20 Ottawa Street North | 26, 6, 6 fl | Proposed

[urbd]

Proposal for 26-storey condo building made to Kitchener council
The developer says they'll be making a $350,000 affordable housing donation as part of the project.

lol

[ac3r]

Proposal for 26-storey condo building made to Kitchener council
The developer says they'll be making a $350,000 affordable housing donation as part of the project.

T-thanks...I guess? That'll maybe pay to drywall a room and a half and install some electrical. Assuming a building existed to do that in.

[cherrypark]

Proposal for 26-storey condo building made to Kitchener council
The developer says they'll be making a $350,000 affordable housing donation as part of the project.

T-thanks...I guess? That'll maybe pay to drywall a room and a half and install some electrical. Assuming a building existed to do that in.

$50k higher than IN8 is giving for 30 Francis, which is saying something.

[ac3r]

I guess if the region pools together both funds, they could buy a fixer upper and when the next developer offers them these offensive sums of money they could then renovate it and house maybe 3 people.

[nms]

Any chance that municipalities can add a percentage levy on new condo sales? Something that would lead to a meaningful pot of money that allowed something to actually happen would be nice. Or maybe something that developers could draw from if they were allowing affordable housing in their developments to offset the costs of "cutting into my God-given right to a profit" or however they pitch it to Council when they beg, cap-in-hand, for a few extra floors on their towers? (sorry for the sarcasm)

[ijmorlan]

… when they beg, cap-in-hand, for a few extra floors on their towers? (sorry for the sarcasm)

In other words, when they beg to be allowed to build more housing than the rules allow.

Don’t forget, we want building housing to be profitable. That way the people who do it will do it more.

[tomh009]

Any chance that municipalities can add a percentage levy on new condo sales?  Something that would lead to a meaningful pot of money that allowed something to actually happen would be nice.  Or maybe something that developers could draw from if they were allowing affordable housing in their developments to offset the costs of "cutting into my God-given right to a profit" or however they pitch it to Council when they beg, cap-in-hand, for a few extra floors on their towers? (sorry for the sarcasm)

Why should this be only on condo sales? Are condo buyers somehow more responsible for our housing issues than single-family house buyers?

[dtkvictim]

Any chance that municipalities can add a percentage levy on new condo sales? Something that would lead to a meaningful pot of money that allowed something to actually happen would be nice. Or maybe something that developers could draw from if they were allowing affordable housing in their developments to offset the costs of "cutting into my God-given right to a profit" or however they pitch it to Council when they beg, cap-in-hand, for a few extra floors on their towers? (sorry for the sarcasm)

Why should this be only on condo sales? Are condo buyers somehow more responsible for our housing issues than single-family house buyers?

Exactly. This would never cut into profits, but it would make the most affordable housing stock in the city (typically condos) even more expensive. High rise condos already have a higher cost per sqft, so the less wealthy purchasing these get less for more. An additional tax would make the imbalance even worse. The lower middle class subsidizing the lower class while the wealthier get off free.

---

I also think the image of the greedy profit seeking developer has become a bit of a caricature, and 99% percent of people perpetuating it have 0 clue about the financials of any development. People would be surprised by the number of developments, some even in our region, that turn into financial disasters.

Not saying there isn't a lot of money to be made in development (there is), but it's not as black and white as greedy developers turning on the money printers and then asking for more. Consider also that a large portion of profits go to the banks, investment funds, and wealthy individuals who are financing these projects and not always to the developer. This money may look elsewhere if the risk/reward calculations become unfavourable, and there are already a lot of projects behind the scenes that don't pan out in part because of a lack of funding.

[cherrypark]

Any chance that municipalities can add a percentage levy on new condo sales?  Something that would lead to a meaningful pot of money that allowed something to actually happen would be nice.  Or maybe something that developers could draw from if they were allowing affordable housing in their developments to offset the costs of "cutting into my God-given right to a profit" or however they pitch it to Council when they beg, cap-in-hand, for a few extra floors on their towers? (sorry for the sarcasm)

Different than the God-given right to equity for existing homeowners - particularly low density, heritage designation and "look and feel" wielding ones - to profit while also slowing and increasing the development costs for new builds both big and small? Perhaps we could all pull our weight a little more...

I agree the inception of some municipally dealt fund to incorporate more permanently affordable rentals into appropriate developments - mixed or stand-alone - is well overdue.

[nms]

Fine, add the levy to all new units, I don't care.  The prices are going up anyways, whether or not the Cities figure out a way to fund affordable housing.  Offering $350,000 on a development with 464 proposed units is an insult.  Even if every one of the proposed 464 units in this development sold for $350,000 (and you can bet that they will be a lot higher than that), the project will gross $162,400,000.  (I would not be surprised if the gross sales number was close to double that figure) $350,000 is 0.2% of the total cost of the project.

On a whim, Mr. Google answered the question: "What's the typical profit when building a condominium tower in Ontario" with this article:

In the ever-growing real estate industry, you are probably wondering how big the developer’s slice of the pie is. You may be in for a shock here, as the developer’s profit margin can be as low as just 12 percent. The average figure is between 12-20 percent, once all costs have been taken into consideration. Given the recent upwards trajectory in the Toronto property market, that figure may come as a surprise.

Am I to believe that an industry that could give me between $19,488,000 (12%) and $32,480,000 (20%) in profit per project (such as this one) is not a caricature of a "greedy developer"?  Where do you think all of your favourite local developers found the money to buy up even more local property and grace our skyline with their spectacular projects?

It's also interesting that this article popped up on CBC KW's Morning Edition today: "As rents rise this Waterloo student mulls cramming into a house with 5 others"  Has anyone had any success to figure out whether all of the built units in the Region are actually occupied?  I don't have the numbers handy, but I'm pretty sure that the number of newly built units was far outstripping both increasing university and college enrollment, as well as general population growth in the area.  Something isn't making sense.

[tomh009]

Am I to believe that an industry that could give me between $19,488,000 (12%) and $32,480,000 (20%) in profit per project (such as this one) is not a caricature of a "greedy developer"? 

Presumably that's 12% to 20% of the total sales revenue. But it takes several years to break ground, then years to build, and a few more years before you can completely detach from a new building, and risks lurk at every step. Compare that to any random consumer electronics company named after a fruit, which ships the product to consumers in a box, and then moves on to the next customer. At a net profit margin of 26%.

I personally don't see developers any more "greedy" than other businesses. And they are far from a monopoly, so they cannot dictate prices, another developer can easily undercut others.

Where do you think all of your favourite local developers found the money to buy up even more local property and grace our skyline with their spectacular projects?

Banks. Or a stock market offering.

All that said, I have previously proposed a development fee to fund affordable housing.

[cherrypark]

Fine, add the levy to all new units, I don't care.  The prices are going up anyways, whether or not the Cities figure out a way to fund affordable housing.  Offering $350,000 on a development with 464 proposed units is an insult.  Even if every one of the proposed 464 units in this development sold for $350,000 (and you can bet that they will be a lot higher than that), the project will gross $162,400,000.  (I would not be surprised if the gross sales number was close to double that figure) $350,000 is 0.2% of the total cost of the project.

On a whim, Mr. Google answered the question: "What's the typical profit when building a condominium tower in Ontario" with this article:

In the ever-growing real estate industry, you are probably wondering how big the developer’s slice of the pie is. You may be in for a shock here, as the developer’s profit margin can be as low as just 12 percent. The average figure is between 12-20 percent, once all costs have been taken into consideration. Given the recent upwards trajectory in the Toronto property market, that figure may come as a surprise.

Am I to believe that an industry that could give me between $19,488,000 (12%) and $32,480,000 (20%) in profit per project (such as this one) is not a caricature of a "greedy developer"?  Where do you think all of your favourite local developers found the money to buy up even more local property and grace our skyline with their spectacular projects?

It's also interesting that this article popped up on CBC KW's Morning Edition today: "As rents rise this Waterloo student mulls cramming into a house with 5 others"  Has anyone had any success to figure out whether all of the built units in the Region are actually occupied?  I don't have the numbers handy, but I'm pretty sure that the number of newly built units was far outstripping both increasing university and college enrollment, as well as general population growth in the area.  Something isn't making sense.

Right, which is equal to ~4-10% annual compounding interest on that money for a 2-3 year project. Financiers want to make money, and that isn't a wild return. I don't expect that anyone developing suburban homes (or frankly mid-rise) is doing any worse on returns or there wouldn't be money worth making. I would agree all of the above should do more to contribute to a market that is enabling their profit.

My comment was actually asking whether current homeowners are paying their way enough. We don't have capital gains on a primary residence, land value tax, etc. - is that right? 

If a levy is perhaps reasonable on above-market condos (fine with me if it adds more affordable units), on even more city resource and land demanding sprawl (more fine with me), why are incumbent residents off the hook in the present tense when they hold onto abnormally low density housing accruing equity, or when they exit to downsize or move to a lower cost city? 

Saying this as an owner of one of those downtown homes (who wishes there had been more available options for denser family housing when we were buying).

[CP42]

12-20% return over a 3-5 year investment is not anything crazy… especially considering the numerous risks involved. 

If developers were in it solely for profits, there are much easier and less risky investments to make.

Folks get so caught up on the fact that they make a profit, like that isn’t the purpose of any business… if they didn’t make a profit, nobody would build housing. 

There are also other factors to consider, such as how many local contractors are employed as a result of a development, that seem to hardly ever be considered in these conversations.

[ac3r]

First post has been updated with some new sketches: https://www.waterlooregionconnected.com/...2#pid97942

[tomh009]

26+6+6 now?

I do like the angled cut for the driveway.