Deposits returned in Varsity condo project

Thursday, June 29th, 2006

Fiona Anderson

VANCOUVER SUN FILES The former Varsity Theatre was town down earlier this year. A condo project in its place has been postponed due to costs.

The unprecedented rise in construction costs has claimed its first Vancouver victim — the Varsity in Point Grey Village.

The proposed 19-unit condominium project, which took its name from the 65-year-old theatre on West 10th Avenue it was to displace, pre-sold last October. But by the time its developer Salient Group sought tenders to start building, costs had jumped 20 per cent, Salient’s president Robert Fung said in an interview.

Meanwhile, the landmark movie theatre was torn down.

“So the way that the current costs and the current revenue are, our lenders have said they are unable to finance and we have no choice but to return deposits,” Fung said.

Construction costs in Vancouver have been increasing at an estimated one per cent each month. But that’s an average, Fung said, and the months between October and February were above average. Costs for the Varsity also rose more than average because, with only 19 units, it is a small project and that’s a “big problem,” Fung said.

“Small projects are very, very inefficient from a construction standpoint and as construction costs are going up the premium [for small projects] seems to be going up also,” Fung said.

The building’s design of steel and concrete also led to higher costs, he said.

“These are unprecedented cost increases that neither ourselves nor the professional quantity surveyors nor the contractors anticipated and, unfortunately, the project has suffered from it,” Fung said.

Fung has been personally calling purchasers over the past few days to let them know the project would not be proceeding as originally planned. However, the project is not dead, Fung said. Salient will be redesigning and re-pricing the project and purchasers will have first dibs on buying a unit at the new higher price. How much higher that new price will be, Fung couldn’t say. But it will be at least 20-per-cent more expensive, he said.

And this time, the units won’t be priced until costs are locked-in, Fung said.

In the meantime, deposits will be returned to purchasers with interest. Salient is also throwing in a bonus payment, amounting to about 15 per cent of the deposit, calculated annually, to compensate the purchasers for their inconvenience.

In January, Anthem Properties cancelled its upscale Bambu development in downtown Victoria because of rising costs. It was 90-per-cent pre-sold.

© The Vancouver Sun 2006

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