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Old Posted Nov 11, 2012, 1:53 AM
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SteelTown SteelTown is offline
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Condo Boom

The condominium conundrum

http://www.thespec.com/article/83398...m-conundrum%23

There's a breath of fresh air blowing through the lower city, as a series of large investments lift up tired apartment buildings and give rise to the first set of multi-residential buildings in decades in Hamilton.

Jeff Paikin, president of New Horizon Homes, is spearheading two key developments in Hamilton's downtown area — the ambitious three-tower project on the site of the former Thistle Club called City Square, and a smaller 33-unit building at the corner of Dundurn and Aberdeen.

His are among four key new construction projects under way. There are another eight large-scale projects worth $450,000 or more which involve either major renovations or entire rebuilds, such as the Stinson Lofts project.

Until a couple of years ago, New Horizons' sights were set mostly on single-family dwelling subdivision developments in Hamilton and the surrounding regions.

But Paikin said market conditions began to change in the last couple of years, changes which make for a more compelling case for entering the condo market.

“There were a couple of reasons why we shifted our way forward,” he said. “We thought there was a demand for a more urban style of home. There was also less land on the periphery of the city. You had to be a much bigger player to acquire large pieces of land.”

The pace of condo development in Hamilton is part of a larger trend sweeping the country according to a recent census-based report by the Canada Mortgage and Housing Corporation (CMHC) .

The report released in September noted that condominiums represented 10.8 per cent of the home ownership market in 2006, compared to just 3.3 per cent in 1981. In Hamilton's CMA (census metropolitan area including Burlington and Grimsby), the number of people who lived in condos nearly doubled by 2006.

The CMHC report looked at the steep rise in condo development in Canada between 1996 and 2006.

Locally, the trend started in Hamilton with the sales of the luxury condos in the renovated Pigott Building and former SunLife offices in 1996.

CMHC noted that the popularity of condos had little to do with the aging of the population. Condo ownership rates rose in every age group. It found that childless couples were much more likely to be interested in living in a condo.

Another key change in the market was the strengthening in housing prices.

For example, condos at the new phase of the City Square project start at $190,000. According to Realtors Association of Hamilton Burlington in October, the average residential price rose 11.9 per cent to $367,790 in October in Hamilton's CMA.

At the same time, CMHC has also suggested those rising house prices will continue to encourage the construction of new condo-style apartments.

This is a recent change.

In July, the Municipal Property Assessment Corporation found Hamilton home prices rose 10 per cent over the past four years. The increase lagged behind the provincial average which had increased by 17 per cent.

It was just enough to push multi-residential development, said Paikin.

“It's the same cost to build condos in Toronto as in Hamilton — those are fixed — but the prices have to be there to justify it,” he said. “Right now it's a sensitive balance.”

Derek Doyle, a real estate agent who sells a lot of condos, agrees. He said more recently, the FilmWorks Lofts in the former Hamilton Spectator building on King William acted as a restart button on downtown condo development.

“The big thing with the city of Hamilton is its focus to redevelop the downtown. I'm a member of YEP (Young Entrepreneurs and Professionals) of the chamber — our focus is the downtown. How do you make the downtown better? You have all these beautiful houses downtown but they're full. You need to build and you have to go up.”

Doyle said that when Don Campbell, president of the influential Real Estate Investment Network, declared Hamilton as the best place with the best investment, investors listened.

“He said that two years in a row,” said Doyle. “There are a lot of investors buying up properties. Hamilton is very attractive in terms of affordability and the quality of life is very good.”

Doyle said there is an increased demand from young professionals like himself for urban-style condos downtown and from ex-Torontonians. He just bought two lofts at the Witton Lofts project on Murray Street — one for himself and one for rent.

Just this month Dave Blanchard of Wilson and Blanchard announced plans for a large-scale retail/condo rebuild in the heart of the city.

Gerald Asa, vice-president at Effort Trust, said while the housing market has supported the construction of condos to be put up for sale in Hamilton, construction in building rental units has lagged and he said it's not likely to rebound as swiftly.

“It's a tough, tough market,” he said. “It's very difficult because rents are extremely low.”

In addition, the supply of reasonably priced apartments for rent is strong, removing any incentive to build.

“We have projects that are under way in places where it makes sense to do rental construction ... in Oakville for example,” he said. “Hamilton is really a unique animal. It's really the lack of wealth spread throughout the city that's the problem. It makes it difficult to build apartments.”

Alf Hendry, CEO of Homestead Holdings which owns 17 properties in Hamilton, said the supply is also varied, making it more challenging to find a place in the market to build.

Yet two local developers believe they've spotted a place for construction in the multi-residential rental market.

Harry Stinson is embarking on building a multi-residential building downtown — the Hamilton Grand — although it is scaled back considerably from original plans to a six-storey building intended as a rental property. He'll be aiming it at grad students, health care or other travelling professionals.

And Ward 1 Councillor Brian McHattie said there are plans for some rental units. Developer Denis Vranich had a recent meeting with the city's development issues committee about the building he owns at 220 Dundurn Street South.

McHattie said Vranich intends to turn it into luxury rental apartments aimed at professionals working at the McMaster Innovation Park or the CANMET facility nearby on Longwood Road.

However, the number of rental projects is limited. In McHattie's ward, there is definitely a trend toward condo, rather than apartment rental, projects.

A recent public meeting about a new multi-residential project at Locke near Canada Street was held to gauge neighbourhood sentiment.

He said there are other possible projects: a multi-storey condo development near the Aberdeen Gardens seniors' complex and a second phase of the Allenby School condo redevelopment.

There are also plans for a condo project just off of James Street South, called Acclamation Lofts.

Despite the recent burst in activity, Paikin said a condo boom is not certain in Hamilton.

He appeared before city council in the summer to ask for an extension of the downtown boundaries to enable him to receive a 50 per cent reduction on development charges on the second condo tower at the site of the former Thistle Club. He sees such incentives as crucial to making the projects make financial sense in the downtown core.

Council referred the issue back to staff to consider the matter.

Paikin said Hamilton's condo market, despite its many successes and potential, is still uncertain, and easily influenced by the swings in the economy and the market for single-family dwellings.

“I would call it baby steps. There's no miracle,” he said. “It's still price sensitive. We better treat it with the fragility that it has.”

lmarr@thespec.com

905-526-3992

Upcoming projects

Key condominium/apartment developments ($450,000 plus) according to documents filed with the city's planning department:

ADDRESS:90 Charlton Ave. W. – City Square ( http://www.newhorizonhomes.ca/). Second tower with 99 units in the redevelopment of the former Thistle Club property with two-thirds of the units sold. First phase, a 76-unit tower at the corner of Robinson and Park streets is complete and 90 per cent sold. A third tower is also planned on the property.

DEVELOPER: Dundurn Capital Partners (Robert Manherz, president) with project management by partner New Horizon.

VALUE: $12 million (building permit, overall it is a multimillion-dollar project)

STATUS: Jeff Paikin, president of New Horizon, appeared before council in the summer asking for a 50 per cent break on development charges. The development is currently just out of the boundaries for a special grant programs . City staff has been asked to review the issue. An answer is expected soon. Construction is continuing.

ADDRESS: 427 Aberdeen – Urban West ( http://www.newhorizonhomes.ca/)

DEVELOPER: New Horizon

STATUS: Construction is nearly complete with tenants expected to be able to move in this fall. There are 33 units in the building.

ADDRESS: 7 Griffin Street, Waterdown Courtyard ( www.waterdowncourtyard.com)

DEVELOPER: Bruno Comegna

VALUE: $1.1 million (building permit)

WHAT'S HAPPENING: A live/work condo concept in a seven-unit lowrise that promises to echo the heritage design of Waterdown's downtown core.

ADDRESS:467 Charlton Ave. East

DEVELOPER: Ron Van Kleef, president of Hamilton Cab

VALUE: $20 million

WHAT'S HAPPENING: A project which aims to build 153 units in three, six-storey buildings. Van Kleef is currently submitting plans and studies to the city for review.

Major renovation/alteration

ADDRESS: 50 Murray St. West – Witton Lofts ( http://wittonlofts.com/)

DEVELOPER: Core Urban Inc.

VALUE: $6.6 million (building permit figure, estimated total cost $10 million)

WHAT'S HAPPENING: The old McIlwraith School is being converted into Witton Lofts, a 36-unit project.

ADDRESS: 200 Stinson Street – Stinson School Lofts ( www.stinsonschool.com)

DEVELOPER: Harry Stinson

VALUE: $7.6 million (building permit figures, estimated total cost $15 million)

WHAT'S HAPPENING: A renovation of a historic school near the downtown core. The building is expected to have 75 units ready by next spring.
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Old Posted Nov 11, 2012, 4:14 PM
thistleclub thistleclub is offline
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From CMHC six months ago:

"An increase in the number of single-detached home starts in Hamilton and a new condominium apartment building in Burlington boosted total starts in the Hamilton Census Metropolitan Area (CMA) to more than double the number a year ago, according to preliminary data released today by Canada Mortgage and Housing Corporation (CMHC)."

And last month:

Based on recent trends, the house price differential between Toronto and Hamilton remains significant enough to encourage more people to move from the GTA into the Hamilton CMA. Consequently, the Hamilton CMA has seen net migration doubled from recession levels....

• Existing home sales to decline in late 2012 and into 2013 as modest job growth and mortgage changes dampen homeownership demand.

• Existing home average prices in both Hamilton and Brantford will become passive in 2013 as each resale market entrenches deeper into balanced territory.

• In 2013, residential construction activities will return to historical levels and in line with household formation.


Over-all CMA stats are still lagging behind the six-month moving average.
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Old Posted Nov 11, 2012, 5:35 PM
drpgq drpgq is offline
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I think there's a bit of a market for luxury (or least higher quality) rental apartments down by Mac. Most of the Hamilton rental stock is quite tired (for example Camelot Towers).
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Old Posted Nov 12, 2012, 3:29 PM
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We're seriously lacking in luxury apartments. There building tons in Aldershot near Hidden Valley Park, probably over 5 buildings built within a decade.
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Old Posted Nov 13, 2012, 1:39 PM
thistleclub thistleclub is offline
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Quote:
Originally Posted by SteelTown View Post
We're seriously lacking in luxury apartments. There building tons in Aldershot near Hidden Valley Park, probably over 5 buildings built within a decade.
And all on brownfield sites.
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