One of Ottawa’s largest homebuilders has added more than 500 new tenants to its growing portfolio of income-generating properties with a new 28-storey student apartment building in Little Italy.
Choo Communities, the parent company of Ashcroft and seniors residence Alavida Lifestyle, officially opened Envie Student on Tuesday.
While not officially affiliated with Carleton University, the building – located one O-Train stop away from the post-secondary institution – is targeting students with furnished suites clustered around common living and cooking areas shared by up to four tenants.
The first residents moved in ahead of the start of the current academic year and the building’s 550 suites are more than 90 per cent leased, said company founder and CEO David Choo.
“Welcome to the future of student housing,” Mr. Choo said at a reception to officially open Envie, which features a fitness centre, recreational areas and a coffee shop.
The building is managed by Choo Communities and cost “a little shy” of $60 million to construct, Mr. Choo said.
Rents range from $575 to $1,369 per person per month.
Ashcroft purchased the former animal shelter on Champagne Avenue, near the intersection of Carling Avenue and Preston Street, some six years ago with the intention of building condominiums, Mr. Choo said.
He declined to go into the specifics of the business case behind the switch to student housing, beyond saying that “insight and ambition” guided the decision.
“This is the best use,” he said. “Student housing is starting to become revolutionary in Canada.”
Many builders in Ottawa that were focused on condominiums earlier this decade are now turning their attention to rental buildings as hundreds of unsold condo units continue to sit on the market.
Speaking last month at the Ottawa Real Estate Forum, Julianne Wright – the director and general manager for research, valuation and advisory services at the Altus Group – called student housing the industry’s “flavour of the day.”
“The net income levels achieved in student housing projects are higher than in conventional apartment buildings, despite the higher management burden that comes along with it,” she said.
Ms. Wright said one of the key drivers is the rising number of international students in Canada.
Indeed, Mr. Choo said Envie is home to 135 foreign students from 62 different countries.
He declined to say how much revenue the property brings the company annually but said he expects to see a return on investment “pretty quick.”
While a builder selling condos would typically recover their investment as the sales close and homebuyers take possession, owners of rental buildings must typically cash rental cheques for years before they start to turn a profit or must look to exit their investment by selling the property to a REIT.
Construction financing was provided by Desjardins Business. Stéphane Chénier, senior manager for real estate at Desjardins Business, said the loan-to-value ratio for the property is approximately 55 per cent and said there is still more local demand for privately owned, purpose-built student apartments like Envie.
“There is still space in Ottawa for more student housing,” Mr. Chénier said.
He said Desjardins also financed two student housing projects closer to the University of Ottawa: The 190-suite Laurier Friel in Sandy Hill and the newly opened 385-bed residence at 45 Mann Ave., which Mr. Chénier said opened to “100 per cent occupancy.”
Meanwhile, Choo Communities is constructing a second Envie tower next to the existing structure that is scheduled to be completed in the summer of 2018.
Mr. Choo said he wants to “expand like crazy” and is currently looking at other property sites across the country for student housing projects.