Hey there, time traveller!
This article was published 7/6/2009 (2850 days ago), so information in it may no longer be current.
That's how much Mark Hofer, president of Direct Focus Marketing Communications Inc., spent to convert a four-storey warehouse at 230 Princess St. into 43 New York-style apartments.
To make the project economically viable, Hofer had to make most of the loft-style apartments smaller than usual so he could fit more of them into the building and reduce the per-unit development costs.
That's why bachelor suites in The Edge on Princess are an average of 450 square feet, the one-bedroom units average 650 sq. ft. and the two-bedroom apartments are 900 to 1,200 sq. ft.
While that's smaller than average, Hofer has tried to make up for the reduced size by offering more amenities -- such as exposed timber frames and brick walls and stainless-steel appliances, including an in-suite washer, dryer and dishwasher.
Now he's about to find out if his gamble will pay off because he starts marketing the units next week, with a planned occupancy date of Aug. 1.
He said 10 of the units have already been leased without any advance marketing, "so I'm optimistic."
Hofer said the biggest challenge he faced in redeveloping the 104-year-old Frost and Wood Warehouse building was the high cost of stripping down the interior to the bare walls and installing new mechanical systems. That included new electrical systems, new plumbing, and new heating and air conditioning.
"They (heritage-building redevelopment projects) are far more time consuming than new projects, they're more expensive and they involve more red tape," he said. "They've got to be affordable for the developer... and they've got to be affordable for the consumer."
And when it's a heritage building, the exterior also has to be preserved, Hofer said, which means the developer can't add more windows to accommodate more suites on each floor.
"We still managed to get a good density of units within our building," he said. "The footprint of the building was right and the design of the building was right, so we could get 12 units per floor. But some buildings just don't lend themselves at all to that."
That's one of the reasons why most developers have been converting Exchange District heritage buildings into luxury condominiums, rather than rental units. That way they can make the units larger and charge enough to recover their costs and still get a return on their investment.
But Hofer and other advocates for more downtown housing, such as veteran real estate agent Bill Thiessen, say the downtown needs a mix of new housing, not just luxury condos.
That includes more affordable condos -- units priced at under $200,000 -- and more affordable apartments -- units priced at under $1,000 a month, said Thiessen, of RE/MAX Professional Realty.
"It's all about the numbers. If we had more (condos) that are about $179,000 or $199,000 and less that are about $399,000, it would be a boon for the downtown," he said. "You create options for hundreds of people, as opposed to dozens."
But how do you do that, given the high cost of redeveloping downtown heritage buildings?
Hofer said one answer might be for governments to offer more financial assistance. That way developers could afford to charge less.
He said the tax credits and tax-credit financing offered by the city is a step in the right direction. But it only applies to the city's portion of the property tax bill, which is about 45 per cent, not the provincial portion, he said.
"The city has its program but clearly more has to be done or we'd be seeing more development than we are."
But Thiessen, who specializes in downtown condos, isn't convinced that more subsidies are needed. He said he thinks a better idea would be to ease the restrictions on the redevelopment of heritage buildings to allow for things such as adding more windows. He said that often can be done without destroying the original look of a building.
He said heritage officials have to remember these Exchange District warehouses were never designed to house people. That's why it's so costly to bring them up to residential safety standards, and why more flexibility is needed.
Ross McGowan, CEO of the city's downtown development agency -- CentreVenture -- said another option for making downtown living more affordable might be to offer a federal tax credit to people who live downtown.
Using less expensive finishing materials might be another way, he added.
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What's the rent?
Developer Mark Hofer had planned to convert the 104-year-old Frost and Wood Warehouse building at 230 Princess St. into lower-cost rental units that even students could afford. The rental rates being talked about as recently as last fall were $492 to $774 a month for the 36 bachelor and one-bedroom units in the four-storey building, with the rates for the seven two-bedroom units to be determined later.
But the high cost of redevelopment, coupled with Hofer's decision to go with higher-quality finishes in the suites and to include most of the utilities in the rent -- everything but cable, telephone and Internet -- bumped up the rental rates. Here's what the new rates will be:
Bachelor units: $750 a month
One bedroom units: $950 to $1,150
Two-bedroom units: Still to be determined