A 179-unit condominium project nearing completion near Mayfair shopping centre is likely to be converted to a rental project before construction wraps this year.
Mike Geric Construction, which is in the midst of building the 12-storey Tresah West project, is in the process of informing those who bought units in the building they might not be taking possession.
“We got to the point where we just had to look at some options, which we are doing right now,” said Shannon Kowalko, director of marketing and community relations for Mike Geric Construction. “Part of the process of looking at transitioning this to a rental project is that we would have to communicate to our buyers.”
Kowalko said the company has been working over the last week to contact all buyers with contracts to purchase in the building. She said there are about 90 of them, after 30 per cent of buyers rescinded contracts earlier this year when the company changed the terms of sale due to rising costs.
A combination of rising labour and material costs, delays, supply chain issues and high interest rates driving up carrying costs contributed to the need to re-evaluate the project, Kowalko said.
She stressed no firm decision has been made on what will happen, but they are in the process of making the transition from condominium to rental and the first part of that is speaking with each of the buyers first.
Letters confirming termination of sales agreements are also being sent to purchasers once they have been contacted by the company.
The letter, signed by Mike Geric Construction president Edward Geric, says rising costs have “irreparably damaged Tresah West’s viability as a market condominium project.”
Geric said the loss of nearly 30 per cent of Tresah West pre鈥憇ale buyers in the spring, due to the radically different housing and mortgage environment, had a massive impact on their construction financing.
“The project is now operating on a very restrictive month-to-month construction loan. For the foreseeable future, there is no way to recover those presales in a market that has seen year-over-year prices plummet by almost $90,000, leaving a massive gap between buyer price expectations and actual construction costs,” he said.
In the letter Geric said the company explored all options and determined it can only complete construction by converting Tresah West to a purpose-built rental building.
“We are currently working to obtain the various approvals needed to make that happen,” he wrote. “While this was never our intention, there are no other options. We’ve exhausted every other possibility, and I am sorry that delivering your expected home is no longer possible.”
Planning staff at the City of Victoria have said developers changing the purpose of a project during construction are dealt with on a case-by-case basis, and the city tends to provide advice on what kind of process they would need to follow.
Kowalko said they are in the process of ensuring all purchasers get their deposits back.
She said reaction from buyers has run the gamut from understanding to frustration.
“But the reality is we did everything we could to try and ensure the viability of the project as a market condo would happen,” she said.
Construction continues at the tower, and Kowalko said the goal remains to have it completed by the start of 2025.
It’s the second big change for the project, which broke ground in 2020.
Tresah started life as a two-phase, 247-unit project across from Mayfair shopping centre on a block between Speed Avenue and Frances Avenue.
At the time it was estimated to be an $80-million project, though costs have ballooned since then, and featured Tresah East a six-storey, 68-unit building, which is already complete.
The 12-storey tower, Tresah West, was originally planned as a mass-timber condominium project but was changed two years ago, due to costs and efficiency, to recycled steel and concrete.
In mass-timber buildings, the primary load-bearing structure is made of solid or engineered wood — lumber is laminated together to form structural components for floors, walls and beams.
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