By Sue Stefko
Several years ago, the development property market was booming in and around the Glebe Annex, with prospects for large-scale developments. There were two Canada Lands Company projects. Homes on Bell Street South were to make way for 49 apartment units. And a single-family home at 7 Maclean was torn down to build a seven-unit apartment building.
Since then, all these projects have stalled, even as more development properties hit the market.
Just outside the neighbourhood, we recently learned that a developer who had planned a project for the Booth Street complex (for sale since 2020) had pulled out of the deal. Last August, the application for 450 Rochester – the large parking lot south of the Heart and Crown on Preston – was cancelled by the owner. That’s a particularly tough blow, given the promise of a much-needed grocery store and other amenities.
In the neighbourhood itself, the 7 Maclean project was cancelled, although the land was purchased by Canci Homes for the future expansion of their apartment building at Bell South and Maclean. However, the Bell Street South property (269-281) was relisted for $5.8 million and sat for nine months before the listing expired in May. The property was being touted as a prime development land with “immediate development opportunities.”
The land at 317 Arthur Lane South at Plymouth, where a three-unit townhouse was demolished in the summer of 2023 after a fire, was likewise described as a “clean slate” for developers on a lot permitting “higher-density, multi-unit residential buildings” that was ripe for “favorable zoning amendment for higher density.” At nearly $1.1 million, the 60-by-70-foot property is clearly priced for developers, but it’s been on sale for nearly a year.
On Bronson, the half -acre property next to McDonalds has been empty since the Esso gas station was demolished more than 20 years ago. The property (likely contaminated) has been for sale by its owner Imperial Oil since 2021.
At the south end of the neighbourhood, 522 Cambridge Street South, an adorable but dated little bungalow sits on a generous 50-by-130-foot lot. This home has been listed since last October as a development property, first for $1.5 million, then down to $1.4 before the listing expired. It proclaimed the site as a “golden ticket to capitalize on Ottawa’s booming urban growth,” selling the dream of “towering edifices” on the site. However, this too remains unsold. So does the three-acre parking lot at 299 Carling Avenue, which also promised tall buildings and higher density. It’s been on the market since November 2022.
So, what’s going on? How can so much prime development land remain unsold in the middle of a housing shortage? Well, it’s complicated, and pandemic related. The personal finance website WOWA.ca notes: “The average home price in Ottawa has decreased by about 6.6% over the past three years and increased by approximately 52% over the past five years.” In translation, WOWA notes that after a meteoric rise in home prices (a 50 per cent increase between 2020 and 2022), we’re coming down from the pandemic buying spree.
Of course, low interest rates during the pandemic fueled the buying spree, but they have climbed since as central banks around the world raised rates to fight soaring inflation. Higher rates mean more expensive mortgages for buyers and higher construction costs, so some home purchases and projects have been put on hold until interest rates come down again.
The interest-rate chill helped make 2023 the slowest year for Ottawa home sales in 13 years. Condos – what most of the empty properties were targeted for – sold for 5.5 per cent less in the first eight months of 2023 than the year before. However, Ottawa’s condo construction starts reached historic highs in 2023, largely due to pre-construction condo sales during the 2021 and 2022 boom. Things may be turning around for condos again, as they are seen as a more affordable way to get into the real estate market. Condo prices were in fact 3.7 per cent higher this January than the year before. So, can we expect the condo market and land sales to heat up again?
Nothing is ever simple. Ottawa developers are battling high interest rates, more expensive building materials, a labour shortage and rising development charges. However, real estate sales in general are on the upswing, with more inventory and brisk sales activity this spring, perhaps in anticipation of reduced interest rates. And, with low rental vacancy and soaring rental rates, perhaps this will encourage the construction of apartments.
What does all this mean for the vacant properties in our neighbourhood that owners hope to sell to deep-pocketed developers? With so many competing pressures and factors to consider, it’s still anyone’s guess.
Sue Stefko is vice president of the Glebe Annex Community Association and a regular contributor to the Glebe Report.
