There are a multitude of trends developers consider when deciding on the type and location of homes to build. In Calgary, Alberta, a proposed condominium development raised the question of whether three-bedroom condos were feasible to add on 16th Avenue NW. However, the managing principal of the development company shared that the demand is too low to justify the high price of building this type of residential real estate.
According to the managing principal of the company, land price is the number one factor influencing this decision. Construction costs, including financing costs, interest, profit and regulatory costs from government bodies are also a factor. In this case, three-bedroom condominiums would cost more to construct than two-bedroom condos because they are harder to fit in a smaller plot of land.
The cost of a residential real estate project like this can be lowered in a few ways, such as changing the parking layout, but it still ends up being more expensive. Density bonusing from the city could also help sway the developer in another direction. However, the lack of demand in Calgary, Alberta for a condominium make the project less feasible.
The development company's managing principal said that most families tend to look for a ground-oriented product like a duplex, townhouse, or single family unit to avoid condo-specific challenges like parkade and condo fees. Residential real estate trends like these are important to understand for buyers, sellers, and developers throughout Alberta. Those looking into the legal side of building or buying a home or building should speak with a lawyer about the legalities related to this decision.
Source: Calgary - CBC News, "Not enough demand to justify building more 3-bedroom condos, says developer", Stephen Hunt, Jan. 18, 2018