How the condo market is changing
Wanda Chow, June 10, 2014, (BURNABY NEWSLEADER) — Kevin Cheng and Jenny Yeh don’t know it, but they’re the face of a growing trend in Lower Mainland real estate.
The couple is making plans to downsize from their soon-to-be empty nest to condo living in the Metrotown area.
And while their seven-bedroom Killarney house would be far too much space for them once their eldest son marries soon and moves out, they aren’t interested in retiring to a tiny one-bedroom unit.
They bought an 893-square-foot, two-bedroom unit for their son in the first tower being built at the redeveloped Station Square. After sales for the second phase start on June 8, they plan to purchase another two-bedroom for themselves, in the 1,000-square-foot range.
For the son, two-bedrooms will give them space if he and his wife have a child, said Cheng, 57, in Mandarin through his younger son, Fuhao. For the couple, the space will give them room to store their belongings.
“And when we have grandchildren they’ll be able to stay over in the second bedroom,” said Yeh, 55, with a smile.
The couple’s plans reflect a growing trend in the local real estate market—a demand for larger units, especially from baby boomers downsizing from houses that sit on now-valuable property.
The trend is so strong that Intergulf Development Group has applied for a new rezoning for its 38-storey condominium tower on Nelson Avenue, across from Bonsor Park, only months after receiving approval in principle from Burnaby council on an earlier proposal.
Nothing in the new proposal is different except for an expansion of the amenity space and more significantly, the mix of unit sizes. The new plan, which goes to public hearing on June 24, will reduce the total number of units from 304 to 293.
It eliminates one-bedroom units altogether and cuts the number of one-bedroom-plus-dens by more than half. That floor space has been redistributed to increase the numbers of two-bedrooms, two-bedrooms-plus-dens, and studios-plus-den.
“While we find there is strong investor demand, it tends to be investors that will actually look to live in these units and hope that they’ll appreciate in value over time, but it’s important to them that they’re livable,” said Shaadi Faris, vice-president of Intergulf. “It’s not just about finding the smallest and cheapest.”
Faris noted a similar demand at Intergulf’s Empire at QE Park development on Cambie Street in Vancouver. There, the developer combined 30 smaller units into 15 larger ones to meet market demand.
“They’re typically downsizers getting out of a single-family house but still want to have that space … We’re seeing similar interest in Burnaby as well.”
If approved, the Nelson Avenue project, dubbed The Park at Metrotown, will launch in the fall, Faris said.
Tracie McTavish, president of Rennie Marketing, said the demand is from the “baby boomer bulge who are now starting to sell their homes.” When they sell their houses, they’re buying condos and either putting the balance into the bank or helping their children buy their first homes. “It’s one chequebook with two buyers.”
At the Binning Tower at the University of B.C., market demand led to the developer combining one- and two-bedroom units into larger suites, McTavish said.
At another project on the Cambie corridor, the first wave of sales was all for top-floor and larger units or those with views. “To this day they’re still trying to sell their smaller one-bedrooms.”
McTavish noted that most investors wouldn’t purchase a larger unit—”there’s no return there”—so the trend is really among people buying to live in the condo.
It’s either downsizers or younger people used to living in strata homes who want to upsize to accommodate their growing families.
Rennie Marketing is handling the sales in the first tower at the planned redevelopment of the Brentwood mall site in Burnaby, which start later this month.
McTavish said there is roughly a 50-50 split between one- and two-bedroom units, which is “somewhat unusual” but reflective of the stronger appetite for larger suites.
Three-bedrooms units are more risky from a developer’s perspective because their high cost could make them difficult to sell. McTavish said if demand is there for such units, more could be included in future phases of the 28-acre project.
Another trend identified is that boomers leaving their houses want to “age in place” so will tend to stay in the same areas where they’ve been living for many years, said McTavish. You can expect 30 to 40 per cent of buyers in a project will come from the area within three to five postal codes.
The developers of the Station Square project, Anthem Properties and Beedie Development Group, focused on livable floor plans, said Houtan Rafii, vice-president of residential development for Beedie Living.
The project’s second and third towers will have more well-sized, one-bedroom units and fewer studios than in its first phase.
Rafii noted that people are getting used to the idea of living in condos, near transit and services, for the same price of a house located out in the suburbs a longer commute away, he said. “It’s a tradeoff sometimes.”
Greg Zayadi, vice-president of sales and marketing for Anthem Properties, said Station Square is seeing a demand for “strong-sized two-bedrooms of about 1,000 square feet.” The project’s floor plans aim for good use of space—for example, two bedrooms that are spacious rather than chopping up the space by including a den into the same square footage, Zayadi said.
“People are willing to pay $600,000, $650,000 for those units as you get to the top of the tower, and they sell really well at $550,000.”
Houtan Rafii, vice-president of residential development for Beedie Living, checks out the model for the new Station Square development.