Toronto-based PineMount Developments has completed one of the first new apartment building sales in the post-COVID-19 environment, divesting the 64-unit Ferndale Gardens in Barrie, Ont., for $24 million.
The buyer is Toronto’s Starlight Investments, an active acquirer in the apartment market in recent months.
“I think it might be the first new construction deal done post-COVID. Other deals got under contract (prior to the pandemic-related economic shutdowns in March), and then closed after COVID,” Derek Lobo of SVN Rock Advisors in Toronto told RENX.
SVN’s Carolyn Ennest facilitated the transaction.
Lobo said the price of $375,000 per unit does not represent a reduction from pre-COVID pricing, despite deal volume across Canada having declined by about 40 per cent during the past six months.
“The price is essentially the same as we would’ve expected pre-COVID,” Lobo said. “Trade volume is down, but prices have held.”
Demand for apartments remains strong
Although Lobo believes transaction volumes might remain lower for several more months due to the usual lag time getting deals done, he doesn’t expect the market itself to cool. The first two reasons involve demand, both from renters and investors, which remains strong.
“No. 3, interest rates are at historic lows and they were before COVID. And here’s the point now, everyone expects them to stay low. We are in the zombie apocalypse of interest rates,” he noted.
“The fourth thing is, maybe, land costs come off and maybe construction costs come off because no one is going to be building hotels, retail and office.”
Ferndale Gardens is located at 430 Ferndale Dr., in the south end of Barrie, a fast-growing city of 150,000 residents about 45 minutes north of Toronto.
The concrete-construction, four-storey building was designed as a higher-end rental with a mix of one- and two-bedroom apartments and outdoor parking.
It has extensive amenities including social room with kitchen, lobby lounge and cafe bar, outdoor pergola sitting area, outdoor rooftop terrace, onsite fitness studio, pet spa and electric car charging facilities.
“We wanted to build a rental product, but we were always focused on the demographic of the empty-nester,” said PineMount founder and president Eli Turkienicz.
He said the market is under-serviced for this type of new product for people moving out of longtime residences, but who don’t want to buy a condo.
“So we’ll provide them with an alternative, a higher-end apartment with condo-quality finishes that they can rent.”
When the building was sold, only a few apartments remained to be leased-up.
Turkienicz’s company has developed single-family and smaller projects in several other GTA and GGHA cities. He became familiar with Barrie while driving through the city to reach his cottage in the Muskoka region.
PineMount acquired the property after it had sat vacant for several years while being owned by other developers.
“It was done specifically to start development on it. It was not long between closing and then going forward with the redevelopment,” he said.
PineMount was founded in 2010 when Turkienicz left the family business to strike out on his own. Originally trained as a lawyer, Turkienicz soon entered the family development business, then known as Milton Turk and Sons, about 30 years ago.
The family focused more on the commercial side of things, so when Eli set out on his own, he wanted to do something different.
“I did not want to overtly compete with what my family was doing. They were not involved much in residential at the time so I decided to pursue that. I did see it as a good opportunity.”
After several years constructing single-family and smaller multires projects, he met Lobo a few years ago and is now moving into larger-scale apartment development.
“I guess I got converted,” Turkienicz said.
Strong interest in Ferndale Gardens
Ennest said SVN marketed the Ferndale building to “a select group of new construction buyers,” setting off a sale process that took just 18 weeks. Both she and Turkienicz said there was strong interest in the property — even before it was actually put on the market.
“There always was interest before COVID and right through the whole shutdown and up to now,” Turkienicz said.
“There were a number of players interested in purchasing this building and COVID did not seem to have an impact on their interest.”
Ennest said the development had many attractive elements, including its location both with respect to Barrie (linked to Toronto and the GTA by Hwy. 400 and GO train commuter service) and the neighbourhood.
“It’s new construction and institutions are looking to make their portfolio younger,” she noted. “Barrie is a growing market, in close proximity to the GTA. We’re always receiving calls with interest in being in the GTA.”
The building is located next to the environmentally protected Ardagh Bluffs, an extensive forested area.
More development planned for Barrie
Turkienicz isn’t done with the city, either. Although his next project is slated to be a nine-storey, 170-apartment development on Sheppard Avenue West in Toronto, he’ll soon be returning to Barrie.
PineMount owns a site that’s about an acre in size at 129 Collier St., overlooking the nearby Lake Simcoe / Kempenfelt Bay waterfront.
“We have a pipeline of projects that we’ve built up and one of them is another site in Barrie,” he said. “This one is in the downtown, between Collier and Dunlop . . . it runs between both streets.”
PineMount plans a phased, 260-unit development which fits into current zoning for the site.
“We are looking to build two towers, in two phases. The first one would be about 100 units with some podium parking and then the second phase after that, the balance of the units.”
Having tasted success with PineMount’s largest project so far, Turkienicz plans to continue helping fill the need for more purpose-built rental developments.
“I know there is a desire, hunger out there for new product. Some of the larger, institutional landlords are constantly looking for new buildings to add to their portfolio and there is not a lot out there,” he said.