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181 King St S: Brick Brewing Redevelopment
02-27-2017, 09:49 AM
I'll definitely be interested to see how the parking plays out. Will they (smartly) choose not just to play host to the local Brick Brewing in their brewpub, but also the local Community Carshare as an option for those eschewing all (or some) cars? It will also be interesting to see what the per-stall cost of parking is, since they say it will be intended to reflect the true cost of parking. If it's $10/20,000/spot, it's definitely not a true cost reflection, but it'll also be a heck of a thing to see people dropping more on a parking spot than they dropped on the car to fill it. Then again, given the amenities here, it's almost as though they've set the table to have this first-ever in Waterloo Region low-parking/true-cost-parking building intended for the strata of customers most likely to have the highest car ownership. The amenities suggest that the cost of any kind of unit here, buy or rent, would be so high as to truly only attract choice non-car users, rather than anyone who doesn't drive due to any kind of cost concerns.
02-27-2017, 07:37 PM
I think it would be great for this development to host a car share car but, even if not, there are three car share vehicles (one of which is a van) within a five minute walk of here.
As for who owns or doesn't own a car for which reasons, maybe there are some people who rationally take their residential and transportation decisions as related ones. If living somewhere means being able to avoid the very large costs associated with car ownership, maybe one can afford to pay a lot more to live in that place.
02-27-2017, 09:39 PM
(02-27-2017, 09:49 AM)Viewfromthe42 Wrote: It will also be interesting to see what the per-stall cost of parking is, since they say it will be intended to reflect the true cost of parking. If it's $10/20,000/spot, it's definitely not a true cost reflection (...)
So what do you think is the true cost of a parking spot?
02-28-2017, 09:39 AM
The most recent report I'd been able to find on structured parking costs across north america, a 2017 release, puts costs in the $20,000-35,000 range, with zero profit, so presuming that they are truly trying to fully separate the cost of parking, they'd also need to put equal profit margins on those costs, making it come in somewhere in the $35,000-50,000/spot range. More likely on the lower end, since this will not likely be an underground-heavy parking structure. But if it's lower than $30,000, you know they're having parking subsidized by owners who don't buy it. That said, I still appreciate very much that they're moving in this direction, but with such a costly luxury building, it'll be hard to parse out any true per-unit savings. While the most spartan of 1 bedroom condo units on the market will still top $220K, this building's units will be priced higher, likely so much higher that you would feel you were paying luxury prices even before being told that no parking was included. So I'm supportive but skeptical.
02-28-2017, 11:24 AM
OK, so I went to look, and found two studies here, average construction costs US$19K and US$24K:
More relevant are the Canadian costs, though. Altus Group projects a range of C$65 to C$95 per square foot, or C$22K to C$32K. I expect Kitchener numbers will be closer to the low end, whereas Toronto or Vancouver will be at the high end.
So it's not too far from your cost numbers. But I don't know where you get a 30-45% margin assumption. I doubt that most developers would be making more than 10-20% on a condo project today. And in any case, even at cost, there is no "subsidy": building extra spaces at $25K each and selling them at the same price neither increases or decreases the developer's profit.
The Altus Group numbers are for free-standing parking garage structures, near as I can tell from your link, and it's absolutely cheaper to build the Sunlife structure at John and Caroline compared to the 144/155 integrated parking structures right next door. If you scroll to the next page and include a few more cities like Ottawa and St. John's, the cost range for those structures widens to $50 to $135 per square foot, or $17K to $45K for a much simpler structure than integrated parking.
The VTPI numbers are USD (so multiply by 1.33), and right below the costs they estimate that the design and other non-concrete costs to be 30-40% of the per-space cost (so multiply by 1.3-1.4), for a total CAD cost of 1.75-1.85 with no profit margin added.
A developer will not get financing for a project without an overall rate of return on all construction, from suites to add-on finishes to commercial units to parking. When you make the parking contribute nothing towards profit, it means everything else has to contribute more than it's fair share, so if there is a lesser profit margin on structured parking, it means that non-car users are paying more so as to still yield the same overall profit rate. Similar idea to how the cost of a store's free parking lot is paid for through increased prices, prices paid both by drivers who use the lot, as well as transit users, cyclists, taxi shoppers, and walking shoppers. You can agree or disagree that this is a problem, but it is absolutely a subsidization.
As for the profit margin, a quick glance around shows that different years and market competitiveness show profit margins as high as 25-35%, and as low as 5-10%. So to take the low end of the VTPI and add in profit margins and a good amount of unaccounted-for costs, the spot cost minimum goes to the $35-40K range.
A local example could be the Benton garage. $15,000,000 to finance the build, 500 spaces, or $30,000/space for a still-simpler-than-condo parking integration with zero profit margin.
02-28-2017, 01:42 PM
I don't want to make this a big argument thread here, but I will point out that many costs are lower in Canada so you can't just multiply by 1.33 (let alone 1.4) to get Canadian prices.
Other than that, I will simply reiterate that I disagree with your 35-40% profit margin assumption (take a look at some TSX-traded property developers for a reality check: the returns are well below 10%), and the subsidy/financing link (the bank doesn't care how much money the developer makes, they just want to ensure that the financing is repaid).
I'd say there's almost nothing that's cheaper in Canada, and I'd also argue that it's the hottest markets where margins are thinnest and overall numbers (and thus profit weighting) of sales highest, representing more Toronto and Vancouver than Kitchener.
But I'll still leave it that it was $30,000/space to build the Benton garage without a cent of profit, half a decade ago, 100% above ground, and without the need to accommodate residences on top and the associated utilities and design stylings pushed through the parking design. So that's a pretty good floor or low-end estimate.
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