Winnipeg Construction

[1ajs]

BUSINESS
Winnipeg Free Press - PRINT EDITION
Developers eye city grants
Residential units waiting for renewal of $20-M program
By: Murray McNeill
Posted: 02/14/2011 1:00 AM

They've had their noses pressed to the window for weeks, waiting to see if the city and the province extend their wildly popular downtown residential grants program.
Now it looks as if local developers who missed out on the first batch of grants will soon find out if they'll get a second kick at the can.

more here : http://www.winnipegfreepress.com/business/developers-eye-city-grants-116145689.html

[cheswick]

Rent controls absolved in city's vacancy squeeze
By: Larry Kusch

Rent controls should not be blamed for Manitoba's minuscule vacancy rate or the dilapidated condition of some apartment buildings, according to a report to be released today.

The 39-page study, authored by University of Winnipeg economics professor Hugh Grant, also concludes "there is no evidence" that caps on rent have slowed the pace of new apartment construction or spurred a recent spike in condo conversions.

[email protected]

http://www.winnipegfreepress.com/local/r...-in-citys-vacancy-squeeze-116215324.html

edit: please read this on third party articals http://forum.skyscraperpage.com/announcement.php?f=129&a=313

[1ajs]

Winnipeg Free Press - ONLINE EDITION
GE, StandardAero building new $50-M facility
By: Martin Cash
Posted: 02/15/2011 9:44 AM

GE Canada and StandardAero are building a $50-million engine testing plant in Winnipeg bolstering the province's leading role in aircraft engine maintenance, repair and overhaul.
StandardAero will operate the new plant to be built on land leased from the Winnipeg Airport Authority alongside about 700,000 square feet of production space the company currently occupies.
The centre is expected to initially employ 10 with the potential to grow to 50 employees within five years. The design and construction of the facility at the airport could employ up to 200 workers.
StandardAero already employs about 1,350 people in Winnipeg.

read more here: http://www.winnipegfreepress.com/local/b...uilding-new-50-M-facility-116229779.html

[Bdog]

Originally Posted by 1ajs

Winnipeg Free Press - ONLINE EDITION
GE, StandardAero building new $50-M facility
By: Martin Cash
Posted: 02/15/2011 9:44 AM

GE Canada and StandardAero are building a $50-million engine testing plant in Winnipeg bolstering the province's leading role in aircraft engine maintenance, repair and overhaul.
StandardAero will operate the new plant to be built on land leased from the Winnipeg Airport Authority alongside about 700,000 square feet of production space the company currently occupies.
The centre is expected to initially employ 10 with the potential to grow to 50 employees within five years. The design and construction of the facility at the airport could employ up to 200 workers.
StandardAero already employs about 1,350 people in Winnipeg.

read more here: http://www.winnipegfreepress.com/local/b...uilding-new-50-M-facility-116229779.html

Great news. Hopefully we continue to invest in and attract more R & D to promote our aerospace cluster, whether it's composites at Smart Park, testing facilities like this, or other high tech manufacturing...

[Mininari]

Originally Posted by cheswick

Rent controls absolved in city's vacancy squeeze
By: Larry Kusch

Rent controls should not be blamed for Manitoba's minuscule vacancy rate or the dilapidated condition of some apartment buildings, according to a report to be released today.

The 39-page study, authored by University of Winnipeg economics professor Hugh Grant, also concludes "there is no evidence" that caps on rent have slowed the pace of new apartment construction or spurred a recent spike in condo conversions.

[email protected]

http://www.winnipegfreepress.com/local/r...-in-citys-vacancy-squeeze-116215324.html

edit: please read this on third party articals http://forum.skyscraperpage.com/announcement.php?f=129&a=313

Wow, really? I find this extremely hard to believe. Vacancies are low, maintained buidlings are virtually non-existant, and new rental construction is rare because why then...? Oh thats right, rental-landlords are willing to spend all their profits on maintaining their properties, and rental-developers are willing to develop at a LOSS... isn't the average cost to build new construction somewhere around $200/sq/ft these days???

I know I'm attacking a study with little more than disbelief, but this one seems like it missed the entire picture.

[h0twired]

Anyone who believes that rent controls aren't the problem are just drinking WAY too much NDP kool-aid.

If rent controls were a non-issue you would see developers building apartment blocks as fast as they could to take advantage of the current low vacancy rates and high rental demand.

However it is impossible to compete in Manitoba if the average rent doesn't cover the costs of construction/renovation and maintenance of a new or refurbished building.

[Bdog]

Originally Posted by Mininari

Wow, really? I find this extremely hard to believe. Vacancies are low, maintained buidlings are virtually non-existant, and new rental construction is rare because why then...? Oh thats right, rental-landlords are willing to spend all their profits on maintaining their properties, and rental-developers are willing to develop at a LOSS... isn't the average cost to build new construction somewhere around $200/sq/ft these days???

I know I'm attacking a study with little more than disbelief, but this one seems like it missed the entire picture.

While I generally agree that rent control legislation in Manitoba need to be changed, I see both sides to this story. Rent controls may play a major role in our low vacancy rates, but rentals aren't being built much in any market (even in one's without strict rent controls). The problem is that they aren't as profitable, and take much longer to recoup your investment.

But I do agree that rent controls are especially going to discourage development in areas with relatively newer rental stock (ie 60s-early 80s built) in decent areas - While rent controls may hold a 2 bedroom unit in that area 900/mo or so, a brand new building would have to charge maybe 1200/mo, making the new product uncompetitive.

However, there are developers in Winnipeg building new rentals in the suburbs, so it is profitable. A great example is Broadstreet properties - their units are mostly all rentals, and rent out quite well: http://www.broadstreet.ca/index.php?page=2&area=winnipeg

If we're really serious about building new rentals, we've got to return to the system we had in the 60s and 70s (when all those slab towers were built all over the country). Essentially, developers could write off their interest payments on rentals, and non-profits doing rentals would get funding to cover their shortfalls. That obviously has to come from the federal government. Rental shortages are a national issue, although in Winnipeg, vacancies are exceptionally low...

[CoR East]

Originally Posted by Bdog

Rent controls may play a major role in our low vacancy rates, but rentals aren't being built much in any market (even in one's without strict rent controls). The problem is that they aren't as profitable, and take much longer to recoup your investment.

I am not a real-estate historian, but I would guess that the decline in rentals probably corresponds quite well with the rise in condominium development. I don't think there really was such a thing as a condominium in the 60s, or even the 70s, this is a form of ownership that became popular in the 80s, and I suspect lead to a dramatic reduction in the number of rental units being built, as it allows the developers to get and get out in a much shorter time frame. It would be interesting to see stats on the numbers of multi-unit buildings built over the last 30 years to see whether overall number of apartments being built has dropped, or just the number of rentals being built.

[Winnipegger]

Originally Posted by Mininari

Wow, really? I find this extremely hard to believe. Vacancies are low, maintained buidlings are virtually non-existant, and new rental construction is rare because why then...? Oh thats right, rental-landlords are willing to spend all their profits on maintaining their properties, and rental-developers are willing to develop at a LOSS... isn't the average cost to build new construction somewhere around $200/sq/ft these days???

I know I'm attacking a study with little more than disbelief, but this one seems like it missed the entire picture.

I wouldn't take the report too light-heartedly. No doubt I am sure you are very knowledgeable about the economics of rent controls, but I assure you that a professor with a Ph.D in economics and many years of experience in the field would be anything less than credible. I know many of you would just love to find studies that coincide with your confirmation bias, but perhaps the rent control is not the only constraint that is causing this city to have ultra-low vacancy rates along with building rates that are lower than they should be at said vacancy rates.

I would suggest that the high costs of construction and maintenance along with the risk involved in the current financial markets are key proponents in our rental stalemate. However, I'm not an expert unlike many of you on this forum so those are just my guesses. Banks and corporations have a lot of money sitting around, but are too scared to invest it in anything, including capital and property because the future seems very uncertain right now.

So don't go bashing a knowledgeable professor's research just because you don't believe it and right-wing economics have bashed it into your head that government regulation is wrong and harms the market. You have the freedom to believe whatever you want, but that doesn't mean you are right. Now go ahead and produce a 38 page, well researched and peer-reviewed paper yourself displaying why rental regulations are keeping construction and maintenance low in Winnipeg. Until then, continue to agree with views that only present themselves in your own favour if you wish to do so, living life only perceiving issues one way.

Oh, and if anyone can actually find the research itself, that would be great. The free press article doesn't state much.

[Riverman]

Originally Posted by Winnipegger

I would suggest that the high costs of construction and maintenance along with the risk involved in the current financial markets are key proponents in our rental stalemate. However, I'm not an expert unlike many of you on this forum so those are just my guesses. Banks and corporations have a lot of money sitting around, but are too scared to invest it in anything, including capital and property because the future seems very uncertain right now.

If this is the case, why wasn't there a ton of apartment construction in the prosperous 10 years before the economic downfall? Answer - rent controls!

Your mouth is surely permanently stained orange from all the NDP kool-aid.

[trueviking]

rent control has nothing to do with the lack of rental units being built....a new apartment building is exempt from rent control for its first 20 years.

the decline in rentals and increase in condominium development has coincided directly with the rise in construction costs....the pay back simply isn't there anymore for rentals..the financing costs kill the economic model...a condo has immediate payback so the builder doesn't have to carry long term financing which can more than double the cost of a new building.

when construction was $100/s.f. rental income could pay the financing....now that construction is $250/s.f., when the long term interest costs are added, it simply doesnt....this is why most rentals today are conversions....you avoid the high capital cost...the only way to make it work.



you build a $1m building with 4 rentals...your total costs with a mortgage is closer to $2m.....they pay $1000/mo. which means you collect $48,000 per year...that is a 42 year pay back without counting for property taxes, maintenance etc.

you build a $1m condo with 4 units and sell each one for $300k.....you earn $200k, have no maintenance costs and you dont pay any taxes.

which would you build?

[Andy6]

Originally Posted by trueviking

rent control has nothing to do with the lack of rental units being built....a new apartment building is exempt from rent control for its first 20 years.

Possibly, but even the threat of more stringent rent control can be enough, which you've got whenever the NDP is in or close to power. It still creates a lack of certainty. In general, a large part of it is probably just not wanting to be involved in an area that is so ripe for political interference in the market (whether rent control or tenant-friendly landlord-tenant and human rights legislation), especially when there's an alternative in which the market is allowed to work (condos, as you point out). It's true that there is a greater immediate payback for a condo, but there are lots of investors looking for a long-term steady income stream that you'd get through investing in apartments via a REIT. So there is a market there, although maybe less so for small projects that wouldn't be of much interest to big developers (which I think might be another issue for Winnipeg, which is necessarily skewed toward smaller projects).

[trueviking]

also...in the past nobody in winnipeg would buy a condo.....the word didn't even appear in winnipeg until 10 years ago when housing prices finally started to rise....now that it is an option, developers prefer the in/out investment gain instead of 30 years of maintenance, taxes and building management.

[Only The Lonely..]

There's lot of vacancy in the rental market, it's just at the higher end.

The days of $500 a month for rent with utilities and parking included are long long gone..

[camzmac]

This is probably small beans, but Prairie Theatre Exchange is getting a renovation. There isn't any information on their website about it. I found out about it from a program (click to see).

[h0twired]

Originally Posted by trueviking

rent control has nothing to do with the lack of rental units being built....a new apartment building is exempt from rent control for its first 20 years.

the decline in rentals and increase in condominium development has coincided directly with the rise in construction costs....the pay back simply isn't there anymore for rentals..the financing costs kill the economic model...a condo has immediate payback so the builder doesn't have to carry long term financing which can more than double the cost of a new building.

when construction was $100/s.f. rental income could pay the financing....now that construction is $250/s.f., when the long term interest costs are added, it simply doesnt....this is why most rentals today are conversions....you avoid the high capital cost...the only way to make it work.



you build a $1m building with 4 rentals...your total costs with a mortgage is closer to $2m.....they pay $1000/mo. which means you collect $48,000 per year...that is a 42 year pay back without counting for property taxes, maintenance etc.

you build a $1m condo with 4 units and sell each one for $300k.....you earn $200k, have no maintenance costs and you dont pay any taxes.

which would you build?

Right.

However, while construction costs have gone up, average rents have not followed due to an artificially restrained market due to rent controls.

Everyone and their dog knows that new buildings are exempt from rent controls, but when you build a new building how can you possibly compete with the existing buildings that are rent controlled and $200-400/month cheaper than what you need to charge to break even.

Removing rent controls would quickly bump up the average to market rates and give new construction a better market in which to compete.

[Mininari]

Well, I guess the question there would be that if one were to build brand new rental units in an area surrounded by old -- BUT in a favourable location (Assiniboine Ave, near the UoW, etc), would enough people be willing to pay a premium for a clean, new, bedbug-free, building? I'm guessing that some would, but not enough to warrant the risk to the developer? I'm pretty sure the students would go for the cheapest option!

[rypinion]

Has anyone seen the "preliminary plans" for Sunstone's Hotel/Restaurant on Waterfront? All the Free Press seems to say is:

City officials said preliminary plans show Sunstone wants to build a three-storey hotel with about 60 rooms and redevelop the Harbourmaster building into a restaurant."

http://www.winnipegfreepress.com/local/hotel-planned-for-waterfront-drive-116296489.html

[cheswick]

Originally Posted by Only The Lonely..

There's lot of vacancy in the rental market, it's just at the higher end.

The days of $500 a month for rent with utilities and parking included are long long gone..

My friend lives in South Broadway area. Pays $568 a month with electic, water, cable, and free use of laundry machines included. (Parking would be extra). Pretty affordable.

[trueviking]

is it me or is the steel at the CMHR a bit more redwood bridgy than anticipated....it doesnt look very cloud-like at this point.