Developers of high-rise condominiums must have a strong constitution and deep pockets, says Eric Martin, vice-president of development for Vancouver- based Bosa Development Corp.
BY GRANT CAMERON
STAFF WRITER
Developers of high-rise condominiums must have a strong constitution and deep pockets, says Eric Martin, vice-president of development for Vancouver- based Bosa Development Corp.
Martin told the Pacific Coast Builder Conference in San Fransico last week that higher steel and concrete prices are making it more difficult for high-rise residential developers to control construction costs, and consequently, lenders are more skittish about financing projects.
Bosa, one of North America’s largest developers of high-rise condominiums, is currently building an 18- storey, 232-unit complex in Irvine— Orange County’s first high-rise condominium community—and a 39- storey, 442-unit complex in San Diego.
Martin, who has been Bosa’s top development executive for more than 15 years, said the higher risk endemic in high-rise condominium development makes these projects more difficult to finance, and bankers expect the developer to put up to 20-30 per cent equity into each project.
“If the developer has $20 million to $30 million of his own money in a $100-million project, the lenders are more comfortable and it increases their expectation that the project will be completed,” he told the conference. “This is not a business for the faint of heart.”
Martin said that to reduce risk, Bosa builds its high-rises only where entitled sites are available and the local government and residents are supportive of—or at least not actively opposed to—high-rise condominiums.
He pointed out that his company chose to build its first Orange County project in Irvine’s Park Place commercial and residential district because the site was already entitled and city officials expressed support for the highrise project.
There is at least one more site in Park Place entitled for high-rise residential development, but to date no announcement has been made regarding who might acquire and develop that site.
Martin also said that Bosa, which has been successfully developing highrise condos in San Diego for the past several years and currently has six projects completed or under construction in the city’s revitalized downtown, doesn’t like to pioneer high-rise condo development and looks for markets that are already proven receptive to high-rise living.
He said Irvine was unusual because his company believed Orange County was ready for high-rise residential, and the Park Place site was ready to go.
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