[David A]

I still don’t quite get the difference between the math for us and Calgary. They’re about $200 more per month for a 1bdrm. But have a dozen highrises being built. Is that really the difference maker? Lots of other cities have higher rents than us, but don’t see the highrises because of their population and workforce.

I think some of it is cultural. Hype, ambition, booster-ism. And some key players like Truman. Calgary just goes for it more than we do.

You have way more high paid professionals working downtown in Calgary; the city has spent decades attracting more corporate offices, while Edmonton hasn't and our downtown in particular has added few jobs over that time.

 

[thommyjo]

You have way more high paid professionals working downtown in Calgary; the city has spent decades attracting more corporate offices, while Edmonton hasn't and our downtown in particular has added few jobs over that time.

That’s what I’m saying I guess. Is this REALLY about the math when Calgary is only bringing in 15% more rent? Or is this more about the jobs, culture, city ambition, sense of momentum because others are building too, etc.

 

[ChazYEG]

That’s what I’m saying I guess. Is this REALLY about the math when Calgary is only bringing in 15% more rent? Or is this more about the jobs, culture, city ambition, sense of momentum because others are building too, etc.

I would also wager that there's a difference regarding the risk perception for developers and property managers. If they have a reasonably high expectation that they'll be able to sell/lease these high rises quickly and start making money sooner rather than later, even at a reduced margin, they're more likely to build. The conditions for their downtown (and adjacent areas) give a much needed assurance that they won't have an expensive asset that you can't recoup your investment and is bleeding money in maintenance and advertising costs. And at the numbers we're talking, the 15-20% difference in rent also amounts to a substantial sum (a $200 difference per unit, on a 200 unit building, over a year is almost $500k. A larger building, or lease rate delta, could see that go up to $1M/year).
Their condo market is also much healthier, which has a lot to do with what has already been said: the city has invested for decades in attracting head offices and high paying jobs to their downtown, making it much more attractive to living (how much more attractive is debatable) than Edmonton's, which makes it easier for condo developments to pencil out. Same condo that sells for $400k in Edmonton is selling for $600-650k in Calgary. That makes a LOT of difference.

 

[TAS]

That’s what I’m saying I guess. Is this REALLY about the math when Calgary is only bringing in 15% more rent? Or is this more about the jobs, culture, city ambition, sense of momentum because others are building too, etc.

Plus, haven't some our recently built towers sold, including those in Ice District? Not sure if developers are getting a return from these sales or not, though.
But the fact properties are being sold with possibly a return (maybe?) boosts confidence in building towers in Edmonton.

 

[David A]

It is not that we can't also attract more jobs particularly to downtown if we want to make more of an effort, it is that Edmonton just really hasn't.

I suppose it has been easier just to focus on big projects in the industrial areas, some of which are not even in the city and so don't provide as much economic benefit to the core.

After the arena was built, attention to the downtown seemed to drop to the bottom of the list of priorities for a while, although COVID and its impact seemed to bring back attention, but mainly in a very reactive way.

 

[Mesopotamia]

My understanding is one level of underground parking, plus part of the main floor. Both this project and Westrich's on 106 Street incorporate red brick, so it should be reasonably attractive.

6 stories, 226 units is the kind of density you see in central London. You don't need towers everywhere.

Yeah but London is unaffordable

 

[thommyjo]

I would also wager that there's a difference regarding the risk perception for developers and property managers. If they have a reasonably high expectation that they'll be able to sell/lease these high rises quickly and start making money sooner rather than later, even at a reduced margin, they're more likely to build. The conditions for their downtown (and adjacent areas) give a much needed assurance that they won't have an expensive asset that you can't recoup your investment and is bleeding money in maintenance and advertising costs. And at the numbers we're talking, the 15-20% difference in rent also amounts to a substantial sum (a $200 difference per unit, on a 200 unit building, over a year is almost $500k. A larger building, or lease rate delta, could see that go up to $1M/year).
Their condo market is also much healthier, which has a lot to do with what has already been said: the city has invested for decades in attracting head offices and high paying jobs to their downtown, making it much more attractive to living (how much more attractive is debatable) than Edmonton's, which makes it easier for condo developments to pencil out. Same condo that sells for $400k in Edmonton is selling for $600-650k in Calgary. That makes a LOT of difference.

Agreed. But the new projects in Calgary certainly aren’t “barely breaking even” in their quality and amenities. So if a very nice highrise is possible there, surely a slightly less nice, but still highrise project is possible here.

I’m not expecting more JWs and Encores all the time. But we can’t get more falcons?

 

[inclusion]

Agreed. But the new projects in Calgary certainly aren’t “barely breaking even” in their quality and amenities. So if a very nice highrise is possible there, surely a slightly less nice, but still highrise project is possible here.

I’m not expecting more JWs and Encores all the time. But we can’t get more falcons?

Last I checked, construction costs were pretty similar between here and Calgary, but they get higher per unit than we do. That makes it tough. Wood will forever be at a significant discount to concrete, not to mention the added costs of parking, etc for a high rise. However, land costs are also lower here than in Calgary, so that plays a factor as well; higher land costs generally lead to more upward development. The combination of factors is stacked against us to a certain extent.

There are still high rise developments planned here: Switch P2, Falcon 2, Parks 2, and HAT Old Strathcona x2 (higher land costs). I think there is a bit of bias towards high-rises being tough here from the likes of Westrich, Autograph, and Regency, but part of that is spin and pressuring the city to provide incentives. We also don't know how all these individual companies market their developments to investors - time until ROI, for example. Like anything, it really depends on who you listen to, but remember that each company spokesperson is going to say something based on how their company is approaching the market - that doesn't necessarily mean they are speaking for the whole market.

 

[David A]

Yeah but London is unaffordable

but so are cities with lots of towers, like Toronto, Vancouver, New York and Hong Kong

 

[David A]

Last I checked, construction costs were pretty similar between here and Calgary, but they get higher per unit than we do. That makes it tough. Wood will forever be at a significant discount to concrete, not to mention the added costs of parking, etc for a high rise. However, land costs are also lower here than in Calgary, so that plays a factor as well; higher land costs generally lead to more upward development. The combination of factors is stacked against us to a certain extent.

There are still high rise developments planned here: Switch P2, Falcon 2, Parks 2, and HAT Old Strathcona x2 (higher land costs). I think there is a bit of bias towards high-rises being tough here from the likes of Westrich, Autograph, and Regency, but part of that is spin and pressuring the city to provide incentives. We also don't know how all these individual companies market their developments to investors - time until ROI, for example. Like anything, it really depends on who you listen to, but remember that each company spokesperson is going to say something based on how their company is approaching the market - that doesn't necessarily mean they are speaking for the whole market.

I don't really know what the market is like in Calgary, but things generally seems to be slowing in most cities in Canada. So if they are still building a lot in Calgary, they could end up with a lot of unsold units.

There are still some larger projects planned here, but not as many. Maybe builders are being a bit more cautious in Edmonton now for some reason, but perhaps that could turn out to be a good thing.

 

[constance_chlore]

Yeah but London is unaffordable

I think North Americans don't realize how anomalously expensive London is. Think Los Angeles rent with Tennessee incomes. They really could use more towers, plus more mid-rises in the the rather NIMBY-ish outer boroughs.

(This is not a comment on the attitude Edmonton should have. Towers are great! So are six-story mid-rises, as long as they're well-built and attractive. If this is a concrete build with a nice exterior, I'll be happy.)

 

[Kosy123]

I think North Americans don't realize how anomalously expensive London is. Think Los Angeles rent with Tennessee incomes. They really could use more towers, plus more mid-rises in the the rather NIMBY-ish outer boroughs.

(This is not a comment on the attitude Edmonton should have. Towers are great! So are six-story mid-rises, as long as they're well-built and attractive. If this is a concrete build with a nice exterior, I'll be happy.)

I remember seeing someone on TikTok mention moving from London to Vancouver, and her mentioning how Vancouver was much more affordable despite living on a server/hospitality salary. Absolutely nuts to think about.

 

[constance_chlore]

I remember seeing someone on TikTok mention moving from London to Vancouver, and her mentioning how Vancouver was much more affordable despite living on a server/hospitality salary. Absolutely nuts to think about.

It is nuts! And yet lots of people feel compelled to live there because it's where a disproportionate number of the good jobs in the UK are.

 

[Garceyues]

Interest rates stuck, migration slowing, immigration down, oil prices not so good, political uncertainty internationally, the Canadian economy weak ... this is clearly not the time for many nice big projects.

All of the same applies to Calgary yet they continue to have large new projects beginning in recent months. Even if one wants to argue Calgary has a stronger local economy, they are more affected by oil prices yet continue to do fine.

 

[MakeYEGGreatAgain]

^ exactly....are Calgary developers able to stomach more risk...maybe.

Despite 15 - 20% in additional average rent over Edmonton, Calgary construction costs and land value are also higher than those in Edmonton....So how do the numbers work. My sense is that their downtown projects probably command at least 30 or 35% more than you would get in Edmonton.