Apartment developers add glam touches
Builders are adding amenities and upgrading technology to bring in higher rents, make projects viable
If renters are eager for an indoor pool, yoga studio, rooftop patio or even a pet spa, they don't need to limit their searches to just condominiums any more. Luxury apartment buildings, increasingly popping up across Canada, offer an alternative.
Take Les Terrasses Francesca, for example. The new residence, just 10 minutes from the Byward Market in Ottawa, features hardwood floors, granite counter tops, a washer and dryer in each unit, 9 1/2-foot ceilings, an indoor salt-water pool and fitness centre, just to name a few of its condo-like amenities.
Its first tenants are expected to move in during February, adding momentum to a small but growing movement toward the high end in the rental market.
The trend, while still a niche, is coast to coast. Even though apartment vacancy rates remain historically low in major cities across Canada, seemingly providing little incentive to landlords to raise their game, many owners and developers see the value of providing upscale amenities, as they potentially attract a higher calibre of renter and bring in bigger rents.
In some cases, the promised high returns can be the only way to get a project off the ground and make it viable.
These apartments fit the demand from two demographics of renters, according to Francesca Lépine-Willson, one of the owners of the six-storey Les Terrasses Francesca, where monthly rents begin at $1,950.
The first group is younger people who are established in a good job and want attractive accommodations, but live dynamic and mobile lives – not knowing if they'll be in Ottawa, Toronto or Vancouver next year, for example. They want the flexibility to pick up and move if needed, and renting can be easier than owning. The other group is older renters or owners who are ready to downsize but don't want to return to the same style of apartment they had when they were students, says Ms. Lépine-Willson.
"The downsizers have achieved what they've achieved in their life, and they are ready to give up the house, the stairs and the maintenance, but they don't want to give up the comfort and the quality," she says.
The stylish LIV Apartments and The Balmoral have also emerged in the past five years in Ottawa, while the Bridgewater in North Vancouver, B.C., and The Alexander in Halifax opened just last year.
The Bridgewater was named the 2017 rental development of the year by the Canadian Federation of Apartment Associations and features electric car charging stations along with many of the same features of Les Terrasses Francesca, while The Alexander has a nearly 12,000-square-foot rooftop terrace. The Roehampton, in Toronto's midtown, touts a "condo-style" amenity package that includes a concierge, gym with fitness centre, indoor pool, steam rooms and yoga studio.
Lance Coulson, an executive vice-president in the national apartment group at CBRE Group Inc., says these luxury buildings will be more prevalent in the future, but states a rental project still needs to make sense from a developer's perspective in order to buy land and build.
"For the longest time it didn't make sense to build rentals," he explains. "It just made sense in some areas, depending on the density. The land costs, especially in Vancouver or Toronto, would have to be carefully analyzed."
Mr. Coulson says some developers would build a rental to add to their existing asset mix – maybe they already own a shopping mall in their portfolio, he says. Or, to get more space from a municipality to build a larger project, they would agree to construct a rental, too.
In Vancouver, where Mr. Coulson is based, he sees professional couples who don't have the equity to buy a home but are willing to pay top dollar in rent if they see higher-end finishes similar to condo quality. They're also looking for different amenities, whether that's a pool or gym, or being on a transit line.
"In order to get those market-leading rents, developers are going to have to keep updating their finishes and adding more amenities to their buildings," he says.
Ms. Lépine-Willson agrees that added amenities mean the rent is higher compared with a regular apartment building, but also notes the tenants are getting much more for their monthly payments.
For builders, the debate goes on about whether constructing a luxury apartment or a condo is the better approach.
"To just do a regular apartment or something more plain Jane, it's very difficult to make the numbers work," she says. "The cost of construction these days is just prohibitive, so you have to build luxury to make it work.
"Why do we do this instead of condos? It's a bigger profit margin and a quicker profit margin for building a condo, and that's why most builders do choose that route. [But] we feel there is a niche market to supply something that is equivalent to a luxury condo."
The trend goes beyond the finishes and features to include how renters interact with the landlords. Many buildings, for example, now give renters the option to pay their rent online.
More than ever, tenants are more technologically savvy than the building owners, and according to a survey co-sponsored by Avison Young, Informa Canada and Rentlogic, the ability to pay their rent online is the renters' most-desired feature when looking for a new place.
Dwindling are the days when apartment dwellers drop off their rent at the superintendent's door or mail postdated cheques to the landlord.
Toronto's Greenwin Property Management, established in the 1940s, introduced a digital tool for its tenants in 2013. Its myGreenwin program allows for tenants toA pay rent online at their convenience, submit and track maintenance requests online, communicate directly with Greenwin's head office, and purchase insurance.
"It was a combination of renter's requests and research complied by [our team]," says Brian Turpin, the director of information technology for Greenwin, explaining how the portal came to be. "Greenwin's ownership group and technology team have been keen on developing a multifunctional resident portal that's both paperless and mobile-friendly for years."
"The efficiencies that have been created – both from an end-user and back-office perspective – are immeasurable," he continues.
Technology is driving the trend in other ways, too.
In Toronto's West Don Lands neighbourhood, about 10 minutes east of the CN Tower, the community is benefiting from ultra-high-speed connectivity, helping separate it from other rental properties in the area.
Provided by Beanfield Metroconnect, it's Canada's first open-access ultra-high-speed broadband community network (and approximately four times faster than typical residential networks).
"What we tried to do was enable both content consumption and content creation so we had that ability [for tenants] to do creative work at home and in an office environment, plus we made it affordable so then no one gets left behind," says Kristina Verner, Waterfront Toronto's vice-president of innovation, sustainability and prosperity.
Tight times in the rental market
Vacancy rate in purpose-built rental apartments in both Kelowna and Abbotsford-Mission, B.C., the lowest in Canada among cities with at least 10,000 people, as of October of 2017, according to Canada Mortgage and Housing Corp. They are followed by Victoria (0.6 per cent), Kingston (0.7 per cent), Vancouver (0.9 per cent) and Toronto (1.0 per cent).
National average, down from 3.7 per cent a year earlier.
Vacancy rate in Saskatoon, highest in Canada. It is followed by St. John's (7.2 per cent) and Regina and Edmonton (both at 7.0 per cent).