Downtown Real Estate

[TAS]

^Yes, kinda. It's coming up in report but admin doesn't support it. There's various ways to achieve the subsidy everyone has their own opinion how to do it or not do it. If we don't figure out something, some kind of leadership or plan of action the latest housing boom will be lost to Downtown.

Is the previously successful 5 year property tax freeze that materialized into various new projects like The Parks, Mercury, Falcon etc not on the table for consideration again? I think I'd prefer that rather than a cash handout.

Plus, the federal government's no gst on new apartment builds is still applicable as well.

 

[Greenspace]

Yes, there are a variety of tools including property tax freeze is also being explored.

From what I understand the no GST thing is certainly helpful and appreciated but not the determining factor in most large projects about whether they can go ahead or not. Rental projects might have 30-40 year cost implications and paybacks.

 

[bodsbods9090]

^Yes, kinda. It's coming up in report but admin doesn't support it. There's various ways to achieve the subsidy everyone has their own opinion how to do it or not do it. If we don't figure out something, some kind of leadership or plan of action the latest housing boom will be lost to Downtown.

That's very discouraging to hear.

Are there some in the admin group who believe it didn't work well like when Iveson and Co. implemented it?

 

[IanO]

The reality is that Edmonton is seeing unprecedented growth and yet almost nothing in Downtown proper.

This is unlike other high growth periods such as 70-80, 03-08 and 12-17, where we saw significant growth in the core.

Ottawa, Calgary, Halifax, Surrey, Mississauga, London and even Winnipeg are seeing strong growth in their cores at the moment; mostly driven by multi-fam residential.

Unfortunately, the condo market is basically non-existent and the cost to construct versus rents folks can achieve leave Edmonton in quite the predicament exacerbating sprawl and continuing to expose Edmonton to risk for taking on the O&M for all of the new infrastructure to service these areas.

 

[northlands]

the cost to construct versus rents folks can achieve leave Edmonton in quite the predicament

Not to sound like a doomer, but the disconnect between construction costs and what the market/individual will afford for rents is another grueling symptom of how wage stagnation is crushing this nation. It shouldn't require folks paying disproportionate amounts of their income to cover shelter costs, like in Calgary/Ottawa/Halifax (nevermind in the GTA or Van), just to be able to build.

 

[edm13]

Not to sound like a doomer, but the disconnect between construction costs and what the market/individual will afford for rents is another grueling symptom of how wage stagnation is crushing this nation. It shouldn't require folks paying disproportionate amounts of their income to cover shelter costs, like in Calgary/Ottawa/Halifax (nevermind in the GTA or Van), just to be able to build.

Important point here. Real GDP per capita has not moved in ~10 years. In recent years, real GDP per capita in the US has left Canada in the dust. And places like Australia, where GDP per capita was below Canada a decade ago, has now surpassed Canada.

 

[CaptainBL]

The reality is that Edmonton is seeing unprecedented growth and yet almost nothing in Downtown proper.

This is unlike other high growth periods such as 70-80, 03-08 and 12-17, where we saw significant growth in the core.

Ottawa, Calgary, Halifax, Surrey, Mississauga, London and even Winnipeg are seeing strong growth in their cores at the moment; mostly driven by multi-fam residential.

Unfortunately, the condo market is basically non-existent and the cost to construct versus rents folks can achieve leave Edmonton in quite the predicament exacerbating sprawl and continuing to expose Edmonton to risk for taking on the O&M for all of the new infrastructure to service these areas.

The part that worries me is that if we are in this period of high population growth, and a strong Edmonton economy (one of, if not the strongest in the country forecasted over this and the next couple years) and we still cannot see a bump in more towers bringing more population downtown thus eliminating many empty lots, then I dont know when or what it will take for us to see that bump. There are some fine economic fundamentals in place from an economic and population growth standpoint but construction and financing costs are disproportionally higher than what rental rates and sales prices are needed to make a building attractive, and that worries me about our downtown development.

 

[WestEndWebber]

CoE Executive Committee is discussing this topic as we speak: Residential Incentive Program Options

 

[David A]

The main problem isn't price, it is desirability so a subsidy to address price isn't really the best solution.

 

[occidentalcapital]

The part that worries me is that if we are in this period of high population growth, and a strong Edmonton economy (one of, if not the strongest in the country forecasted over this and the next couple years) and we still cannot see a bump in more towers bringing more population downtown thus eliminating many empty lots, then I dont know when or what it will take for us to see that bump. There are some fine economic fundamentals in place from an economic and population growth standpoint but construction and financing costs are disproportionally higher than what rental rates and sales prices are needed to make a building attractive, and that worries me about our downtown development.

Edmonton is still relatively empty and DT is built like the DT of a city with 3 million people. It's simple, we just need more people here. In both region and city. This will drive growth. I think Edmonton could pretty easily accommodate an annual 5% growth rate just by the way the city is built, compared to other places that struggle above 2%. It's not a bad thing, it's a good thing and a serious opportunity for the city in a high immigration environment.

 

[BrettB]

The main problem isn't price, it is desirability so a subsidy to address price isn't really the best solution.

Fair point, but I'm not 100% sure this is backed up by the data.

In 1997, the city launched the Capital City Downtown Plan, offering $4.5M in subsidies for the 1,000 units built downtown.

The downtown neighbourhood profile shows that after years of stagnation, the population downtown went from 5,135 in 1996 to 11,555 in 2016. It stagnated again 2016-2021.

So as much as I hate subsidies, there might be a valid argument to encourage investment.

 

[IanO]

There had been hope to have 20,000 by 2020 (ambitious but was not out of the realm), but now it looks as though that might not be hit for 10 or 15 years which is absolutely insane to think about.

Perception, safety, employment growth, lifestyle and the like are key, but it looks like subsidies will be needed.

That said, given the cost to construct and the ability for developers to sell or rent at rates they need, those may not even be enough to move more than 1-2 projects forward each 3 year development cycle.

Simply put, that needs to double or triple to see real progress and be on par with comparable cities.

 

[Greenspace]

There's lots I can and will say about this at some time but the reality is we're on track to build the most units in Edmonton region's history and have had no new permits Downtown in 2 years. If we are collectively concerned about sprawl and tax efficiency and climate goals, we can not continue as we are. The delta to build Downtown is too great right now, we are competing internationally for financing and the City can play a roll on where things should be built and how we get there.

Capturing just 2% Downtown (BIA boundaries) of 20,000 units built this year in the region is 400 units or two 200 unit towers starting construction EVERY year.

 

[Kosy123]

I'm listening so far to the committee proceedings and I'm glad that HAF money was brought up as a possible funding source, and the discussion that it's a downtown vs suburbs focus thing.

Sohi mentioning that funding for downtown will come at the cost of suburban amenities was poignant and important. We're going to have to choose (probably with an implementation of the substantial completion standard as well).

 

[IanO]

A city's reputation is not created by how amenity rich a burb is, but certainly is determined by the vibrancy, safety and overall Downtown experiences that residents, investors, visitors and workers have.

Downtown has received a lot of funding, but rightly so given its tax-base contributions and importance to the ENTIRE city.

It's incredibly short-sighted to let Downtown languish, stagnate and become stale; the vast majority of reports and experts basically agree that investments and subsidies to accelerate Downtown residential infill pays off in spades in the long-term, encourages additional privately led growth, uplifts assessments and makes best use of city infrastructure.

Win-Win-WIn.