Calgary developer Frank Lonardelli sees a void in the city for purpose-built residential rental buildings which also feature street-front retail. It's a void he intends to help fill.
The model has been a staple of the development community for years in places like Toronto, Vancouver and Montreal, as well as in European cities.
And it’s a trend Lonardelli, the CEO of Arlington Street Investments, has already jumped on in Calgary. In particular, he's focusing these types of projects along the busy 17th Avenue S.W. corridor, with its high traffic count both in terms of pedestrians and vehicles.
His latest project is Enzo, which fronts the high-profile street and is located across from Tompkins Park. It will be home to 90 units and about 10,000 square feet of retail, including the popular Italian restaurant Buon Giorno which has been on the current site for decades.
Construction is also expected to start in early 2023, with completion expected in 2024.
“And we’ve had 70,000 square feet of interest on the main floor for the retail,” said Lonardelli.
Enzo, Arlington, apartments and retail
The Enzo site encompasses four properties Arlington bought over the past few years and comes following the recent completion of Fifth, which includes 52 apartments and 12,000 square feet of street-front retail at the busy intersection of 17th Avenue and 5th Street.
“It’s a very European model. If you go to any European city, there’s always a proprietor on the main floor and it’s been very common for people to live upstairs," Lonardelli explained.
"The fact of the matter is if you went to Vancouver or Toronto there would be a tremendous number of examples in mixed-use development.
"Calgary’s 20 years behind both Vancouver and Toronto. I like building into a trend that is 20 years behind."
He also cites generational differences as another driver for the trend.
“We also have this very interesting demographic that’s been perpetuated by a couple of things. In our generation, the first thing we wanted to get was a car, then we wanted to get a house. Gen Z and Gen Y are not thinking that," he said.
"They’re thinking about experiences. So they want to be living in amenity-rich, well-located and brand new buildings. And that’s our clientele. We’re not a mass landlord.
"The large tenancies really represent the entry level of the marketplace. . . . We’re not interested in that clientele.
"The clientele that we want and we’re going to cater to will be an urban-centric, probably recently graduated, who want to live, work, play and shop within a four-block radius of where they walk to work.
"My guy or girl is not going to own a car. They’re going to get around with scooters and Ubers.”
Other segments Lonardelli identified include professional urbanites who have recently divorced or separated from a partner; and retirees who've sold their Calgary homes, have retirement properties in warmer climates and want to downsize to a smaller home in the city.
Developing 17th Avenue
Lonardelli said 17th Avenue has always been the street “that wants to happen.”
“I didn’t do anything unique. I just decided to do the thing that everyone wanted to do. They just didn’t do it because it was either going to take too much time or it would be too hard, which they were probably right,” he said. “If you talk to any developer today and you said ‘If you had the ability of building in the Beltline, where would you want to build?’ they would tell you 17th.
“The reason they haven’t done it is because we went off market to buy all these buildings. So none of them were for sale. If you’re a developer and you’re going to go knock on doors, you know that, man, that’s going to take a long time, a lot of energy. We thought that was the opportunity.”
Arlington has plans to develop about seven sites along the high-profile gateway on the outskirts of Calgary’s downtown core.
“We didn’t tell anybody we were going after all these buildings on 17th Avenue and then we bought 27 buildings to consolidate into eight different development sites. We now own 40 buildings. That’s completed that aspect of it,” said Lonardelli.
“Then it was about changing the land use, which we’ve done on every project.”
Development plans for 17th Avenue began three years when Arlington renovated the National building at the corner of 17th and 5th Street. The 36,000 square feet of office space is fully occupied and the street front includes two food establishments.
“The appeal for us (for rental apartments) is we don’t like selling our assets. We think that the 17th Avenue corridor will continue to appreciate over the interim and the long term.
"Our city is significantly behind in terms of new rental stock. And the other thing is we really want to create an ecosystem . . .
"We wanted to acquire intersections and then, how do we use the retail tenants to actually positively affect every retail tenant in our building against the tapestry of all the other things that are in the market already,” Lonardelli said.
Future projects along the corridor
The fourth project Arlington has planned is the Fishman’s block at the corner of 17th Avenue S.W. and 5th Street, across from Fifth and kitty-corner to the National. This project will include about 210 apartment units with 12,000 to 15,000 square feet of retail.
Arlington will partner with a builder on this project, which it expects to announce in 2023. The project is to start either at the end of Q3 or during the fourth quarter and complete in 2025.
Arlington also has a site a couple of blocks west that it refers to as High Street, where the Higher Ground coffee shop currently exists. Eventually it will become the company’s fifth 17th Avenue S.W. project.
“We don’t have any plans to do anything with that building currently,” said Lonardelli.
The company also has two sites at the corner of 17th Avenue and 14th Street for future development.
One is called The Sentinel, which Lonardelli described as the largest assembled site in the Beltline at 66,000 square feet.
“That asset there has got 500 units. It’s likely going to be a partner, or we have a couple of very large institutions who want to take that project forward. So we’re moving through that process right now,” said Lonardelli.
“We have a long-term goal to execute project by project and make sure you’re testing the marketplace along the way.”