New ‘blank canvas’ concept cuts Vancouver condo price

With only kitchen and bathroom completed, buyers expected to finish rest of the space

Designer Craig Stenghetta (L) and developer Jason Turcotte | Submitted

Sales of condos in new Metro Vancouver strata projects were down 30% during 2020’s second quarter, according to Altus Group, which claims pre-sales have hit the lowest level since the summer of 2009.

In August, nearly 75% 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 said. A big problem for major tower developers, MLA noted, is a lack of international students and other foreign buyers who once dominated the new condo market but have virtually vanished during the pandemic.

Condo sales are holding up well, however. Transactions were up 19.4% in August compared with a year earlier, and prices are up 0.5% from July at a benchmark of $685,000, according to the Real Estate Board of Greater Vancouver (REBGV).

In response to the pre-sale slump, condominium developers have been coming up with rent-to-own plans, low down payments and other creative ideas to lure buyers.

Richmond-based Panatch Group has sold out a 138-unit Port Moody condo project that offered some local buyers – Port Moody residents who pledged to live in the unit – a rent-to-own program, wherein the buyers paid about $1,200 in rent for two years with all of rent applied to an eventual down payment. In the project’s second phase, Panatch buyers were given a $1,000 gift certificate to spend at local merchants. As of August, 111 of the project’s 220 condos had sold within four months.

At the City of Lougheed development in Burnaby, condo buyers can purchase with just a 10% 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.

Now Cressey Development Group is offering prospective buyers a radical new option: to purchase apartments with only the kitchen and the bathroom finished. The “open canvas” concept at the 13-storey, 154-unit Format project, now being built at 1503 Kingsway in Vancouver, provides pre-sale buyers with a “blank slate and floor plan in which buyers will be provided with a kit of parts” to finish the unit, according to a Cressey release.

Jason Turcotte, Cressey’s vice-president of development, said the project is targeted at younger buyers.

The stripped-down Format condos begin marketing in mid-September. They will be priced at about $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 seven hundreds,” Turcotte said. The current benchmark price of a resale condominium in East Vancouver is $600,800, according to the REBGV.

Other developers are wary of the blank-canvas idea.

Kush Panatch, president of Panatch Group, which demands that all the company’s condos are finished to the same standard, said Cressey “could be opening a can of worms” because of inconsistent and delayed finishing of condos in the project.

“Developers don’t need big incentives to attract local buyers today. Incentives are being used mostly to attract investors.” •