Real estate developers thrive in a healthy market
Parker Place | Issue #2 | November 25, 2005
Location, design and price are major factors to consider as a developer
Timing is all-important in the real estate development industry. Much research is done on the market before committing shovel to dirt, but there is still a bit of a gamble every time a decision is made to build.
There's the selection of the right piece of land, the financing, selection of a compatible architect and in this city the all important approvals of city council and powerful community associations. Just because a piece of dirt is zoned for whatever use a developer intends, doesn't mean that after purchase and spending more money on environmental studies, engineering and design, the approvals will be automatic.
There has to be consideration given to traffic flows and other density issues but I know many developers and their architects have endured much frustration over things that they are far more suited to address, such as design details and signage. So I take my hat off to those who are willing to invest their money in projects that take too much time and energy in getting the necessary approvals, never mind the tough job of measuring the saleability.
Residential condominiums are a good example. Towers are not an easy sell to the authorities and timing plays such an important part of the equation of success or nail biting.
Not many years ago there were only a couple of high-end towers in downtown Calgary and there was no rush to build more. Then a couple of developers had the foresight to anticipate changes in lifestyles, and Eau Claire and the west end suddenly became one big construction site.
The success has been remarkable, yet every time a new permit is issued the question of "do enough people want to live in the core to justify building?" is asked. Today the answer has to be absolutely. The right location, design and price obviously are key, but I witnessed a feeding frenzy recently when Sky Tower, on the corner of 10th Ave. and 1st St. S.E., was launched. All 220 units had deposits that same day.
I also checked with a future development just a couple of blocks away on the site of Gaslight Square at 10th Ave. and 4th St. S.W. Same response. Although the necessary approvals to build have yet to be secured from the city, pre-sales have drawn sufficient interest for both developments of Gateway Mid-town to be built. In fact, although the final design has yet to be determined, the 240 units in the west tower are spoken for. One of the best looking condo towers in my view is 5 West on the corner of 5th Ave. and 8th St. S.W. Here again the first tower sold very quickly and the developer has made the decision to go ahead with the second.
Several others are already in the construction stage and I am looking forward to seeing the designs for the mixed use development planned for the site of the former Greyhound bus barns on Riverfront Avenue. It will provide another 900 to 1,000 residential units. There is also a proposed complex on the east side of the Harry Hays building plus residential considered in further development on the surface parking lots at Eau Claire Market.
Yet developers don't sink their money into a hole for pilings unless they believe the market is healthy, so unless something totally unforeseen happens, real estate in the downtown core is going to be quite healthy for the foreseeable future. This also means the re-sale market will be brisk as well; so REALTORS better get to know where to find parking spaces.
"I intend to live forever. So far so good"