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CANCELLED
Speed and Frances, west tower
Uses: condo, commercial
Address: 606 Speed Avenue
Municipality: Victoria
Region: Urban core
Storeys: 12
Condo units: 83 (loft, 1BR, 2BR)
Sales status: in planning
Speed and Frances, west tower, is a 12-storey residential building with 83 condos, six townhomes and ground fl... (view full profile)
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[Burnside/Gorge] Speed and Frances towers | condos; commercial | 12 & 12-storeys | Cancelled


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#181 attica

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Posted 02 November 2015 - 08:35 AM

It's like the city doesn't understand basic economics at times.  

 

It is even worse on small residential projects.  For example, one of the many things, they will make a builder or owner-builder replaced the entire frontage of the sidewalk (irrelevant of existing condition)/boulevard curb where the driveway is and the re-asphalt once the curb is replaced.  Ohhh yea, and the company you are using has to be approved by the city.

 

All of their policies add immense cost, percentage wise, to a small project.  You can't exactly hire uncle Bob to come do curbs/re-asphalt.  

 

I think within 24 months it won't be possible to find a single family home in City of Victoria on a 5,500 sq/ft lot under $1,000,000.

 

Condos will need to up in price too with all the crap being thrown at bigger projects.

 

New house in Oakland's area.  Previous sidewalk was just fine.

 

 

.. this is not how real estate economics works, real estate prices are not a function of costs + profit. You cannot arbitrarily pass down costs to consumers. A unit is worth whatever the market will pay. Think of it the opposite...if a developer could get 505K per unit instead of 500k per unit, they are not going to charge 5k less.

What basically happens is increases in project costs act as a level that at a certain point will make the project with its current unit mix and type unfeasible. (this can mean increases in costs if the developer has to switch to a higher price point project, but the quality of the product would need to increase as well).

This CAN have a market wide increase in prices if the extra costs incurred by the city make it harder for developers to leverage land, thus less land is brought to market and then supply/demand economics come into play.

(note this has nothing to do with Vancouver vs Victoria markets, its consumer behavior and real estate economics)

Source: Director of real estate economics at UBC and other prominent researchers


Edited by attica, 02 November 2015 - 08:36 AM.


#182 jonny

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Posted 02 November 2015 - 08:46 AM

- Attica

 

The various municipalities that make up Greater Victoria love to throw up hurdles and roadblocks that impede development. In my opinion, these roadblocks restrict supply.

 

Developers walk away from the market. Projects take months longer than they should which means developers are slower to place product into the marketplace. Buildings are 15 floors rather than 25 or. Density is 5:1 when it should be 10:1. Land is designated unnecessarily as ALR when it has never been used as farm land. Getting a property rezoned is an absolute nightmare and takes years rather than a couple of months.

 

That the municipalities have accomplished in terms of "affordable housing" is essentially move supply from S1 to S2. When supply is restricted, quantity goes down and price goes up. Econ 101.

 

supply_decrease.png



#183 MarkoJ

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Posted 02 November 2015 - 09:54 AM

.. this is not how real estate economics works, real estate prices are not a function of costs + profit. You cannot arbitrarily pass down costs to consumers. A unit is worth whatever the market will pay. Think of it the opposite...if a developer could get 505K per unit instead of 500k per unit, they are not going to charge 5k less.

 

I agree that developers need to market properties at whatever the market can bear; however, if the cost is too high to squeak out a 12% margin, for example, he or she won't build.

 

There are currently only four brand new completed single family homes (three $1 million plus) for sale on MLS® in the municipality of Victoria.  Market just doesn't support land cost + city fees/policies + construction costs.

 

Land cost can't really fall based on city fees/policies being too high (substitute buyer is a 1st time buyer buying the tear down to fix up) and construction costs don't swing too much and are open to larger market.


Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2020 | Fair Realty

www.MarkoJuras.com Full Service MLS® - 2.75% | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#184 attica

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Posted 02 November 2015 - 12:22 PM

- Attica

 

The various municipalities that make up Greater Victoria love to throw up hurdles and roadblocks that impede development. In my opinion, these roadblocks restrict supply.

 

Developers walk away from the market. Projects take months longer than they should which means developers are slower to place product into the marketplace. Buildings are 15 floors rather than 25 or. Density is 5:1 when it should be 10:1. Land is designated unnecessarily as ALR when it has never been used as farm land. Getting a property rezoned is an absolute nightmare and takes years rather than a couple of months.

 

That the municipalities have accomplished in terms of "affordable housing" is essentially move supply from S1 to S2. When supply is restricted, quantity goes down and price goes up. Econ 101.

 

supply_decrease.png

 

that is exactly what i said....

"This CAN have a market wide increase in prices if the extra costs incurred by the city make it harder for developers to leverage land, thus less land is brought to market and then supply/demand economics come into play"

 

The problem is the narrative, that is constantly thrown around that costs are just "passed down" to consumers, and that a 5k increase in fees = a 5k increase housing prices

 



#185 attica

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Posted 02 November 2015 - 12:23 PM

I agree that developers need to market properties at whatever the market can bear; however, if the cost is too high to squeak out a 12% margin, for example, he or she won't build.

 

There are currently only four brand new completed single family homes (three $1 million plus) for sale on MLS® in the municipality of Victoria.  Market just doesn't support land cost + city fees/policies + construction costs.

 

Land cost can't really fall based on city fees/policies being too high (substitute buyer is a 1st time buyer buying the tear down to fix up) and construction costs don't swing too much and are open to larger market.

 

Also exactly what i said...

"This CAN have a market wide increase in prices if the extra costs incurred by the city make it harder for developers to leverage land, thus less land is brought to market and then supply/demand economics come into play"



#186 Mike K.

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Posted 02 November 2015 - 12:28 PM

Which likely puts even greater pressure on the developer to ensure every last fee is calculated into the pricing.

Taxes should be the City's mechanism for cost recovery, not the hidden tax that is the uplift fee.

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#187 attica

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Posted 02 November 2015 - 12:28 PM

the otherside of the coin is who is getting the land lift, it is a fallacy to assume that it just goes to support the developers proforma, often with the "residual land value" left over large amounts of it just go to fueling land speculation and increased purchase prices, so its the original seller who takes a lot of that value. It is a difficult situation where either that value goes to the seller, the buyer or the city. Obviously some needs to be available to leverage the land and bring it to market. The key is how much.



#188 Mike K.

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Posted 02 November 2015 - 12:32 PM

I would argue that the uplift fee only apply if a property is flipped after securing the more favourable zoning. And I have a feeling these uplift fees are in response to that practice.

Want to flip? No problem, but we'll charge you a tax valued at x of x and there's no recourse.

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#189 MarkoJ

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Posted 02 November 2015 - 12:42 PM

The problem is the narrative, that is constantly thrown around that costs are just "passed down" to consumers, and that a 5k increase in fees = a 5k increase housing prices

 

I agree on any individual project it does not matter.  If one bedroom condos on Speed Ave will sell for $299k they will sell for $299k irrelevant of what the cost to the developer is.  However, as part of the larger market the consumers pays for everything, the land, the construction costs, the city fees, and developers' margins.  It is of my opinion if the city fees/development policies dropped/improved there would be more competition as more developers' would enter the market at improved margins.  Land could also go up in cost but land is a relatively small component of condo projects in Victoria.  Bosa, for example, paid $6 million and grossed over $80 from the Promontory.

 

Right now in the condo pre-sale marketplace there is very little inventory.  We have the Escher, Legato, and Encore all selling very well and there is nothing in the pipeline for the next year or so.  As a result of the short supply prices in the pre-sale market are being pushed up.

 

Supply would be in a better position if the Northern Junk and other projects were pre-selling instead of trying to get past the city obstacles.


Edited by MarkoJ, 02 November 2015 - 12:46 PM.

Marko Juras, REALTOR® & Associate Broker | Gold MLS® 2011-2020 | Fair Realty

www.MarkoJuras.com Full Service MLS® - 2.75% | www.834sales.com & www.promontoryforsale.com - Building(s) specialist 

Looking at Condo Pre-Sales in Victoria? Save Thousands!

 

 


#190 Nparker

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Posted 17 April 2016 - 06:54 PM

If only Comrade Isitt had this much concern over the establishment of tent city.

 

The City of Victoria has refused to back down from a requirement for an almost $1-million amenity contribution before two residential towers on industrial/commercial property across from Mayfair Shopping Centre will be allowed to proceed. In what Coun. Ben Isitt hoped wasn’t playing “a game of chicken” with the developer, Oakwood Parks Estates, councillors stuck with staff recommendations calling for a $975,000 amenity contribution for a proposal to build two 12-storey towers over ground floor commercial on Speed and Frances avenues.
 

The developer says the project represents a $52-million investment — likely the most significant capital investment in the area since Mayfair mall was built — and will pay future property taxes of about $385,000 a year.

 

Isitt said it would be helpful if the city had more internal capacity to do its own economic analysis of proposed developments. That way the city would know if it was “asking too much in terms of stalling this project and freezing use of the land for a decade or is this just a game of chicken?”

 

Isitt said that based on all available reports, the amenity request appeared to be reasonable....

http://www.timescolo...toria-1.2232985

Then again, perhaps SIC was able to supply enough community amenities to speed up the development approval process.


Edited by Nparker, 17 April 2016 - 06:59 PM.


#191 VicHockeyFan

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Posted 12 June 2016 - 06:56 AM

Is sound a bit like this developer does not have secure financing in place.

 

http://www.timescolo...entre-1.2276529

 

 

Victoria policy requires developers to make an amenity contribution tied to changes in zoning that increase allowable density, which increases the value of the land. For properties outside the core, city policy calls for an amenity contribution equivalent to 75 per cent of the additional value of the land, as determined by an independent consultant.

In this case, the potential increase is estimated at $1.3 million, so the amenity contribution would be $975,000.

The developer has long been trying to negotiate a reduction in the amenity fee, but on the advice of staff, council has remained steadfast.

Last week, councillors refused a request from the developer to allow the amenity contribution be paid at occupancy (with a convenant committing payment) rather than the building permit application. City staff, again, recommended against.

 

- See more at: http://www.timescolo...h.iRmTRUZZ.dpuf


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#192 Mike K.

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Posted 12 June 2016 - 07:32 AM

Could this be because the intention is a flip?

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#193 VicHockeyFan

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Posted 12 June 2016 - 08:04 AM

Could this be because the intention is a flip?

 

I don't know, it would be clear in the flip it still needs to be paid, ie. it would be in the price or in the agreement.


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#194 Nparker

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Posted 12 June 2016 - 08:31 AM

How can Council constantly harp on the lack of affordable housing while making statements like this:

 

 

But Coun. Pam Madoff, who has not supported the application from the outset, said her lack of support had nothing to do with the amenity contribution, but everything to do with “planning being dictated by the happenstance of property ownership.” Madoff noted that this type of development has not been contemplated for this area and it could have significant impact on the existing commercial and industrial uses in the area.She also questioned how “a neighbourhood that could see this kind of population densification without the basic amenities of a park or a school or anything like that.”

- See more at: http://www.timescolo...h.cHxoBFpe.dpuf

Do they still not understand that every time higher density housing is approved the supply increases and takes some pressure off our over-inflated market?



#195 Mike K.

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Posted 12 June 2016 - 08:46 AM

There's a school up the street. Which was closed by the schoolboard due to low enrollment.

Shouldn't Madoff be happy more residents are coming in? But of course she also has no problem with the removal of rental units so long as her supporters want it that way.
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#196 VicHockeyFan

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Posted 12 June 2016 - 08:48 AM

How can Council constantly harp on the lack of affordable housing while making statements like this:

Do they still not understand that every time higher density housing is approved the supply increases and takes some pressure off our over-inflated market?

 

No.  They do see that $1M they can use for something or other though.


<p><span style="font-size:12px;"><em><span style="color:rgb(40,40,40);font-family:helvetica, arial, sans-serif;">"I don’t need a middle person in my pizza slice transaction" <strong>- zoomer, April 17, 2018</strong></span></em></span>

#197 Nparker

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Posted 12 June 2016 - 09:09 AM

...They do see that $1M they can use for something or other though.

Like supporting more tent cities. That seems to be the kind of density they want. To be fair to PM, there is a park and school near SIC , so I guess the location was perfect in her eyes for greater density.



#198 Robb

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Posted 24 June 2016 - 08:16 AM

Public hearing on this was yesterday.  Did anyone here go?

 

Edit:  Talked with someone who went.  Project moving forward with only Coun. Madoff sill opposed.


Edited by Robb, 24 June 2016 - 10:28 AM.

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#199 jonny

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Posted 24 June 2016 - 11:07 AM

Thanks for the update Robb!



#200 Nparker

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Posted 24 June 2016 - 11:28 AM

...Project moving forward with only Coun. Madoff sill opposed.

Quel surprise!



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