Posted Dec 11, 2018, 5:58 PM
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Developers eager to get on board new transit lines
(The Globe & Mail, David Israelson, Dec 11 2018)
“If you build it, they will come.” Those may be inspirational words, but for commercial developers in Canada who hope to build near transit lines, they can be frustrating.
Build what? When? Where? Across Canada, developers are confronted with a dilemma – it can be lucrative and good city planning to construct commercial projects that have access to new transit, but transit takes years of planning and many cities have trouble making decisions about where to run their lines.
“Clearly there is a desire to acquire development opportunities near mass transit growth – the city will promote higher densities, and both residential and commercial rents are going to be higher, resulting in shorter lease-up and higher final values. You want to own real estate where the people mass,” says David Lehberg, founder and chief executive officer of Knightstone Capital Management Inc., a Toronto-based property developer.
Even when projects are under way, they’re not necessarily a certainty. Many Ontarians recall when then-premier Mike Harris cancelled an Eglinton Avenue West subway line in Toronto that was already under construction in 1995, filling in a tunnel; a light rapid transit (LRT) line along the same road is now being built, at considerably greater cost.
“For a major [commercial] project, land development is a 10-year undertaking from acquiring the land to opening the finished product,” says Andrew McAllan, head of real estate management at Oxford Properties Group, one of Canada’s biggest commercial developers.
The issue for Oxford and other developers is that assembling land around transit corridors depends on local and regional governments determining where they want the transit to be built.
Mr. McAllan is a strong advocate of green and sustainable building practices, which include putting up projects near transit, but the uncertainty over transit decisions makes even the strongest advocates skittish, he says.
“Having certainty is critical, and in the absence, you see hesitation not just on the part of the developer, but also the lender. These are multimillion-dollar projects that rely on financing, and if you don’t have certainty, people are hesitant to commit,” he explains.
Read it in full here.
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