Silicon Valley North fuels condo boom
Real estate frenzy develops in Kitchener-Waterloo as Google moves into the neighbourhood
In a banquet hall in north Toronto, a condominium-sales event generated the kind of frenzy more often seen on a trading-room floor.
Michael Wekerle, former Bay Street trader, technology investor, Dragons’ Den judge and now real estate mogul, stepped up to a podium in front of about 1,600 people to make his pitch. Waterloo, with its two universities and a burgeoning technology sector that’s attracted companies such as Google and dozens of startups, is booming, he says.
“It’s a land grab,” Wekerle, 52, dressed in a light grey three-piece suit and trademark sunglasses, told the rapt crowd last weekend. “There were zero cranes when I first showed up there and there are 15 cranes in the sky now.”
He finished his speech. Then all hell broke loose. Prospective real estate investors surged to the back of the room, submitting paperwork for offers on one or more units as agents in suits shouted and gestured to clients, who anxiously paced the aisles. Three hours later, the 250-unit, $85-million District Condos project was sold out and 170 people were added to a waiting list.
The fervent demand for property in Waterloo highlights the city’s coming-of-age as an investment destination: first by technology companies and now real estate firms looking to gain from the city’s metamorphosis. Real estate investors at the event, including families, seasoned individuals and couples, were looking for higher returns than in Toronto, where homes are sold for almost double what they are in Waterloo.
“It’s what that fellow was talking about,” said Bill Ring, head of operations for a property management company, referring to Wekerle. “Students are coming in and need a place to live, tech companies are opening. It’ll all drive the value up.”
Ring drove two hours to attend the event and buy a one-bedroom unit. It’s his first condo investment, which he in- tends to flip to another buyer before it’s completed, taking advantage of the advertised 40 per cent return. “I don’t want to invest in stocks because they’re crazy and real estate is a solid, safe investment.”
With a population of about140,000 people, a third of them students and 20 per cent working in the technology industry, Waterloo has been billed as Canada’s Silicon Valley. Home to BlackBerry Ltd., Open Text Corp. and dozens of startups, Waterloo and Kitchener are so in-demand that condo development is surging.
Wekerle, who made millions trading Canadian oil and mining stocks before turning to tech, recently bought six buildings there formerly owned by BlackBerry. He’s currently negotiating the purchase of another three buildings in the region.
“It’s like lightning in a bottle — you could try this in a hundred different places and never achieve the same type of community as what has been created” in Kitchener-Waterloo, Sam Sebastian, country manager for Google Canada, said in statement Jan.14 after opening a new building that will be home to more than 350 engineers as the company expands in the country.
NKL Properties, the closely held developer of District Condos, guarantees the investor as much as $1,930 per month on units for the first two years. Units in the building range in price from $270,000 one-bedroom suites to two-bedroom units for about $340,000. Toronto-based FirstService Corp., whose shares have risen 90 per cent over the past 12 months, will manage the property.