Revenue Property with Development Upside
Seize this unique chance to acquire .471 acres in the heart of Penticton, BC. This prime location takes advantage of the extensive Penticton North Gateway development zone and is within a short walk to Okanagan Lake, South Okanagan Event Center Complex, downtown eateries, golf, recreational activities, and more. This property is designated for high-density residential use in the current OCP.
Beyond the generous current revenue stream, the site holds remarkable potential for future development and expansion as the site supports plans for either a 58 unit apartment building or a 32 unit townhome development consisting of 16 townhomes and 16 ground level suites to be verified with the City of Penticton. Fronting on two streets plus alley access provides additional versatility and value for development.
Offered at - $2,675,000 representing a 6.53% Cap Rate
Future Potential
For development potential, the site supports either:
A) 58-unit apartment building, or
B) 16 townhouses with 16 ground-floor suites
Current Use
Formerly the Black Forest Motel, this property is currently being used for rental housing. This 26 unit building fills a need in the rental market and has had strong demand. Management has been updating units and renting them at higher rates once renovated as well as collecting a utilities fee with new tenants. There is currently a paid manager on site who wishes to stay and continue to manage the property.
Current room mix consists of 12 kitchenette units, 12 sleeper rooms, 1 two bedroom unit and 1 fully restored kitchenette (manager’s suite). 14 of the units have had interior renovations including paint, flooring, baseboard heating and AC.
This property has a current gross income of $285,600 with a NOI of approximately $174,700 which includes $14,280 of vacancy allowance. Projections are intentionally conservative, as historically, the property does not experience meaningful vacancy costs. In the event of tenant turnover, damage deposits help offset expenses, and historically the rooms have been re-rented quickly, often with prorated first-month rent.
Approximately 20% of the building has been updated including upgrades to the plumbing, HVAC, and electrical systems. 14 of the 26 units have also been renovated which has resulted in a notable increase in rental income. 7 rooms are currently under market rents adding to the holding upside as tenants turnover.
Penticton’s Development Focus
The City of Penticton is progressing with its redevelopment strategy for the North Gateway, situated in the northwest corner of the city. “The vision of the plan is to create a connected, complete sustainable destination that captures and celebrates Penticton’s natural beauty, sports excellence, events and festivals while adding to the economic vitality, housing diversity and local fare.”
This strategy outlines plans for boutique shops, expansive multi-use pathways, tree-lined streets, diverse housing options, hotels, as well as entertainment and recreational facilities. This will allow for a mix of walkable and accessible retail/commercial uses within the area to support residents, visitors and event/convention delegates. This involves creating a neighbourhood where everything can be reached by active transportation.
The North Gateway will see transportation upgrades as well as further growth of the SOEC complex envisioning up to 350 new hotel rooms, nearly 30,000 square feet of new commercial space, two new ice surfaces, and an expansion of convention facilities.
Additionally, the North Gateway aims to offer a variety of housing types, which will include:
A residential housing supply ranging from apartments to townhomes, projecting between 1,750 and 2,250 new units.
Employee housing will represent approximately five to ten percent of the housing development.
