What’s driving demand for new residential towers in Edmonton?

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WATCH ABOVE: The real estate market isn't firing on all cylinders right now, but that's not stopping the development of residential towers. People aren't rushing to buy condo units. So, what's driving the demand? Vinesh Pratap looks into it – Sep 27, 2019

After sitting idle for several years, construction will soon start on a parcel of land in Grandin which will house a new residential tower.

“There’s a lot of infrastructure to support density in this location,” says Salima Kheraj with Beaverbrook Group, the company behind the 20-storey building.

CX Grandin will be targeted towards young professional, students, even families for the ground-level townhomes. It will be a rental building.

“The mortgage rules have changed, the stress test; it’s making it a little challenging for first-time home buyers,” explains Kheraj, on the decision to go with rentals.

READ MORE: Edmonton city council approves 55-storey tower on Hotel Macdonald’s doorstep

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The development follows a recent trend in the city with the shift away from building towers with condos for sale.

“If the developers are smart… they’ve left themselves the flexibility of being able to sell those units in the future, should the market flip,” says Sheldon Johnston with Liv Real Estate.

According to the firm, in June there were 2,538 condos available for sale in Edmonton, a number that’s dropped slightly to 2,323.

READ MORE: Here’s the income you need to pass the mortgage stress test across Canada

As the rental side gains momentum, one aspect Johnston is monitoring is possible saturation on the higher end of the market.

“But we do still have positive migration,” Johnston says. “We have a young city. So, there are a lot of opportunities for rentals to be absorbed.”

According to the latest available information from the Canada Mortgage and Housing Corporation, the city’s apartment vacancy rate is 5.3 per cent.

In Grandin, the developer initially looked at going only mid-rise, but decided to go higher to better fall in line with city policy for density around the LRT.

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The new rental building is expected to be complete by fall 2021.

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