The man responsible for salvaging any profit from Vancouver's financially troubled Olympic athletes village - and saving local taxpayers from potential losses - is euphoric these days.
"Those opening ceremonies - that should add $25 a square foot to what I can get at the village," Bob Rennie says gleefully over lunch on the third day of the Games, as the street below the restaurant ran thick with thousands of 2010 Olympic Games tourists. Mr. Rennie, officially known as the city's best-known condo marketer but unofficially as one of the city's major power brokers, is kidding, as he often does. Well, sort of.
The reality is that many are hoping there's an element of truth in Mr. Rennie's humour.
Among them are brothers Peter and Shahram Malek who run Millennium Developments and who pledged $70-million of their assets to keep the athletes village project going when their financing started to collapse at the beginning of the recession. Another group is the City of Vancouver, which is owed almost $200-million for the land and was forced to loan the Maleks $800-million for their construction refinancing.
Both are depending on a healthy real-estate market to recoup the village's $1-billion cost. It would be a relief if the reflected glory from the Olympics would make a difference once the athletes go home.
Certainly the village, after a year of rocky news coverage, has been basking in the Olympic glow. A recent New York Times Magazine essay on the Games by Liberal Leader Michael Ignatieff was accompanied by a picture worthy of an architecture magazine. The site looked like a modernist marvel on the water. Television shots frequently highlight it. Media outlets report that athletes love it.
And, amid the frenzy of the Games, the village, as part of the city's Southeast False Creek district, received LEED Platinum certification, making it the greenest neighbourhood in North America.
The question is: Will that make a difference? And will it be enough given the circumstances of the village's finances and the current state of the market?
Many are dubious.
"The problem with Millennium is their costs," says Cameron McNeill, another major development marketer who points out that the village was built at the peak of prices for labour and materials. "Will the market bear the $1,100 a square foot they need? I think that's stretching it. I think it's going to be extremely difficult for them to recoup their costs."
Mr. McNeill, the head of MAC Marketing Solutions, is selling a building across the street from the village, the James. He's pricing it in the $700-a-square-foot range. That's the average price Mr. Rennie got for the first 250 village condos before the crash.
It means the remaining 500 condos have to sell for much more on average for the project to break even. Although Mr. McNeill believes in the long-term benefit of the Games and agrees the city made the right move by taking over the village's finances to make sure it was completed, he can't see how the remaining condos will fetch those prices.
Development consultant Michael Geller, who recently oversaw the planning of Simon Fraser University's UniverCity project, said the athletes village project will likely sell at prices high enough to recover the $800-million in construction costs. "But I am worried about the city recovering the $193-million it was supposed to get for its land."
University of British Columbia business professor Tsur Somerville said that extensive research has provided zero evidence that Games cities experience real-estate booms after the tourists go home.
"I don't deny that there are going to be some purchasers who like the Olympics and say, 'I want to buy something in Vancouver.' That exists but it's not enough to move the whole market," Mr. Somerville says. Like many, he doubts the developers will do any better than break even on the project.
The Olympic athletes village was never meant to have these problems. For a decade before the Olympics, the neighbourhood - industrial waterfront land the city had slowly acquired over the years - had been planned as a showcase environmental district, a place that would pioneer the latest in green building technology, urban agriculture, innovative energy systems and more.
Vancouver committed itself to building an athletes village there as part of the Vancouver-Whistler bid in the late 1990s and promised to use $30-million of federal money contributed for a Games legacy to build social housing into it.
A new set of left-wing councillors elected in 2002 wanted to see the village's sustainability enhanced by having a good social mix - one-third market condos, one-third "affordable" housing, one-third social housing.Report Typo/Error