‘Golden opportunity’ in Silver Heights

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This article was published 05/06/2017 (3235 days ago), so information in it may no longer be current.

A Winnipeg developer is tapping into the growing demand for higher-end apartments by converting a former condominium development into luxury rental units in St. James.

Dynasty Lands International Inc. is half-way through converting the 84-unit Silver Heights Condominiums at 350 and 360 Lodge Ave.

Company president Allan Borodkin said it’s gone smoothly.

He said it took less than 10 months to rent 31 of the 42 units in Phase 1, which has been completed. (The other 11 units in the four-storey complex were sold as condos by the original developer and have remained condos).

Even though a second 42-unit, four-storey building won’t be ready for occupancy until September, Borodkin said 18 of those units have been pre-leased.

“So we’re thrilled. That’s a good market uptake,” he added.

The units in Phase 2 include three one-bedroom units and 39 two-bedroom suites. All units have a private balcony, in-suite laundry and heated parking. Many of them feature condo-style finishes such as stone countertops and hardwood floors.

Borodkin said the one-bedroom units will be 688 square feet in size and will rent for $1,320 per month. He said all three of them have been pre-leased. The two-bedroom units will range in size from 973 sq. ft. to 1,230 sq. ft., and will rent for between $1,775 to $1,999 per month, he said.

Dynasty acquired the Sturgeon Creek Condominiums from the original developer — Pace Homes Ltd. — in July 2015. Borodkin said there were several reasons Dynasty opted to convert the unsold units into rental apartments rather than market them as condos.

One reason was because its focus is developing rental apartments. The other was because earlier efforts to market them as condos weren’t successful.

“So we thought there was a better opportunity to convert it to rental, and we have been very successful,” he added. “We’ve rented out these units very quickly.”

Borodkin said this isn’t the first time condos have been turned into rental units in Winnipeg.

“There are condominium units being rented everywhere in the city.”

He said he knows of several condo developments near the University of Manitoba where about half of the units are owner-occupied and the other half were purchased as revenue properties and rented to foreign students and people who want to live in the area but would rather rent than own their home.

“They (investors) bought them as a capital appreciation, and want to have a revenue stream while they’re waiting for the units to go up in value,” he explained. “That’s the theory.”

Ken Clark, a broker with Act Realty who is active in the condo market, agreed there’s growing demand for newer apartments with condo-style features and amenities.

Clark said most of that demand is coming from empty-nesters and retirees who five years ago could have sold their single-family home for upwards of $500,000, bought a nicely appointed two-bedroom, two-bathroom condo, and still had $50,000 to $100,000 to spend on other things.

But with rising house prices, many are finding that’s no longer possible, he said. So they’re choosing to sell their home, bank the money, and rent a newer apartment or a condo that has been converted into a rental suite.

“They’re thinking it will be a while before they would spend $500,000 on rent,” he said.

Clark predicted this won’t be a short-term trend.

“Five or 10 years out, I think the demand (for nicely appointed apartments) is still going to be there.”

Borodkin said Dynasty bought the Silver Heights Condominiums because it was an infill development in an area of the city that hadn’t seen any new apartments built since 2005.

“And there is not land available in St. James,” he added. “So we saw this as a golden opportunity.”

He noted the original development plan also called for 42 bungalow- and townhome-style condos to be built along the perimeter of the property. He said Qualico’s Streetside Development Corporation purchased that portion of the development from Pace, renamed it Golden Gate Estates, and went ahead and built the bungalow- and townhouse-style condos.

“They started building in 2015 and sold out very quickly,” he added, which suggests there is also still a demand for new condos.

Peter Squire, residential market analyst for the Winnipeg Realtors Association, agreed, saying the fact more condos are being converted to rental units shouldn’t be interpreted as a sign the demand for condos has weakened.

He said condos sales in Winnipeg were quite strong through the first five months of this year, with more than 200 units selling in the month of May alone.

“So I can assure you it’s not because we’ve had a slow condo market this year,” he added.

Clark said Winnipeg did experience a surge in new condo development a couple of years ago, which led to a temporary build-up of inventory. But that has since been whittled down, he added.

murray.mcneill@freepress.mb.ca