Beyond the Woods: Timberwest and Real Estate

Image by: Nik West

Last summer’s decision by forestry giant TimberWest to parcel off 54,000 hectares of land for potential real estate development caught many Vancouver Island residents by surprise. It also left people across the Island wondering about the future of their communities – and the place for forestry within them.

FOR AN EXPANSE OF TIMBERLAND that has done little but supply fibre to B.C.’s once-proud logging industry in the last 100 years, TimberWest’s land holdings outside Ladysmith have some mighty fine views. From the vantage point of a rocky outcrop high above the quaint seaside town, the Gulf Islands stretch away like a labyrinth of ocean blue and forest green toward the open waters of Georgia Strait and the snow-capped Coastal Mountains. A few hundred metres below, on a cul-de-sac in the municipality’s upper reaches, a new subdivision foreshadows a day in the not-too-distant future when the growing community will begin to creep uphill, slowly overtaking the thick stands of Douglas fir, pine and arbutus that now carpet the mountainside.

Bev Park, TimberWest's chief financial officer, believes that day is just around the corner. “Our land up in the hills behind Ladysmith has some incredible views,” says Park, who was recently named president of Couverdon, TimberWest’s new real estate arm. “As you stand on it, you know something is going to happen there soon. It really epitomizes what the Couverdon-TimberWest relationship is.”

The property – almost 800 hectares rising along the tiny town’s municipal border – is among dozens of parcels TimberWest has put up for sale as part of an ambitious effort to divert one-sixth of its land from forestry into real estate. Last summer TimberWest announced plans to sell or set up joint ventures on 54,000 hectares of timberland stretching from Campbell River to Sooke – almost 17 per cent of its Vancouver Island empire. In February the company formed Couverdon to take on the complex, long-term job of converting those forestlands into viable real estate.

Arriving at an all-time low point for the forest industry, Couverdon heralds what TimberWest executives believe is a fast-approaching economic tipping point when the real estate value of the land outstrips the value of the lumber it produces. But the shift from logging to land management also marks a fundamental change in TimberWest’s relationship with communities on Vancouver Island, where for generations economic prosperity has depended on a healthy forest industry. TimberWest spokesperson Stephen Bruyneel says the change is being driven in part by residential growth, which has increased the potential for conflict between logging and development. “There’s a natural tension between communities that depend on logging and communities that have to watch the logging happen around them,” Bruyneel says. “When it’s time to go back and cut some of these areas 20 years from now, we’ll be right next to someone’s house.”

Critics of TimberWest’s new real estate division worry that other logging companies will follow suit and the province’s forest industry will die a slow and painful death. But Paul Quinn, a forestry  analyst with RBC capital markets in Vancouver, says hiving off small chunks of marginal forestland for development will have little effect on the overall timber supply in the grand scheme of things. “A lot of them are not great sites for growing trees, but they’re great scenic sites,” Quinn says of the Couverdon properties slated for development. “There are still large tracts of Canadian forest that are never going to be ‘higher and better use,’ ” he says, using the industry catchphrase for lands that have higher values for their non-timber amenities, such as recreation, conservation or development.

Park is quick to correct the common misperception that TimberWest is selling off land that has been severed from the province’s tree-farm licensing system. Unlike other forestry companies that harvest almost exclusively from licensed land – 95 per cent in the case of Western Forest Products Inc., for example – TimberWest owns all but a tiny fraction of its property fee simple. “Lots of people think we’re a public resource, but we’ve got a billion dollars invested in land on Vancouver Island,” Park says. “We’re here for the long haul.”

And TimberWest’s move from sawmills to subdivisions won’t happen overnight. It’s a long-term, complex endeavour involving hundreds of parcels of land, each with its own specific nuances and regulatory hurdles. The Couverdon website lists 31 properties stretching from Shawnigan Lake and Port Renfrew in the south all the way to Telegraph Cove and Quatsino Sound north of Campbell River. Offerings range from smaller parcels close to urban areas – such as a 16-hectare farm on Farnham Road just north of Comox for $299,000 – to large tracts of wilderness, including 5,000 hectares in the Capes Lake area southwest of Courtenay for a paltry $25 million.

Most of TimberWest’s land lies outside municipal boundaries, in regional-district territory where subdivisions are frowned upon as “rural sprawl.” The vast majority is designated as “forest management land,” a tag that carries a nominal tax rate compared to other commercial and industrial properties but prohibits development. Couverdon’s mission in those parcels it plans to develop, says Bruyneel, is to negotiate long-term agreements with the affected communities, trading amenities such as parkland, affordable housing and watershed protection for zoning designations that would increase the value of the land and pave the way for development. “We know the best way to raise the value of that land is to have it rezoned,” Bruyneel says. “But it’s not just, ‘Look at that hill, let’s stick a house up there.’ This is about working with these communities on some kind of longer-term planning vision.”

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