Value key to in­ner-city suc­cess

In­flux of young peo­ple want to live in down­town

Calgary Herald - Calgary Herald New Condos - - Front Page - KATHY MCCORMICK

Cal­gary has the de­mo­graph­ics and the dy­nam­ics to at­tract peo­ple to live down­town — even with the re­cent slump in high­rise ac­tiv­ity in ar­eas such as the Belt­line, says an ex­pert in in­ner-city con­dos.

But it will take some in­no­va­tion for condo de­vel­op­ers spe­cial­iz­ing in con­crete tow­ers to be a suc­cess, says Calvin Buss of Buss Mar­ket­ing.

“The down­town condo tow­ers in the first quar­ter had just over 100 sales,” he says. “That’s not many when you con­sider how many tow­ers are un­der con­struc­tion or sell­ing now.”

About 10 high­rise build­ings within the Belt­line area have units for sale, he says.

“And if you look at it, two projects had most of those sales. Mid­town had about 55 sales and Luna had an ad­di­tional 20. That doesn’t leave much for all the rest of the down­town projects.”

The Belt­line is bounded by 14th Street S.W. on the west, the El­bow River on the east, the CPR tracks on the north and 17th Av­enue on the south.

The rea­sons for the suc­cess of the two projects boils down to price, he says.

Luna, the third condo tower by QualexLand­mark, re-ne­go­ti­ated prices with sup­pli­ers.

The price per square foot was in the range of $390 for the 20 units it sold from Jan. 1 to the end of March, says Buss.

Most other de­vel­op­ments were more in line with $500 per square foot or more.

Mid­town, the tower that Pointe of View res­cued from re­ceiver­ship, has av­er­age prices per square foot in the $400 to $500 range.

But the 55 units it sold from Jan­uary to March were smaller, so prices were lower.

“Some units were just 510 square feet — so av­er­ag­ing the price per square foot to $450, the price of those con­dos was just $230,000.” And peo­ple were buy­ing. “Peo­ple want to live down­town and it’s a clean, new and safe in­ner city,” says Buss. “If the in-mi­gra­tion num­bers are strong, it will have a dis­pro­por­tion­ate ben­e­fit for the in­ner city be­cause, gen­er­ally, those com­ing in are younger.”

In-mi­gra­tion refers to the move­ment of peo­ple to Cal­gary.

In­vest­ment con­tin­ues to be a mo­ti­vat­ing fac­tor to pur­chase a condo, says a re­cent sur­vey by TD Canada Trust.

“Cal­gar­i­ans con­tinue to see the value in pur­chas­ing a condo as an in­vest­ment strat­egy,” says Chris Wis­niewski, as­so­ci­ate vice-pres­i­dent of real es­tate and se­cured lend­ing for TD Canada Trust. “Af­ford­abil­ity and sta­ble monthly ex­penses can make con­dos very at­trac­tive for both first-time buy­ers and in­vestors.”

The re­main­ing units still in in­ven­tory within the in­ner city are larger — and, thus, pricier.

“Close to 575 units are stand­ing in­ven­tory, ei­ther fin­ished or un­der con­struc­tion and wait­ing for sales,” says Buss. “That will take a long time to ab­sorb and sales have slowed con­sid­er­ably be­cause most are too big and/ or too ex­pen­sive.”

But that won’t stop ei­ther buy­ers or de­vel­op­ers, he says.

“Buy­ers to­day draw the line at how much they will spend — and how much they can spend, how much debt they are will­ing to pur­chase and the price of that debt.

“Those de­vel­op­ers who suc­ceed are the ones with the best value. They won’t stop de­vel­op­ing, but they’ll find dif­fer­ent ways of cre­at­ing and in­no­vat­ing to com­pete against the stand­ing in­ven­tory.”

As of the end of March, 75 multi-fam­ily condo apart­ment units had been started, says Al­tus Group — down from 84 in 2009. And 3,874 were un­der con­struc­tion to the end of March — a num­ber that may seem high, but it com­pares to 6,225 the pre­vi­ous year.

Con­do­minium high­rise tow­ers dot the in­ner-city Belt­line area near the Sad­dle­dome. Af­ford­abil­ity and in­no­va­tion are mo­ti­vat­ing buy­ers, say ex­perts.

Condo high­rises such as Sasso and Vetro are chang­ing the in­ner city.

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