Reliance holds two key downtown properties on each side of the Johnson Street Bridge, which is being replaced. The Janion is on the north side and the Northern Junk property is on the south. Revised plans for a commercial-residential development on the Northern Junk property have been submitted to City Hall after going through city advisory committees.
"The building was split into two buildings and more refinement occurred about landscaping," said Stovell. He is hoping that project will soon go before Victoria's governance and priorities committee for referral to public hearing.
Built in 1891, the Janion was empty for more than three decades before Reliance bought it in June. The old structure is not beyond rescue, "but it's going to be a fairly heroic economic effort to bring the building back to life," he said.
Stovell is confident a broad market exists for micro units. He said potential buyers include business travellers, parents wanting a home for their children at university, up-Island residents seeking a place in downtown Victoria and those who work downtown.
"It's the walkability," he said. "It's just a very, very urban place and that's a good place for small compact units because the idea is that your living and your dining rooms aren't in your apartment … they are outside."
And their prices are below what's being sold these days in the capital region. The average price of the 127 condos sold last month was $320,304, while the median price was $263,450.
Prices down
Ray Blender, Re/Max Camosun general manager, said micro units would likely be bought as investments to use as vacation rentals or by single people working in the downtown core. The micro size is popular in other cities, too.
Blender, however, isn't so sure parents of university students would buy them because they often purchase condos within walking distance of campus. He also figures that business travellers would likely be on expense accounts or here for short-term stays.
He recalls when the Mermaid Wharf condo project on Swift Street sold out quickly with compact units of about 400 to 500 square feet. "From that, I can see people buying these as an investment."
In Greater Victoria condos usually run 700 to 800 square feet, with entry-level prices between $250,000 and $350,000, Blender said, adding that for the past two years in the condo market, "there's really no strength if you're looking at appreciation because, with the amount of new development, it keeps the prices down."
Stovell expects the buyers of the small condos to be a mix of owners and investors looking to rent them out. Zoning even allows overnight rentals, he noted.
Pure rentals
Other developers are also looking to profit from Victoria's notoriously tight rental market, including EY Properties. The Greater Victoria company is plowing ahead with a 104-unit rental property at the corner of Burnside Road West and Tillicum Road, where the firm will also be building new commercial headquarters. EY is in the early stages of construction despite the economics.
Industry insiders have long held that the economic case hasn't existed for purpose-built rental accommodation because of high land prices, construction costs and the limited rent an owner can expect - even though the rental vacancy rate is low at around 2 per cent.
But, says EY president Ernie Yakimovich, the rental market is still the kind of ground his company prefers: "We are primarily in the rental business; that's our core business and we felt the condo market is a difficult market to time and it seems to be a bit saturated … there's a lot of condos built. We wanted to follow our core business."
Yakimovich also said most of the company's other rental stock consists of older buildings, and it was time for something new.
"There's been very little new product [that's been] built in rental and we felt if we built a building that was new and modern we'd be all right," he said, adding it didn't hurt that borrowing costs are at all-time lows. "This will be the first pure rental building built in Saanich in 25, 27 years."
There have been plans for other rental units in Greater Victoria, including the 120-unit, 12-storey Hudson Mews tower behind the Hudson development, as well as proposals for units at the Dalton Hotel on Yates Street and the re-imagining of the Queen Victoria Hotel on Douglas Street.
EY's new building, which will share the block with the company's 2,500 square-foot head office planned for the corner of the lot, will be both green and unique to the local market.
Doug Yakimovich, EY Properties' project co-ordinator, said the building will be constructed to at least a gold BuiltGreen standard. It will also be the first six-storey wood-framed building in Saanich.
The $10 million-plus project broke ground in September and is expected to be complete by the end of 2013. EY anticipates being able to rent the building completely within eight months, or less, of opening the doors.
An improved economy and more jobs in the city, spurred on by the increase activity in the ship-building sector, will help.
The suites will will rent for between $775 and $1,700 per month.
– With files from Andrew Duffy, Victoria Times Colonist
from Western Investor December 2012
