A unique high-rise rental tower in Calgary’s East Village is 25 per cent leased before a marketing campaign for sales even began, illustrating what Bosa Development says is the demand in the market for purpose-built rental homes.
Built on the success of the Arris tower, Vancouver-based Bosa will go ahead with the construction of a bigger tower on the site this summer.
Robert Marchand, vice-president of marketing at Bosa, said the demand may be fuelled by a pandemic-inspired need for larger homes. It marks the first concrete high-rise in the city to convert entirely from condos to rentals as well as the first rental building with in-house grocery store and other retailers.
“With a few banners on the building and a few social media posts, our phone started ringing and we leased 45 out of 190 homes before official marketing started,” said Marchand.
“In about 2015, we had seen a decline in the marketplace for for-sale homes – anything single-family, condos – in Calgary with the oil uncertainty.”
Both absorption and construction volume has declined.
“These towers take typically about three years to build something like this. Each year-over-year, if you look at the stats on the for-sale side, each year was a little less volume and a little bit price decline from 2015.
“So looking at our forecasting for this building the appetite for pre-sales had been diminished in Calgary and you can see that across all multifamily buildings. We don’t see a lot of pre-sale activity right now.”
Downtown Calgary lacks purpose-built rental
Marchand said the company looked at other options and the rental market was attractive because there is a lack of purpose-built rental in Calgary.
“People were looking for something that was large, livable but also was high amenitized and they could deal with an owner/operator . . . looking for a larger entity that would be a little more consistent than individual owners.
“We started looking down that path pretty seriously and . . . we decided to push forward a couple of years ago with Arris’ first tower – 190 units – as a rental.
“As we brought that on it really solidified the second tower for us to bring to market right away, which is why construction is starting this summer.”
The project is a joint venture with RioCan consisting of two towers on top of the commercial podium – Bosa is managing the residential towers and RioCan the 5th and 3rd retail/commercial portion of the site. A Real Canadian Superstore is part of the interconnected, one-block project on the east side of the downtown core just behind Calgary’s City Hall.
The first tower is 24 storeys with the second tower 42 storeys. They comprise just over 500 rental suites in total. Bosa expects the construction of the second tower to take about two years. Occupancy has already begun for the first tower.
Rental suites range from 630 to 1,565 square feet.
Bosa Development and Calgary’s East Village
Marchand said the company has two to three other sites it will eventually build on in East Village, as well as plans for its Currie Lands mixed-use development in Southwest Calgary.
“We’ve got lots of property in Calgary. Bosa’s definitely not shy on Calgary whether it’s rental or for sale and we’re continuing to build in the city in the foreseeable future for sure,” he said. “I think there’s on the books about 3,500 homes to be built.”
Kendall Brown, market analyst with research firm Urban Analytics, said one of the attractive features of Arris is larger floor plans than typically found in downtown Calgary, plus its amenities which are becoming a trend among rental buildings.
“It’s been quite successful due to the timing of the launch. We haven’t really had a big project launch in the downtown (for awhile). The location being in East Village definitely contributed to the number of leases they’ve seen so far and the interest,” she said.
“Rental projects with extensive lifestyle amenities and daily conveniences are more likely to achieve faster absorptions, higher rents and lower turnover. A lot of younger professionals are choosing buildings based on the amenity offering.”
Being the first rental building in the core with a grocery store anchoring its retail is another big selling feature, she said. Several other retailers will also be focused on daily needs and conveniences.
“I toured it a couple of weeks ago and the amenities are very, very nice. The layouts are good. The sizes of the units are quite big.
“They are attracting an older demographic and given how hot the (real estate) market is right now they’re seeing a lot of people who are downsizing, selling their houses and maybe not sure what their next steps are, so they’re moving into this building. It’s a luxury building.”
In general, Brown said there is currently more demand for rental homes, adding all rental buildings launched in Calgary recently are doing quite well.
The revitalized East Village area, which a few years ago was an urban wasteland, now has more than 1,600 new homes built since 2014. It includes commercial real estate space as well as hotels, the new Central Library and Studio Bell (the National Music Centre).
It’s a 20-year master-planned community with $396 million invested in infrastructure so far and a planned $3 billion in private sector investment.
The East Village project, which is spearheaded and overseen by Calgary Municipal Land Corporation, is spread across 15 city blocks and eventually will be home to about 3,500 residential units.
“Bosa’s early success in leasing Arris is testament to the interest Calgarians have in the East Village lifestyle,” said Clare LePan, vice-president of marketing & communications at CMLC.
“East Village has live-work-play dialled into a few walkable, bikeable and well-connected streets and projects like Arris are reinforcing growth in downtown Calgary.”