With that goal in mind, I produced a document titled The Market Manuscript which I distributed among the many contacts I have made over the past decade working in the residential real estate space in Toronto.
I reviewed data and forecasts from CMHC, the Altus Group, RealNet Canada, Will Dunning Inc, Urbanation Inc, UrbanLogic Ottawa, the Conference Board of Canada, in addition to commentary by economists working for the ‘Schedule 1’ banks. The document was well-received and has been downloaded from our website more than 900 times and more than 1,000 hard copies have been distributed within the industry and to Fortress Real Capital investors.
The second Market Manuscript was uploaded in mid-October, and the bigger and more robust document has been very well-received.
Successful Calgary housing market
In researching and putting together the Market Manuscript, and preparing my slides for my keynote presentation at the ULI and PWC Emerging Trends event, I kept coming back to the success of the Calgary housing market.
A few years ago, Toronto-based developer Lamb Development Corporation approached Fortress about partnering in Calgary, and we are happy to announce the condominium apartment project conceived at that time, called 6th and Tenth, has achieved its pre-sale targets and is now under construction.
Other Ontario developers have also taken note of Calgary, including Fram Building Group, Metropia, and Minto, which all have current or future projects planned. We’ve also been approached by two other major Toronto developers to look at high-rise projects in Calgary.
In the first half of the year in the Calgary Census Metropolitan Area (CMA), new housing starts were up 67% over 2013, and at the end of September, starts were up 56% annually. The most unbelievable statistic is the completed and unabsorbed unit count collected by CMHC; there were just two completed and unsold condominium apartment units in the entire CMA at the end of September!
Developers 99.92% sold
Nearly 2,500 condominium apartment units have completed in the CMA this year, which means developers are 99.92% sold – you’d think at least a couple developers would have a few suites with bad layouts, or no views, or were simply overpriced, but absolutely everything is selling. This makes us pretty excited about the prospect for our latest venture with Lamb Development Corporation in Calgary called The Orchard, a two-building condominium apartment project which will be soft launching later this fall.
It is not only the high-rise market that is doing well, but the ground-oriented market as well. According to CMHC, the average new single-detached home absorbed in the Calgary CMA in September was approximately $638,000, an increase of 16% year-over-year. We have been actively seeking development partners for this coveted market segment.
In my latest Market Manuscript document, I show several forecasts for starts in the Calgary CMA for 2014, and TD Economics had the highest projection at 18,000 units.
Despite this big jump in starts from 12,600 last year, TD recently commented that Calgary remains one of the few cities that is undersupplied. Strong demand and limited supply is the reason Fortress and many other developers are looking west this year.
Fortress Real Developments is a diversified real estate development and investment company that partners with established builders and developers across the country. Fortress sources equity capital for the partnership, in addition to providing value-add services such as market research, structuring of debt, marketing, and other realty services.
Ben assists in evaluating both the market conditions and projects that Fortress is active in. Follow his blog posts and commentary on the Canadian Housing Market at www.fortressrealdevelopments.com/news or follow him on twitter at @BenMyers29