How We Stress-Test Development Assumptions in Smaller Markets: A Vancouver Island Perspective

When it comes to real estate development, especially in smaller communities across Vancouver Island, even modest assumptions can make or break a project.

At Jackson & Associates, we specialize in development and commercial appraisals tailored to the nuances of Vancouver Island markets from Courtenay and Parksville to Powell River and Port Alberni. Our work helps lenders, developers, and local governments make smarter, risk-aware decisions.

In this article, we share how we go beyond boilerplate models to stress-test feasibility, verify assumptions, and produce reliable appraisals grounded in local data and market behaviour.

We Rebuild Every Pro Forma From the Ground Up

Even on smaller-scale projects, assumptions matter. We’ve seen too many reports rely on developer-supplied numbers without scrutiny.

We take each appraisal assignment and:

• Reconstruct the pro forma using current regional cost data, lease/sale comps, and servicing costs

• Adjust for local market conditions, not big-city trends

• Challenge rent and sale assumptions with verified market evidence

• Factor in absorption timing for smaller pools of buyers or tenants

Recent Example: In a 22-unit townhouse project in Comox, our analysis helped the lender and developer understand how slowing absorption rates and rising construction costs would impact funding timelines and required pre-sales.

2. We Stress-Test Value With Sensitivity and Scenario Analysis

Development in smaller centres often has tigh margins and very little room for error. That’s why we model out multiple scenarios.

We test:

• Rent and absorption sensitivity  Can the project withstand a slower lease-up or lower-than-expected rents?

• Cost escalation What happens if construction or servicing costs jump 10% midstream?

• Yield risk  How does a 0.5% cap rate shift affect the values?

• Exit timeline variations  If the market slows, what’s the holding cost impact?

These scenarios allow our clients to prepare for both best- and worst-case outcomes even on relatively small-scale developments.

3. We Understand Local Policy and Planning Constraints

Every Vancouver Island municipality is unique in how it handles zoning, land use planning, and development approvals.

We help clients navigate:

• OCP alignment and rezoning probability

• DCCs and CACs (Development Cost Charges and Community Amenity Contributions)

• Parkland dedication requirements or cash-in-lieu valuations

• Timing risks associated with public hearings or infrastructure upgrades

Example: We recently provided a "value as though rezoned" analysis for a local government assessing a CAC calculation in a small coastal municipality. The work helped both the developer and municipality find common ground on a fair contribution value.

4. Real Projects We’ve Worked On

Here are just a few recent examples of our development appraisal work across Vancouver Island:

• 41-unit mixed-use rental and commercial complex (Courtenay – mortgage financing)

• Final phase of a 3-phase stratified rental/commercial project (Courtenay – valuation for lender and equity partners)

• 22-unit townhouse project (Comox – development financing feasibility)

• Mini home community development (Powell River – feasibility analysis for alternative housing model)

• Public-sector valuations for local governments (e.g., payment in lieu of parkland dedication; valuation “as though rezoned” for CAC negotiation)

Each of these assignments required not only local market knowledge, but also the ability to model risk, clarify assumptions, and speak the language of developers, lenders, and municipalities alike.

5. Trusted by Lenders, Builders, and Governments

While our projects may be smaller in scale than those in Greater Vancouver, the stakes are no less significant.

Lenders need clarity.

Developers need realism.

Municipalities need fair and supportable valuation.

Our team:

• Applies CUSPAP-compliant methodologies

• Builds custom feasibility models for each site

• Reflects true local market behaviour, not abstract trends

• Helps clients prepare defensible applications for funding or approval

Final Thoughts

Development in smaller markets demands a careful balance of optimism and realism. With rising construction costs, increasing policy complexity, and slower absorption rates, understanding the true viability of a project is more important than ever.

At Jackson & Associates, we don’t just give you a number we provide insight, clarity, and practical tools for decision-making in real time.

If you’re acquiring, rezoning, or financing development land on Vancouver Island, we’re here to help.