Empty home tax to bring $30m in first year

Linda Givetash
Canadian Real Estate Wealth

The city of Vancouver’s new empty homes tax is expected to bring in $30 million in revenue in its first year.

Vancouver Mayor Gregor Robertson said $17 million has already been collected from owners of almost 8,500 properties that were determined to be vacant or under utilized for at least six months of the year.

“For those who didn’t rent their empty property and chose to pay the empty homes tax, I just want to say thank you for contributing to Vancouver’s affordable housing funding and making sure we can invest more in affordable housing,” Robertson said at a news conference Monday. “For those who did rent their empty homes, thank you very much for adding to the rental housing supply here in Vancouver. It’s desperately needed.”

The tax is the first of its kind in Canada, requiring homeowners who do not live in or rent out their properties to pay a one per cent levy based on the assessed value of the home.

Robertson said the tax was intended to address the city’s near-zero vacancy rate.

The most recent figure from the Canadian Mortgage and Housing Corporation puts the city’s rental vacancy rate at 0.8 per cent, up slightly from the previous year, the mayor said.

It’s unclear yet if the tax has increased the availability of rental accommodation, Robertson said, adding that the city is developing better data collection methods to monitor the impact of initiates like the tax more closely.

The city previously said about 60 per cent of properties affected by the tax are condominiums.

The tax on the properties where owners said their home was empty ranged from $1,500 to $250,000, Robertson said, noting the highest tax bill came from a $25-million home.

The funds will support the city’s affordable housing initiatives and residents can provide feedback on exactly where the money should be spent.

Robertson said increasing capacity at homeless shelters or adding to the city’s rent bank, which provides one-time interest-free loans to low-income residents in a financial crisis, are among the possible initiatives that could benefit.

The median tax due is just under $10,000 and Robertson said anyone who doesn’t pay up will face fines and have the bill added to their property taxes next year.

“Those who are not playing ball here and who are skirting the system, we will get you,” the mayor said.

Nearly 99 per cent of homeowners completed an empty homes tax declaration.

The tax cost the city $7.5 million to implement and annual operating costs for the first and subsequent years are pegged at $2.5 million.

Audits are underway and the city said just under 1,000 complaints or disputes have been filed that need to be addressed in the coming months.

Robertson said it will be up to city council to decide whether the tax is having the desired effect, and that will likely take a few years of data to determine.

“I would say at this point it looks like some signs of success,” he said. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

Cities to the east of the Lower Mainland are easing the growing pressure for commercial and residential demand in Metro Vancouver

Western Investor

The latest residential data underlines the strength of the economy of the far east of the Lower Mainland as Abbotsford and Mission report 1,777 new homes under construction in March.

Abbotsford reported record-breaking building permits in 2017, representing a 92 per cent increase over the previous year to a total value of $480 million.

Mission tallied $52 million in 2017 permits, up from $43.5 million a year earlier.

“Abbotsford Mission will post a real GDP gain of 2.5 per cent in 2018, led by strong gains in industrial production, as well as solid domestic demand, as it continues to attract families living in the Vancouver region who are seeking out more affordable housing,” the Conference Board of Canada stated in its recent Metropolitan Outlook 2018 report.

The region’s goods-producing sector will lead the way over the next two years, thanks to growing business opportunities, a lower Canadian dollar and a solid U.S. economy, the report noted.

Manufacturing activity is expected to remain healthy, especially in the key wood products industry.  

“The outlook for the construction sector is also bright, with housing starts and non-residential investment both poised to be strong,” said Alan Arcand, associate director with the centre for municipal studies at the Conference Board of Canada. 

While many think of Abbotsford as an agriculture community,  aviation and aerospace is the No. 1 sector driving the city’s economy. The Industry Training Authority predicts the sector will need 4,000 new staff in the next five years alone. Abbotsford International Airport, the  fourth busiest airport in B.C. and No. 20 in Canada, handles 114,528 aircraft movements per year and more than 677,000 passengers.

Abbotsford is also, of course, the agriculture capital of Canada, with gross farm receipts three times those of Ontario’s Niagara region, which is Canada’s second most productive agricultural area. 

“A growing and diverse community, Abbotsford is affordable, conveniently located with access to vital transportation networks, and boasts a skilled and educated labour force,” said Mayor Henry Braun. 

The availability of relatively affordable land and a welcoming approach to investment have made Abbotsford a darling of the real estate development community.

Last year, Abbotsford was named “Most Business Friendly Municipality” under the NAIOP Awards for Municipal Excellence, The award is given annually by NAIOP, the commercial real estate development association. The award was in recognition of the city’s increase in building permit issuances from 2015 to 2017, as evidence of it attracting businesses, encouraging the growth of existing businesses and promoting industrial development. 

In addition to recognizing the increase in building permits, NAIOP highlighted Abbotsford’s extensive effort to increase the amount of industrial land available by requesting the conversion of 600 acres from the Agricultural Land Reserve (ALR). Abbotsford launched a comprehensive four-stage industrial land supply planning process to identify opportunities for future industrial growth in the city last year.  Currently, the city  is in Stage 3 of the industrial land study. The background research and analysis conducted in stages 1 and 2 looked at the city’s optimal role in serving both the local and regional industrial markets, and the suitability and potential to accommodate future industrial development and to meet the community’s employment needs.

Part of the vision for preparing the community to grow to 200,000 people from the current tally of approximately 141,400 was the recognition that more land would be needed. 

Braun said the municipality decided to limit residential growth and seek extra land for jobs space only.

“[We] are not going to be looking for exclusions in the ALR for residential growth,” the mayor said. “We need to densify, and go up, and that’s welcome news for lots of people.”

Braun said the city is focusing on infill opportunities, not just to limit sprawl but also to limit the expense on civic infrastructure.

Mission  

The district of Mission is also becoming a destination for industrial real estate due to a lack of supply and higher prices in Metro Vancouver. With easy freeway access and just 15 minutes from the U.S. border, Mission is seen as ideal for distribution facilities. 

There are two main industrial parks in the Mission area: Mission Industrial Park that allows light industry, warehouse, office use and even accessory retail; and Silver Creek Industrial Park, which has direct railway and Fraser River frontage. 

The 39-acre Silver Creek Industrial Park has bays for sale or lease ranging from 3,060 square feet to 6,370 square feet.  

Mission Industrial Park has lease opportunities for much larger spaces, from 10,000 square feet to 80,000 square feet, according to a District of Mission report.

Mission industrial space leases for an average of $8 to $9 per square foot. 

Last year, industrial building permits in Mission reached $1.85 million, up about $500,000 from a year earlier. 

Downtown Mission has a mix of historic buildings and modern architecture and amenities to support a city of nearly 40,000. Downtown street-front retail lease rates average $8 to $13 per square foot. 

At Heritage Park Marketplace, close to the University of the Fraser Valley’s Mission campus, lease rates range from  $22 to $26 per square foot, triple net. Rents are even higher at the Junction Shopping Centre, a 250,000-square-foot power centre, where lease rates average $32 per square foot,  triple net. 

Mission’s commercial building permits were $1.9 million in 2017, with 27 permits.

Residential is the dominant construction factor in Mission, though, confirms Stacey Crawford, the district’s economic development officer.

He notes that Mission residential building permits hit $39.1 million last year, up from $31.9 million a year earlier and far outstripping all other sectors. 

In all, about 90 new detached houses have started this year in Abbotsford and Mission and, while less expensive than in Metro Vancouver, they are not cheap.  The average price for a new detached house in Abbotsford-Mission is now $978,530, up from $956,000 a year ago. 

Copyright © 2018 Western Investor

Developers cancel pre-sale agreements

Ephraim Vecina
Mortgage Broker News

Amid reports about the rash of presale condominium cancellations in Toronto, a similar phenomenon has also become apparent in Canada’s other red-hot market.

In Vancouver, two high-profile examples of such projects that were cancelled for various reasons include Vivagrand’s 72-unit Langara West situated at Cambie Street, and the 92-unit Murrayville House in Langley.

Meanwhile, the Westbourne Residences by Jago Development in New Westminster is underway, but only after majority of buyers agreed to pay an additional 15% to their approximately two-year-old pre-sale contracts. Jago said earlier that it was unable to keep up with unexpected costs brought about by extreme weather, soil conditions, and labor shortages.

Despite the disquieting news, however, the number of condo construction projects delayed due to cancellations is not as bad in Vancouver (26 developments) as it is in Toronto (143 developments), the Altus Group said in a recent study. The Toronto projects haven’t started even though over 70% of their units have already been presold.

“The majority of projects that have not started construction launched sales in the last six months and may be awaiting demolition permits or construction contracts,” Altus Group senior director Matthew Boukall told Postmedia. “The Vancouver market is seeing a much, much lower number of projects not commence construction once they have hit over the 70% sales test.”

Boukall added that another factor influencing the Vancouver market is that presale prices in the city – which in the last two years alone have increased between 30% and 60% – have been “elevated” for much longer than they have been in Toronto.

The Altus Group report noted that B.C. developers have encountered dramatic upward spikes of “as much as 20% higher” in construction prices. This is compared to the 6% – 8% increase observed in Toronto, and the 5% – 7% range anticipated for Vancouver this year.

B.C.’s large increases last year were not due to “buying land or getting permits, but the higher cost of labour due to shortages in trades, relative to the amount of work,” according to Ian Butterfield of Butterfield Development Consultants.

Most of Metro Vancouver’s condo projects are by “developers of reputation who have a continuous stream of projects they want to sell,” Butterfield added. “Their deep pockets mean they can absorb the increase, and it’s also likely they bought land a long time ago. Their profits will be reduced, but the project still makes sense.”

Copyright © 2018 Key Media

Despite a ballooning vacancy rate, Calgary’s office market is showing positive signs of recovery

Tanya Commisso
Western Investor

All of Western Canada’s office markets have reported an increase in leasing activity, reflected in decreasing vacancy rates in Vancouver and positive absorption in Alberta markets. However, falling demand in Metro Calgary has led to compressed rental rates.

Vancouver saw increases in inventory but the vacancy rates dropped. Vancouver watched its downtown vacancy rate drop for the eighth straight quarter, from 6 per cent in the third quarter of 2017 to 5.8 per cent in the fourth quarter 2017. New supply from the West Tower at Rogers Arena (70,000 square feet), One Burrard Place (150,000 square feet) and 400 West Georgia (350,000 square feet) is not anticipated to match increased demand.

The downtown Calgary office market experienced another year of increasing vacancy in 2017 but there were some positive signs of recovery. For the first time since 2012, Colliers International recorded two consecutive quarters of positive absorption in the second and third quarters. The final quarter of 2017 brought this cycle to an end with 266,000 square feet of negative absorption. The fourth quarter 2017 vacancy ballooned to 27.4 per cent and posted an average net rent of $14.50 per square foot – less than half of Vancouver’s average rate of $31.89.

Edmonton turned a corner in the final quarter of 2017, recording its first period of positive absorption since early 2015. Tenant growth led to a decreased office vacancy of 17.2 per cent and an average rent of $18.10 per square foot.

Toronto recorded over half a million in positive absorption in the fourth quarter of 20917, led by Class AAA product. High quality product continues to drive up demand and lease rates.

© Copyright 2017 Western Investor

 

High-end West Van realtor worries family lifestyle is now unsustainable, judgment reveals

Bethany Lindsay
other

A real estate agent from West Vancouver has brought housing market uncertainty into his divorce proceedings, arguing a slowdown caused by government policies has made his family’s jet-setting lifestyle unsustainable.

Jason Soprovich’s realty company, of which he is the sole shareholder, has raked in more than $13 million in the last seven years, according to a B.C. Supreme Court judgment posted online last week.

But as he hashes out a divorce agreement with his ex, his legal team is arguing that the future of the real estate market is so hazy, the firm’s past performance isn’t a great indicator of what he can afford to pay in spousal and child support.

Soprovich argued “that it would be devastating to him if his income for support purposes is based on an average of the realty company’s past three years’ net income,” Master Leslie Muir wrote in the judgment.

“He says that the real estate market slowed down from 2016 to 2017 and is likely to slow further down in 2018.”

ason Soprovich Realty Inc. brought in $2.95 million in pre-tax net income in 2016, according to the judgment. Last year, the firm made about a third of that amount, or $1 million.

The causes of that decline, Soprovich told the court, include the foreign buyers’ tax, tightened mortgage rules and rising interest rates. He argued that anticipation of more measures from the NDP government is also affecting the market.

Soprovich was married to Monica Thiessen for 17 years before they separated in the fall, and they lived a luxurious life during those years, according to the judgment.

The couple were members of the ritzy Hollyburn Club and the Capilano Golf and Country Club, and their children have always gone to private school. The family made annual visits to Hawaii, Las Vegas and L.A.

Thiessen worked part time throughout the marriage, arranging open houses and showing homes to buyers while the children were at school, according to the judgment.

‘Reason to be pessimistic’

But the family’s extravagant way of life will have to change, Soprovich argued.

“His view is that the standard of living that the parties have enjoyed in the past was and is unsustainable,” Muir wrote.

The court agreed that the skyward trajectory that has marked the local real estate market for years appears to have ended.

“I accept that the respondent has reason to be pessimistic about the real estate market and hence his income,” Muir said.

But, she added, “It is reasonable to assume that much of the impact of the changes to the real estate market referred to by the respondent has been reflected in the market by now.”

While the couple hammers out a divorce agreement, the court has asked Soprovich to pay $12,318 a month in interim child support and $22,960 in spousal support.

©2018 CBC/Radio-Canada.

Credit unions picking up the bank rejects

Allison McNeely
Canadian Real Estate Wealth

When prospective borrowers sit down in the boardroom to negotiate a loan at one of Canada’s largest alternative lenders, they’re greeted by a sculpture of a gun with its barrel twisted back toward the shooter.

“We tell the borrowers if you are dishonest to us, it’s like pulling a loaded gun on yourself,” says Eli Dadouch, 52, founder and chief executive officer of Toronto-based Firm Capital. The company lends to home buyers, builders, developers, and landlords that bigger banks can’t or won’t touch, charging more than twice as much for the risk.

It’s been a lucrative business. In addition to the gun sculpture, Dadouch’s extensive contemporary art collection at the company’s office in the city’s north end includes pieces by U.S. pop artist Steve Kaufman and photographer Rodney Smith. With new mortgage rules pushing more home buyers to alternative lenders like Firm Capital, business may be about to get even more lucrative.

“We think there will be some opportunities because the credit unions will pick up the vast majority of the bank rejects. It goes down the food chain.” said Dadouch, sitting in Firm Capital’s boardroom, where espresso and cookies are served. “We’ll get their business.”

Business Boost

Alternative lenders are playing a growing role in Canada’s real estate market as the industry searches for new sources of financing, risk-averse banks become more picky, and investors look for yield.

The march to the private market has been driven in part by a desire to reduce taxpayer exposure to housing, which has until recently, been on steroids. Federal and provincial governments have gradually been tightening the screws, reducing amortizations, instituting foreign-buyer taxes and making it tougher to get a mortgage.

The moves have begun to bite. About 49 percent of all outstanding mortgages were uninsured at the end of last year, up from 36 percent five years ago. And the housing market in Toronto, Canada’s biggest city, has abruptly slowed, with average prices plunging 14 percent in March from a year earlier, the biggest drop since 1991.

Sure Bet

That doesn’t worry Dadouch, who thinks any slump is temporary in Toronto due to the simple fact that more people want to own a home than there is land or homes available. He met Firm Capital’s Chief Financial Officer, Jonathan Mair, buying distressed debt from him in the early 1990s, when interest rates rates reached double-digits and several trust companies collapsed in the recession. Even at that time, portfolios of residential mortgages sold to investors at only a slight discount to face value, Dadouch said.

“I think single-family always does really well in this country,” he said. Single-family mortgage lending currently makes up about 15 percent of the company’s business. The company has about C$1.3 billion ($1 billion) in mortgage assets, including C$562 million in its publicly traded mortgage investment corporation at Dec. 31.

MICs will likely grow to about 14 percent of transaction volume in Canada under new the new mortgage rules from about 10 percent now, according to research from Canadian Imperial Bank of Commerce last year.

One Hour

Firm Capital’s specialty is lending for terms up to 24 months, after which the borrower will ideally refinance the loan at one of the country’s big banks, or if things aren’t going well, head to another private mortgage investment corporation. Its public mortgage portfolio has an average interest rate of 8.3 percent, compared with about 3 percent for home loans at the big banks.

“In this liquid market, whenever there’s a problem, somebody refinances us,” he said. “You never want to be the last guy on the stick. Leave enough room to get taken out.”

Dadouch got into real estate as a teenager managing properties for his parents before starting a mortgage business with his father in 1988. He kept growing Firm Capital after his father’s death in 1990, and it currently employs 80 to 90 people, he said.

Unlike the traditional bank lenders, Firm Capital doesn’t focus on a prospective borrower’s credit score when considering a residential mortgage deal, lending primarily on asset value, Dadouch said. They also rely on borrower integrity when dealing with builders and developers, making a decision within an hour about whether or not they’ll be willing to extend credit, he said. They’ll do one deal in 10 that they’re shown, Dadouch said.

“We have no pressure to lend money for the sake of lending money,” he said. “When your commodity is cash, they’ll come to you wherever you are.”

Art Financing

Firm Capital has sold a handful of real estate projects in the last 10 years after borrowers couldn’t pay. He can’t remember the last time they had to sell a single-family home to recoup their investment, he said.

“We honor every commitment we give,” he said. “We will work with a good guy who runs into trouble.”

The company provides first mortgages, secondary debt, mezzanine and equity financing in transactions anywhere from C$1 million to C$50 million for builders and developers, Dadouch said. But they’re willing to go higher — the company provided a first mortgage for C$147 million to finance the construction of Canada’s tallest condo tower, The One, located in Toronto’s upscale Yorkville neighborhood. They also have a small art finance business, a nod to Dadouch’s passion.

Last Resort

“They’re very entrepreneurial, flexible, and creative in the types of deals they do,” Michael McTaggart, a partner in PwC’s corporate advisory and restructuring group, said by phone from Toronto. “When I go up there, I do my homework.”

The company counts former Canadian Finance Minister Joe Oliver and Frank Newbould, a retired judge who oversaw high-profile bankruptcies like Nortel Networks Corp., among its board of directors.

There’s no question Firm Capital would be considered a lender of last resort for a home buyer given the punitive fees that mortgage investment corporations can levy, sometimes around 20 percent all-in, including other professional fees, said Shawn Stillman, a broker at Mortgage Outlet. Nevertheless, he’s seeing greater demand for mortgage investment corporations from his clients that have been shut out of the housing market due to the new regulation, he said.

“Would they be the first lender I would go with? Absolutely not,” Stillman said by phone from Toronto. “But if there wasn’t this demand for the money, they wouldn’t be in business.”

Dadouch doesn’t disagree: “Nobody deals with us, or any other MIC out there, because they like any of us,” he said. “They come to us because there’s a story.” 

Copyright Bloomberg News

Copyright © 2018 Key Media Pty Ltd

Boutique build adds modern touch at Fort Langley?s Lily Terrace

Michael Bernard
The Vancouver Sun

Project: Lily Terrace

Project Location: 23203 Francis Ave., Fort Langley

Project Scope: 24 one- and two-bedroom residences ranging from 1,015 sq. ft. to 1,659 sq. ft. with a mix of heritage elements in historic village of Fort Langley. An easy walk to amenities, including restaurants, cafes, grocery stores and other services.

Prices: From the mid $900,000s

Developer: Lanstone Homes

Architect: Site Lines Architecture

Interior Designer: Sara Brown and Co.

Sales Centre: 9054 Glover Rd., Fort Langley

Centre Hours: By appointment only

Sales phone: 604.371.3899

Website: www.lilyterrace.ca

Occupancy Date: Spring 2019

Designing in today’s world where consumers have long lists of what they want in their modern home is the nature of the job for many architects. Overlay the demand of a municipal council that requires builders to abide by heritage guidelines and that job becomes even more challenging.

Gord Klassen, principal architect of Site Lines Architecture Inc., and his Fort Langley-based team faced that dual task in designing Lily Terrace, a 24-unit condominium complex inside the heritage boundaries of Fort Langley.

“We had a planner consultant that did a 43-page booklet that gave us a rationale for how to design,” said Klassen, describing the process of summarizing the history of the former Hudson’s Bay fur trading post and the colony of British Columbia’s first provisional capital.

“The intent (of council) was to “lock into” the historic period of Fort Langley as opposed to letting it change as time goes on.”

Fortunately, Klassen and his team had a range of design choices, which reflected the various styles of the village community that dates back to 1827.

“The term that comes up is diverse—from whole classic to Gothic revival, Edwardian to Early Modern and Arts and Crafts. We pick bits and pieces of everything, but mainly from Arts and Crafts and so far it has worked.

“We were able to get what the developer wanted and come up with something we are proud of.”

What emerged on paper is a three-storey building with single-level homes on three floors, and a pleasing street façade framed by pitched roofs that start on the second floor.

Developer Lanson Foster says Lily Terrace, whose three-quarter-acre site includes 17,000 sq. ft. of office and retail space, is unique in Fort Langley.

“Our goal was to design for a luxury boutique project with some commercial space. The single family units range from about 1,000 sq. ft. to 1,700 sq. ft, or one-bedroom-and-den to two-bedroom-and-den homes.”

Foster said the project should appeal to both the downsizer market and as well as professional families who are interested in the location as a lifestyle choice. “If you want to buy a condo in Fort Langley, there is no other product like this available.”

Foster, whose track record includes building single-family homes in the area, said the product reflects a higher than typical level of luxury: from wide-plank engineered hardwood flooring and high-end plumbing fixtures to premium appliances and well-appointed kitchen spaces, with fittings such as built-in spice racks and pull-out pantries. The homes also have nine-foot ceilings with top floor homes boasting vaulted ceilings.

Kitchen appliances include a 36-inch french-door refrigerator and a 46-bottle wine fridge, both by Sub Zero; a 36-inch Bertozzoni gas oven, six-burner cooktop and a speed oven, a Fisher & Paykel double dishwasher and a chimney-style fan unit.

In the master ensuite are floor-mounted faucets feeding into a free-standing tub, and a frameless glass shower enclosure with a curbless porcelain tile base with low profile drains. Double vanities feature quartzite countertops, undermount sinks and wall-mounted faucets and ample storage.

Homes are heated and cooled with Mitsubishi forced air ductless mechanical systems.

When she first considered Lily Terrace, project interior designer Sara Brown said, “I want my studio space within this building!”

“Fort Langley has always been one of my favourite communities. I have worked with Lanstone Homes on many single family custom homes within the Fort and also have some friends who live in the neighbourhood.”

She said the interior design needed to be modern enough to appeal to the current design trends, yet heritage enough to not feel out of place within the community.

“I immediately envisioned matte black finishes paired with polished marble and a wide-plank, heavily charactered natural-hardwood floor,” she said. “The modern farmhouse trend is everywhere right now, and I knew it would work beautifully in this building.”

Lily Terrace reflects the fact that finishes have evolved over the last few years from the “greys” of five years ago to light, natural wood tones paired with whites, and saddle brown leather and matte black with brushed gold accents, she said.

“With a blend of texture, warm finishes and the detail of superb craftsmanship, developments like Lily Terrace are able to achieve the look and feel of a custom home.”   

The surrounding environment also reflects what buyers want: doctors’ and dentists’ offices nearby, lots of cafes and restaurants as well as banks and grocery stores, all within easy walking distance, said Foster.

Another desirable amenity is the Fort-to-Fort Trail, a 7.9-kilometre path that takes walkers and cyclists through pastoral farmland between the HBC’s original fur trading fort and the Fort Carin site.

On Lily Terrace’s rooftop are common amenities for the residents, including a 1,100-sq.-ft. seated lounge area with a gas BBQ fire pit, and a play area for children. There are two underground parking spaces for each suite, including some private garage space, liberally sized locker space, electric car stations and surface parking for visitors.

The homes, scheduled for completion in spring 2019, are covered by a two, five and 10 year Travelers Company of Canada warranty.

© 2018 Postmedia Network Inc.

A Fraser Commons Interior designer plays all the traditional shapes and angles to give rooms a refreshed look

Mary Frances Hill
The Province

Fraser Commons

Where: 725 Southeast Marine Drive

What: 363 one-to-three-bedroom homes

Residence sizes and prices: Remaining homes include two – and three-bedroom units ranging from 738 to 1,066 sq. ft; starting at $772,900 for a two-bedroom and $984,900 for a three-bedroom

Developer and builder: Serracan Properties

Sales centre: 725 Southeast Marine Drive

Sales centre hours: noon — 5 p.m., Sat — Thurs, or by appointment

Telephone: 778-737-3178

Fraser Commons is a project from Serracan Properties in Vancouver. (Note that image can’t run prior to project profile on March 24, 2018.) [PNG Merlin Archive] PNG

When interior designer Cristina Oberti took on the design of the display space for Fraser Commons, a condo project slated for Fraser and Southeast Marine Drive, its eventual occupants were uppermost in mind.

“The design and development of this project was first and foremost about the people who will live in it or in its surrounding area, and to me this was an endless source of inspiration during the design process,” says Cristina Oberti, principal of Cristina Oberti Interior Design, which worked with Serracan Properties on the development.

It began with a detail as simple — and as significant — as the hexagonal tiles on the kitchen backsplash.

Oberti’s team was inspired by the exterior diamond pattern that covered the Blue Boy Motor Hotel, built by the Wosk brothers in the 1960s at the Fraser Commons’ site.

“It was a way for us to celebrate the present while remembering the past,” she says.
After the great popularity of subway tiles in kitchen and bathroom spaces, creative designers like Oberti love to present classic items in refreshed designs.
“The backsplash is the focal point of a kitchen, so what you choose to do with this surface can have a big impact on the overall look and feel of the dining and living room areas,” Oberti says. “The hexagonal tile, though traditional in its shape, is very current and speaks to the tastes of today. In its familiarity, the shape feels surprisingly modern and new. We used the shape of the kitchen backsplash tiles as a graphic inspiration for the display suite designs. ”

Where kitchen tiles make an impact with small details on a grand scale, Oberti chose huge tiles for the bathroom to create a spacious, seamless space.
“Large tile formats have a lot of benefits in the bathroom. From a functional perspective, less grout means less maintenance for homeowners and less work for the installers. From an esthetic standpoint, the larger tiles create the illusion of continuity. The tiles make the bathroom feel as though it was carved out of a single slab of stone.”

Oberti created an interesting open-concept space by pairing and contrasting shapes. The pendant light over the dining table reflects the contours in the living room artwork and appears to soften the lines and angles of the furnishings.

“Too many angles can make a space feel stiff, so adding in a few curves is essential to maintaining a welcoming environment,” she says. “Next to raising comfort levels, the combination of hard and soft edges makes those accent angles pop all the more.”

© 2018 Postmedia Network Inc.

Escalating costs imperil development

Natalie Wong
REP

Builders in Toronto’s frenzied condo market are walking away from giant towers they have pre-sold, reflecting a rougher road to profits — and leaving buyers in the lurch.

Soaring construction costs and condo values in Canada’s largest city, where prices have surged amid a booming economy and strong immigration, have spurred developers to cancel projects they started when construction was cheaper and pre-sales were less lucrative. Condo prices have increased about 20 percent since February of last year, according to the Canadian Real Estate Association.

“Many projects launched for pre-sales prior to having their proper approvals in place,” Shaun Hildebrand, a senior vice president at Urbanation Inc., said. “By rushing to bring units into a hot market, some projects jumped the gun and added risk to the development.”

According to Urbanation, which studies the Toronto condo market, there are 10,622 condo units in the greater Toronto area that were offered for pre-sale before 2017 and still await construction. Since the start of last year, 17 projects, with 3,627 units, have been canceled in the region, according to real-estate-services firm Altus Group Ltd. That’s up from seven projects, with 808 units, in 2016.

This month alone, Liberty Development Corp. pulled the plug on a three-tower, sold-out condo development, citing problems with construction financing. Liberty didn’t respond to an email seeking comment.

Bad Timing

The threat of still more cancellations looms over Toronto, where housing is tight, and expensive, as it is. While the average price of a home was down 17 percent in March from a year earlier, according to the Toronto Real Estate Board, the decline comes after a long run-up. To cool the market, the government added rules making it more expensive to borrow — pushing buyers into condos from even pricier single-family homes.

Typically, developers need pre-sales of at least 70 percent to get financing to move a project forward, said Phong Ngo, director of data solutions at Altus. That isn’t their last hurdle. From there, the longer it takes to break ground, the higher the costs of materials and labor, especially as interest rates rise. Builders may face delays in getting government permits, finding contractors and workers amid the hot demand or parrying special-interest groups that oppose construction.

As of February, 143 condo projects that are at least 70 percent pre-sold hadn’t started construction yet, according to data from Altus. Of these, 43 had hit the 70 percent mark more than a year earlier.

Construction costs in the Toronto area, which typically have risen in tandem with inflation, increased 6 to 8 percent last year (compared with inflation of about 2 percent), according to Altus. “We believe that going forward next year, it’ll be at least that or more,” David Schoonjans, senior director at the firm, said. At the same time, labor costs are rising, with hourly compensation up 2.4 percent across Canada in 2017.

“At some point the project stops making financial sense,” Schoonjans said.

It is in that environment that the Toronto region finds itself with 412 condo projects totaling 101,208 units in the works, Altus reports.

The Rebound

In the end, “only a small portion” of condo buildings will be canceled, said Lauren White, senior vice president of the Land Services Group at CBRE Group Inc. “Therefore, the effect will be a minor tightening on supply as purchasers from canceled projects move to active projects.”

Homebuyers who have had their projects scrapped will be back in the market again, increasing demand even further, said Mike Czestochowski, executive vice president of the group.

That’s good for builders but a problem for buyers. Many who get their deposits back from the developer of a nixed project probably will have lost equity, because the market is a lot hotter today, Czestochowski said.

With the intense demand for housing in and around the city, many new projects are bound to rise and canceled ones to be revived — at higher prices.

“We haven’t seen an increase in supply yet,” he said. “It would be hard to imagine what else they do with the site.”

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