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Downtown Real Estate

policyenthusiast said:
A few updates. A rent-to-own company from Ontario is coming to Edmonton, with plans to buy a large amount of our affordable homes and then sell them at a premium through a rent-to-own model. Appreciation of 5% annually is added regardless of market shifts.

A private equity fund (I think it's called Twenty8 capital) is buying up majority interests in Edmonton condo corporations which are struggling to maintain fiscal health. They can use the majority interest to force the remaining owners to sell, even at a loss. They can also dissolve the condo corporation (after liquidating the held capital) and turn it into rentals. This is mostly happening with low-rises and in Downtown, from capital being redirected out of Toronto and Vancouver, and into Edmonton and Winnipeg.

Downtown's overall market is still in a decline (or more optimistically, stable), as of Q3.
View attachment 703187

Mark my words, in 3 years we will lament the loss of the current prices you see in Edmonton's market. Many more Edmonton residents will be tenants of Ontario landlords, and it will be much harder to own a home in the City as a young professional. I am concerned, and I don't expect any legislation will come forward to stop the change on the horizon.
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Not a finance guy at all, but could it be possible they're leveraging private capital to buy out enough units to take control of a building, convert to rentals, then refinance it via favorable (high LTV, long amortization) CMHC lending to take out equity while generating steady cash flow? These older buildings might not score well on energy efficiency BUT would likely score major points in affordability, given their generally far below average market rents.
 
northlands said:
Not a finance guy at all, but could it be possible they're leveraging private capital to buy out enough units to take control of a building, convert to rentals, then refinance it via favorable (high LTV, long amortization) CMHC lending to take out equity while generating steady cash flow? These older buildings might not score well on energy efficiency BUT would likely score major points in affordability, given their generally far below average market rents.
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That is exactly what they are doing. It’s actually a great business plan when CMHC insurance is involved. 28 capital bought my condo unit last year. I was the 3rd last to sell so I got a little higher than most of my neighbors.

There are at least 4 groups in Edmonton that I know of that are actively doing this. From what I think I know, 28 capital is the largest with the most units.
 
FrankRizza said:
That is exactly what they are doing. It’s actually a great business plan when CMHC insurance is involved. 28 capital bought my condo unit last year. I was the 3rd last to sell so I got a little higher than most of my neighbors.

There are at least 4 groups in Edmonton that I know of that are actively doing this. From what I think I know, 28 capital is the largest with the most units.
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Anyone know where there is more information available about this? It seems like very few people know it's happening, but it's kneecapping Edmonton's affordable housing stock.
 
policyenthusiast said:
Anyone know where there is more information available about this? It seems like very few people know it's happening, but it's kneecapping Edmonton's affordable housing stock.
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There were some reddit threads on people mentioning condos being bought out over the last few months, but this forum is the first place where I got anything close to a "story" regarding any of this. I wouldn't have known until you brought it up.

I'm sure we have some CBC or CTV staffers who lurk here who might want to give this a look lol
 
Hm, a small 4-storey building across the alley from us (bottom of the stairs on 104 St, down the hill from Hillside) has recently been completely revamped. New windows, painted walls, total demolition inside from what we could see of the dumpster. I was sure that had been a condo and now there's nobody in it. I wonder if it's a similar situation.
 
IanO said:
'Calgary's grant program that offered developers $75 per square foot has been successful. With nearly 20 projects approved, the city is set to remove over 2.5 million square feet of office space from the market, creating more than 2,500 new homes.'

ATB real estate report
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Considering that Edmonton had no such incentive, I am very happy with the results we're getting
 
ChazYEG said:
Considering that Edmonton had no such incentive, I am very happy with the results we're getting
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I'd rather spend grant money first on new construction and buildings first and office conversions last tbh. I get that there's a property tax uplift for lower office vacancy rates, but the amount of money Calgary is throwing at conversions for the units they're getting seem underwhelming. I get it's a different problem and we have a glut of parking and empty lots that makes it easier for us to focus on new builds, but cost-benefit for tax dollars seems better for new builds?

So far for office conversions, we're getting:
  • Phipps Mckinnon Conversion. (100 units)
  • Financial Building Conversion (33 units)
  • McKenney Building Conversion (33 units)
  • CN Tower Conversion (344 units)
  • The Standard on Jasper Conversion (???)
  • WSP Place Conversion (???)
and possibly
  • Highfield Place Conversion
 
IanO said:
'Calgary's grant program that offered developers $75 per square foot has been successful. With nearly 20 projects approved, the city is set to remove over 2.5 million square feet of office space from the market, creating more than 2,500 new homes.'

ATB real estate report
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Isn't that just how YYC divy's up their HAF bucks? Let them turn derelict towers from the 60's and 70's into apartment buildings that no one will live in. We get brand new buildings with our HAF bucks while they give their ego's a boost and "dumby down their office vacancy rates" to make their DT numbers look better. Now with Cenovus buying MEG - watch out MEG workers in their MEG building - gone. Conoco will be down to a few warm bodies. CNRL is abandoning their "flagship" buildings in Banker's Hall #2 and Dome and Home towers and moving into an old Shell building built in the 70's - all the while giving up half of their pre-existing office space. I'm telling you, if YYC did NOT convert these buildings - ouch!
 
I don't think we should take any pleasure in Calgary's challenges for the delta between the two cities is now a grand canyon and they are not looking back.
 
IanO said:
I don't think we should take any pleasure in Calgary's challenges for the delta between the two cities is now a grand canyon and they are not looking back.
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:rolleyes:I certainly don't take pleasure, but I also don't hand-wring about being left behind. Edmonton should be Edmonton and worry less about being compared to Calgary.
 
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