Colonnade BridgePort chief executive Hugh Gorman says the company has “five to 10 years’ worth” of multi-residential development projects in its pipeline and hopes to get a few of them off the ground later this year or early in 2025.
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As soaring construction costs level off and interest rates stabilize, a major Ottawa real estate firm is poised to launch several multi-residential housing developments in the coming months – but its CEO warns that many projects are still in limbo as profit margins remain razor thin.
Colonnade BridgePort chief executive Hugh Gorman says the company has “five to 10 years’ worth” of multi-residential development projects in its pipeline and hopes to get a few of them off the ground later this year or early in 2025.
The firm’s most ambitious proposal is a multi-phased development on a five-acre property at 25 Pickering Pl., just east of the city’s main Via Rail terminal and the Tremblay LRT station.
Colonnade BridgePort is partnering with Toronto-based investment firm Fiera Real Estate to turn the current industrial site into a “mixed-use, high-density community hub” that will eventually include up to 1,200 residential units in a mix of rental apartment highrises, condos and retirement residences, as well as retail space, parkland and possibly a hotel.
While the project is still going through the site plan approval process, Colonnade BridgePort has started to tear down existing buildings on the property and remediate contaminated soil in anticipation of starting construction on the first phase early next year, Gorman said.
Long-term plans call for buildings ranging from 12 to 30 storeys on the site. The first phase will likely include two rental apartment buildings at estimated heights of 14 and 28 storeys near the Via Rail station with a total of about 500 units.
Colonnade BridgePort plans to subdivide the property in the hope of selling some lots to other developers that will build condos and seniors’ housing.
The company has had “preliminary” talks with other firms, but condominium projects are a tough sell in the current economic climate, Gorman conceded.
“The pro formas are just starting to work on the multi-family side. It’s not so great on the condo side yet. The economics aren’t there.”
Many economists are predicting the Bank of Canada will start cutting interest rates later this year. But Gorman said, until that happens, many big-ticket housing proposals will likely remain on hold.
“As the projects get bigger, you extend the construction schedule and it creates more risk,” he explained. “We were hoping to see interest rate relief by this time and, of course, that’s not happened yet.”
Gorman said the high cost of borrowing money to launch new builds has caused many investors to remain on the sidelines.
“The most risky thing to do in real estate is to build something. It’s fraught with downside, and there has to be enough upside to warrant people taking on that risk.”
Still, the veteran real estate executive sees signs that brighter days are ahead for the industry.
He notes that construction costs, for example, have finally begun to stabilize after rising dramatically during the pandemic due to supply chain disruptions and skilled labour shortages.
After soaring nearly 25 per cent in 2021 compared with the previous year, residential construction costs rose just 1.9 per cent in Ottawa last year over 2022, according to Statistics Canada.
