LNG angst pushes northern landlords to the wall

Rents, prices plunge as liquefied natural gas plans delayed

The real estate market in northeast B.C., which includes Fort St. John, is slowing down, particularly in the multi-family rental sector | Jason Dudley/Shutterstock.com

An organizer with a pro-liquefied natural gas (LNG) group in Fort St. John says he’s “alarmed” by news that gas driller Progress Energy (NYSE:PGN) is drastically cutting spending as it awaits a decision on Pacific NorthWest LNG. 

“From a starting point of already bad, this is worse,” said Alan Yu of FSS for LNG. “The light at the end of the tunnel is dimming.” 

In April, Progress CEO Michael Culbert said the company was planning major upstream cuts amid delays in federal environmental approval for Pacific NorthWest LNG. 

Oil and gas giant Petronas, Progress’ parent company, has yet to make a final investment decision on Pacific NorthWest, which would be one of the largest LNG facilities proposed for B.C.’s coast. 

“The plan with the final investment decision moving forward was another $5 billion in the next three years moving into the development phase,” Culbert said. “We are going to drop that [figure] down to somewhere around $500 million over the next two years – so a significant drop.” 

The northeast real estate market is already feeling the effect of the downturn, particularly in the multiple-family rental sector.

“The landlord party is over,” said Kevin Kurjata with Century 21 Energy Realtyin Dawson Creek.

He detailed erosion in what had once been a high-flying rental market in Dawson Creek, which had posted the second-highest rental rates in the province as recently as two years ago, spurring a multi-family building boom.

“The price of energy has plummeted and vacancy rates in Dawson Creek have skyrocketed. It used to be impossible to find a place to rent. Today, property management firms have given me vacancy estimates over 20%.” Kurjata said he has reduced rents on older apartments he owns to around $950, down from the $2,200 range two years ago.

In 2012, he noted, a half-duplex on 104th Avenue in Dawson Creek sold in a month for $323,000. The adjoining, identical three-bedroom unit is now listed at $269,900 and has been on the market for 127 days “with no offers,” he said.