The Good, Bad, and the Ugly in Condo World

Promises, promises... where will the Westcorp Hotel/Piggy bank end up?

We certainly had an interesting juxtaposition of developer news this week – on one hand, the team behind the new Glenmore Central condo proposal in North Kelowna markets their complex as a practical and affordable option exclusively to Kelowna residents, and on the other, Edmonton-based Westcorp announces that their 33 storey mixed use residences/hotel by the lake would be delayed yet again because of out-of-town buyer uncertainty surrounding the speculation tax.

Westpoint Projects Inc., the local developer behind the Glenmore Valley Landing project (currently being built near the corner of Glenmore and Summit) wants to develop a 105 unit condo in the same area to target Kelowna residents on a tight budget who are keen to enter the housing market. To that end, they will advertise the new condo exclusively within the region. Imagine that.

“The Glenmore Central project comes at a time when practical and affordable home ownership is what Kelowna desperately needs. We are very excited to be able to work on a project that will provide exactly that in a location central to everything,” said Rob Haberman, a partner with Glenmore Central.

“We made the decision not to market this project nationally, to give Okanagan residents the chance to purchase ahead of others. It’s the right thing to do for Kelowna and it will help to build the community,” added Sam Brovender, of West Point Projects.

Glenmore Central will soon be part of the Glenmore Valley Landing project.

Additionally, Westpoint plans to limit rentals to 30-days or longer in an effort to encourage owners to occupy the units, rather than rent them out short-term.

The goal of this proposal comes in stark contrast to Mission Group’s plans for its “Brooklyn” complex in downtown Kelowna that we wrote about a few weeks earlier, when its president, Randy Shier went on record saying that basically their development is targeting the short-term rental crowd. We hope that Westpoint’s proposal encourages city council to ask questions regarding why Mission Group feels it necessary to market their new downtown proposal this way, particularly when our city’s vacancy rates remain dire.

Even Westpoint Could Probably Build Westcorp’s New Hotel By the Lake

Meanwhile in other news that just about everyone in this city saw coming, Edmonton-based developer Westcorp has announced further delays of their massive waterfront hotel/condo tower that was approved by city council earlier this year. Gail Temple, Westcorp Vice President of Operations, is blaming the speculation tax, and according to her, it has put the project in danger.

“…we had intended to go to market with those residences this summer. Now, based on the feedback from potential buyers, we know that we cannot go to market this summer because we don’t determine this, it’s our buyers,” said Temple. “The success of this hotel project being built is entirely dependent on the sale of the real estate.”

This new wrinkle comes after Westcorp finally came clean in February that they needed luxury condo pre-sales to raise the necessary capital, even though Temple told us differently a few years ago, claiming that the delay in construction then was because of “low water table levels”. I suppose that’s code for the (city-approved) hotel-only project was not getting financing from Westcorp’s lenders.

The $200 million plus, 33 storey hotel by the lake – will it ever get built?

So now it’s the speculation tax. This excuse automatically brings up the question of why developers’ projects like Mission Group’s “Brooklyn”, as well as their new tower “Ella” and their development “Aqua”, and Kerkhoff’s “One Water” towers (they held an opening sales event for their 29 storey “West” tower yesterday that was fast-tracked amid high demand for the units in the 36 storey tower beside it) are able to go full-speed ahead into pre-construction and construction phases.

I’m not sure what is affecting Westcorp’s pre-sales ability, but we certainly haven’t seen any advertising for the project yet, and Westcorp hasn’t even submitted their application for a building permit, so how might they be gauging interest exactly? In fact, while our business, tourism, and real estate development community were singing the praises of this ambitious project during approval, we were left wondering if there was anything in the Westcorp portfolio that would suggest that they could actually pull this off. Moreover, could they not replan the condo units as affordable, non-luxury ones for locals – y’know those starter homes that are kind of in demand right now (but, admittedly not as popular for stashing global capital)?

Temple recently gave everyone a few answers to these questions via Castanet, “We are continuing on with working drawings and all of the design work required to get us to building permit. We are not stopping that work… We will be testing our market and finding out. Our hope is that certainty will be a big help. Is it our greatest hope that this tax goes away and it will not be punitive to those Albertan buyers etc., of course we are.” It sounds like at the moment that they are only merely speculating about the speculation tax.

What also interests us here is the chorus of empty talking points by those who are willing to stake their claim with Westcorp in order to pile onto the anti-speculation tax spin. Here’s our mayor being asked about it by Okanagan Edge, saying the delay is one of the “unintended consequences” of the tax.

“One of them (consequences) would be the loss of potential jobs. There would be hundreds of people working on this job site, and now those jobs are no longer required, at least for now…. And, we know the long-term impact, at least for now, is the fact our community was looking forward to having another high-end hotel in our community that would attract people from right across North America and the world, spending dollars in local businesses, potentially falling in love with this city, then eventually becoming part-time, then full-time residents.”

Previous pre-speculation tax delays by Westcorp didn’t seem to bother our mayor this much however.

And here’s Kelowna-Lake Country’s Liberal MLA, Norm Letnick chiming in:

So it appears that many of our local leaders are just fine with having such inexperienced developers telling us how we should feel about the pending speculation tax and what it’s doing to their projects, rather than taking cues from far more experienced and successful developers like the aforementioned Randall Shier of Mission Group, and Kerkhoff Construction who continue to propose, sell, and build out their projects to fruition throughout the back drop of this upcoming legislation.

By all indications Norm Letnick’s track record reveals him to be a smart, compassionate and educated person, so why in this political climate of increasing falsehoods, fear-mongering and mock populist concern for the workers by the established elite, would he feel compelled to join in with such a divisive misleading tone? Given that his compatriots in the Okanagan, like Dan Ashcroft, and in the vanguard of his party, like Andrew Wilkinson, have been publicly busted for outright wilfully lying to the people, perhaps he might rethink how far he wants to go towards the Trumpian populist rhetoric (and yes the Liberals are now calling proportional representation a “rigged” system – lol. But more on that another time).

Anyway, given the history of Westcorp and this property, is it perhaps time to acknowledge that this developer might not be up for the job? In the meantime, we’re all stuck with dealing with another year’s worth of staring at an empty, over priced parking lot in the heart of downtown.