Located just north of the US border, neighbouring three of the Great Lakes, home to an international airport, and well connected to rail lines, waterways, and the Trans-Canada Highway, Sault Ste. Marie—more colloquially known as the “Soo”—is one of Ontario’s most valuable transportation hubs. That said, the city’s appeal transcends its prime location. Sault Ste. Marie is rich in natural beauty, including lakes, provincial parks, and hiking, biking, and skiing trails. Natural attractions and more draw a growing number of newcomers to the city each year, boding well for real estate investing in Sault Ste Marie.

Sault Ste. Marie is an important transportation hub, rife with natural beauty and up-and-coming potential. This article explores several drivers of Sault Ste. Marie’s economy and how they contribute to the record real estate conditions in the city.

 

Sault Ste Marie real estate investing: Quick facts

  • Sault Ste Marie real estate is affordable. The average cost for a detached single-family home was just $182,000 as of 2019. That’s compared to $792,000 in Toronto and $269,000 in Sudbury.
  • The city is an attractive place to settle for immigrants, boasting record high rates of retention. 73.4 percent of the immigrants who arrived in the city from 2007 to 2011 still remained five years later.
  • Sault Ste. Marie is known for generating alternative energy, including hydroelectricity, solar power, and wind power. The city ranked 10th globally over 111 cities in KPMG’s 2016 Competitive Alternatives study.
  • Advanced manufacturing is a cornerstone of Sault Ste. Marie’s economy. In recent years, Noront Resources, a Canadian-based mining firm selected the Algoma Steel site in Sault Ste. Marie for its ferrochrome production facility (creating over 1,000 jobs) and the Federal Economic Development Initiative for Northern Ontario announced a five million dollar investment into Tenaris (creating 75 jobs).
  • The province’s Northern Ontario Heritage Fund Corporation (NOHFC), has invested over $74 million into economic development and business innovation since 2013, which has helped to create or retain more than 4,830 jobs.
  • The average price of homes sold in Sault Ste. Marie in November was $221,645, up from 28.9 percent in the year prior.
  • The cap rate for a multi-family apartment in Sault Ste. Marie is 6.3 percent. That’s compared to 3 to 4.5 percent in Toronto.
  • Average rents in the city have increased from $849 in October 2019 to $1,063 as of February 2020.
  • The city is in the midst of several housing development projects, which will yield multi-family residential units, luxury condominium units, affordable housing in the coming years, and other opportunities for real estate investing in Sault Ste Marie.

 

Affordable cost of living

One of the most enticing aspects drawing buyers and real estate investors to Sault Ste Marie is the affordable cost of living. This partly owes to local sources for water filtration and electricity. Sault Ste. Marie is unique in that the city generates most of its electricity from clean, renewable sources like solar, wind, and hydroelectric generation.

Compared to other Ontario cities, housing in Sault Ste. Marie is far more affordable. To illustrate, the average cost for a detached single-family home was just $182,000 as of 2019. That’s compared to $792,000 in Toronto and $269,000 in Sudbury. Moreover, rental costs are 50 percent less in Sault Ste. Marie and purchasing power is more than 28 percent higher compared to Toronto.

One more factor that contributes to Sault Ste. Marie’s affordability in the median household income, which is high for a mid-sized city$77,000 per the last census. 

 

Sault Ste. Marie’s growing population

Affordable cost of living is one of the factors that have made Sault Ste. Marie an increasingly attractive place to settle for newcomers to Canada and interprovincial migrants alike. Speaking to the former, Sault Ste. Marie boasts high rates of immigrant retention, according to a report published last year. More specifically, 69 percent of the immigrants that arrived to the city between 2002 and 2006 remained there five years later, and 73.4 percent of the immigrants who arrived from 2007 to 2011 remained five years after that. Both scores were the highest recorded in the immigrant retention category amongst the communities consulted for the study: Brockville, Chatham-Kent, Grey and Bruce Counties, Sault Ste. Marie, and Greater Sudbury.

Consistently high rates of retention likely owe to the fact that the city touts various pro-immigration programs and initiatives. For instance, the Local Immigration Partnership (LIP), which provides potential residents with information pertinent to relocating. In addition, the Sault Community Career Centre focuses on settlement via a program called New To The Sault, which introduces newcomers to the area and assists with network building through events.

Finally, Sault Ste. Marie is one of several cities participating in the Rural and Northern Immigration Pilot. In October, two skilled immigrant workers in Sault Ste. Marie were the first in Canada to receive permanent residency through the program.

 

Growing sectors for employment

Another reason Sault Ste. Marie is attracting increasing numbers of immigrants and interprovincial migrants is thanks to growth in several sectors, promoting job creation. This is in addition to the city’s existing highly skilled workforce, which is supplemented by students from Algoma University, Sault College and Lake Superior State University, yielding 2,000 graduates annually. Below, I explain some of Sault Ste. Marie’s expanding sectors for employment.

 

Alternative energy

Sault Ste. Marie is the self-proclaimed alternative energy capital of North America. In addition, the city ranked 10th globally over 111 cities in KPMG’s 2016 Competitive Alternatives study. Perhaps most notable is Sault Ste. Marie’s hydropower facilities, including but not limited to the Cloverland Electric Cooperative Hydroelectric Plant and the Sault Ste. Marie Hydroelectric Power Complex. In addition, the Sault area is home to solar and wind power developments and Sault College touts training for students looking to pursue careers in alternative energy. Additionally, in the coming years, northern Ontario’s budding alternative energy industry will benefit from ample government involvement—including capital investments and cost reductions, such as tax cuts and reduced electricity costs.

 

Natural resources and forestry

Given its unique proximity to the Boreal forest and the St. Lawrence forest, Sault Ste. Marie is one of the best places in Canada to study forest ecosystems. As such, many people in the city are employed by government run vocations, such as the provincial Ontario Forest Research Institute (OFRI), the federal Great Lakes Forestry Centre (GLFC), and the Ministry of Natural Resources. To add, Sault College touts a world-renowned Natural Environment and Outdoor Studies program. The city is also home to Arauco North America, a global manufacturer of forest products.

 

Manufacturing, Production & Mining

Advanced manufacturing is a cornerstone of Sault Ste. Marie’s economy. The city is home to Algoma Steel, Tenaris Algoma Tubes, Arauco North America, and McDougall Energy, amongst others. Last year, Noront Resources, a Canadian-based mining firm selected the Algoma Steel site in Sault Ste. Marie for its ferrochrome production facility, which is approximately a one billion dollar investment. Once it’s up and running, the FPF facility is expected to employ between 300 and 500 people directly, and more than 1,000 indirectly. And more recently, the Federal Economic Development Initiative for Northern Ontario (FedNor)—the Government of Canada’s economic development organization for Northern Ontario—announced a five million dollar investment into Tenaris—a move that will create 75 new full-time jobs. Tenaris is a global manufacturer and supplier of steel pipes and related services, primarily for the energy industry.

 

Technology

Technology is another sector that’s rapidly growing in Sault Ste. Marie, thanks to hubs such as the Sault Ste. Marie Innovation Centre and tech-centric employers, including PLATO Testing, Essar Steel Algoma, and Algoma Games, Ontario Lottery & Gaming Corporation, as well as environmental research facilities and web development enterprises. And much like alternative energy, tech-forward training is promoted through Algoma University and Sault College.

 

Transportation

In addition to an existing network of (extensive and impressive) transportation-related infrastructure in Sault Ste. Marie, efforts are underway to expand the transportation sector further. In recent news, the Sault area is slated for bus fleet enhancements, which is part of Draft Transportation Plan for Northern Ontario. The plan is geared at expanding highways and transit services in Northern Ontario, which will aid in job creation. The city has also undertaken improvements to its Bay Street corridor, including the addition of new pedestrian crossovers and traffic lights.

 

Agriculture

The City of Sault Ste. Marie goes to great lengths to support and promote local agriculture through events and initiatives such as Eat Algoma, Buy Algoma Local, and the Rural Agri-Innovation Network (RAIN). Speaking to the latter, RAIN is geared at building a resilient farm and food sector in through innovative research and agriculture development projects.

 

Entrepreneurship

For both entrepreneurs and entrepreneurial hopefuls, Sault Ste. Marie offers cost benefits and unique value, in the form of quality talent and expertise at an affordable rate, low business operating costs and a low cost for land and real estate. The Sault Ste. Marie Innovation Centre, the Millworks Centre for Entrepreneurship, and StartUP Sault all exist to foster and support entrepreneurship in the city. Additionally, the Northern Ontario Heritage Fund Corporation (NOHFC), has invested over $74 million into economic development and business innovation since 2013, which has helped to create or retain more than 4,830 jobs. To date, Sault Ste. Marie is home to over 2,000 businessesand that number is growing.

 

Sault Ste Marie real estate investing

Growth in the aforementioned sectors bodes well for investing in real estate in Sault Ste Marie. Last month, home sales in the city set a new record for the month of November at 141 units. That’s up 15.6 percent from the previous year, according to the Sault Ste. Marie Real Estate Board. As for home sales, the average price of homes sold in November 2020 was $221,645. That’s an increase of 28.9 percent from the year prior. Additionally, cap rate in the city is much higher than many Ontario cities. According to Colliers Canada, the cap rate for a multi-family apartment is 6.3 percent. That’s compared to 3 to 4.5 percent for the same asset class in Toronto.

Speaking to the rental segment, Sault Ste. Marie has a healthy vacancy rate of 4.9 percent, which is expected to drop, given high rates of immigration and bourgeoning opportunities for employment. Additionally, average rents are on the rise. In October 2019, average rent in the city was $849. As of February of 2020, the average rent in the city increased to $1,063. This number is expected to rise.

 

New development projects

In anticipation for newcomers to the city, Sault Ste. Marie is in the midst of several housing development projects, including a new housing development in the city’s west end, approved in September—a project that will yield 22 multiple attached townhouse dwelling units. Efforts are also underway to supply Sault Ste. Marie’s multi-family segment. Some notable projects in the works include the rezoning of a property on Western Avenue to multi-family residential, the approval of a 20 million dollar apartment complex to be built in downtown, the approval of a 16-unit apartment building on White Oak Drive West, and a (newly completed) 40-unit luxury development in the Harbour Breeze area.

Finally, in September, the federal and provincial governments announced that they would be allocating more than one million dollars in funding for construction of new affordable housing in Sault Ste. Marie. Post-completion, the project will include a nine-unit housing development, a community hub for local social services, a gymnasium, a child-care centre, and an EarlyON Child and Family Centre.