Calgary: Downtown condo boom includes rental market
It is reminiscent of the condo boom of a few years ago but today’s real estate construction frenzy has one major difference.
Nearly half of all proposed or under construction developments in the downtown area are for rental use.
Figures supplied to the Herald from the Altus Group Limited indicate there are 2,184 proposed condo units, 2,038 in the pre-construction stage and 1,762 under construction for a total of 5,984 in the combined area of Eau Claire, West End, East Village, Downtown and the Beltline.
Proposed developments include those publicly announced but not having submitted an application for development approval. Pre-construction consists of projects with development approval submissions.
And under construction refers to projects with a building permit in place and site excavation started.
For rental units, there are 2,116 in the proposed stage, 2,638 in the pre-construction stage, and 828 under construction for a total of 5,582 units.
The Altus report also said there are 575 units under pre-construction and 306 under construction that have yet to be determined as to their use.
Ian Meredith, consultant with residential advisory services with the Altus Group, said that with a total of 12,447 units, and assuming an average of two people per unit, it would be equivalent of the population of Okotoks in an area basically between the Bow River and 17th Avenue.
“It’s a significant number no doubt,” said Meredith. “Basically what it’s telling us is that Calgary is a strong growth market nationally and an excellent place to invest and there’s a mix of condominium developers looking to capitalize on the current market and rental developers looking to capitalize on the long-term growth position of the market.
“The rental segment has been a growing segment . . . (Construction) is comparative to the peak of the last development cycle around late 2006, 2007. The difference though is that this time around we’re seeing half of those 12,500 units made up of rentals. We saw no rentals during the last cycle.”
He said a large portion of the net migration numbers to Calgary are made up of professionals, earning high incomes, moving to the inner-city. Another factor is that the decision to purchase a home is being delayed along with family formation. And people born after 1981 appear to be less accepting of a suburban lifestyle than the generations that preceeded them.
Lai Sing Louie, regional economist for the Prairies and Territories region with Canada Mortgage and Housing Corp., said net migration to the Calgary census metropolitan area in 2013 was a record 45,168.
“Net migration is a key driver of housing demand. Rental market conditions usually tighten when migration is on the rise,” he said. “Due to the large influx of people over the past two years, Calgary has been experiencing low vacancy rates and rising rents.
“Most people have a plan or very good idea of where they will live when they get to Calgary. A key segment of the housing market is the rental market. Most people rent before purchasing a home. Over time, migrants tend to have a similar homeownership profile as those born here. When Calgary experiences high levels of migration, this tends to impact the rental market immediately and supports housing demand in the resale and new home market. When looking to buy, condominium apartments tend to have a price advantage over single-detached homes. For some, it is also about location and lifestyle. Combined, these factors make condominium ownership an attractive choice.”
According to the CMHC, net migration in the Calgary region was 31,996 in 2012. Previous to the past two years, the biggest net migration figure was in 2006 at 25,120 people.
BY MARIO TONEGUZZI, CALGARY HERALD