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Some developers are hopeful that the University District could be a bright spot for future townhouse developments in Calgary, such as the Ivy by Brookfield, seen above in an artistic rendering.Brookfield

Year-to-date sales of city-centre row townhouses are up 7.9 per cent in Calgary, according to latest stats from Calgary Real Estate Board (CREB). Substantial price declines, a buyers' market and a continuing trend towards urbanization have combined to encourage sales in an otherwise struggling market.

It's a granule of positivity in a market where most sectors are in decline and while some developers are buoyed by the figures, others remain skeptical that there's longevity in it.

"Within the city centre, row prices have declined by 5.75 per cent," CREB chief economist Ann-Marie Lurie says. "The price declines in the row product have encouraged sales activity. Year to date, city-centre row sales have totalled 286 units; 7.9 per cent higher than last year."

"The semi-detached product within the city centre is a bit different," she continues. "While prices have eased, sales activity continues to slow. There were 389 sales in this segment so far this year, 7.4 per cent below last year. This is partially related to price declines in the detached sector of the city centre, adding more competition for the semi-detached product."

Citywide, year-to-date sales of row townhouses fell more than 14 per cent, indicating that the inner city is indeed bucking a trend, though Ms. Lurie stresses the need to consider inventory levels as an important part of the equation.

"The months of supply for row houses is highest in the city centre, indicating that supply outweighs demand by a greater amount in there, resulting in relatively steep price declines," she explains.

Construction of new townhouse developments across Calgary has fallen more than 70 per cent in 2016 but, despite the city centre currently having more than six months of row townhouse supply, many developers still consider them a safe bet as part of an inner city condo development.

According to stats from Buzz Buzz Homes, North America's largest marketplace for new construction homes, 60 per cent of new townhouse developments in Calgary in 2016 were part of city centre condos. That's up from 40 per cent in 2015 and 36 per cent in 2014.

"Urbanization is a big trend in Calgary right now and we're seeing a lot of downsizers looking for a lock and leave lifestyle while retaining the independence and privacy of a single family home," says Robert Duteau, senior-vice president of development at Grosvenor Americas.

Stats from Buzz Buzz Homes also show a 70-per-cent increase in the square footage of condo-based townhouses under construction in Calgary from 2015 to 2016; indicating that downsizers rather than first-time buyers are indeed many developers' target market.

"Most people buying townhouses as part of high rises will be able to afford an infill but it's the maintenance free aspect they're looking for," Mr. Duteau adds.

"Townhouses at grade level in condo developments are a great solution for developers because those ground floors are typically much harder to sell," he continues. "They're appealing to buyers because they come with all the amenities of a condo."

Grosvenor has two city-centre developments scheduled for completion in the next six months; Smith in Beltline which is 50-per-cent sold and Avenue in the west end, which is 80-per-cent sold. Both are apartments with townhouses at grade. Together, they total more than 300 apartments and 14 townhouses, of which, currently two are sold.

Mr. Duteau admits that "to have two developments of this scale completing in an economic downturn is, of course, very much concerning." But he remains confident in the townhouse proposition.

"Townhouses in condo developments are almost always last to sell as they don't sell to investors but to end users," Mr. Duteau says. "So it's logical they'll sell later in the process. And they will sell, they're a sought after product in great locations at a good price."

But not all developers agree that Calgary's inner-city townhouse trend has long-term promise. Battistella Developments was building stacked townhouses back in the early nineties, but in recent years, they've focused exclusively on downtown micro-condos and first-time buyer apartments.

"Where we're building closer to the core, it's a challenge now, because of the high cost of land. The density has to get higher to make it work," general manager Paul Battistella says.

"Even a bit further out, I'm not sure the land values can carry the lower density. At the time we were building stacked townhouses, we were at around $500,000 an acre. Now, that number will be double that in a comparable inner suburb."

Mr. Battistella says even townhouses within high-rises in Calgary present problems, in his experience.

"Calgary isn't like Toronto or Vancouver; it doesn't have a downtown that works for families," he says, "and most families can't afford a townhouse at inner-city prices anyway. So the market is small."

Three years ago, Battistella's 100-unit Pixel development in Kensington launched with apartments and skinny 13-foot-wide townhouses at grade. The mini-townhouse product wasn't one Calgarians were familiar with, but for Battistella, it was essential to keep costs down market the units under $500,000.

"If we'd done it any other way, they wouldn't have sold," Mr. Battistella says. "As it was, those units were last to sell in the development and it was a struggle. It's not something we would do again. It just wasn't worth the hassle."

Meanwhile in the northwest, construction recently got under way on phase one of the new 200-acre University District which will have 167 townhouses to just 100 apartments.

The steepest year-to-date price declines in row townhouses have occurred in the northwest of the city, where prices have fallen an average of 7.34 per cent. But, with inventory levels at less than half those in the city centre and consistently less new product coming to market, developers are hopeful that the future of townhouses for the University District could be bright.

"Townhouses will be a key housing form in University District," says James Robertson, president and CEO for West Campus Development Trust. "In an urban development, townhouses provide an attractive housing option for buyers who are looking for larger square footage but don't want to give up on location, lifestyle, convenience and well-being. It's a desirable trade-off which provides more time to accommodate other lifestyle choices."

Upon completion, townhouses will make up 15 per cent to 20 per cent of the overall housing mix in University District, which Mr. Robertson believes will buoy sales in the long term.

"I think we will continue to see the desire for urban townhouses rise. With affordability being an important consideration, the townhouse is an attractive consideration."

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