Major Vancouver developer Cressey Development Group is offering a stripped-down strata concept that offers a reduced price on a new East Vancouver project where the homes come with only a kitchen and a bathroom.
The “open canvas” concept at the 13-storey, 154-unit Format project, now being built at 1503 Kingsway, Vancouver, provides pre-sale buyers with a “blank slate and floor plan in which buyers will be provided a kit of parts” to eventually finish the unit, according to a Cressey release.
Cressey is working with Vancouver designerCraig Stenghetta, principal of Ste. Marie Art + Design, the design firm behind some of Vancouver’s top restaurants.
For example, buyers can add new walls for an additional bedroom or add a kitchen island or a closet. If the homeowner decides later on that they want to reconfigure their space, new fixtures can be added or changed as the homeowner sees fit, according to Jason Turcotte, vice-president, development at Cressey, who said the project is targeted at younger buyers.
The stripped-down Format condos begin marketing in mid-September. They will be priced at approximately $1,000 per square foot, which translates to a starting price of $550,000 for a unit of around 540 square feet, with two-bedroom units in the “mid to high $700s” in the concrete tower.
Turcotte said these prices are similar to new concrete condos in Burnaby, but “reflect value with a Vancouver address.”
Turcotte noted that, by the time a new condo suite is being finished, most of the heavy spending on a strata project has already been made, for land, construction, financing and various government fees.
But the Format prices may be less than the replacement value in the city.
The current benchmark price of a resale condominium in East Vancouver is $600,800, according to August data from the Real Estate Board of Greater Vancouver.
Incentives are becoming more common in Metro Vancouver’s new condo market, where pre-sales were down 30 per cent during the second quarter of this year, according to Altus Group, which claims pre-sales have hit the lowest level since the summer of 2009.
In August, nearly 75 per cent of the 508 new condos launched as pre-sales in Metro Vancouver failed to sell, according to industry research firm MLA Canada – and this was the best one-month performance since COVID-19 arrived in March.
A further seven projects with 1,113 new strata units, mostly concrete tower condos, will hit the pre-sale market in September, MLA adds.
A big problem for major tower developers, MLA notes, is a lack of offshore students and other foreign buyers who once dominated the new condo market but have virtually vanished during the pandemic.
Sales of existing condos are holding up well, however, with transactions up 19.4 per cent in August compared to a year earlier and prices up 0.5 per cent from July, at a benchmark of $685,000, according to the Real Estate Board of Greater Vancouver (REBGV.)
Two Port Moody projects have offered rent-to-own schemes that allow buyers to apply two years of a condo’s rent towards the down payment. At the City of Lougheed development in Burnaby, condo buyers can purchase with just a 10 per cent down payment staggered over two years on selected units. Other tower developers have been dangling no-cost upgrades, free parking and other perks to entice buyers.
Turcotte said the Format condos could be finished using Cressey-provided materials immediately, but buyers could also use off-the-shelf products from suppliers such as Ikea, and take as long as they want to create “their own personal space.”
Other developers are wary of the idea.
Kush Panatch, president of Richmond-based Panatch Group, which demands that all the company’s condos are finished to exactly the same standard, said Cressey “could be opening a can of worms” because of inconsistent and delayed finishing of condos in the project.
“I see a lot of problems,” Panatch said, including future disputes with comparative pricing when buyers decided to sell.
Panatch said his company has had success with more modest incentives, such as a rent-to-own concept, and offering buyers $1,000 gift coupons that can be used at neighbouring retailers and restaurants.