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General Urban Kitchener Updates and Rumours - Printable Version

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RE: General Urban Kitchener Updates and Rumours - ookpik - 11-14-2015

I made that comment as a joke, hence the smiley at the end. Of course we should all feel free to offer our opinions and enter into vigorous discussion. If I offended you in any way then I apologize.

Now re the Ottawa St property. Evidently no developer was willing to step up and develop it. Not even George who bought it in 2012 when the LRT wasn't yet a sure thing and who thus presumably paid a lot less than Wright just did. My inference is that with all the other development along the route no one wants to further inflate what may turn out to be, at least in the shorter term, a RE bubble. So for the time being the land will be put to productive, if not ideal, use. Surely this is a lot better than letting the land lie fallow for another several years. 

By buying the property now Wright gets something he can use to expand his business. There was already a car dealership there so he can reuse the existing building and infrastructure with minimal improvement. And thus he gets to continue to expand his economic contribution to the community. What's not to like with that?

But in addition to this benefit Wright now also has the option to repurpose and redevelop this property in the future as post-LRT demand materializes and RE prices rise. Car dealerships require a lot of relatively undeveloped real estate to serve as what's effectively a giant parking lot. Consequently as property values rise it becomes more economical for them to relocate to the suburbs where land is cheaper. (There used to be several large car dealerships at major intersections along Yonge St in Toronto. Where are they now? Are there any left on Yonge St within the city proper?)

So here's some wild speculation. At some point Wright may find it profitable to relocate the Ottawa St operation and sell the property at a large profit. He wins twice, first by expanding his current business and then again when he next expands it. Sounds to me like he's making a very smart move.


RE: General Urban Kitchener Updates and Rumours - Smore - 11-14-2015

I went to Wright when looking for my last vehicle. While I didn't buy there, I found the experience very easy and would have had no problem buying from them if they had what I was looking for.

As far as the properties go, is it not generally accepted that used car dealerships are a transient type and that any interim occupation of a property by a used car dealers is one giant leap ahead of a derelict building or empty, blocked off parking lot? At least its functional use!

And in the time it takes to get a few 18 wheelers or some young mechanics to move a bunch of cars to the next transient lot, the place can be "shovel-ready"!!


RE: General Urban Kitchener Updates and Rumours - MidTowner - 11-14-2015

(11-14-2015, 11:10 AM)Smore Wrote: As far as the properties go, is it not generally accepted that used car dealerships are a transient type and that any interim occupation of a property by a used car dealers is one giant leap ahead of a derelict building or empty, blocked off parking lot? At least its functional use!

And in the time it takes to get a few 18 wheelers or some young mechanics to move a bunch of cars to the next transient lot, the place can be "shovel-ready"!!

No doubt that a used car lot is better than no use at all. I found it disappointing because the last I had heard about this location, there was a possibility that a grocery store was going to locate there. I think that would have been great, and I think it's a shame that won't come to pass.

Your second point is a really good one. The 20 Ottawa lot will still by and large be a lot ready for redevelopment if and when someone thinks that makes sense.


RE: General Urban Kitchener Updates and Rumours - mpd618 - 11-14-2015

(11-14-2015, 08:48 AM)ookpik Wrote: I've been concerned that it may be difficult to find enough new occupants to fill these projects without depressing property prices and rents, i.e. that a RE bubble may be forming along the route.

(What would be so bad about depressing property prices and rents?)


RE: General Urban Kitchener Updates and Rumours - ookpik - 11-14-2015

(11-14-2015, 06:08 PM)mpd618 Wrote: (What would be so bad about depressing property prices and rents?)
Are you buying or selling? Wink


RE: General Urban Kitchener Updates and Rumours - mpd618 - 11-15-2015

(11-14-2015, 10:14 PM)ookpik Wrote:
(11-14-2015, 06:08 PM)mpd618 Wrote: (What would be so bad about depressing property prices and rents?)
Are you buying or selling? Wink

I'm interested in more people being able to live and work in urban areas next to transit, and that means that lower rent choices are available to those who want them. I do own a home, but that's neither here nor there.


RE: General Urban Kitchener Updates and Rumours - ookpik - 11-15-2015

I appreciate that. Of course as a buyer you'd like to see RE values low so that more people can afford to live and work along the LRT. No argument there. I would suggest to you that this sort of intensification will succeed only if the developers can benefit, i.e. profit, from this as well.

We're discussing why the Ottawa St property isn't being redeveloped. Put yourself in the position of a potential developer. In fact a developer who owned the property since 2012 did just that. Presumably they know more about this sort of stuff than we do. Yet they decided to sell the property rather than develop it. And they sold it to someone, a car dealer, who likely isn't going to have to invest much new money into it in order to operate his business on it. 

This is consistent with my speculation that there may be a RE bubble forming along the LRT route. Lots of RE is getting developed with new residential and business capacity. We both agree that this is good. All this activity also drives up prices for anyone who wants to buy land and redevelop it. That's also fine if they can find buyers/renters. But what if too much capacity gets built too soon? Prices will drop and developers will start losing money. Why would a developer, especially one who's looking to enter the fray fairly late, want to risk being part of that?

George claims he didn't want to sit on land that he didn't want to develop. That land also wasn't generating any revenue so his investment was losing money by way of opportunity costs, property tax, maintenance, etc. Wright bought the property from him because it solved an immediate business problem--he could grow his business--and it also gave him the option to redevelop the property in the future if LRT-based intensification made that a viable business proposition.

I don't see a problem. Is there a shortage of residential and/or commercial space along the LRT route? Will there be a shortage when LRT service begins? I suspect no to both. So what's the big rush to redevelop even more land right away? Why would anyone want to take that risk if they don't have to?


RE: General Urban Kitchener Updates and Rumours - BuildingScout - 11-15-2015

(11-15-2015, 09:37 AM)ookpik Wrote: We're discussing why the Ottawa St property isn't being redeveloped. Put yourself in the position of a potential developer. In fact a developer who owned the property since 2012 did just that. Presumably they know more about this sort of stuff than we do. Yet they decided to sell the property rather than develop it. And they sold it to someone, a car dealer, who likely isn't going to have to invest much new money into it in order to operate his business on it.

You give the developer far too much credit. First, it seems to me that he was always looking to flip it. First to the Toronto supermarket investors, now to Wright Auto Sales when the former fell through. Second, a developer might choose to pass for many reasons other than the development not being viable.
  • Maybe his trusty contractor is busy with other projects?
  • maybe they exhausted their network of investors with other ongoing projects and cannot presently secure the cash to finance the project?
  • maybe he just doesn't understand LRT and has the wrong growth projections?
  • maybe they go for short term gains at the expense of the long term health of their business model, just like the Waterloo Inn shareholders focused on forestalling the competition instead of developing the amazing property they were sitting on?
I have a couple of friends who are developers and those are some of the reasons I've heard directly from them when they tell me some project they were working on folded.


RE: General Urban Kitchener Updates and Rumours - BrianT - 11-15-2015

The car dealership is not as prime for near future development as the properties close to Tim Horton's on Charles Street, which will be right next to the station. https://www.google.ca/maps/@43.4428739,-80.4726147,17z


RE: General Urban Kitchener Updates and Rumours - clasher - 11-15-2015

There's also the completely empty gravel lot on the south-east corner of Ottawa and King that's beside towne bowl and the lube-n-go... not nearly as big but it's just empty. The BMO also has a substantial lawn and a lot of parking spaces. It's an intersection I avoid if at all possible.


RE: General Urban Kitchener Updates and Rumours - ookpik - 11-15-2015

(11-15-2015, 10:01 AM)BuildingScout Wrote: • Maybe his trusty contractor is busy with other projects?
In a booming market some developers will compromise their standards and engage whoever they can find. Usually the result is subpar quality.

Quote:• maybe they exhausted their network of investors with other ongoing projects and cannot presently secure the cash to finance the project?
A booming market attracts greedy developers and greedy investors who are ill-equipped to weather the storm of a downturn. Sometimes their projects go bust leaving partly completed buildings in their wake and home buyers who've lost both their deposits and their future homes.

Quote:• maybe he just doesn't understand LRT and has the wrong growth projections?]\
• maybe they go for short term gains at the expense of the long term health of their business model
Especially greedy developers and greedy investors who want in on "a sure thing."

Quote:the Waterloo Inn
Another huge tract of RE that will eventually get redeveloped. (In the meantime it would make a great car dealership mall just like the one next to it [ducks] Wink)

I'm all for redevelopment and intensification. But I'd rather it be done gradually in a rational way rather than hurriedly in a bubble.


RE: General Urban Kitchener Updates and Rumours - MidTowner - 11-15-2015

(11-15-2015, 12:48 PM)ookpik Wrote: I'm all for redevelopment and intensification. But I'd rather it be done gradually in a rational way rather than hurriedly in a bubble.

Perhaps a lot of redevelopment doesn't happen as a result of rational deliberation on the part of market actors, but instead from irrational euphoria during a bubble. I have no idea, but your comment reminded me of an article I once read: http://www.forbes.com/2011/03/10/skyscrapers-burj-dubai-leadership-leaders-bubbles.html That's discussing a different scale of development than we are in this Region, of course. I remember finding it neat, though.

It's true that there have been a lot of developments along the Ion line, and particularly in the University Zone. I also personally think we're probably in a residential real estate bubble generally in this country. But as far as developments in Kitchener, until recently very few rental properties have been built for quite a while. I wonder how many more condo projects the market can support along the King Street corridor, but I'm not sure what evidence there is that that area specifically is in a bubble.


RE: General Urban Kitchener Updates and Rumours - nms - 11-16-2015

(11-14-2015, 07:57 AM)MidTowner Wrote: That is discouraging news.

The article says that the company will keep its Waterloo lot. I guess I'd be being too hopeful to assume that it's 89 Bridgeport and not 35 Weber (at the corner of Weber and Bridgeport) that they're keeping. That big corner lot could be redeveloped. I have to say that both their old and new locations seem like they have many other better uses.

Here's what the article said about the two Waterloo properties:

"Wright Automotive Sales started in Waterloo in 2001 with a little lot at 89 Bridgeport Rd., which is located beside its current operation in Waterloo. Wright will retain that property, so it will have a presence in Kitchener, Waterloo and Cambridge."

When I first read the article, I interpreted that "that property" was 89 Bridgeport Rd.


RE: General Urban Kitchener Updates and Rumours - tomh009 - 11-16-2015

(11-14-2015, 08:48 AM)ookpik Wrote: The Record article points out that the Ottawa location "has been vacant since 2013. Patrick George, a well-known home builder in Kitchener whose family owns G&A Masonry in Breslau and Deer Ridge Heights Inc., bought the 1.3 hectare property in 2012. It is a high-profile location on an arterial roadway that is zoned as a mixed-use corridor by the City of Kitchener in its latest official plan. It is a short walk to the light rail train station..." Presumably potential buyers knew that and yet couldn't justify a high enough offer to outbid Wright.

The article goes on to say, "George had planned a high-density development with retail on the main floor and residential units above. But he became busy with other projects, and did not want to redevelop the property before the light rail trains start operating." Are you suggesting that the city have barred George from selling the property to potential buyers whose redevelopment plans didn't meet their standards?

Actually, the way I interpreted the article is that Wright is leasing the property, not buying it (I re-read three times and I did not spot any reference to the property being sold).  And this makes sense, George wants to wait for the LRT completion before taking on a major construction project, and in the meantime Wright can lease the property "as is" without significant renovations.


RE: General Urban Kitchener Updates and Rumours - ookpik - 11-16-2015

(11-16-2015, 02:43 PM)tomh009 Wrote: Actually, the way I interpreted the article is that Wright is leasing the property, not buying it (I re-read three times and I did not spot any reference to the property being sold).
By George! Wright you are! I've reread the article I don't see anything explicit about buying or leasing either. Good catch and thanks.

Quote:And this makes sense, George wants to wait for the LRT completion before taking on a major construction project, and in the meantime Wright can lease the property "as is" without significant renovations.
That's still consistent with my speculation that the owner, whoever it is, wants to speculate on the property while at the same time derive income from the land and the structures on it.