Could a changing real estate market leave a high-rise-sized hole on Kelowna’s waterfront?

KELOWNA – The tallest building ever approved by Kelowna city council will go ahead on what is arguably the most prominent development site in the city.

With no other high-rises around it and standing 131 metres tall, the as-yet unnamed Westcorp hotel and luxury condominium development will dominate the skyline in the southern part of the downtown core. Council on Tuesday approved the development variance that allowed the greatly-expanded project.

The massive podium-and-tower structure will sit amid the city’s most iconic attractions including Stuart Park, City Park, Kerry Park, City Hall and the cultural district.

But what would happen if the project ran into financial trouble or the real estate market crashed? Could the city end up with a big hole or a half-built tower right beside Ogopogo and The Sails.

“There’s nothing we can do if a developer goes into receivership or decides to stop construction to force them to continue,” confirmed Kelowna city planner Terry Barton, who said the city does not require any kind of bond guaranteeing completion of the project.

Certainly, it’s a scenario with precedent in Kelowna. Look no further than 1151 Sunset, the 21-storey highrise that’s finally nearing completion on Sunset Drive.

Kerkhoff Construction is getting ready to cap off the residential condominum tower but it first saw life under the name 'Lucaya' before the 2008 financial crisis gutted the project, leaving behind a half-finished foundation and abandoned construction crane for years.

Several other large projects languished half-finished for some time before market conditions improved enough for another developer to step in and finish them off including The Conservatory in Glenmore and SOPA Square in the Pandosy Town Centre.

Westcorp Development itself has a good reputation, at least in the Alberta market, Barton said.

“They haven’t built anything significant here yet but they are a big developer, well-financed, who have been in the game for many years,” Barton said. “They have lots of experience and deep pockets. They are not new to this and if anybody can pull it off, they can.”

Still Barton concedes high concrete construction is the riskiest of all developments, given their lengthy time-to-market of at least two to three years from design to completion.

“A lot can change in the market in that time,” Barton said, including the completion in Kelowna of several other large high-rises and other significant low-rise condominium projects.

While planning staff recommended against approving the expanded project, Barton says that wasn't because of any potential for the project to fail in an overcrowded or collapsed real estate market. By some estimates, as many as 15 highrise projects have either been approved or are being considered by the city for the downtown core as well as more outside of downtown.  

“We remain neutral on the economic side. It’s not our responsibility to predict the market,” he said. “We can’t formally take into consideration the developer’s bank balance, whether they are making money or losing money on a project. It is always based on planning principals and the rest is up to the people and the politicians."

However Barton did say he thought the 20 percent foreign buyers tax, extended during yesterday’s provincial budget to Kelowna and West Kelowna, likely wouldn’t have much impact on  local condo sales.

“The people buying condos here are not generally that type of buyer,” he said. “Buyers in this market are still largely from western Canada.”

Read more stories on the Westcorp hotel.

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