New high-rise rental building opens despite potential loss of tenants across city
Canada Mortgage and Housing Corporation expects vacancy rates to increase
After 20 years of setbacks, the Upten apartment tower is officially open in Victoria Park, but it's entering a rental market that is facing a lot of challenges due to the COVID-19 pandmeic and layoffs in the oil and gas sector.
The 38-storey mixed-use building has 379 rental suites with prices ranging from $1,600 to $3,000 per month.
Riaz Mamdani, CEO of Strategic Group, the project developer, says he is not concerned about units sitting empty.
"Our target tenant for our 379 rental units is that tenant that wants a home, a home in the inner city that has a lot of amenities. They want the convenience of being close to downtown, they want upscale, they want size," he said.
"People who want a lifestyle and are prepared to pay for that lifestyle in the inner city."
The building includes several amenities such as a large gym, catering kitchen and party room, which Mamdani says is an advantage during COVID-19 since people aren't able to leave their homes as much.
"Your home has become more of a focal point, and a building like this that's able to cater to people who work from home … this becomes the choice for them," Mamdani said.
Initially, he says, the company had projected rental prices to be 30 per cent higher.
"It was a more lucrative project when we first envisioned it five years ago. It still works. It still makes mathematical sense. And over the long term, I think it'll be a very successful project."
The building is now at 25 per cent occupancy, but the CEO says the company is on track to lease 95 per cent of the new units by summer.
Calgary's economy difficult for landlords
Gerry Baxter, executive director at the Calgary Residential Rental Association, says COVID-19 and the economy has been extremely difficult for landlords.
"Those that needed a helping hand, landlords gladly worked with them to work out payment plans because they didn't want to lose their tenants," he said.
"But then there were many other tenants out there who thought it was a rent relief holiday and didn't have to pay their rent."
The latest data from Canada Mortgage and Housing Corporation (CMHC) is pointing to an increase in vacancy rates, based on people leaving the city.
Michael Mak, senior analyst with CMHC, says vacancy rates are more likely to be affected by the labour market than the average rent prices.
"Especially with the recent job cuts in major companies that are headquartered in Calgary, it's likely that we're going to see people moving out of Calgary to seek more jobs."
As for rent prices, he says landlords are competing with each other and are not only lowering rent but also using incentives to drive demand.
The official CMHC data for Calgary and across the country will be released in the new year.
With files from Terri Trembath.