After a period of rising interest rates and inflationary pressures, 2024 emerged as a year of economic renewal and transition. Despite several challenges, forecasts were optimistic that the economy would soon be on the road to recovery. Several converging factors led to a significant tightening of the housing market, influencing the demand for both rental housing and self-storage, but this also created investment opportunities in both sectors. The agricultural industry responded well to evolving global dynamics, with the reduction in borrowing costs creating an opportune time for farm investments and technological improvements.
At Avenue Living, we relied on our proven and defensible strategy to navigate these complex market dynamics. By focusing on the factors within our control, we raised the bar on operational excellence, service standards, thoughtful investments, and innovation. Our multi-family, self-storage, and farmland portfolios benefited from this approach, resulting in strong performance and sustainable growth in each.
Driving New Standards for Same-Door Multi-Family Performance
In the prairie provinces, the real estate market faced a sharp uptick in demand, driven by a significant rise in international immigration and interprovincial migration from more expensive cities like Toronto and Vancouver. Gabriel Millard, Managing Partner – Equity Capital Markets, states, “This is happening alongside a structural supply deficit in this country, as driven by a confluence of factors including rising land costs, increased construction costs both in terms of material costs and labour availability, higher taxes and fees associated with development, and regulatory hurdles.”
This combination of strong demand and limited supply contributed to an imbalance in the Canadian multi-family market, particularly in Alberta, which drove rental rate growth in the province and created opportunities for real estate investors.
“Ultimately, the market forces for real estate can be summed up to basic supply and demand. In Canada, we are facing a significant influx of demand," says Millard.
The Core Trust navigated these dynamics by leaning into our key competencies: optimizing operations and strategically deploying capital into markets we know well. In 2024, the Core Trust acquired 995 suites, bringing our portfolio up to a total of 18,104 suites. Our focus on improving same-door performance, striving for operational excellence, and investing in CapEx projects contributed to a positive year.
Millard emphasizes the importance of consistently raising the bar on our offerings to distinguish ourselves from peers and deliver consistent results for our residents and unitholders. "Our primary goal for the year was concentrating on same-door performance. In a period of rising rents, you need to ensure that you continue to enhance service standards to encourage resident satisfaction and retention," he shares. The focus on providing an exceptional resident experience alongside the ability to drive strong Net Operating Income (NOI) growth positively impacted the fund's position. “The NOI we have achieved has been remarkable. As a result, we saw very strong fair value gains this year,” says Millard.
By maintaining a long-term perspective and focusing on controllable factors, the Core Trust is well-positioned to tap into future opportunities and continue its trajectory of success.
Self-Storage Prioritizes Operations
Mini Mall Storage Properties (MMSP) focused heavily on operational efficiency in 2024, including robust revenue management strategies, the expansion of successful ancillary fee programs, the introduction of a four-week billing cycle, and significant capital investments to elevate property standards.
Capital investment has always been an important part of the equation when it comes to Mini Mall’s success. “This year we were really intent on driving the brand standard side of our business and increasing the quality of our assets through capital improvement projects,” says Adam Villard, Chief Executive Officer (CEO), Mini Mall Storage Properties.
While the year presented challenges with softer demand linked to housing market trends, Villard expects to see that trend starting to reverse in 2025. “The softened market is primarily being led by a slowdown in housing sales. But we anticipate that housing activity will begin to increase, driving self-storage demand as more people buy, relocate, or downsize.”
The strategic acquisition of properties within established hub-and-spoke regions further solidified the company's geographic footprint. With 1.3M square feet acquired in 2024 and a total of 9.3M square feet spread across 234 facilities, Villard emphasizes the importance of providing an exceptional service experience. “We will continue to focus our acquisition efforts on regions where we have seen long-term success, adding locations that complement the established hub-and-spoke model so that there's always an opportunity for a customer to come in and talk with somebody in person."
A Buyer’s Market for Farmland
Throughout 2024, Tract Farmland Partners continued to harness Saskatchewan's position as a global leader in agriculture, leveraging advanced technologies and satellite imagery to optimize land management and investment decisions. As the world navigates food security concerns, Canadian farmland — particularly in Saskatchewan — has become an increasingly attractive asset class. Tract Farmland Partners has been steadily focused on consolidation and expansion to ready itself for future growth opportunities ahead of the ever-increasing global need. The fund now has a total of 7,845 acres under management, with nearly half of that acquired just this year.
Tract's proactive approach to acquiring and consolidating farmland and its commitment to operational efficiency positioned it well to capitalize on market opportunities. As we move into 2025, Tract is poised for significant growth, driven by strategic acquisitions, technological innovation, and a firm commitment to long-term success.
Looking ahead to next year and anticipating potential changes in interest rates and market dynamics, Leif Snethun, Tract’s CEO, shares that “Dropping interest rates support farmland values, making it a good time to be on the buy side of the market.” The shift in Canadian and international markets towards the last half of 2024 has created a buyers' market, welcoming a wave of opportunity.
Throughout 2024, Avenue Living navigated a complex market landscape characterized by shifting economic conditions, and heavy demand. By prioritizing operational excellence, raising the bar on our service standards, leveraging innovative technologies, and maintaining a keen focus on our core competencies, we achieved favourable results. As we look ahead, we remain dedicated to delivering exceptional value to our investors and stakeholders.
Stay tuned for an Insights post on our outlook for 2025 in the coming weeks.
This commentary and the information contained herein are for informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities in any jurisdiction, and do not and are not intended to constitute financial or legal advice. This article may contain forward-looking information and past results may not be indicative of future results. Avenue Living Asset Management Ltd., Avenue Living Real Estate Core Trust, Mini Mall Storage Properties Trust, Tract Farmland Partners LP, and their respective affiliates, have no obligation to update, or any liability in respect of, the information contained herein. Readers should speak to their own financial advisors about any investment decisions and the associated risks.
