Canada: Crazy for Condos?
Part I in a series about the multi-family residential housing market
By Judy Penz Sheluk
Canada’s Smallest Condo
Real estate prices in the Lower Mainland are among the richest in North America. In cities like New York, Tokyo and Paris they found a solution: Build smaller but build closer to amenities.
Interesting, but could it sell in Whalley, B.C., an old area within Surrey, tarnished with a less-than-ideal reputation?
Charan Sethi began to research, but not in the traditional way. “I began walking around the area we planned to build in, and what I discovered was a multi-generational neighbourhood; that showed me it was a stable community. Furthermore, the Gateway Skytrain Station on 108th Avenue was only a seven-minute walk away.”
Next, Sethi approached his daughter, a recent university graduate, who told him that “Young people...don’t like what you like. We like a balanced life; we like to work, play and have a decent place to stay.”
Armed with one young person’s opinion, Sethi asked a new employee, a recent MBA graduate, to call up all his friends and associates. “I didn’t want to hire a marketing company. I wanted my research to be at the grass roots level. He told me, ‘All we need is a studio; 300 to 500 sq.ft. is more than enough.’ I stared doing plans around that.”
To succeed, Sethi knew the price point had to match his target demographic, those earning $11 to $22 an hour, and then worked backwards. The result is their latest project, Balance, a four-storey building with 56 micro suites.
“We had already built more than 420 homes in Surrey City Centre’s Gateway District, so we were known, and familiar to the process, but even so, it wasn’t easy to convince the city with this sort of out-of-the-box thinking. Parking was a real sticking point; we eventually settled on .75 spaces per unit.”
Parking stalls will be sold separately at a cost yet to be finalized. As for the actual units, 60 per cent of the Balance suites are 305 square feet or smaller. All micro suites will contain five stainless steel appliances, hardwood floors and a balcony. The largest suite in the complex is a one-bedroom at 653 square feet. Pricing will start at $109,900 and go up to $160-170,000.
“I won’t have control over our purchasers, but I hope 100 per cent of the units are sold to homeowners, rather than investors,” said Sethi. “I really want Balance to be a viable part of a community undergoing revitalization.”
It’s been a few years since building “green” became an integral part of the residential housing market, but building green condominiums, now that was another story. After all, building green is more expensive to build, and the necessary upcharge isn’t always easy to sell. Today’s condo buyers might understand, maybe even embrace, the concept of a smaller carbon footprint, but not at the expense of granite countertops, stainless steel appliances, and building amenities.
“The Molinaro Group has always been recognized as a quality builder, and a few years ago we decided a green sustainable approach was simply the right thing to do,” said Vince Molinaro. “There are also a number of tangible benefits. For the buyer, there are lower condo fees due to reduced heating and cooling costs. From a builder’s perspective, it’s a great thing to market; green continues to make headline news. Finally, there is a financial benefit for us: Section 37 of the Ontario Planning Act permits municipalities to authorize increases in permitted height and/or density through the zoning bylaw in return for community benefits, of which green is one.”
The Molinaro Group are currently finishing work on Strata, their sixth condominium building in Burlington, Ont., a small city centrally located within an area defined as the Golden Horseshoe.
Strata, the first Molinaro condominium to be certified as LEED Silver, is a 21-storey building featuring 186 units ranging in size from 604 sq.ft. for a one-bedroom, one-bathroom suite, up to 1,982 sq.ft. for a two-bedroom, two-and-a-half bathroom penthouse. All units include in-suite laundry. Initial occupancy started April 1, 2012.
Building to LEED Silver certification isn’t inexpensive. With Strata, Molinaro decided to target geo-thermal as a key feature, and they found a way to mitigate the cost. “By incorporating geo-thermal into the design, and signing a 30-year energy supply agreement with Ameresco on behalf of the condo corporation, we have projected savings of more than $30 million over the 30-year period. That’s based on an estimated $44.3 million in energy costs over the same period for a conventional building. And those heating and cooling savings will be directly reflected in the homeowners’ condo fees.”
The Molinaro Group’s next big project will be a five-acre site in Burlington, with five 20-storey buildings, 1,000 units in total. While all will be registered as condominiums, some buildings will, at least initially, be marketed as rental units, while others will be sold as homeowner condos. All will be built with the goal of achieving of LEED Silver or higher.
“We knew there would be a learning curve with the first building,” said Molinaro. “Our expectation is that with our second and third building, costs will come down. We’ve made the commitment to build green. Strata is just the beginning.”