As the Olympic Games come to a close I am hearing more and more inquiries about the Olympic Village and what its future holds? Is it for sale now? Is it going for sale soon? And if so, for how much??
I am in the process of answering all of these questions and am currently in regular contact with Millenium Developments and the Sales Team releasing these units in May... I will update you with details as I get them... but are these units going to be a steal of a deal or worth waiting for? I'm not so sure.. As described in the article below, unless the developers take a major loss on every single unit the properties are going to be overpriced at $1000 plus/square foot and that is huge money for the area...
“Those opening ceremonies – that should add $25 a square foot to what I can get at the village,” Bob Rennie says gleefully over lunch on the third day of the Games, as the street below the restaurant ran thick with thousands of 2010 Olympic Games tourists. Mr. Rennie, officially known as the city's best-known condo marketer but unofficially as one of the city's major power brokers, is kidding, as he often does. Well, sort of.
The reality is that many are hoping there's an element of truth in Mr. Rennie's humour.
Among them are brothers Peter and Shahram Malek who run Millennium Developments and who pledged $70-million of their assets to keep the athletes village project going when their financing started to collapse at the beginning of the recession. Another group is the City of Vancouver, which is owed almost $200-million for the land and was forced to loan the Maleks $800-million for their construction refinancing.
Both are depending on a healthy real-estate market to recoup the village's $1-billion cost. It would be a relief if the reflected glory from the Olympics would make a difference once the athletes go home.
Certainly the village, after a year of rocky news coverage, has been basking in the Olympic glow. A recent New York Times Magazine essay on the Games by Liberal Leader Michael Ignatieff was accompanied by a picture worthy of an architecture magazine. The site looked like a modernist marvel on the water. Television shots frequently highlight it. Media outlets report that athletes love it.
And, amid the frenzy of the Games, the village, as part of the city's Southeast False Creek district, received LEED Platinum certification, making it the greenest neighbourhood in North America.
The question is: Will that make a difference? And will it be enough given the circumstances of the village's finances and the current state of the market?
Many are dubious.
“The problem with Millennium is their costs,” says Cameron McNeill, another major development marketer who points out that the village was built at the peak of prices for labour and materials. “Will the market bear the $1,100 a square foot they need? I think that's stretching it. I think it's going to be extremely difficult for them to recoup their costs.”
Mr. McNeill, the head of MAC Marketing Solutions, is selling a building across the street from the village, the James. He's pricing it in the $700-a-square-foot range. That's the average price Mr. Rennie got for the first 250 village condos before the crash.
It means the remaining 500 condos have to sell for much more on average for the project to break even. Although Mr. McNeill believes in the long-term benefit of the Games and agrees the city made the right move by taking over the village's finances to make sure it was completed, he can't see how the remaining condos will fetch those prices.
Development consultant Michael Geller, who recently oversaw the planning of Simon Fraser University's UniverCity project, said the athletes village project will likely sell at prices high enough to recover the $800-million in construction costs. “But I am worried about the city recovering the $193-million it was supposed to get for its land.”
University of British Columbia business professor Tsur Somerville said that extensive research has provided zero evidence that Games cities experience real-estate booms after the tourists go home.
“I don't deny that there are going to be some purchasers who like the Olympics and say, ‘I want to buy something in Vancouver.' That exists but it's not enough to move the whole market,” Mr. Somerville says. Like many, he doubts the developers will do any better than break even on the project.
Now the city, which reverted back to a centre-left council in 2008 under Mayor Gregor Robertson, finds itself in the same position as any caught-by-the-crash speculator, hoping that market prices will rise enough to make the real-estate bet pay off.
City politicians are also hoping that both the Olympics and Mr. Rennie can work some magic. “Go, Bob, go,” Mr. Robertson urged as he presided over the turnover of the first village building to the Vancouver Organizing Committee last fall.
Mr. Rennie says there won't be any real magic to it. He believes what will ultimately work in the village's favour are the fundamentals of real estate: supply and demand.
(Although the developers will have to add some financial sweeteners to make the math work over all. They're expected to sell off the retail spaces that occupy the lower parts of some buildings, rather than continuing to lease them out. And they'll also likely have to sell another 110 rental apartments, on top of the 750 condos.)
Realistically, Mr. Rennie doesn't expect demand to shoot up because of the Olympics. But he does expect it to be strong for the same reasons it always has been in Vancouver. People do want to move here. And, among those already living here, the market is back to giving them good prices if they want to sell their high-end houses and downsize to waterfront condos.
The supply-side picture is strong, too. “Any oversupply from the hype of the Games is gone. Thousands of developments went on hold or were shelved,” he says.
Although developers are now starting to put themselves in gear again, the village has one advantage. In a city where buyers are often forced to buy units by looking only at plans and model suites, which often don't match reality, the village is built.
“We haven't seen ‘build it and they will come' for a long time,” Mr. Rennie says.
As for the Olympic glow? Will it help him sell the unit where gold-medal snowboarder Alexandre Bilodeau once slept?
“We are a brand society and Vancouver doesn't have a lot of legendary addresses,” Mr. Rennie says. “It doesn't necessarily add value, but it makes choosing between here and down the block easier.”
Portions of this blog courtesy of Frances Bula, The Globe and Mail
Blogged By Kelsie Struch, Realtor, Century 21 In Town Realty, Vancouver 778.387.6090