Bill Gairdner of Gairloch Developments sent me this message the other morning:
He is talking about Junction House and he is, of course, right. It is a very cool feeling to create homes for people.
It's not easy building buildings. People get upset at you. They tell you that you're ruining their community. And broadly speaking, it can feel like every imaginable obstacle has been placed in front of you to make things more difficult.
But at the end of the day, once the dust settles, there will be places to live where places did not exist before. And then people will move into these places and transform them into homes.
They'll make them their own, create new memories, and, in the case of the people that Bill was referring to, they'll raise a family.
I'm not trying to make this sound more grandiose than it deserves to be. But I am being honest when I say that I know the team feels both a sense of honor and a great sense of responsibility because of the work we do.
You want people to be happy and you want the city to be a better place. So it's hard not to feel a little emotional when you see people moving into a place that you've worked tirelessly on for several years.
Yeah, it is a cool feeling, Bill.
Alex Bozikovic is right to praise Gairloch's upcoming development in the Junction. It's a beautiful project and it's exciting to see so many architecturally significant projects in one neighborhood -- either completed or to be completed. I'm thinking specifically of DUKE Condos (TAS and Quadrangle), our Junction House project (currently under construction), and now Gairloch's.
But Alex (as well as Jeremiah Shamess) is also right to point out some of the tensions and contradictions that are inherent to building at this scale. We want European-type mid-rise buildings all along our avenues, but we also want our housing to be more affordable. Problem is, mid-rise buildings are the most expensive way to build.
The approvals process also tends to privilege urban design considerations over things like livability and construction costs. We talk about the shadow impacts that the project might have on the surrounding community, but not about how well the suites will layout when it's all said and done -- not to mention how expensive they will be to build.
The cynics will tell you that it doesn't matter what it costs to build because developers will always profit maximize (as is the case with every other for-profit business). But that's an oversimplification that ignores a bunch of factors.
One, it's not as simple as just price. You also have to consider sales velocity. Price and sales velocity tend to be inversely correlated. In other words, as prices increase, sales velocity tends to naturally slow. You then begin to trade-off higher prices for increased time (which has a cost) and more market risk.
As I've said many times before on the blog, development happens on the margin. Usually the way this plays out is that you create a development pro forma, you look at all of your project costs, and then you say, "oh shit." You're then stretching to figure out how you're going to make the math work.
Two, there are usually always parts of a city where development isn't feasible (in some unfortunate cases, it might be the entire city). The potential revenues simply don't support the costs. And as costs continue the rise, any areas that have not seen a corresponding increase in prices and/or rents will also become undevelopable.
So there's price, and there's also a question of where great buildings are even possible. As many have already pointed out, it's certainly not everywhere.
