Value key to inner-city success
Influx of young people want to live in downtown
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.