[Alex_YYC]

 

[O-tac]

Wood frame DT feels so weird and wrong. I get the requirement for affordable housing, just can't remember anything wood frame like that except maybe in Chinatown?

 

[Mountain Man]

There's some wood frame in the East Village.

 

[CBBarnett]

Wood frame DT feels so weird and wrong. I get the requirement for affordable housing, just can't remember anything wood frame like that except maybe in Chinatown?

What are the conditions that make concrete economical again? I assume we just need some relative easing in construction costs of concrete over wood plus higher demand/prices to justify in the core? There's always going to be one-offs that built in whatever material, but the majority seem to track with the trend on what makes sense for costs/demand/rents.

 

[Mountain Man]

Over 6 floors wood becomes too onerous (and not allowed by code) and either steel or concrete are the norm. The CLT stuff would be allowed over 6 storeys, but I doubt it's much cheaper than steel or concrete.

 

[CBBarnett]

Over 6 floors wood becomes too onerous (and not allowed by code) and either steel or concrete are the norm. The CLT stuff would be allowed over 6 storeys, but I doubt it's much cheaper than steel or concrete.

So put most simply, we essentially need demand for downtown space to increase to justify more than 6 storeys, while also seeing high enough rent prices for that space to justify the higher costs that come with concrete or steel.

 

[Surrealplaces]

I remember doing some cost comparisons a while back, and If I'm remembering correctly concrete was about 60% higher per unit. Even though in most cities rents are more expensive closer to downtown, in Calgary they don't seem to vary that much. I can see why developers have taken to building boatloads of 6 storey builds in the burbs.

Edit: Found the previous post. So not 60% higher but quite a bit higher per unit for concrete. These numbers aren't scientific, and doesn't take in the average size of a unit. Just general calculations using the numbers available. Also wondering if I have the unit numbers correct? First and park at 18 floors has more units than Sunalta Heights at 27 floors? First and park has a bigger floorplate though.

Concrete
Sunalta	207	$50.7M	$245K/unit
That Hat 14th	279	$75M	$269K/unit
First & Park	211	$44M	$209K/unit
Wood Frame
Trail 19	78	$10.2M	$131K/unit
Glenmore Apts	264	$42M	$160K/unit
Hudson	125	$19.4M	$155K/unit
Skyview Point	100	$15.2M	$152K/unit

 

[Calgcouver]

What are the conditions that make concrete economical again? I assume we just need some relative easing in construction costs of concrete over wood plus higher demand/prices to justify in the core? There's always going to be one-offs that built in whatever material, but the majority seem to track with the trend on what makes sense for costs/demand/rents.

Probably around ~$700psf saleable. Used to be closer to ~650psf. Just guessing as i haven't priced out concrete in a while. Numbers for rental are different though.

 

[ByeByeBaby]

I remember doing some cost comparisons a while back, and If I'm remembering correctly concrete was about 60% higher per unit. Even though in most cities rents are more expensive closer to downtown, in Calgary they don't seem to vary that much. I can see why developers have taken to building boatloads of 6 storey builds in the burbs.

Edit: Found the previous post. So not 60% higher but quite a bit higher per unit for concrete. These numbers aren't scientific, and doesn't take in the average size of a unit. Just general calculations using the numbers available. Also wondering if I have the unit numbers correct? First and park at 18 floors has more units than Sunalta Heights at 27 floors? First and park has a bigger floorplate though.

Here's the 2024 numbers from the Altus construction cost guide: (I included Van because I'm cutting and pasting from a PDF).

Assuming 800 sq ft floorspace per unit (note that not all the floorspace is in the unit - halls, common spaces, etc. so 800 sq ft might be reasonable for half 1 BR half 2 BR), that's $250K/unit for the mid point of pricing for high rise, and $225K/unit for wood frame, plus $64K per parking stall assuming 350 sq ft per stall, no extra costs. (Areas with high ground water - such as the downtown - I believe are under 'unusual circumstances' which could put it up to $100K per stall). Note also none of this includes land.

 

[Alex_YYC]

 

[Golfing guy]

I remember doing some cost comparisons a while back, and If I'm remembering correctly concrete was about 60% higher per unit. Even though in most cities rents are more expensive closer to downtown, in Calgary they don't seem to vary that much. I can see why developers have taken to building boatloads of 6 storey builds in the burbs.

Edit: Found the previous post. So not 60% higher but quite a bit higher per unit for concrete. These numbers aren't scientific, and doesn't take in the average size of a unit. Just general calculations using the numbers available. Also wondering if I have the unit numbers correct? First and park at 18 floors has more units than Sunalta Heights at 27 floors? First and park has a bigger floorplate though.

Concrete
Sunalta	207	$50.7M	$245K/unit
That Hat 14th	279	$75M	$269K/unit
First & Park	211	$44M	$209K/unit
Wood Frame
Trail 19	78	$10.2M	$131K/unit
Glenmore Apts	264	$42M	$160K/unit
Hudson	125	$19.4M	$155K/unit
Skyview Point	100	$15.2M	$152K/unit

How much of the concrete downtown is land costs?

 

[Calgcouver]

How much of the concrete downtown is land costs?

Here is a how i would quickly look at a concrete high-rise on a downtown lot that is for sale right now.

1009 9 Ave SW is for sale right now for just under $12M (a little over $10M per acre). Land appears to be zoned CR20. This allows for a base density of 3FAR before density bonusing. You can increase the density through an incentive table that works primarily for offices built in the 1980s (plus-15 connections, indoor gardens, cash-in-lieu, etc.).

So if we take ByeByeBaby's post further:

From this point you still have to add costs in for:
-Land
-Site Demo/Remediation
-Cost to get to the density required through the bonusing table for CR20
-Development cost charges (OSL's, fees for permits, etc.)
-deep and shallow utilities
-surface works and landscaping
-garbage removal systems
-construction management fees
-marketing fees
-costs incurred from financing
-sales commissions
-legal costs
-streetlighting, bus stops, indemnification/rehabiliation work, whatever else the City needs
-additional costs for shoring and noise attenuation (upgraded windows, drywall and acoustics) due to the train line

Those costs can add up pretty quickly, so development costs can easily get to around $500-600psf for a fairly complicated building that a Construction Manager would need to take significant fees on if you can't self-perform the construction which would eat into your net profit.

Right now there is a listing in Mark on 10th for sale, it is 2bed+2bath, asking $494,900 for 764sf (asking $647psf, saleable). Mark on 10th is in a better location as it is on the south side of 10 Ave away from the railway tracks and with local amenities that are open after 5pm. 10 Ave is also a reasonably attractive street to leave your building onto, the subject site we're looking at is fronting onto a one-way freeway that is 9 Ave, surrounded by surface parking lots, with freight trains behind and the 8th street underpass that is pretty dumpy in it's current state.

If i were to guess, i wouldn't be able to sell a condo unit for $647psf in this location at 1009 9 Ave SW, i would underwrite at less than Mark on 10th to assume for market risk of the build time, possibility the market could turn in the time it takes to get to occupancy, and all of the downsides of the location (particularly how much of 9 Ave sucks).

All this considered, i would think the best development strategy on this site would be to reduce my costs so i can get to the point where i have a good ROI on this site. That would likely mean reducing construction costs by going to six-storey woodframe construction, which in turn reduces the amount of layers of underground parking i would need also reducing costs. At this point i don't need to use any density bonussing and i'm building at around 3FAR for that built form. Also i wouldn't be able to pay them anywhere near $10M per acre because i can't even take advantage of the height because i simply can't sell units here for $650-700psf. This would also reduce the overall project budget, reducing the amount of cash i need up front and less money i have to finance for construction.

This is exactly why buildings like the one in this thread are getting built downtown. I would much rather see these under utilized parking lots build out at a scale that is more akin to Marda Loop or University District if it means they will build out faster. This is why so many parking lots will sit forever, they don't make sense to build concrete towers on for what you can sell them for and they are zoned for high densities that the landowners use to hold for a kings ransom while they make money on parking.

 

[MissingMiddle]

Here is a how i would quickly look at a concrete high-rise on a downtown lot that is for sale right now.
View attachment 583217

1009 9 Ave SW is for sale right now for just under $12M (a little over $10M per acre). Land appears to be zoned CR20. This allows for a base density of 3FAR before density bonusing. You can increase the density through an incentive table that works primarily for offices built in the 1980s (plus-15 connections, indoor gardens, cash-in-lieu, etc.).

So if we take ByeByeBaby's post further:
View attachment 583229
From this point you still have to add costs in for:
-Land
-Site Demo/Remediation
-Cost to get to the density required through the bonusing table for CR20
-Development cost charges (OSL's, fees for permits, etc.)
-deep and shallow utilities
-surface works and landscaping
-garbage removal systems
-construction management fees
-marketing fees
-costs incurred from financing
-sales commissions
-legal costs
-streetlighting, bus stops, indemnification/rehabiliation work, whatever else the City needs
-additional costs for shoring and noise attenuation (upgraded windows, drywall and acoustics) due to the train line

Those costs can add up pretty quickly, so development costs can easily get to around $500-600psf for a fairly complicated building that a Construction Manager would need to take significant fees on if you can't self-perform the construction which would eat into your net profit.

Right now there is a listing in Mark on 10th for sale, it is 2bed+2bath, asking $494,900 for 764sf (asking $647psf, saleable). Mark on 10th is in a better location as it is on the south side of 10 Ave away from the railway tracks and with local amenities that are open after 5pm. 10 Ave is also a reasonably attractive street to leave your building onto, the subject site we're looking at is fronting onto a one-way freeway that is 9 Ave, surrounded by surface parking lots, with freight trains behind and the 8th street underpass that is pretty dumpy in it's current state.

If i were to guess, i wouldn't be able to sell a condo unit for $647psf in this location at 1009 9 Ave SW, i would underwrite at less than Mark on 10th to assume for market risk of the build time, possibility the market could turn in the time it takes to get to occupancy, and all of the downsides of the location (particularly how much of 9 Ave sucks).

All this considered, i would think the best development strategy on this site would be to reduce my costs so i can get to the point where i have a good ROI on this site. That would likely mean reducing construction costs by going to six-storey woodframe construction, which in turn reduces the amount of layers of underground parking i would need also reducing costs. At this point i don't need to use any density bonussing and i'm building at around 3FAR for that built form. Also i wouldn't be able to pay them anywhere near $10M per acre because i can't even take advantage of the height because i simply can't sell units here for $650-700psf. This would also reduce the overall project budget, reducing the amount of cash i need up front and less money i have to finance for construction.

This is exactly why buildings like the one in this thread are getting built downtown. I would much rather see these under utilized parking lots build out at a scale that is more akin to Marda Loop or University District if it means they will build out faster. This is why so many parking lots will sit forever, they don't make sense to build concrete towers on for what you can sell them for and they are zoned for high densities that the landowners use to hold for a kings ransom while they make money on parking.

I really appreciate this analysis! And I agree with your outlook.

But why are the vacant lots valued that high if no one can afford to develop them? Surely the parking revenues are not nearly high enough to pay the yearly costs (property taxes). Why is $5M/acre cash-in-hand not more valuable than the annual carrying costs?

How do you fix this?

• Parking lot property tax?
• Rezoning and tax based on allowed density?

It just looks like people who refuse to lower an unrealistic price because "it might go up," and because the carrying costs are so low.

 

[Albertasaurus]

I really appreciate this analysis! And I agree with your outlook.

But why are the vacant lots valued that high if no one can afford to develop them? Surely the parking revenues are not nearly high enough to pay the yearly costs (property taxes). Why is $5M/acre cash-in-hand not more valuable than the annual carrying costs?

How do you fix this?

• Parking lot property tax?
• Rezoning and tax based on allowed density?

It just looks like people who refuse to lower an unrealistic price because "it might go up," and because the carrying costs are so low.

I think the big problem is most of the parking lots are owned by pension funds that have a very long-term outlook on things, and would be happy to sit on a chunk of land for 20 years to maximize long term shareholder value rather than take a more short term view of things.

But I fully agree that the tax system needs an overhaul to disincentivize this behaviour. not sure of the legalities of doing so, however.

 

[Surrealplaces]

Thanks for the great insight @Calgcouver. I agree with you, I’d be quite happy to see low to midrise buildings get developed on those lots if it meant they were built faster.

As far as taxes go, I think it would be OK to increase the tax on empty lots that sit for speculation. Not a huge raise, but may be a 25-35% increase. Just enough of a increase that it may steer some pension owners into selling.