There are too many condos on the market today. Wynne Powell, president and CEO of London Drugs Ltd., offers this explanation as to why a long-planned development in East Vancouver—to be anchored by a new branch of the large-format drugstore—is now on hold.
“We want to start constructing that in a market that hasn’t got as many condos on the market as it currently does,” Powell told the Georgia Straight in a phone interview.
He noted that money isn’t the problem. After all, the developer—Hastings Sunrise Development Limited—is a subsidiary of H. Y. Louie Co. Ltd., one of the biggest firms in B.C. And it’s the same company that owns the London Drugs chain.
“There’s no financial trouble with us,” Powell said. “This is not a question of we don’t have the dollars to do it—we could easily develop it. It’s just a prudent decision of when you want to bring something to market.”
The mixed residential and commercial project, called Alba, is on the north side of the 2500 block of East Hastings Street between Kamloops and Penticton streets. It’s a four-storey development with 108 one- and two-storey condos. A new and bigger London Drugs and other commercial establishments will occupy the ground level. A well-established branch of London Drugs is currently located in the same block.
According to Powell, the initial response from condo buyers was encouraging. However, presales later slowed. “Not just in this project,” Powell said. “But as the markets became more challenging, people have been less inclined to do presale opportunities.”
Powell indicated that in previous condo projects involving London Drugs as an anchor establishment, the apartments were sold out before construction. With respect to Alba, he said, the developer had a 60-percent presales target. According to Powell, the market “isn’t supporting that percentage at the moment”.
According to information provided, there are two completed condo developments in Vancouver anchored by London Drugs stores: the Vine in Kitsilano and Kerrisdale Station.
As with other types of homes, sales of condos have been below average, based on figures released by the Real Estate Board of Greater Vancouver on May 2. In April of this year, 1,052 apartments were sold. According to the REBGV, that’s an 11.6-percent decline compared to the 1,190 sales in April 2012, and it’s a decrease of 12.4 percent compared to the 1,201 sales in April 2011.
The board also reported that the benchmark price of an apartment dropped 2.6 percent from April 2012, to $365,900.
Soon, many more condos will be on the market. On May 8, the Canada Mortgage and Housing Corporation reported that construction began on 1,181 apartments and other attached properties in Metro Vancouver in April.
Advertising material covers the fence around the site of the postponed Alba development. One section extols the Hastings Sunrise neighbourhood for its “small town while still metropolitan” allure. Another says, in part, that the area is “such a neat little spot”. More than a half-dozen retail outlets were demolished last year in preparation for the now-idle construction site.
“We’re open during construction,” proclaims a sign outside the current London Drugs. Another sign nearby points to the company’s presales centre about a half-block east.
Powell doesn’t know when the project will resume. “The market will determine that,” he said, “not us.”
For now, according to him, maintenance work is being done at the current London Drugs store, which opened its doors to the community on May 8, 1973. When construction begins, the store’s operations will move to a nearby temporary location while its modern replacement is being put up.
“Hastings Street is going through a tremendous renewal and regeneration,” Powell said. “That’s what we want to participate in. We’ve been there 40 years. We understand this neighbourhood.”
In the meantime, the community “will benefit at this point from a little bit of a rest to give the market a chance to mature a little bit”. Powell stressed, “This is strictly what we feel to be a prudent business decision.”