What Happens to Cancelled Condo Projects?
Tuesday August 30, 2016
From the desk of Ben Myers, SVP Market Research and Analytics.
I was discussing the number of upgrades we’re getting from purchasers at our Collier Centre project in Barrie with my wife the other day. I told her almost all of the buyers the previous developer of the project had deals with have re-upped with us, many choosing more upgrades than they chose the first time around. We purchased the Collier Centre development, which failed under the previous ownership.
My wife asked me a question I didn’t have the data for “what typically happens with cancelled condo projects?” – I thought the topic would make a good topic for a blog post.
I pulled data from Altus Data Solutions for cancelled projects between 2003 and 2012, to see what happened to them a couple years later. A total of 122 projects and 20,208 units were pulled from the market during that time. For comparison purposes, 999 new condominium projects launched during that 10-year period.
Based on the Altus data and my research, 28% of cancelled condo units during that 10 year span have been re-launched, sold, built and completed by the same developer. Nineteen percent have been built and completed by a new developer.
Ten percent of the units are under construction by the same developer and 10% are under construction by a new developer (Collier Centre would fit in here if it was in the GTA). So 70% of the developments were eventually built or under construction after being cancelled.
Note that of the completed developments, nine projects were converted to townhouses, two to retirement buildings, two to purpose-built market rental buildings, two to affordable rental buildings, and one to an office project.
Ten percent of the projects are now being proposed again by the same developers, or new ones, while 12% have not been built (where there appears to be no new proposals forthcoming). Most of these projects are “C” locations at best.
In conclusion, good real estate typically remains good real estate. Bad market timing, poorly priced or designed projects often need a reboot with a new strategy. The majority of sites have come back in a new form have been successful the second time around.