk to them about what’s going on in Saint John … is that the city is actually achieving a stabilized market and a healthy economy without the population growth,” he says.
“They are essentially taking the old, condemned, unsafe buildings out of the supply and demolishing them. Then the redevelopment is mainly focused in the uptown… I think a lot of investors miss that when they’re going over the numbers in Saint John.”
But he says turbulent markets in other provinces are causing some investors to look a little more closely at the Port City.
“I would actually say that the strength in Toronto and Vancouver is causing a lot of people to look at New Brunswick because Toronto and Vancouver are overpriced and you can’t cash-flow,” says Rogerson. “While Calgary has the opposite, where we have an increase in vacancies.”
Yet, investing in Saint John and New Brunswick does have some big deterrents. Double property taxation and lack of direct flights to places like Calgary are just some of the things that turn people off.
“Definitely not having direct flights to Calgary to Saint John makes it tough. No one wants to come out,” says Rogerson. “Then they’re afraid to invest somewhere they can’t get to easily. That’s probably the biggest obstacles.”
Then is there is the fact that for many, Saint John has an image problem.
“I don’t necessarily agree with this, but people’s perception in the media and everything comes up. All the positives stories in the media that never turned out like Energy East, the second oil refinery, reopening the shipyard, getting rid of double taxation,” says Rogerson. “The more time we spend talking about that stuff and then it doesn’t happen hurts.”
This mentality is something Rogerson wants to try to combat. He says he plans to continue to invest in real estate in the city and will encourage colleagues to do so too.
“I definitely have plans to make material investments and get people from the west to invest in the east,” he says. “I see it as a long-term play . . . I don’t sell. I just buy.”