Exodus of Vancouver developers should be red flag for Calgary

This column is an opinion from Richard White, who has written extensively on Calgary's urban development. For more information aboutCBC's Opinion section, please see theFAQ.

It all started so innocently. A phone call to Mike Bucci, vice-president of Vancouver-based Bucci Developments, to talk about their new Dominion project in Bridgeland. It ended up as a discussion about the uncertain future of residential development in Calgary's city centre.

Bucci Developments has been part of the renaissance of urban living in Calgary's city centre for the past 25 years, building over 1,200 new homes in Bridgeland and Kensington. But, for the first time in 25 years, Bucci has no new projects in the works for Calgary. While Mike Bucci said he would like to keep the Calgary team together, he is starting to think he might have to move staff to Vancouver, as the future of Calgary's downtown and its neighbouring communities is uncertain.

While I always try to be positive about the future of Calgary's city centre, this doesn't surprise me. Like many urban analysts, I've wondered for several years now why builders keep constructing new highrise residential towers when the downtown employment numbers are falling. With the two major markets for highrise living being young downtown workers and empty nesters, one would assume less downtown employment means less demand for new downtown residential projects.

COVID has changed market

Plus, with COVID restrictions, empty nesters may be rethinking the idea of downsizing from their large suburban homes to a downtown apartment. If you can't enjoy the fitness centre and amenities of the highrise, or the restaurants, arts events, and festivals of the downtown, why move there? Better to stay in your suburban home with its home gym, media room, lots of space for offices and even your own large deck for socially-distanced gatherings with family and friends.

COVID has changed the market for highrise living, not only in Calgary, but around the world if not forever, at least for many years. We can't stick our head in the sand and hope the world will return to what it was before COVID.

Calgary's city centre has enjoyed an urban living renaissance since the mid 1990s. It's been a good run, but nothing lasts forever.

Vancouver developers have been a key part of that urban renewal starting with Nat Bosa, who built the first downtown residential building in decades in the mid '90s in Downtown West. The Bosa family continues to build residential buildings in Calgary today. Bosa was followed by several other Vancouver residential developers, including Anthem Properties, Bucci Developments, Qualex-Landmark, Grosvenor, Intergulf and Westbank Corporation (a partner in the Telus Sky project).

The west coast contingent was so dominant, I heard Calgary's downtown referred to as "Vancouver East" a few years ago. However, some Vancouver developers have quietly begun their exodus, as the demand for highrise residential development in our greater downtown declines.

Ambitious plans scrapped

First it was Qualex-Landmark which, after building over 1,000 new condos in the Beltline, closed its leasing office after completing the first of thetwo-tower Park Place project across from Memorial Park. Then it was Grosvenor, the builders of Avenue (Downtown West) and Smith (Beltline). They had ambitious plans for two other projects along Fourth Street S.W. in the Beltline, but decided not to proceed, closing their Calgary office in 2019.

And, while Anthem Properties has a mega-project called "Crossroads at Erlton Station" on the books, it currently has no new active projects in the downtown.

Could Bucci be next?

It should be a red flag for Calgary politicians that Vancouver developers are leaving Calgary. It is a reminder that private investment moves to whatever city offers the best return on investment.

If Calgary's downtown residential market crashes, it will have a major impact on the completion of East Village, which is only half finished. And, without significant residential development, the entire economic case for the Stampede Park's transformation is in jeopardy.

Calgary is currently trying to compete with cities around the world for young tech talent. The good news is the typical tech professional loves to work, live and play in an urban neighbourhood a place with bars, cafes, live music, restaurants, parks and recreational activities. They are also less interested in home ownership. They'd rather rent, keep their options open, and be able to move to whatever city offers them the best opportunity for growth and a quality lifestyle.

Can Calgary's downtown compete with Vancouver, Seattle, Toronto or Montreal for tech talent? We can try, but realistically, Calgary's downtown is not on the map for most young tech workers. Yes, we should try to change that, but it won't happen quickly and there is no guarantee it will happen at all.

As I stated in a previous CBC Calgary opinion piece, Calgary's "sweet spot" for attracting talent is 30-something tech entrepreneurs with young families or about to start families. But for them it's not downtown, but rather our established communities near downtown that have the most appeal.

Last word

Calgary definitely needs more people living in the greater downtown to make it a more attractive place to work and play.

The good news is the city centre's population is still increasing, and there are currently 2,500 new homes in highrise buildings recently completed or under construction, which is probably a five year supply.

Even more good news came this week when the city announced $45 millionin incentives to help developers and affordable housing agencies convert old office buildings into residential developments.

HomeSpace has already been approved for $5.5 million to convert the 1958 Sierra Place office building at Seventh Avenue and Sixth Street S.W. into 108 affordable housing homes. This building was identified in 2017 as a potential office-to-residential conversion, but the owner couldn't make the numbers work.

More details on how the formula works will be announced shortly, but I am told it is based on a per-square-foot incentive and can be used in conjunction with Canada Mortgage and Housing Corporation (CMHC) and other programs.

Maybe the exodus of a few Vancouver developers is more a cautionary yellow flag, rather than a red one. And if I was betting man, I would wager Bucci will find another Calgary project.

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