confusion
Active Member
U Condos, for reasons unknown to me (other than the location) is actually selling in this market. So no need to speculate on it even though it hasn't broke ground yet.
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Projects cancelled or on hold due to the Credit Crunch
- Thread starter Automation Gallery
- Start date
U Condos, for reasons unknown to me (other than the location) is actually selling in this market. So no need to speculate on it even though it hasn't broke ground yet.
adma
Superstar
Well, duh. Nothing Compares To U
cdr108
Senior Member
I find "U"s advertising so ego stroking, it's a wonder buyers aren't enticed.
"it's all about U ... "
confusion
Active Member
Thanks adma, I never knew you had those types of feelings for me... oh wait, are you talking about the condo?
torplanner
Active Member
I'm somewhat surprised that the Trump is still going up. The word on the street was that they were at least considering capping it when the garage was finished and waiting out the storm.
lordmandeep
Banned
I think though if its already above ground, why not keep going...
torplanner
Active Member
Agreed. I should have qualified that I was speaking 6-8 months ago while they were still below ground. Now it makes perfect sense. Glad we won't have another Stump (sTrump?)
Mike in TO
Senior Member
It would essentially be impossible to bring costs down that low unless selling units under 450 square feet. Some labour and material costs are coming down, but they make up a relatively small portion of total project costs. There really isn't a whole lot of opportunity to lower prices by a significant margin unless building at a loss (which a couple prominant low-rise builders are doing to burn through inventory - this hasn't happened yet on the high-rise side)
casaguy
Senior Member
Recession puts skids on hotel construction
TERRENCE BELFORD
Globe and Mail Update
March 24, 2009 at 6:00 AM EDT
The once stately pace of new hotel construction in Canada has hit a recessionary speed bump.
The challenges of finding financing during a global credit crunch, along with uncertainties about short-term demand from both business and recreational travellers, has meant that almost all new projects in the planning stages, and even those in the early stages of construction, have or will be shelved to wait for better days, experts say.
At the same time, however, those same hurdles may mean a brisk upswing in the sale of existing properties, as private investors take advantage of opportunities for recession-fuelled deals.
“We expect private investors to make up about 75 per cent of the resale market in hotel properties this year,†says Bill Stone, executive managing director at Colliers International Hotels, the hospitality division of Colliers International, a real estate advisory company.
“In down times especially, private investors have the cash, can qualify for financing and can see great opportunities for superior returns.â€
Those internal rates of return on hotels usually run at about 20 per cent, he says. And with lenders raising both minimum standards for financing and interest rates charged, properties looking to refinance debt or in need of cash for repositioning or refurbishing may indeed come on the market this year.
“Over all, we are not worried right now,†says David Larone, director of PKF Consulting Inc., which tracks the hotel industry.
“The situation is not like the meltdown of the early nineties, when we had 30-per-cent oversupply in many urban centres. Projects which are above grade in the construction cycle are likely to go ahead, especially smaller 80- to 120-room business hotels, which have represented the bulk of activity in the past two years,†he says. Canada had 360,000 hotel rooms in properties with 25 rooms or more at the end of 2008.
“We have been adding to the number of rooms at between 1.7 per cent and 2 per cent for the past few years. We think this year that increase will fall marginally to 1.5 per cent,†Mr. Larone adds.
And after that? “We will just have to see what the spring and summer bring,†he says. “Whatever predictions you make now will likely prove wrong. We just don't know what is going to happen.â€
For the past three years, the focus in the hotel industry has been on smaller, business-oriented hotels in suburban and smaller city markets, says Curtis Gallagher, vice-president at CBRE Hotels, a division of CB Richard Ellis Real Estate Ltd. They were targeted at meeting the needs of an expanding economy, were relatively inexpensive to build – $125,000 to $150,000 a room versus triple that cost in urban centres – and could be up and running within a year.
With such a short turnaround cycle from start of construction to completion, developers of those new properties have to take out their pencils to work out cost versus rewards.
Is it better to finish a project that will open its doors while the recession is in full swing, or save money by halting work and waiting for better economic times to complete construction?
At the same time, the ability to find financing for new projects or even complete construction has become moot in smaller centres, Mr. Gallagher says.
“What we are seeing is that any project that is not above grade [ground] level in the construction cycle is being postponed,†Mr. Gallagher says.
In the first quarter of last year, there were 265 projects totalling 30,000 rooms in the planning or construction stage across Canada, according to CBRE Hotels. By comparison, by January of this year, those figures had dropped to 237 projects and 29,000 rooms.
“About 25 per cent of those 237 were under way, 35 per cent were scheduled to start in the next 12 months and about 30 per cent were in the planning stage,†he says. “I would guess that unless they are 60 per cent to 70 per cent complete, projects will be shelved until conditions improve.â€
At the same time, large new luxury hotels already under way will undoubtedly be completed, he adds. In Toronto, mixed-use projects such as the Four Seasons, Ritz-Carlton, Shangri la and Trump Tower will continue apace. The condominium element of those projects has reached the stage in the sale cycle to justify construction financing.
The only major hotel project cancelled to date is Vancouver's Ritz-Carlton. In that city, the new condo market has taken a nosedive in both buyer demand and market prices.
“We feel construction will not start again until the credit crunch and recession ease,†Mr. Gallagher says. “And, right now, nobody knows when that will be.â€
Despite concerns about the effects the current recession will have on business travel – the life blood for many hotels across the country – vacancy rates in January and February are down only marginally from the same months last year, according to PKF Consulting.
“The effects of cutbacks may not have hit yet,†Mr. Larone says. If the recession deepens, the situation may change because travel budgets are often one of the easiest overhead items to slash.
Nor have hotel operators reduced rates.
“Cutting rates in today's market is unlikely to attract more business and, besides, once you cut rates, it is awfully hard to raise them again,†Mr. Larone says.
One bright spot in an uncertain future noted by both Mr. Larone and Mr. Stone is increasing interest by U.S. and European equity funds in financing both new and resale hotels.
“There are equity groups now looking to finance deals,†Mr. Larone says. They are attracted by the fact that, unlike the early nineties, most hotel operations have strong balance sheets and cash on hand – plus the lure of those 20-per-cent returns on investment.
Local credit unions are also playing a role in financing business hotels in smaller cntres, Mr. Stone adds. “They see it as a way of supporting the local economy.â€
TERRENCE BELFORD
Globe and Mail Update
March 24, 2009 at 6:00 AM EDT
The once stately pace of new hotel construction in Canada has hit a recessionary speed bump.
The challenges of finding financing during a global credit crunch, along with uncertainties about short-term demand from both business and recreational travellers, has meant that almost all new projects in the planning stages, and even those in the early stages of construction, have or will be shelved to wait for better days, experts say.
At the same time, however, those same hurdles may mean a brisk upswing in the sale of existing properties, as private investors take advantage of opportunities for recession-fuelled deals.
“We expect private investors to make up about 75 per cent of the resale market in hotel properties this year,†says Bill Stone, executive managing director at Colliers International Hotels, the hospitality division of Colliers International, a real estate advisory company.
“In down times especially, private investors have the cash, can qualify for financing and can see great opportunities for superior returns.â€
Those internal rates of return on hotels usually run at about 20 per cent, he says. And with lenders raising both minimum standards for financing and interest rates charged, properties looking to refinance debt or in need of cash for repositioning or refurbishing may indeed come on the market this year.
“Over all, we are not worried right now,†says David Larone, director of PKF Consulting Inc., which tracks the hotel industry.
“The situation is not like the meltdown of the early nineties, when we had 30-per-cent oversupply in many urban centres. Projects which are above grade in the construction cycle are likely to go ahead, especially smaller 80- to 120-room business hotels, which have represented the bulk of activity in the past two years,†he says. Canada had 360,000 hotel rooms in properties with 25 rooms or more at the end of 2008.
“We have been adding to the number of rooms at between 1.7 per cent and 2 per cent for the past few years. We think this year that increase will fall marginally to 1.5 per cent,†Mr. Larone adds.
And after that? “We will just have to see what the spring and summer bring,†he says. “Whatever predictions you make now will likely prove wrong. We just don't know what is going to happen.â€
For the past three years, the focus in the hotel industry has been on smaller, business-oriented hotels in suburban and smaller city markets, says Curtis Gallagher, vice-president at CBRE Hotels, a division of CB Richard Ellis Real Estate Ltd. They were targeted at meeting the needs of an expanding economy, were relatively inexpensive to build – $125,000 to $150,000 a room versus triple that cost in urban centres – and could be up and running within a year.
With such a short turnaround cycle from start of construction to completion, developers of those new properties have to take out their pencils to work out cost versus rewards.
Is it better to finish a project that will open its doors while the recession is in full swing, or save money by halting work and waiting for better economic times to complete construction?
At the same time, the ability to find financing for new projects or even complete construction has become moot in smaller centres, Mr. Gallagher says.
“What we are seeing is that any project that is not above grade [ground] level in the construction cycle is being postponed,†Mr. Gallagher says.
In the first quarter of last year, there were 265 projects totalling 30,000 rooms in the planning or construction stage across Canada, according to CBRE Hotels. By comparison, by January of this year, those figures had dropped to 237 projects and 29,000 rooms.
“About 25 per cent of those 237 were under way, 35 per cent were scheduled to start in the next 12 months and about 30 per cent were in the planning stage,†he says. “I would guess that unless they are 60 per cent to 70 per cent complete, projects will be shelved until conditions improve.â€
At the same time, large new luxury hotels already under way will undoubtedly be completed, he adds. In Toronto, mixed-use projects such as the Four Seasons, Ritz-Carlton, Shangri la and Trump Tower will continue apace. The condominium element of those projects has reached the stage in the sale cycle to justify construction financing.
The only major hotel project cancelled to date is Vancouver's Ritz-Carlton. In that city, the new condo market has taken a nosedive in both buyer demand and market prices.
“We feel construction will not start again until the credit crunch and recession ease,†Mr. Gallagher says. “And, right now, nobody knows when that will be.â€
Despite concerns about the effects the current recession will have on business travel – the life blood for many hotels across the country – vacancy rates in January and February are down only marginally from the same months last year, according to PKF Consulting.
“The effects of cutbacks may not have hit yet,†Mr. Larone says. If the recession deepens, the situation may change because travel budgets are often one of the easiest overhead items to slash.
Nor have hotel operators reduced rates.
“Cutting rates in today's market is unlikely to attract more business and, besides, once you cut rates, it is awfully hard to raise them again,†Mr. Larone says.
One bright spot in an uncertain future noted by both Mr. Larone and Mr. Stone is increasing interest by U.S. and European equity funds in financing both new and resale hotels.
“There are equity groups now looking to finance deals,†Mr. Larone says. They are attracted by the fact that, unlike the early nineties, most hotel operations have strong balance sheets and cash on hand – plus the lure of those 20-per-cent returns on investment.
Local credit unions are also playing a role in financing business hotels in smaller cntres, Mr. Stone adds. “They see it as a way of supporting the local economy.â€
dt_toronto_geek
Superstar
That's reassuring news for the major hotels being built in Toronto (Trump, Four Seasons, Shangri La). Not reassuring for a project like 1BE.
digitalis
Active Member
"Second Bow tower in Calgary put on hold"
Although I realize that it isn't in Toronto, it seems that the second phase of The Bow in Calgary has been put on hold...
http://www.globeinvestor.com/servlet/story/RTGAM.20090401.wbowtower0401/GIStory/
Although I realize that it isn't in Toronto, it seems that the second phase of The Bow in Calgary has been put on hold...
http://www.globeinvestor.com/servlet/story/RTGAM.20090401.wbowtower0401/GIStory/
Archivist
Senior Member
Without any malice to Calgary, I have to admit that it was a pleasure to see the cover of the Globe's business section today with a huge green "up" arrow over Toronto, and a big red "down" arrow over Calgary, with regard to the recent report on housing starts that shows Ontario doing quite well while many other regions falter. The caption on the photo indicated that eight projects around the Arriva condo it mentions are cancelled in Calgary. I had no idea their falloff was that severe. So far, Toronto residential construction is doing quite well, surprisingly.
One question: does anyone know when a condo project is counted as a new home start? Is it at the beginning of site preparation or excavation or when the concrete pours? Just wondering, as it may help explain March's blip.
Boom to bust to blip
DAVID EBNER AND HEATHER SCOFFIELD
Globe and Mail Update
April 8, 2009
VANCOUVER, OTTAWA — The 42-storey Arriva condo tower just south of downtown Calgary was to be the tallest residential building in Alberta, a much-touted development by Torode Realty Advisors.
Now, the project is in court protection from creditors, with only about half the units sold and 20 per cent of the tower built.
Arriva was a product of Canada's extended 2002-2008 home building boom, powered by Alberta and British Columbia, and now stands as a symbol of the crash that continues to ravage the real estate market in the West.
Nationally, new housing starts were up in March, a surprise to economists. But the increase that snapped six consecutive months of declines does not indicate a new trend, economists say, and was widely considered a blip. The supply of homes far outweighs demand for houses and condos, meaning a recovery in the home building market will be slow and extended.
The gain in new home starts in March was driven by condos in Ontario and Quebec, but the West continued to slide.
March saw only 744 urban housing starts in British Columbia – one-third of the 2,371 starts in March, 2008.
In the Prairie provinces, where Alberta led development, there were 967 starts in March, about one-fifth of the 4,768 a year earlier.
Stark signs litter Calgary, particularly in the Beltline community where Arriva is among eight condo projects now halted. The situation is similar in Vancouver, where big-name projects such as the Ritz-Carlton condo hotel are shelved, and desperate developers such as Amacon now offer huge discounts to attract buyers. At the yet-to-be-built Beasley, a 34-storey downtown condo, Amacon has slashed prices more than 30 per cent: one-bedroom units are now $250,000, down from $440,000; and two bedrooms are $497,000, cut from $755,000.
Canada Mortgage and Housing Corp. yesterday said new home starts in Canada, on an annualized basis, were at 154,700 in March – up from 136,100 in February, but far below the 200,000-plus level that was standard during this decade's long boom. (Economists surveyed by Bloomberg LP had expected a seventh-consecutive monthly decline to 130,000.) “The simple fact is there were more homes built than needed in the last seven years,†said economist Douglas Porter of BMO Nesbitt Burns Inc. “And there really hasn't been any let up in the decline in the West.â€
CMHC said the construction of new homes “is now at a more sustainable level,†describing the pace of building in the boom as “exceptionally strong.â€
But several economists described the increase in new-home starts as a negative for the home building market. “This is a step backwards in the push to work off increasingly bloated Canadian housing inventories,†economists at Scotia Capital Inc. said in a report. Economists at Toronto-Dominion Bank said the housing market will slide for several years as weak demand slowly eats away at ample supply.
Beyond factors such as interest rates and the general strength of the economy, housing starts are closely correlated to the available supply of completed but unoccupied homes. There was a glut in the early 1990s, but supply was tight by early this decade, which is when the building boom exploded.
The expectation among many economists of extended hard times for home builders contrasts with some optimism elsewhere. In its budget Tuesday, the Alberta government forecast 22,000 housing starts in the province in 2009, double the current annualized rate.
But economist Dan Sumner of ATB Financial said housing starts were one of the first signs that the Alberta economy was headed for a slowdown, and began sliding in the summer of 2007. The trend won't change soon, he said.
“There is still an excess supply inventory that needs to be weaned in most Alberta markets,†Mr. Sumner said in a report yesterday.
One question: does anyone know when a condo project is counted as a new home start? Is it at the beginning of site preparation or excavation or when the concrete pours? Just wondering, as it may help explain March's blip.
Boom to bust to blip
DAVID EBNER AND HEATHER SCOFFIELD
Globe and Mail Update
April 8, 2009
VANCOUVER, OTTAWA — The 42-storey Arriva condo tower just south of downtown Calgary was to be the tallest residential building in Alberta, a much-touted development by Torode Realty Advisors.
Now, the project is in court protection from creditors, with only about half the units sold and 20 per cent of the tower built.
Arriva was a product of Canada's extended 2002-2008 home building boom, powered by Alberta and British Columbia, and now stands as a symbol of the crash that continues to ravage the real estate market in the West.
Nationally, new housing starts were up in March, a surprise to economists. But the increase that snapped six consecutive months of declines does not indicate a new trend, economists say, and was widely considered a blip. The supply of homes far outweighs demand for houses and condos, meaning a recovery in the home building market will be slow and extended.
The gain in new home starts in March was driven by condos in Ontario and Quebec, but the West continued to slide.
March saw only 744 urban housing starts in British Columbia – one-third of the 2,371 starts in March, 2008.
In the Prairie provinces, where Alberta led development, there were 967 starts in March, about one-fifth of the 4,768 a year earlier.
Stark signs litter Calgary, particularly in the Beltline community where Arriva is among eight condo projects now halted. The situation is similar in Vancouver, where big-name projects such as the Ritz-Carlton condo hotel are shelved, and desperate developers such as Amacon now offer huge discounts to attract buyers. At the yet-to-be-built Beasley, a 34-storey downtown condo, Amacon has slashed prices more than 30 per cent: one-bedroom units are now $250,000, down from $440,000; and two bedrooms are $497,000, cut from $755,000.
Canada Mortgage and Housing Corp. yesterday said new home starts in Canada, on an annualized basis, were at 154,700 in March – up from 136,100 in February, but far below the 200,000-plus level that was standard during this decade's long boom. (Economists surveyed by Bloomberg LP had expected a seventh-consecutive monthly decline to 130,000.) “The simple fact is there were more homes built than needed in the last seven years,†said economist Douglas Porter of BMO Nesbitt Burns Inc. “And there really hasn't been any let up in the decline in the West.â€
CMHC said the construction of new homes “is now at a more sustainable level,†describing the pace of building in the boom as “exceptionally strong.â€
But several economists described the increase in new-home starts as a negative for the home building market. “This is a step backwards in the push to work off increasingly bloated Canadian housing inventories,†economists at Scotia Capital Inc. said in a report. Economists at Toronto-Dominion Bank said the housing market will slide for several years as weak demand slowly eats away at ample supply.
Beyond factors such as interest rates and the general strength of the economy, housing starts are closely correlated to the available supply of completed but unoccupied homes. There was a glut in the early 1990s, but supply was tight by early this decade, which is when the building boom exploded.
The expectation among many economists of extended hard times for home builders contrasts with some optimism elsewhere. In its budget Tuesday, the Alberta government forecast 22,000 housing starts in the province in 2009, double the current annualized rate.
But economist Dan Sumner of ATB Financial said housing starts were one of the first signs that the Alberta economy was headed for a slowdown, and began sliding in the summer of 2007. The trend won't change soon, he said.
“There is still an excess supply inventory that needs to be weaned in most Alberta markets,†Mr. Sumner said in a report yesterday.
maestro
Senior Member
I thought it's building permits issued.
Riverdale Rink Rat
Senior Member
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The Beltline whacking
On a recent ski trip to my ex-hometown, my brother drove me through 'Condo Gulch'. Since he's a 40-ish Calgary homeboy in Real Estate, he knows all the players. It really comes down to hubris -- the younger generation of a number of the Calgary RE monied class all thought they were going to show up gramps or dad by making a serious killing on one building... and $40 oil is a different world from $140!
This won't hurt Calgary RE all that much, though. Most of these projects were spec. anyway. Not a huge loss (except to the developers, of course.)
On a recent ski trip to my ex-hometown, my brother drove me through 'Condo Gulch'. Since he's a 40-ish Calgary homeboy in Real Estate, he knows all the players. It really comes down to hubris -- the younger generation of a number of the Calgary RE monied class all thought they were going to show up gramps or dad by making a serious killing on one building... and $40 oil is a different world from $140!
This won't hurt Calgary RE all that much, though. Most of these projects were spec. anyway. Not a huge loss (except to the developers, of course.)
simuls
Senior Member
I believe a project is labelled a "start" when the first concrete is poured, not excavation.