Betting big on West Broadway

PHIL HOSSACK / WINNIPEG FREE PRESS Enlarge Image

Developer Stefan Aarnio converted this former rooming house on Balmoral Street into four executive apartments, complete with granite countertops.

A young developer is betting several hundred thousand dollars that West Broadway will be one of Winnipeg's next residential hot spots.

That's how much Stefan Aarnio, a former musician/band manager turned residential developer, spent over the last 12 months to convert a fire-damaged rooming house on Balmoral Street into four executive apartments.

And now the 25-year-old is about to find out if the gamble will pay off for him and two other local investors who sank money into the project.

Aarnio said he recently began marketing the suites on the Internet, and the response has been encouraging. He's fielded calls from young professionals from as far away as Calgary, California and Nova Scotia who are moving back to Winnipeg and looking for an apartment to rent. Two from Calgary were to view the two main floor suites this past weekend, he added.

He said his timing is good, with the city's overall apartment vacancy rate hovering at an all-time low of 0.7 per cent.

Aarnio said he chose West Broadway for his first project because he's convinced it's poised to become the next Osborne Village or Corydon area.

"I would say that within five years... it will probably be comparable," he said. "And I think it's young professionals and students that are going to take the area over."

He's not the only one who thinks that.

"I would totally agree," said Frank Zappia, a real estate agent with Zappia Group Realty who has sold a lot of homes in the West End and West Broadway areas.

"It's been an up-and-coming area for a few years. And because it has been undervalued for so long... there is a lot of potential there," Zappia said.

Although parts of West Broadway have been grappling with crime and poverty issues, Zappia said it is one of the neighbourhoods that has also seen some of the biggest escalations in house values in recent years.

He estimated that in the last eight or nine years, the area's average selling price has soared from $25,000 or $30,000 to $170,000 to $200,000.

"And for a couple of hundred thousand dollars you're getting a pretty nice house," he said.

Zappia said rising property values have also encouraged a growing number of homeowners and apartment-block owners in the area to upgrade.

"It's the same kind of thing we saw in the Wolseley area eight or nine years ago."

The executive director of the West End Business Improvement Zone said new housing developments have also been springing up around the neighbourhood, the most recent being a 44-unit condominium complex that Sandu Developments Inc. is building on Sherbrook Street.

"Being in such close proximity to the downtown, it's an ideal location for young professionals who want to be able to walk to work," Leah McCormick said. "And there are lots of restaurants and shops in the area." Aarnio's new three-storey complex, called The Treehouse Lofts at 187 Balmoral St., is located south of Broadway immediately west of the Great-West Life buildings on Osborne Street.

He admits the project was more difficult and more time consuming than he anticipated because it involved gutting the building, which was heavily damaged in an October 2009 fire. About all he retained was the foundation and the four outside walls.

Aarnio removed a lot of inside walls to create a more open floor plan. He said the professionally designed suites come equipped with granite countertops in the bathroom, laminate and vinyl flooring, stainless-steel appliances and an in-suite washer and dryer.

He hopes to rent out the two 600-square-foot, main-floor suites -- a one-bedroom and a one bedroom plus den -- for $997 a month. He's asking $1,497 for the 1,000-square-foot, two-bedroom units on the second and third floors.

"It's been a really crazy learning experience," Aarnio admitted. But he said he's in the real estate development business for the long haul, and already has a second project underway -- the redevelopment of a two-bedroom duplex in Fort Rouge.

He'd like to partner with an experienced developer who could mentor him and help him take his fledgeling business to the next level. His goal is to double the size of each new project he works on and to eventually start building new multi-family complexes.

Know of any newsworthy or interesting trends or developments in local office, retail or industrial real estate sectors? Let Murray McNeill know at 697-7254 or by email:

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition August 22, 2011 B5