West Village Towers | 150m | 41s | Cidex Group | NORR Dubai Yahya Jan

General rating of the project

  • Great

    Votes: 5 6.4%
  • Very Good

    Votes: 11 14.1%
  • Good

    Votes: 21 26.9%
  • So So

    Votes: 8 10.3%
  • Not Very Good

    Votes: 14 17.9%
  • Terrible

    Votes: 19 24.4%

  • Total voters
    78

UrbanWarrior

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Well I think these guys are looking 2 - 3 years ahead, where Calgary is likely going to be back on top of national GDP growth for cities. I don't think it sounds so crazy for this thing to go ahead. In fact, I think it makes sense to build for the inevitable future where Calgary has an extremely low vacancy again.
 

maestro

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GDP is heavily weighted in favour of natural resources which is a core business of ours. Of course, It wouldn't take much to lead Canada in GDP growth. I think you are underestimating the amount of available space and overestimating how quickly the space hoarding that got everyone in this mess will be forgotten. Some of the larger players had reserves in the hundreds of thousands square feet. That is completely unheard of anywhere else in our nation.

I don't think it's too crazy either but, not for your reasoning. That sort of free spending speculation ended with the 1980s when the Trump types all went bankrupt and the pension funds took over real estate. This bust is the first time oil and gas has also been hit hard by their corporate real estate decisions. The national energy policy effect on real estate was more landlord . This will have lasting consequences.
 

JonnyCanuck

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I agree with your assessment Maestro. This recession is different from the one in 08-09. We are now in the third year of the oil price collapse. Does anyone really think that the price is going to boomerang in the short to medium term? After stabilizing for awhile, a barrel has just slipped below $50 again. Oil and gas companies have adjusted to the new reality and right-sized their businesses. Many of those lost jobs are not coming back to downtown Calgary even if oil does get to $70 and stay there. For this reason, the city and industry are now looking at how to re-purpose all of that vacant office space. All this indicates that there may not be the level of demand for rental residential in the inner city that some believe will be in the future.
 

Always_Biking

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The recession is different for sure, but 2-3 years a quite a ways out. If there are no more high rise tower starts going forward these guys could very well be in a decent position in 3 years. worst case scenario is that many of rental units on the market will be absorbed over those three years, but if the economy takes off, there could be a shortage by then.
 

maestro

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The oil companies amassed a huge amount of space throughout the boom for future consideration. They are now paying for it. The ongoing rumours with Cenovus is that they won't be occupying Brookfield Place where they have a long term, million square foot lease arrangement. I just don't see a return to hoarding head leases even if oil/gas recovers to the peak of the boom years in two or three years time. You already see the fundamental shifts at work within these companies as they align closer with corporate Canada conservatism. I don't think they expect to reach the peak of the boom in 2 to 3 years if ever again.

Rental residential is a different animal. It's more reliant on continued high demand from international investors than demand from renters. We are grossly underbuilt as a nation compared to our grossly overbuilt neighbours to the south and that is a huge part of the attraction.
 

maestro

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The recession is different for sure, but 2-3 years a quite a ways out. If there are no more high rise tower starts going forward these guys could very well be in a decent position in 3 years. worst case scenario is that many of rental units on the market will be absorbed over those three years, but if the economy takes off, there could be a shortage by then.
Ask yourself? What advantage is there to building now opposed to building when there actually is a shortage? Your worst case scenario is pretty damn good too.
 

Always_Biking

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If you build now you'll be the first to take advantage of a lower vacancy rate. Yes, it's a gamble, but on the other hand when you start when the vacancy rate is high, you'll be competing against a bunch of other projects all with the same idea. You could be competing for higher construction costs also.
 
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UrbanWarrior

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If you build now you'll be the first to take advantage of a lower vacancy rate. Yes, it's a gamble, but on the other hand when you start when the vacancy rate is high, you'll be competing against a bunch of other projects all with the same idea. You could be competing for higher construction costs also.
That's all basically what I meant :)
 

maestro

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If you build now you'll be the first to take advantage of a lower vacancy rate. Yes, it's a gamble, but on the other hand when you start when the vacancy rate is high, you'll be competing against a bunch of other projects all with the same idea. You could be competing for higher construction costs also.
Building in a depressed market to be first in a recovery doesn't you give the best lease rates. You're also still speculating on the future. That comes with significant costs. The more risk, the more your lenders will want in an equity position or debt repayment. The pension funds and REITs have even higher demands from the managers. REITs are more aggressive as there is more pressure to build but, it also only takes a few projects that don't live up to expectations to damage the REIT's reputation.
 

Alex_YYC

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That all makes sense, but then again the Underwood tower is apparently a go in this climate so who knows. Nothing would surprise me.
 

Always_Biking

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Building in a depressed market to be first in a recovery doesn't you give the best lease rates. You're also still speculating on the future. That comes with significant costs. The more risk, the more your lenders will want in an equity position or debt repayment. The pension funds and REITs have even higher demands from the managers. REITs are more aggressive as there is more pressure to build but, it also only takes a few projects that don't live up to expectations to damage the REIT's reputation.
It would be interesting to know what the factors are in the speculation process. Throughout this downturn, we have seen a couple of rental buildings break ground - possibly three if the residential portion of the Marriott goes ahead.
 

maestro

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Yeah, and I already gave my own reasonings why this one could still go ahead and Underwood finally after so many failed starts. I disagree that these are being built as the result of developers taking advantage of lower construction and speculating on being first to market in a recovery.
 

JonnyCanuck

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It would be interesting to know what the factors are in the speculation process. Throughout this downturn, we have seen a couple of rental buildings break ground - possibly three if the residential portion of the Marriott goes ahead.
At last glance, the flooring for the residential building of the Marriot was above the podium so it looks like it is a go. There are two more that are being seriously evaluated as we speak ... Stadium Shopping Centre and Citizen (in the Beltline).
 

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