Hicks: No need for condo-panic in Edmonton
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No, the sky is not falling.
Last August, Hicks on Biz reported a high-rise condo tower boom happening in the city, 27 high-rise proposals in design, permitting or construction stages, most of them over 20 stories, 10 of them north of 30 stories.
But in January, construction of the Glenora Skyline at Stony Plain and 142 Street came to a crashing halt. Of the four towers, only a few floors of poured concrete from the first had emerged.
Meanwhile, rumours have abounded of temporary stoppages in the construction of other downtown condo towers.
As for office towers, Edmonton commercial realtors were suggesting before Christmas that the city was ready for another office tower or two. Now, suddenly, a few analysts are proclaiming Edmonton to still be awash in office space!
Relax.
First of all, as a rule of thumb, only 25% to 40% of “proposed” condo towers actually ever get built, and those will be by highly experienced, reputable builders with good-quality financing.
There’s a billion games in the development business. A condo tower proposal may be nothing more than a re-zoning scheme that, if successful, would dramatically increase the property value and the owner’s assets.
Once rezoned and design-approved, some developers will sell the property before a spade hits the ground.
High-rise condos are at the riskier end of the real estate game. Institutional or bank financiers will insist a developer has at least 25% of construction financing in place before agreeing to finance the other 75%. Reputable lenders won’t advance a dime until the developer can prove 40% to 50% of the condo units have been pre-sold, with deposits in the bank.
The Glenore Skyline development, veteran observers politely suggest, was “under-financed.”
As for the high-rise condos now going up downtown, all appear at this point to be under active construction.
And why not?
The fundamentals are still excellent. In 2012, Edmonton saw 24,000 people move into the city, way more than recent annual migration of about 17,000 annually. Rental vacancies in town are down to 1% with rents going up. Interest rates are at historic lows. Lots of affluent Edmontonians like the urban condo lifestyle. Condos in Edmonton aren’t considered over-valued. Edmonton’s economic growth is projected at 3% to 3.5% annually for the foreseeable future. Which is about as good as it gets anywhere on the globe.
As for office towers, the balance between supply and demand is being righted with the announcement of the city’s consolidating its services in the new Katz Group tower to be built on the Staples site at 101 Street and 104 Avenue. A new tower is now under construction in Rice-Howard Way and the provincial government’s Federal Building, under renovation for years, is, I kid you not, almost ready for occupancy.
Awash in space, no. But once the above-mentioned new office space comes into play, that’ll be that for quite a few years.
ICELAND AIR IS A HAPPY CAMPER
Iceland Air is so happy with the interest and booking activity on its new Edmonton to Europe route via Reykjavik that the Iceland prime minister is expected to be here for the route’s official opening in early March. The four-day-a-week flight has already been bumped up, from seasonal to year-round.
If Air Canada chooses to make its non-stop Edmonton-London (England) route a consistent, predictable, year-round service, so much the better.
IN A WORD, WOW!
The only reason the west end’s now-open DoubleTree by Hilton cannot be considered a brand-new hotel/conference centre is because the bones are still those of the old Mayfield Inn. It’s a sparkling new hotel property with 238 rooms, as hip and relevant to this decade as the original Mayfield, when it opened in 1972, would have been to the ‘70s.
All that’s untouched in this $42 million “renovation” is the pre-renovated Mayfield Dinner Theatre. With legendary Edmonton chef Willie White (Fairmont Hotel Mac, River House Grill) overseeing the kitchen, expect quality from the 238-seat (three different eating spaces) Stages Restaurant. In July, behind the DoubleTree, the brand-new, $20 million, 124 suite Home 2 apartment-hotel will open for longer-stay guests.
FACTOIDS
Tips on buying a new high-rise condo: (With the Internet and Google, all things are possible.)
-Investigate the builder: Does the company have a track record in town? If so, visit buildings the developer has already built, talk to original unit owners as to their experience and the quality of the construction.
-Search out friends of friends working in the residential/condo tower sector. Ask them about the builder’s reputation.
-Usually, at the construction site, the builder, major trades and financier will be listed. Is it a bank or lending institution you recognize? If no lender is mentioned, be careful.
-Take all salespeople, charming or otherwise, with a grain of salt. They too have to make a living.
-Check if numerous lawsuits or legal claims are filed against the developer’s company. (It’s all publically available, if you know how to find it.) If so, be careful.
-Instead of buying sight unseen, why not look for a tower that’s a few years old, with a track record you can thoroughly assess before making an offer on an existing unit.
