Apartment starts see sharp decline

There's been a dramatic decline in the number of new apartments being built in Winnipeg, even with vacancy rates at record-low levels.

Canada Mortgage and Housing Corp. figures show there were only 322 new apartment units started in the Winnipeg Census Metropolitan Area (CMA) in 2008, and only 237 in the first eight months of this year.

That compares with 619 in 2006 and the 803 in 2007.

At this pace, Winnipeg will finish the year with the fewest apartment starts since 2002. And the decline would be even more dramatic were it not for Broadstreet Properties Ltd., which came to the rescue last month when it began work on 173 new two-bedroom apartments on Concordia Avenue East.

The Concordia Estates project, which will see three new apartment blocks go up in the 1300 block of Concordia, was the main reason for a 30 per cent jump in housing starts last month in Winnipeg and 10 neighbouring communities.

CMHC said Wednesday there were 312 new single- and multi-family starts last month in the CMA, which was 72 more than in August 2008.

And all of the increase was on the multi-family side of the market, where the number of starts more than quadrupled to 186 units from 45 a year earlier. The single-family-homes side saw starts plummet by 35.4 per cent to 126 units from 195 in August of last year.

Jeff Powell, CMHC's senior market analyst for Manitoba, said it's hard to pinpoint why developers aren't building more new apartments in Winnipeg -- especially when the city's overall vacancy rate was hovering at a record low 0.9 per cent in April of this year. And in some areas of the city, it's as low as 0.1 per cent.

Developers and property managers have long blamed provincial rent control guidelines for the dearth of apartment construction. And they reiterated that Wednesday in condemning the province's decision to set next year's rent-increase guideline at one per cent.

Manitoba Home Builders Association president Mike Moore said Wednesday the problem is that rent controls have kept rents for existing units artificially low.

And soaring construction costs make it difficult for developers to build. "You can't be vastly different from them in terms of your rent" and still hope to attract tenants, Moore said.

Broadstreet owner and CEO Kris Mailman said his firm is able to get around that problem by having its own construction arm -- Seymour Pacific Developments Ltd. -- build its apartments, and by using wood-frame construction rather than more costly masonry construction.

Mailman said Broadstreet has built about 1,000 new rental units in Winnipeg over the last 10 years. And he and Dragomir Domuzin, site superintendent for the Concordia Estates development, said the plan is to build about 2,000 more over the next four to five years. That includes 330 that will be built next year in the Sage Creek housing development in southeast Winnipeg.

"We see the potential here," Domuzin said. "There is a huge demand for new apartments, and as long as there is demand, we will continue to build."

murray.mcneill@freepress.mb.ca