Downtown Edmonton development offsets economic slowdown
November 18, 2015
Downtown Edmonton development is expected to propel the residential market for the next couple years. But with at least eight major residential construction projects under way, many of them close to Rogers Place arena, the economic slowdown represents something of a challenge to future developments.
“What’s really going to drive what’s happening out here is what’s taking place downtown. But I think at the same time, it’s going to be very interesting to see what will happen with the product in the city core,” says realtor Mark Slobodan about current activity on projects that will make up to 1,000 condo and rental suites available.
Canadian Mortgage and Housing Corp.’s recent fourth-quarter outlook reflects some of Slobodan’s apprehensions, reporting that housing starts in Alberta will be eight per cent lower than in 2014 and may not see an upswing until 2017.
CMHC attributes the slowdown to the province’s petroleum economy, but Edmonton Downtown Business Association Executive Director Jim Taylor acknowledges that while the slowdown may have impacted the construction of commercial towers, residential complexes haven’t been hit anywhere near as hard.
“Just because the logistics of the economy say we’re not going to get another commercial building for the next six or eight years, there’s no reason why someone shouldn’t build a residential if enough people want to live downtown,” says Taylor. He adds that building permits have been granted for four more downtown tower projects that will include residential, one a hotel adjoining Rogers Place, with several floors dedicated to condos.
Taylor argues that condo construction normally doesn’t begin until a certain percentage of suites are pre-sold. Sales staff at the half-completed, tandem highrise complex The Fox and Fox Two say a majority of suites were purchased before shovels hit the dirt. The 40-storey Encore Tower is a month away from turning sod, but 94 per cent of the 164 suites were reportedly reserved in mid-October when the sales office opened. To date, more than 70 of those units — ranging in price from $459,000 to $2.5 million – have been sold.
Taylor surmises most of the consumers buying suites downtown are young urban professionals and empty nesters, while more affluent buyers opting for the penthouses aren’t concerned about the price tag.
“People who buy at such a high price point are going to buy in a good or bad economy because they’re rich,” he says. “There’s a small market for high-end luxury condos and it’s not affected by the economy."
Still, Slobodan says families or individuals looking for places downtown are finding it more attractive to seek out lower-priced homes in neighbourhoods such as Montrose and Newtown, where a great deal of bungalow development is taking place. In such locales, access to the city core is only an LRT ride away.
“You can spend a half-million to $600,000 for a two-bedroom 1,000-square-foot condo downtown , or you can go into neighbourhoods like Montrose and have a 10-minute commute and also get a 1,000-foot bungalow with your own lot and space for between $200,000 and $300,000.”
As concerned Slobodan may be about supply exceeding demand, the conditions exacerbated by lower oil prices aren’t critical.
“We must also remember that as bad as oil has hit us, there is still a lot of diversity in this city,” he said. “There are a lot of people doing okay.”
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About Gene Kosowan
Gene Kosowan is a freelance journalist based in Edmonton. His work has been featured in such publications as Avenue Edmonton, Alberta Venture and the Edmonton Journal.