A Toronto developer has plans under way to develop what they believe will be the first condominium building comprised of safety deposit boxes.
Parallax Investment Corporation has purchased a lot in Markham, Ont., to construct its 16,000 sq. ft. ultra high-tech security project comprised of safety deposit boxes that range in size. About half the project will be devoted to client parking, and 2,000 sq. ft. of it will be vault space. There will be around-the-clock security, client reception areas, and small private suites.
But instead of operating as a rental, SafeBox Condominium Vaults will operate as a condo, with presales launching March 31. It will have a completion date some time in spring 2013. Although there won't be anyone living in the building, it will operate like a condo development, says Parallax's Nigel Lawson.
Owners will run the building collectively by a condo board, and residents will cover repair bills, pay condo fees and property taxes.
However, unlike renting a safety deposit box, they will be able to sell their boxes or rent them out. While there are lease-style projects in other countries, he says this will be the first condominiumized safety deposit box property.
“We are offering a product you can't get anywhere else,” says Mr. Lawson, who, as a lawyer, oversees the legal aspects of the company's acquisitions. “Because they will own it, they have more flexibility.”
“If a bank closes, you lose your safety deposit box, you have no certainty of continuity.
“As well, you have a purchase price upfront, and when you sell it, you recoup it. There's ability to make money off it…you have the same rights and privileges that any homeowner or business owner has.”
The price of the three-inch high, 10-inch wide, 24-inch deep gold box is $3,600, with an annual fee of $109, and taxes of $64. The platinum box, which is the same length and width, but eight inches high, has a price tag of $5,500, with an annual fee of $273 and taxes of $97.
As is common practice with condos, Parallax is selling the boxes as presales and once the sales are completed, the company will start developing. They still have to pass some city approvals, says Mr. Lawson, because zoning laws don't specify such use for a condo yet. Mr. Lawson says he's confident that sales won't be an issue, considering the early response.
“We have had huge demand,” he says. “I've been spending the last week giving presentations to all the brokerages. It's amazing how many people are finding this such a novel concept and great way to meet market demand.”
The company is looking to develop similar projects in Brampton, Mississauga, Toronto, Ottawa, Calgary, Montreal, and Vancouver, where they are planning for three developments.
Real estate finance expert Tsur Somerville, who is director of the University of B.C.'s Centre for Urban Economics and Real Estate, says he understands why a developer would want to finance a building with presales, but he doesn't understand the appeal for the consumer.
“I still have a lot of trouble getting at why it is that someone would feel they need to do a single upfront payment?” he asks. “Unless I have a lot of wealth now and I won't later, I don't know. From a developer's standpoint, selling these things in advance makes it easier to finance the construction. It shows that there's a market, and a value stream.
“But for the owner, they could raise your strata fees. Strata title means you are jointly paying into security issues, too. They come under strata. A whole bunch of stuff goes along with it.”
Mr. Lawson says ownership can be cheaper than renting in the long run. And as with any condo building, he says the board would have the ability to take action against owners who don't pay their taxes or fees.
Parallax has been around for three decades, developing condominiums, office buildings and shopping malls throughout Ontario.
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