Condo developer self-finances to beat price hikes
May 25, 2021
West tower by Beedie
Soaring prices for lumber and other building materials, and spooked lenders in the condo sector, have convinced some developers to take drastic action.
B.C. multi-family developer Beedie Living is changing their tactics on a current residential tower in order to stay ahead of rising costs and mitigate the amount they have to pass on to homebuyers.
For the upcoming launch of their 194-suite high-rise West residential tower in Coquitlam, Beedie will be self-financing the start of the project. They will begin construction right away—no matter how many homes they sell in the pre-construction stage, according to the compay.
“It’s a signal that we are going ahead. We are confident in this market,” said company president Ryan Beedie.
Condo developers traditionally rely on banks to provide financing for the construction start, based on selling a percentage of the homes in pre-construction sales efforts. Banks typically want to see up to half the project pre-sold within nine months. But Beedie’s project will be different.
Beedie said unprecedented rising material costs and trade companies needing same day commitment on a contract to secure pricing on a project forced the change.
“Prices have increased for labour, wood, copper, roofing supplies and more,” Beedie said. He fears that any delay due to financing would mean higher material costs.
In order to stay ahead of increasing costs, Beedie plans on procuring building materials and securing trades ahead of time to start project construction on their own dime. This is not typical for Beedie or for most residential developers.
A Beedie spokesman said the self-financing for the “massive” project, which also includes commercial space, would cost the company “multimillions of dollars.”