The sluggish market is also afflicting condos, which so far this year represent about 22.5 per cent of new home sales in Ottawa. (In keeping with the way condos are generally discussed in the industry, the percentage refers to apartments only and does not include condo towns).
While some, like Minto’s Lansdowne and UpperWest projects, are selling respectably, others, including Urbandale’s 99 Parkdale and Claridge Condos’ Icon, have sold nothing or seen sales plummet after a initial flurry since opening earlier this year, according to PMA’s latest new home market report.
Tega Homes’ Rhombus Tower, a 32-storey condominium proposed for Parkdale Avenue above Scott Street, seems to have closed shop after selling no units since launching this past May. The property is rumoured to be changing hands, but calls to Tega owner Spyro Dimitrakopoulos have not been returned.
Despite all this, more than half a dozen new condo projects have either recently launched or are about to do so in the Ottawa area. Developers are also pursuing other, longer-term projects.
Are condo builders gluttons for punishment or do they know something we don’t?
“My read is they’re caught between a rock and a hard place,” says John Herbert, executive director of the Greater Ottawa Home Builders’ Association. “They’ve invested massive amounts of money in these projects and now the market’s turned on them, so what can they do? I think they’re forging ahead on a wing and a prayer, hoping the market will heat up again or that their project will be the one that really sells.”
Herbert suspects the pent-up demand for condos in Ottawa has been satisfied, and that fewer units will need to be built in the future to meet demand.
Ottawa’s Morley Hoppner Group has just opened sales on Two The Parkway, a controversial, mid-rise project in Kanata’s Beaverbrook area. “We wouldn’t have launched if we were concerned that much,” says the company’s Ken Hoppner. “We have an excellent location. Interest rates are pretty good.” He believes the current slowdown means buyers, having seen a spate of launches this year, are taking a pause to see where the condo market is headed before committing to a purchase.
Greatwise Developments’ Citä Alta Vista near Bank Street has also just launched. “It’s always difficult to time the market,” says project manager Natan Ary. “I believe we’re in a unique area and that makes us different. If we were in Little Italy or downtown, it might be different.”
Brent Strachan of Minto Communities, which just launched its nine-storey Minto Beechwood last week, says the company had a tremendous response on its pre-launch registration list and while the market overall is slow “not all projects are slow. With so many projects around, people are being more selective.”
Patrick Meedes, managing director of PMA’s new housing division, says that many projects introduced over the past few years have still not sold out completely, thereby increasing the competition as new projects are launched. With more product on the market, the big opening-day sales that we saw in years past have also vanished.
Meedes predicts, however, that mid- and high-rise condos will keep or gradually increase their proportion of the new home market. That proportion is around 17 per cent of all new home sales, with low-rise condos, including flats, accounting for 5.5 per cent of new home sales.
While some developers are launching new sites, others are retooling existing ones in the hope of better meeting market demand. Minto did this with UpperWest earlier this year by offering more large units. Now Richcraft, which like other developers has more condos planned for the future, is re-launching the former Edge in Centretown with more small units and rebranding it The Bowery Condominiums and Lofts. The company has sold only four units at Edge this year after launching it in June 2012.
“The market is so hard to predict,” says Richcraft’s marketing manager, Shawn Bellman. “You think you know exactly what people want, but then they come in looking for something different.”
Claridge Condos, the city’s leading condo builder, is retooling its latest project, the 45-storey Icon in Little Italy, to offer more small, less expensive units. The hope is that strategy will spark sales that have pretty much flatlined following a flurry of buys when Icon launched in May.
Shawn Malhotra, Claridge’s vice-president, says the company’s condo sales have slipped 25 per cent since the first quarter of 2013. “There’s been such a streak for five years, there had to be a slowdown,” he says.
Clearly confident in the long term, Claridge continues to work on other projects, including a proposal for three residential towers at the current site of a Metro store at 245 Rideau St. across from the company’s four-tower Claridge Plaza site.
Urbandale president Richard Sachs, meanwhile, says builders don’t get spooked by market fluctuations. As to all the new launches, he says: “Why not? It’s what we do.”
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Interestingly, this article does not mention demographics, retirements and immigration, three factors that CMHC mentions as drivers of the condominium market (and new housing market in general).