Developers are shifting gears
Shopping for a condo in Ottawa used to be like visiting the buffet table, there was a long line of people waiting to choose from an impressive array of choices. With condo sales softening, however, many developers now see their future in a different market.
Between 2004–2014, condominium apartments captured an average of 85 per cent of total apartment construction, according to the Canada Housing and Mortgage Corporation (CMHC). By 2015, CMHC reported the condo share dropped to 54 per cent of total apartments started. Things aren’t going to get much better anytime soon thanks to the abundance of condo inventory still in stock.
The latest CMHC figures available from March 2016 and indicate there were 600 units for sale in Ottawa, that’s about 6 units per 10,000 people. While the unit number is down slightly from earlier reports, that is the highest ratio on record. This trend is expected to continue through 2017, says CMHC.
The softening condo market has made developers shift gears and look for new opportunities within other markets, namely an underserved rental market. While condo sales are flat, both home prices and rental rates are rising. Another favourable factor about the rental market is that a good portion of the competition, the existing rental units in Ottawa, are decades old.
Here are just a few examples of how developers and builders are going after this market with either new developments or by re-purposing current stock:
- Ashcroft Homes has built Capital Hall Condominiums on Champagne Avenue. These are condos aimed at investors but they are designed as rentals for students, with room for up to 1,000 tenants.
- The University of Ottawa has leased the former Quality Hotel located at Rideau Street and King Edward Avenue—it now houses up to 800 students at what is now called “Rideau Residence.”
- Toronto-based developer Campus Suites and Chicago-based CA Ventures redeveloped 1Eleven, a condo building just a 10-minute walk from the University of Ottawa.
- Colonnade BridgePort has proposed a 22-storey, mixed-used tower at 1960 Scott Street that the company says will have 120 rental apartments.
- In January of this year, the Zlepnig family turned their Southway Inn property into the Waterford Retirement Residence at a cost of $6 million.
- Not that long ago, the Embassy Hotel in Ottawa offered rental suites under the new name Embassy West Senior Living. Now, they want to build an additional two towers for more rental suites.
These examples demonstrate the trend that builders are changing their focus. What does this mean for our city? It means is that we have a healthy, flexible development sector that can adapt to change and market conditions, offer lots of options and contribute to a strong local economy.
And that’s good for all of us.