Winnipeg Free Press - PRINT EDITION

Buyers not biting downtown

Veritas, M2 Engineering find condo market tough

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Renting is proving to be a more popular option than owning for some new downtown condominium residents.

All nine residents in the condo-redevelopment project at 128 James Ave., which opened last May, opted to rent rather than buy their units.

The developer, Veritas Development Group Ltd. (formerly James Avenue Holdings Ltd.) is using the 10th unit in the three-storey heritage building as a display suite in hopes that will lead to sales.

"The goal is to sell them all," said property manager Cindy Zaretsky. "But for now, we're renting them out month to month."

Veritas isn't the only east Exchange District condo developer having trouble finding buyers. M2 Engineering has only pre-sold two of the 43 units in Phase I of its H2O development at 500 Waterfront Dr. And that has owner Michael Mark and listing agent Lisa Derenchuk of RE/Max Performance Realty shaking their heads in bewilderment.

"In two hours last Saturday (Sept. 29), we had 16 groups go through, which is a lot," Derenchuk said. But none of them bought a unit.

Mark said almost every suite in the complex has a view of either downtown, the Red River or the St. Boniface/Provencher Bridge area. The units also feature high ceilings, large windows, a balcony or patio and on-site parking. They're priced at $199,900 to $350,000.

"I just don't know why they're not selling," Mark said.

The lack of sales is one of the reasons Mark has decided to change plans and convert the 43 units in Phase II to rentals.

"There is a shortage of apartments (in Winnipeg), so I don't think we'll have any trouble renting them," he said. "Plus I want to retain ownership of the building."

Although the foundation for the second building has been poured, Mark said he's putting that phase on hold until he sells at least 20 condos in the first building. And if he can't sell the remaining 21 units in the first building, he'll also convert them to rental units.

While Veritas and M2 Engineering are struggling to find buyers, a spokesman for Sunstone Resort Communities said they've sold 25 of the 33 condo units in Phase II of their Sky Waterfront development, also on Waterfront.

"It's going very well," Sunstone vice-president and general manager Bill Coady said, adding they've sold five units in the last two months.

The Sky units are priced at $220,000 to $400,000.

Derenchuk said she thinks one of the things holding back H2O sales is the lack of a display suite -- something Mark hopes to correct in the next couple of months.

"I think people want to be able to touch the walls and see the kitchen countertops," she said.

And Zaretsky said the biggest stumbling block for Veritas is the lack of available parking in the area. All of the nearby parking lots are full, the city has stopped issuing street-parking passes for the area, and construction hasn't started yet on a 450-stall parkade/apartment/retail complex that Sunstone and Qualico Developments plan to build on James. The parkade is intended to provide some parking spaces for residents in the area.

"That's a major issue for a lot of people," Zaretsky said. "If we tell them we don't have parking, they don't even come and look at it (the display suite)."

Although Veritas is also offering a rent-to-own option to prospective buyers, Zaretsky said all of the tenants have declined, saying they want to see what downtown living is like before committing.

-- -- --

A long-awaited $85-million highrise apartment development for downtown Assiniboine Avenue is about to get underway.

Crystal Development Ltd. has erected fencing around a former city-owned lot it acquired in 2009, and president Rubin Spletzer said a contractor will begin shoring up the property next week to ready it for excavation and the installation of concrete piles.

Although Crystal is still waiting for the city to issue building permits for the 25-storey, 234-suite project, Spletzer said he's moving ahead with site preparation.

"I can't wait any more."

He complained last summer that the city was taking too long to remove leftover hydro equipment from the site, located on the south side of Assiniboine between Bonnycastle Park and the Midtown Bridge. He said that work was finally completed in mid-August.

Crystal plans to shore up the entire perimeter of the property, which will take several months. Spletzer said he hopes to have the excavation completed and the foundation piles in by the end of the winter, and to begin pouring the foundation next spring.

-- -- --

The IKEA-led Seasons of Tuxedo shopping centre in southwest Winnipeg is being touted as the continent's first geothermal retail development.

The president of IKEA's partner in the ambitious 1.5-million-square-foot, $500-million project -- Winnipeg's Fairweather Properties -- said he's not aware of any other retail development in North America that's equipped with a central geothermal heating and cooling system.

"There is some very advanced, green technology involved in this project," Michael Nozick said in an interview.

Nozick said at least 50 tenants in the shopping centre, including the 400,000-square-foot IKEA store that's slated to open on Nov. 28, will be connected to the geothermal system. He said there may be a few tenant-owned, stand-alone buildings that will have their own heating and cooling systems.

Nozick refused to say how much extra it will cost to install a geothermal system or what the annual savings in heating and cooling costs are expected to be. He said those details will be released later.

He said confidentiality agreements also prevent him from disclosing which other retail tenants have signed up for the two-phase development, which will straddle both sides of Sterling Lyon Parkway immediately west of Kenaston Boulevard.

The only other tenant that has been confirmed is Cabela's. The big-box outdoor-store chain is building a 72,000-square-foot outlet near the IKEA store, which is located on the south side of on the development site.

Other retailers industry source say are either on board or negotiating for space in the centre include U.S. retail giants Lowe's and Marshalls, as well as Dollarama, Dollar Tree, Sport Chek and Montana's Cookhouse.

 

Know of any newsworthy or interesting trends or developments in the local office, retail or industrial real estate sectors? Let real estate reporter Murray McNeill know at the email address below or at 204-697-7254.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition October 9, 2012 B4

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