A renderings of Edmonton’s Ice District, with residential condos towering over the Rogers Place.Ice District JV Inc.
Edmonton's condo market is either on life support or looking forward to a great 2018, depending on who you ask and what kind of building you're talking about.
Recent numbers from the Realtors Association of Edmonton suggest fewer condos were sold in the region at any time in the past five years, and prices fell with the volume: steep drops in November and December saw prices for condos dip three per cent lower than the same period in 2016.
At the same time, Urban Analytics numbers saw condo sales in the downtown core jump 62 per cent in the third quarter of 2017, the core accounted for almost 86 per cent of all new high-rise condo sales.
Paul Chaput, senior vice-president with commercial real estate company CBRE Ltd., made the "life support" joke to attendees of a commercial real estate conference earlier this month. He says he's heard of developments in southern Edmonton selling fewer than one unit a month.
"If you have a hundred unit project, you need 60 per cent presold … if you're an investor and you buy today you gotta wait five years," to reach that threshold Mr. Chaput says.
"In the outer markets there are projects that do very well; the Carlisle Group launched The James in the [fourth] quarter," Annalise Boytinck, an analyst for Urban Analytics, says. The James is a woodframe low-rise condo development, the first building has 124 units and and the second has 148.
Similar Carlisle buildings in the south west of the city have sold out in recent years.
Carlisle competes mainly on cost, says Jeff Klapstein vice-president of finance and son of CEO Randy Klapstein, and the efficiency gains with the design of The James – a six-storey building, unlike its previous four-storey projects – has lowered the cost per square foot to $215.
He says that in the first building at The James, 65 of 124 suites have been sold, and another event is planned for April to sell the second building.
In the past three or four years Carlisle has completed at least 26 buildings in Edmonton, and some of the projects it completed in 2017 still have some unsold inventory. Given the market slowdown, Mr. Klapstein doesn't expect the company to return to its previous high-speed building pace until late 2018 or early 2019.
Ms. Boytinck says it's not helpful to compare the rate of absorption in a low-rise condo development that might feature as few as 35 apartments to a development in the core.
The city's prime condo location is the "Ice District" next to the new arena, which Ms. Boytinck believes can support a project such as the recently announced 66-storey Stantec office building, which turns into a 483-unit condo development called Sky Residences starting at the 30th floor. Mr. Chaput agrees the Ice District is the game-changer for any developer; it can appeal to everyone from young professionals looking for downtown living, wealthy local downsizers and even international investors looking for a million-dollar unit to own.
Downtown doesn't cure all though: If your tower project isn't close enough to the Ice District it can be tough sledding indeed. For example, a plan for a tower just a few blocks away (on 106 Street north of Jasper Avenue) by Toronto-based Lamb Development Corp. was shuttered in December thanks to poor presales.
Mr. Chaput's insight to the market is also coloured by his job: he facilitates the purchase of apartment buildings for CBRE, and says in the past two years he has seen more than a dozen developments in Edmonton that couldn't find enough buyers for its condo apartments and so have been converted to rental buildings.
Ms. Boytinck believes the coming stress test regime may also help the low-rise market, as multifamily buildings may end up being more affordable than a detached home for first-time buyers.