There is a lack of affordable housing and excess office space.
An office tower is getting a new lease on life
The ten-storey building near the intersection of 5th Avenue and 8th Street S.W. was empty for years after SNC-Lavalin gave up naming rights.
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The building is owned by Peoplefirst Developments, which stripped everything down to the concrete, as it prepares to upgrade them to meet code for the building's new purpose as a residential tower.
The original did not have thermal barriers, windows or balconies. The building will have up to 112 residential units when the retrofit is done.
The Cornerstone is one of five office-to-residence conversions underway inCalgary, which has emerged as a leader in Canada when it comes to repurposing unused offices, a trend that gained traction during the Pandemic and that some hope can be part of the solution to the country.
A year ago, the federal government said it would dedicate $300 million to convert vacant commercial properties into 800 units of rental housing.
The building is being turned into residential space.
The photo was taken by Azin Ghaffari.
When a project has reached completion, the funds will be disbursed based on the converted space's price.
Incentives of their own have not been stopped by the high vacancies in the city ofCalgary, which had high vacancies before COVID-19 and remote work made office life less attractive.
The city gave $73 million to support office-to-residential conversions from a pool of $100 million earmarked for conversion projects last year.
It can be difficult to convert a floor plate. Victoria Girardo, vice-president of real estate lending at Canadian Western Bank, said in an interview that having grant funding in place made the business case more compelling to developers. Ensuring there are affordable housing options where people live is important.
Five of the eight projects are currently under construction and three of them have been approved by the city. According to Natalie Marchut, the remaining $27 million is still available.
Marchut said that the city reopened the program in the summer.
She said that the remaining $27 million would be allocated to the successful candidates of the round of submissions.
It's a good solution to excess office space and a lack of affordable housing, but it's not economically viable in every market.
Avison Young Inc., a commercial real estate services firm, said that the downtown office vacancy rate in the final months of the year was 29.7%, which was the highest in the country.
In other parts of the world, vacancies are not as high, and investors are more patient in waiting for demand to recover.
The Canada Life building, built in 1895, was converted into Le St-Regis lofts in 2021.
There is a sign advertising office space in Canada.
The photo was taken by Lyle Aspinall.
The lowest vacancies in Canada's major cities were found in Downtown Vancouver. There are very few opportunities to convert in the city.
Industry watchers say that conversions in downtown Toronto may never happen because of the costs and market dynamics.
The commercial building vacancies rate in Toronto was 1.9 percent in 2019. In 2020 it grew to 5.9 per cent and then to 9.5 per cent last year.
Eight million square feet of office space is being built in Toronto.
A tower is being built in Toronto.
The photo was taken byBrent Lewin.
Office towers are not the best candidates to be redeveloped.
According to a recent report by Avison Young, many tenants are moving to higher-quality office buildings because of falling commercial rents.
The C and B class buildings are the best candidates for developers to take on the task of converting the space into housing.
The demand for office space in downtown Toronto is very deep according to the chief executive of one of the country's largest office real estate investment trusts.
The office space in Toronto is very old. Most of it has either been built to a very high standard or upgraded to a very high standard.
In the case of Calgary, the building systems are too old and it isn't economical to upgrade that office space because you can't get the kind of rent that would justify the capital outlay.
The building that frames the tower are office buildings.
The photo was taken byGavin Young.
There was a time when demand for office space waned.
The only way to make it work was to convert them into condominiums or rentals. It is on a meaningful scale. I don't think that will happen in Toronto or Montreal soon.
The movement is being embraced by other cities around the world.
In the first phase of the plan, the city will invest $196 million to create 1,000 apartment units. According to a report from RentCafe, Philadelphia and Washington, D.C. have converted the most units in the next two years together.
Olshevsky is the managing director of Peoplefirst, which is developing The Cornerstone in Canada.
Purchasing a commercial building in Toronto is much more expensive than in other Canadian cities and that doesn't take into account the challenges of the construction process.
New designs need to work around every single post tension cable in some buildings. Office buildings don't have enough plumbing to support housing units, and a developer would have to account for that when adding in kitchens and washrooms, among other things.
The prices of materials and labour have gone up a lot.
Inflation is driving everything right now. Construction is not exemption from that. It is important to maintain the quality that we want to have but still fit it into an established budget Olshevsky made a statement. Without the city's support, it would be difficult.
One of the advantages of conversions is that they can be ready for market in less than a year, which is half the time of a traditional new build.
The Cornerstone was bought by Peoplefirst Developments in February of this year.
They think it's just the beginning. Office conversions are something Olshevsky and his team are working on.
The next goal is to complete the project in a better time because it took a little bit of time to solve all the initial problems. We hope to complete pre-construction in three months instead of seven. With the supply chain issues, it shouldn't take more than 14 months to complete the project.
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