Hicks on Biz: One Pearl of an Edmonton high-rise BY GRAHAM HICKS, EDMONTON SUN FIRST POSTED: FRIDAY, MAY 02, 2014 11:54 AM MDT
For those who think Edmonton lacks entrepreneurial drive, the man building the jewel of condo towers, the 36-floor Pearl overlooking the river valley from Jasper and 119 Street, arrived from India as a penniless immigrant 34 years ago.
“When my mom and dad first came, they had no connections, no wealth,” says Raj Dhunna of his father Rakesh Dhunna, respectively chief operating officer and president of Regency Developments.
“They worked day and night, had us kids. My father decided to build our own house in 1987. Then he built a house in Twin Brooks, sold it, built 15 to 20 more.”
One thing led to another, from a rental property portfolio, to a strip mall on 34 Avenue, to a Beaumont 60-unit townhouse project. During the boom of 2006-2008, Regency was gearing up for bigger projects, making strategic land acquisitions
Along the way, Rakesh built up Regency’s network of tradespeople, lenders and sub-contractors. It was that network, plus a strong sense of community, that kept Regency in business during the grim years.
Regency’s first big-time project couldn’t have had worse timing. Regency bought the rezoned land for the 117 unit, 22 floor Quest tower on 105 Street at and 104 Avenue in 2007.
Things looked great. A sales office had opened, 20% of the condos had been sold. Then the global financial crash hit Edmonton in November, 2008. Condo prices collapsed. Sales at Quest ground to a near halt. That’s when Regency’s reputation and its network kicked in, says Raj. “We sat down with our tradespeople and bankers. We all hung in. We never stopped construction. That’s not in our genes.”
By 2010 the economy began to revive. The last Quest condo unit was sold in early 2013.
Rakesh and Raj (freshly minted University of Alberta MBA in hand) had never stopped looking into the future – as developers must do. They’d purchased the land on which The Pearl now sits, a couple of run-down apartment building on Jasper Avenue. The block was ripe for redevelopment.
The original zoning allowed for two 20-story side-by-side towers. “We had travelled, and seen what multi-story condo towers could do,” says Raj.
Why not take the same density, put it into one really tall tower, win over the neighbourhood (and city council) with public amenities at ground level and extra attention to shadow minimization? Going higher meant more unobstructed views of the river valley and the surrounding city.
The timing on the Pearl couldn’t have been better. City council was ready to approve visionary projects. Once it was apparent the Pearl would be a good neighbour, the local community bought in. The rezoning to 35 stories (now 36) passed near-unanimously.
This time, as the concrete was being poured, Edmonton’s economy was improving. Empty-nest baby boomers are exchanging houses for an upscale urban experience. The boomers were buying up the top floors of The Pearl, young professionals buying the smaller, lower units.
“As we were going up, the market was asking for fewer but bigger, more luxurious units,” says Raj. “We went back, re-figured the units, upgraded the quality all around.”
Another floor was added, 174 units shrank to 128 bigger units. The Pearl’s exterior is now finished, all sky-blue and glass. The building is 60% sold and will likely sell out by October’s move-in date.
Leaving Edmonton isn’t in the cards. “It’s about knowing the market, and making changes in a timely manner,” says Raj. And, he says, it’s about community. “My father would never move. When I did my MBA at the U of A, I was influenced by the likes of Joseph Doucet, Ralph Young and Mike Percy. They teach you about pride of place, about doing the right thing.”
In my Hicks on Biz column about the Alberta budget process on April 17, Bob Ascah of the U of A Institute for Public Economics has asked for some clarification of his statements. "The key point about public sector accounting standards,” he says, “is that they do not apply to provincial budgets- they apply to the audited financial statements at year-end."
FACTOIDS – The Pearl condor tower, Jasper and 119 Street
36 stories high
128 units, 65 sold - 23rd to 31st floors almost sold out.
lower floor, 600 to 800 sq. ft. units, average price $300,000 to $400,000
mid-range, 900 to 1,600 sq. ft. units, average price $550,000 to $800,000
top five floors, 2,000 sq. ft. penthouse units (with upstairs and downstairs), average price -$1.8 million.
Five top luxury penthouses – including entire 36th floor as one penthouse - $3 to $4 million each