The future of Surrey's tallest highrise – at 50 floors, the highest between Vancouver and Calgary – hinges on how many premium condominium apartments can be pre-sold in a slowing new home market.
If pre-sales fall short of expectations it could delay the project, according to the head of the Surrey City Development Corp. (SCDC), which has a $13 million stake as a partner in the $100 million project.
"We would have to review our options," said Jim Cox, president and CEO of the SCDC, which is 100% owned by the City of Surrey.
The prime developer and partner, Century Group Inc. of Vancouver, is voicing no such qualms about the biggest project both it and the SCDC have ever been involved with.
3 Civic Plaza is to include a 160-room conference hotel with 330 condominium apartments above, all capped with a rooftop deck 517 feet (157 metres) above Surrey's most celebrated and central intersection.
"I am personally committed to this project," said Sean Hodgins, president of Century Group. "I am not concerned about pre-sales. This project will be going ahead."
Pre-sales refers to buying of new homes before they are built, often before they even start. In today's more restrictive lending environments, lenders often refuse construction financing of new condominium projects unless pre-sales reach at least 30%. "I think it is higher than that [at 3 Civic Plaza]," Cox said.
'High-end' condos
"I would be surprised if it is less than 50% of pre-sales for financing," said Bill Morrison, president and CEO of Pilothouse Marketing Ltd., which is pre-selling the twin-tower, 473-unit Wave condo tower two blocks from 3 Civic Plaza.
Overall housing sales in the Fraser Valley are down 5% so far this year, compared with 2011, but central Surrey has seen a similar increase in sales of condos in the same period, according to the Surrey-based Fraser Valley Real Estate Board.
Hodgins would not confirm what level of pre-sales is required, but he conceded there is a lot of competition from other new condominium projects in the central Surrey area. While not releasing prices, Hodgins said the tower condominiums would be a "high-end product." Morrison, an experienced new home marketer, said this likely translates into about $510 to $515 per square foot, which would be at the top of the Surrey market.
Location, location
The Century Group tower, which officially begins sales in late October, commands a premier location in the city. Situated in the heart of Surrey's City Centre, 3 Civic Plaza will join the City Centre Library and the new Surrey City Hall in ringing a civic outdoor plaza, all steps from a Skytrain station.
Hodgins said in 55 years of business, this is his most exciting project and added it will be in "ground zero" of Surrey's new downtown core.
Morrison, noting that 70% of the 203 condominiums in the first Wave tower have pre-sold since June, said Century Group should have no problem hitting its presales targets.
While noting some of the 6,000 new highrise condominiums now marketing in Metro Vancouver may not proceed due to slowing sales, 3 Civic Plaza looks like a go, said analyst Jeff Hancock, senior manager at MPC Intelligence Inc., which closely tracks the Metro Vancouver new home market.
"Century Group is a sophisticated development company that understands the Surrey City Centre submarket as well as anyone. They have a proven track record, a centre ice location and plenty of commercial/retail space to subsidize the cost of the project. The city is behind them and, once complete, the project will be a game changer for the area," Hancock said.
Hodgins said Century Group is in discussion for branding the Civic Hotel that will anchor the project, but no chain "flag" has yet been named. The entire tower, which includes 5,000 square feet of plaza-fronting retail space, will be built to the LEED (Leadership in Energy and Environmental Design) silver "or better" and will be complete in 2015, Hodgins said. •
