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August 17, 2019

Condo Craze: Calgary’s Housing Transformation

From the inner city to the suburbs, Calgary is poised to continue to transform itself with each rising crane and tower. And, with the number of condos in construction, it’s easy to see that the market has turned – just don’t call it a boom

Condo Craze: Calgary’s Housing Transformation

From the inner city to the suburbs, Calgary is poised to continue to transform itself with each rising crane and tower. And, with the number of condos in construction, it’s easy to see that the market has turned – just don’t call it a boom

 

 

Cranes dot the Calgary skyscape again, from the inner core through to the far-flung burbs. There are more condos in construction now – and even more in the dreaming – than at the height of the boom that ended so painfully in 2008. But the story they’re writing on the city’s landscape is different from the one that left Calgary’s downtown pitted with abandoned holes last time around.

There will be shovels in the ground for 6,600 multi-family units in Calgary by the end of 2014, says the Canada Mortgage and Housing Corporation. And there are already 27 new high-rise (residential and commercial) towers being added to its skyscape right now, with 21 more in the planning stages, according to building data service Emporis.

But, whatever you do, don’t call this a boom. It’s a word that makes developers, buyers, banks – Calgarians in general – skittish. Revolution? Well, that might be too strong a word, too.

Let’s compromise: let’s call it a cyclical transformation, because what’s happening in the Calgary condo market right now is not a repeat of an oft-seen cycle. It’s a brand-new story.

“What’s happened in Calgary right now is that the interest and the demographic has really shifted,” says Sue Anne Valentine, a Calgary realtor who specializes in high-end properties and luxury condos. “We’re experiencing pent-up demand for product that hasn’t really existed in Calgary before.”

And that product is not a one-bedroom converted rental unit that looks like the setting for a bad 1970s porn flick. Valentine’s buyers want Architectural Digest finishes and a panoramic view of the Rockies from their eco-friendly soaker tub. That and room to put up their children and grandchildren should they come to visit – so at least two bedrooms. Two bedrooms and a den? Perfect. Walkability to restaurants and stores? Absolutely. The ability to lock up for three or six months while they snowbird somewhere warmer? Oh, yes.

That and “you have to have a design that is spectacular, unique,” says Wayne Whitlock, a real estate lawyer with Bennett Jones LLP. “This is a rarefied market.”

And, until very recently, a non-existent market, actually.

“That sort of product has not existed here before,” Valentine says. Sure, Calgary’s had condos – but not this kind of condo. The buyers who are buying this kind of condo, they’re approaching this real estate investment differently than their peers from an earlier generation. The idea that homeowners would sell their house as they neared retirement, buy a smaller condo, townhouse or villa and have some cash left over – well, that’s a dream of the past.

“Most of the time, they’re effectively upsizing the cost of their property,” says Valentine. What they want comes with a hefty price tag, but they’re also changing their lifestyle.

Are we talking about a select, tiny demographic? You might think so, but consider that Calgary is a wealthy, well-educated city and that, despite its overall youthful demographic, it’s affected by the inevitability of the baby boomers’ march toward retirement. As that still-dominant demographic bulge gets older, the appeal of mowing that giant suburban lawn and maintaining that white picket fence is fading. Fast.

Not all of them, of course, are chasing the high end of the market, which is effectively back at pre-crash prices and climbing steadily. Condo prices in Calgary are expected to rise at least three per cent this year, according to the generally conservative forecasts by the Conference Board of Canada. The 2,600-square-foot penthouse atop The Guardian South in Victoria Park (on the former site of the Arriva 2 tower) will set you back more than $2 million, while a 1,600-sq.-ft. pied–terre at The River in Mission starts at $1.2 million. And do you remember the gasp-evoking $10-million penthouse at Keynote?

“Calgary is an expensive city,” says Valentine. “It’s not really about what people can afford or want to pay. It’s about what it costs to build and buy.”

Leo Aucoin, an accredited seniors real estate specialist, agrees. His niche is helping the baby-boomer market (and the generation before them, too) flip their suburban houses into maintenance-free abodes.

“It doesn’t really matter what the market is doing or will be doing – they reach an age when they want to get rid of their house and get into a villa or luxury apartment,” he says. “It’s a must-move situation for them.”

Riverside luxury condos aren’t always in their price range, and the “400-sq.-ft. room with bathroom on the side” options cropping up in Calgary’s downtown are too small. But the market has more and more variety: there are midtown condos on the transit arteries and even cheaper condos on the city’s fringes. The suburbs may not be sexy, but buyers anxious to get into the market have lined up at 4 a.m. on sales opening day to snap up lower-priced apartments, even though they’re north of Stoney Trail.

But the meat of the Calgary condo story isn’t about having a 1,200-sq.-ft. apartment on the city’s edge; it’s about having something, anything, within the city’s core. And here, baby boomers are hunting affordability alongside first-time home buyers and youngish professional couples who want walkability and a lifestyle that, as Valentine puts it, “does not include having a yard to maintain.”

That’s the revolution, er, cyclical transformation. Calgarians have always loved their city. Now more and more of them – young and old, alike – want to live in their city. The 90-minute commute from the “affordable” edges is losing its appeal, especially as edge-affordability isn’t quite what it used to be (that’ll be $650,000 and a 90-minute commute, please, and another small fortune to park your car once you get to the core). And, more importantly, perhaps, there is more and more reason to stay and play downtown.

It’s not just the locals who are buying into the appeal of the inner city. Calgary is continuing to add around 30,000 people to its population each year. Those who come from cities with vibrant, walkable cores expect to find the same lifestyle in Calgary.

And now they can. Well, almost. We’re working on it. That’s why it’s a transformation, not a revolution.

Even as development on the fringes of the city continues, it is notable that, for all of Calgary’s reputation as a suburban rather than urban city, its urban/suburban population split is very much in keeping with that of Canada’s nominally more urban cities. David Gordon, director of the School of Urban and Regional Planning at Queen’s University, notes that 87 per cent of Calgarians live in the suburbs, compared to 89 per cent in each of Toronto, Montreal and Edmonton, and 88 per cent in Ottawa and Winnipeg. (Vancouver “wins” with the fewest number of suburbanites at 84 per cent).

In a conversation with Daniel Brook (author of A History of Future Cities in which he dubbed Calgary the “Texas of the Arctic”) at the inaugural Spur Festival in April 2014, Rollin Stanley, the City of Calgary’s general manager of planning and development, said Calgary has been a city that “has largely looked at itself as suburban in its character.” The cranes scattered around the city, and centred in its core, suggest that’s changing. Stanley himself sees the next seven years as critical to transforming how Calgary’s citizens define their city – and its landscape/skyscape.

“I think it’s exciting: we have a mayor and a City Hall very focused on increasing urban density,” says Valentine.

Vision from on high notwithstanding, most of the city’s current densification is occurring in a market-dictated, developer-focused, decentralized environment, although in specific loci: along the banks of the rivers (it won’t flood again, right?), in the Beltline, in already-vibrant neighbourhoods and near focal points such as Kensington, 4th Street S.W. and the universities.

The one part of the city where this transformation is happening according to a grand master plan is, of course, East Village, where the Calgary Municipal Land Corporation began amassing parcels of land in 2007 with the vision of a vibrant, populous eastside of downtown Calgary, even as the last boom’s real estate speculators were fleeing the scene in 2008.

“We were fortuitous,” says Susan Veres, CMLC’s vice-president, marketing and communications. “In 2008, when the world was experiencing the worst financial crisis since the Depression Era, we had our heads down and were busy building infrastructure.

“Had we been a year, two ahead in our process, we would have been expected to articulate our vision and find development partners then. As it was, we announced our vision for the neighbourhood in September 2009, as things were beginning to stabilize.”

The development of the area’s streets, the creation of the RiverWalk, the reclamation of St. Patrick’s Island and work on the 4th Street S.E. underpass continued in a comfortably non-boom environment. By April 2010, CMLC was marketing the land and looking for partners. Vancouver developer Embassy BOSA Inc. came on board in October 2010, breaking ground in September 2012 on the first phase of what will be 700,000 sq. ft. of residential and retail space, including 600 condos. Ontario-based FRAM Building Group and Slokker Real Estate Group signed up in February 2011, breaking ground in February 2012 on a four-parcel, 600,000-sq.-ft. mixed-use project with 396 condo units.

For CMLC, cranes in other parts of the city are both competition and comfort. “We have 29 projects that we’re monitoring as ‘competitive’ to what is going on here right now, and that is really phenomenal,” says Veres. “There are so many wonderful, smart projects, particularly in the Beltline.”

The East Village, she says, has a unique story that involves the creation of a brand and vision for an entire community. But every condo competitor with a compelling story, she suggests, also supports the East Village a few Calgary citizens dared envision 10 or 20 years ago. A Calgary in which a developer could dream up a parkade-free mega-residential tower and hear potential buyers say, “Yeah, I don’t really need to have a car if I live here.”

There was a time, not that long ago, when urban density and inner-core vibrancy were considered … well, what? Un-Calgarian. Unachievable in a city that was too cold for year-round patios and, ergo, was too cold for walkability. But a city’s vibrancy isn’t about its weather – just look at Chicago, says Valentine, which has outrageous wind and brutal snowfall.

So, it’s about … what?

Energy? Why not? Energy. Calgary’s long had that. And now, in East Village, throughout the Beltline, Victoria Park, Kensington and along its riverbanks and CTrain arteries, the city’s energy is expressing itself in a non-suburban way as it transforms its inner-city streetscapes and skyscape.

“People want to live and be within their city. It’s exciting what’s happening,” says Valentine.

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