Investment is on the rise throughout downtown Halifax and Dartmouth. So much so that the view – from both sides – is about to change dramatically.
On one side of the harbour construction is beginning on two 14-storey apartment blocks which will tower over the water’s edge. On the other, plans are being drawn up to pump $290 million into Queen’s Landing on Halifax’s already well-developed waterfront.
The future for the area looks bright. In truth though, the slew of new investments comes after several years of significantly depressed construction levels which haven’t yet properly recovered from the recession.
As Canadian GDP growth faltered in mid-2007, non-residential construction investment in Halifax plummeted, falling 21 per cent between Q1 and Q2 and a further 13 per cent between Q2 and Q3. The sector began to recover in 2009 and 2010, but activity in both years remained around 30 per cent lower than pre-recessionary levels.
In 2011, the private sector pipeline has been particularly active. In downtown Halifax, the 19-storey Trillium condominium complex is nearing completion while United Gulf has requested a permit to start work on a 33-storey tower. And in Dartmouth, Fares Inc. has broken ground on the $500-million King’s Wharf development.
For those operating in the residential development market, it’s a good time to be doing business; vacancy rates are down and rents are up.
In October 2010, Canada Mortgage and Housing Corporation’s six-month snapshot of three-unit-plus apartment buildings recorded the lowest vacancy rate in seven years, with just 2.6 per cent of units sitting empty. In the same quarter, Toronto had a vacancy rate of 3.1 per cent.
Further, Halifax has the highest rental rates of any of Atlantic Canada’s capital cities. In April 2011, the average two-bedroom apartment cost $885 per month – 14 per cent higher than that found in Charlottetown, the second most expensive.
Demand for high-end apartments and condos is particularly high, according to developers operating in the sector. “The residential market is very hot in the multiunit sector. It’s a very healthy industry. If anyone says they have a building to sell, there are buyers lining up and they are paying top prices,” says Nova Scotia developer Francis Fares, whose company is responsible for the multi-use King’s Wharf development.
At press time, the King’s Wharf development had achieved a pre-sale of near 90 per cent of the site’s 1,500-plus units, according to Fares. Funding for the company’s projects has been entirely bankled, with each new tranche of funds released when a certain level of pre-sale and other criterion are met. It’s not just high vacancy rates and pent-up demand that has led to the success of these developments. The two communities are undergoing a shift in consumer preferences and purchasing patterns.
United Gulf Developments’ Skye Halifax project is a re-incarnation of a design originally called the Twisted Sisters. The new approach deliberately shifted the building’s target market from baby boomers to Generation Y – those in their 20s and 30s today – and boosted the capacity.
“Our market research proves there’s a burgeoning demand from Generation Y. They want to live in the city and within a vibrant community, and we’re addressing the need for affordable housing of this type,” says Patrick LeRoy, vice-president of operations at United Gulf Developments.
While demand is there and those working in government are keen to talk about the city’s successes, these developments have been fraught with delays, and both Fares and LeRoy are among other developers that have faced long waits for building permits.
The King’s Wharf project was delayed for two years during the planning stages because it was unable to get permission from CN Rail, which has a track traversing the site.
In the past, developments in Darmouth (where King’s Wharf is based) have been stilted. Nova Scotia Premier Darrell Dexter, who was once chair of the Dartmouth Downtown Development Corporation, reminds us of the failure of Admiralty Place to complete its second and third buildings. He sees King’s Wharf as the latest in a string of developments that are set to change that.
Fares goes further, saying Dartmouth actually has more demand than Halifax for the kind of high-end apartments and condos he’s developing: “I think the market here is just getting started for the kind of product we are doing right now. It’s perfect timing and the perfect fit.”
Office space has also figured high on the list of priorities for developers. The recently announced convention centre, Queen’s Landing and King’s Wharf all feature office space in their design, alongside several smaller single-use developments being worked on this year.
Dexter says supporting this kind of development was a crucial part of the province’s strategy for what he describes as Atlantic Canada’s capital city: “We have seen a number of companies coming into Halifax that are looking for Class A office space. One of their complaints was that they weren’t able to find sufficient quantities for what they needed.”
The convention centre, which was approved for a federal grant this past August, is the largest single investment in Halifax’s central business district for decades. The development is unique in its mix of funding; it will receive $56 million from both the provincial and municipal governments, and $51.4 million from the federal government, with the remainder coming from the private sector.
At the moment the empty lot reflects badly on the downtown core, with a large city-block-wide mess of concrete and rubble opposite one of the more trendy areas to eat and drink. The proposals have not been without complaint in the local media, but these businesses are keen for the increase in clientele.
Last month, Halifax won out over competitors in Quebec and British Columbia to secure a $25-billion federal government shipbuilding contract. Irving Shipbuilding will construct combat vessels for the military. The projected impact of the win is staggering — the contract will result in an estimated 2.4 per cent bump in provincial GDP, and will support 8,500 jobs per year.
Those backing the bid were confident, believing that Halifax’s history in shipbuilding and maintenance, Irving’s status as a Canadian company, and supply chain benefits which will stretch across eastern Canada, placed the city in an enviable position. That confidence turned out to be well-founded.
The project promises to create a large number of highly-skilled jobs and provide the genesis of a centre of excellence which should attract more work.
“We have also seen in the past, and know from ongoing contact and interest, that there are tradespeople out west who want to move to Atlantic Canada and we feel we’ll be able to attract them back home,” says Steve Durrell, president of Irving Shipbuilding, who also plans to focus on apprenticeships to help maintain the talent pipe line.
This is where the two flagship developments and the investments made in residential units go hand in hand. The likes of United Gulf Developments are targeting young people while large government-funded projects help stimulate jobs growth which will entice them to stay in the city.
The investments announced for downtown Halifax and Dartmouth this year are a welcome shot in the arm for the region.
In their efforts to service pent up demand for high-quality office and residential space, commercial developers will first aid the recovery in construction levels and go on to boost the wider economy through the supply chain benefits and tax revenue.
The government support, at municipal, provincial and state levels, has already brought in the convention centre project and hopes to further boost job creation with the shipbuilding contract. Adding jobs through these huge infrastructure investments will have a positive knock-on effect for a range of sectors.