Thursday, August 15, 2013

Pre-sale marketing: Pros and cons for buyers and sellers

I am often asked whether it is better to buy a new condominium before or after construction. As you might expect, my most common answer is “It depends”.

I first learned about pre-sale marketing in the mid-80’s when CBC national news featured a story on people lining up outside a Toronto marketing trailer. They were hoping to buy at The Polo Club, the first Toronto condominium to offer much smaller, affordable suites. The project was sold by Priority Registration, a new marketing approach in which potential buyers had to ‘get on a list’ to be eligible to buy.

Priority Registration was the brainchild of Stan Kates. I knew Kates and his then side-kick realtor Marty Atkins from high school, and was asked to bring them to Vancouver by a client who thought this would be a good approach for his False Creek project. I subsequently learned they created their effective, high-pressure marketing system through a combination of design and accident.

People would line up because they were each given the same appointment time. When they became anxious and tried to get into the sales centre they could not, since there was no handle on the door. Kates discovered this idea by accident after a door handle fell off an earlier sales centre. He incorporated it into future projects since it too enhanced buyer anxiety.

Inside the sales trailer potential buyers discovered there were few floor layouts to choose from. This was to speed up decision making. To further enhance anxiety, each sale was announced over a loud speaker; and when people asked for a brochure, they were often told they were all gone, but were offered paper and pen to copy floor plans off the wall.
Kates firmly believed pre-sale marketing was selling a dream, while post-completion marketing was selling reality. “And never try selling during construction” he told me, “Since you’re just selling a mess!”

The program worked well for The Polo Club and Kates. Today as Chairman of Kates Marketing Group, his website notes he is the creator of Priority Preview® Marketing, a trademarked and copyrighted pre-sales system that has pre-sold over 55,000 homes and condominiums in over 500 projects across North America for well in excess of $5 Billion. He obviously likes 5’s!

Kates did not work on our Vancouver project since we had too many unit types that were too large and expensive for his system. However, in subsequent years, Vancouver developers and marketing consultants have created this region’s very effective pre-sale programs. While they differ from Kates’ early approach, they too have resulted in the sale of thousands of units to homebuyers and investors.
The original model of the Bayshore development. Note the pier at foot of Denman that was sadly never built.
The very first artist's illustration prepared for the Bayshore development. It turned out very much like the drawing!
One of Vancouver’s innovative pre-sale programs was the marketing of Bayshore’s first condominium residences from the Westin Hotel’s gracious International Suite. Since living at Bayshore included special access to the pool, health club and other hotel facilities, the developer wanted to emphasize the dream of living in a waterfront residential resort.
I once purchased the ground floor unit at the front of this building. Unfortunately, I didn't appreciate the impact of the city street light until after it was finished!
A key advantage of Bayshore’s pre-sale program, and many others, is it allowed buyers to choose from a variety of finishing packages and customize a home. However, this occasionally create problems, especially for the developer. I will never forget one if my buyers who complained about her bathtub. “What’s wrong with it” I asked. “It’s a very high quality fixture.”

“Yes” she said, “but it was supposed to be a shower!”

I pre-sold two Westside projects from my office in the CP Station. I offered free taxi rides to potential purchasers. One day, after handing my Yellow Cab credit card to a driver, he asked whether I was the developer whose office was in the Station. When I told him I was, he advised the older lady in yesterday would probably take the third floor two-bedroom if I reduced the price $5,000!

Another advantage of pre-sale marketing is it allows some buyers sufficient time to sell their existing home. For those downsizing from a house, the disposition of decades’ of accumulated possessions and memories can be challenging. Being able to do so over a period of time makes it a bit easier.

A disadvantage of pre-sale buying is that buyers often do not know exactly what they are getting. While this is less of a problem today with full size model suite mock-ups and computer generated view analyses, it is difficult to foresee everything.

I know. When I personally purchased a ground floor Bayshore waterfront condominium, I did not realize there would be a city street light right smack in the middle of my million-dollar living room view. And I was the Development Manager.

These days I often meet new and prospective homebuyers at Hollyburn Mews, a current project in West Vancouver. While I was tempted to pre-sell since there was much buyer interest immediately following the rezoning approval, I decided to wait for various reasons.

Firstly, I wanted buyers to see and understand exactly what they would be getting. Since the project design was somewhat unusual with a central courtyard separating laneway coach houses from street-front duplexes, even I was not exactly sure how it would all turn out.

Selling after completion also encouraged me to include a variety of small features that I suspected buyers might appreciate, but would be hard to illustrate or describe in a marketing brochure.

This approach also made it easier to know the development costs before finalizing sales prices. Fortunately, the credit union which financed the project did not require evidence of pre-sales before advancing funds, which is often the reason why many other developers have to pre-sell.

While selling after completion means developers generally have to wait longer to sell out a project, it does allow buyers to better appreciate what they are getting. In some cases they can also see who will be living next door, and whether their patio will get sun in the morning or afternoon. This is particularly important if this is a home, not just an investment.

Buyers can also see if there is a street light right outside their living room!

Wednesday, August 14, 2013

I say GREED is a factor in the recent condominium slow down!

Recently I had a call from Frank O'Brien who writes for Western Investor and Business in Vancouver who asked why I thought there had been such a significant slowdown in the number of condominium projects getting underway around Vancouver and elsewhere in Metro. To my mind, the problem was complex, but two key reasons were unrealistic asking prices on the part of vendors, and the uncertainties associated with excessive Community Amenity Contributions (CAC's) being charged by Vancouver and other municipalities.  Here's Frank's story.

Greed" blamed as residential land sales plunge | Print |  Email
Wednesday, 07 August 2013 18:32
"Greed" at all levels from the street to city hall is to blame for a sharp drop in sales of residential land in Metro Vancouver, says real estate consultant and developer Michael Geller.
"We all got too greedy," said the president of the Vancouver-based Geller Group.
This week RealNet, a Toronto-based data-tracking firm, reported that sales of land suitable for multi-family properties plunged 30 per cent in Metro Vancouver during the first half of this year, compared to the same period a year earlier. The trend is also seen in Toronto and Calgary, where sales of residential land dropped 51 per cent and 52 per cent, respectively.
RealNet research manager Richard Vilner said the decline in multi-family land demand mirrors a slow down in condominium sales. "Land prices may have peaked in Canada's three biggest housing markets," he suggested.
Metro Vancouver condo developers are pulling back from launching new product, according to MPC Intelligence, because of an overhang of unsold inventory.
MPC says 19 high-rise projects with 3,670 units started marketing between January and June 2013 in Metro Vancouver. This is down 20 per cent compared to the same period in 2012 when developers started marketing 26 projects with a total of 4,600 units.
The decline in low-rise marketing starts is even more dramatic; 18 projects with 1,020 units in the first half of 2013 compared to 34 projects with 2,400 units in 2012 - a 57 per cent drop.
Geller aid many landowners and civic governments haven't yet got the message that the residential market has changed.
"[Land owners] in Vancouver are asking $180 to more than $200 per buildable foot [the amount of square feet of residential space that can be built] for rather poor quality sites,"Geller said. At the same, municipalities, including the City of Vancouver, continue to demand community amenities and development charges from residential developers. "These can add up to $50,000 per unit," Geller said.
In Vancouver, one recent land assembly is made up of six detached houses in the Fairview Slopes area, where, based on current zoning, the list price is $200 per square foot for a low-rise multi-family project. Any developer would then have to add in construction costs of approximately $220 per square foot, plus civic fees, marketing and other soft costs, such as landscaping, notes a study by Altus Group. Yet the average per-square-foot price of a new low-rise condominium in Vancouver is around $500 per square foot, meaning potentially tight margins for speculative developers.
"I am not surprised that land sales have slowed down," Geller said.


Sustainabuild Conference October 30 2013 Vancouver

A couple of years ago I was asked to make a presentation on the pros and cons of undertaking sustainable developments at a SustainaBUILD conference. So I decided to tell the truth. I was never a tree-hugger; I never wore Birkenstocks; indeed, I was never a true environmentalist...I was, to quote a profile in 2005 publication, An Accidental Environmentalist.  However, as a result of my experience at SFU and with the Canada Green Building Council, I thought I could offer a perspective worth considering.  Perhaps it was, because this year I have been invited back. Here's the program:  

8:15 - 8:20 am  Opening Remarks
Conference Chairman: John Holland, President, PHH Arc Environmental
Biography: [more]
8:20 - 9:20 am

The Sustainable Experience 20 Years On — What Have We Learned

In the last 20 years we have moved from sustainability as a concept to sustainability as the prevailing standard for buildings, infrastructure and neighbourhoods. There are now four primary sustainable building validation systems in Canada; LEED, BuiltGreen, BOMA Best and the Living Building Challenge, what do these systems mean, what have they told us and why do owners and developers want these validation systems attached to their buildings and neighbourhoods? Over this period how well have buildings performed compared to the design? What green attributes appeal to tenants and investors? How do sustainable features, help the management of assets and make the building productive? Does the cost of greening a building pay off? What do the last 20 years tell us about the next 20?
Albert Bicol Michael Geller
Presenters: Albert Bicol, P. Eng., Albert Bicol Consulting
Michael Geller, President, The Geller Group
Biographies: [more]
9:20 - 10:10 am

Building Sustainable Cities: Barriers & Opportunities

What does it take to build sustainable cities in the 21st century? What can we learn from other cities? Is the sustainably designed city culturally, socially and economically achievable? This session will examine strategies to achieve sustainable cities while reviewing the impact these communities have on the lifestyle and economic markets. Using lessons from Vancouver and internationally from Europe, the session will move from policy to implementations while assessing green building strategies. The session will also review regenerative projects, specifically looking at achieving sustainability by leveraging innovative finance as well as community and under-utilized buildings. How has the European landscape changed and how has this affected sustainability practice.
Presenters: David Ramslie, Principal, Urban Innovation Lab
Gerben van Straaten, CEO, Walas Concepts
John Madden, Director of Community Planning and Development, Light House
Biographies: [more]
10:10 - 10:30 am

Coffee Break & Tabletop Exhibit

10:30 - 11:20 am

Which Materials Do We Use To Create The Ultimate Sustainable Building

When selecting building materials for projects do you consider the associated factors of extraction, transport, processing, fabrication, installation, reuse, recycling, and disposal? Are there leading sustainable building product certifications in the market today? What are best practices for LEED and sustainable building projects documentation from a materials perspective? Are leading manufacturers providing the right information about their products? Are there trends towards a more systematic approach for sustainable materials management? Are there best practices for specifying sustainable materials? This presentation will focus on some of these challenging subjects with suggestions, stories and frustrations!
Murray MacKinnon Marsha Gentile
Presenters: Murray MacKinnon, Vice President of Sustainability, Ledcor Industries Inc.
Marsha Gentile, Construction Sustainability Specialist, Ledcor Construction Limited
Biographies: [more]
11:20 - 12:15 pm

Do I Feel Better In A Sustainable Building?

In this engaging presentation, Vladimir will cover the complex subject of Indoor Environmental Quality (IEQ) in buildings and explain the importance of focusing on human well-being as the primary driver for high-performance, sustainable building design. He will address the shortcomings of today's mainstream trends in building design driven by "what sells," which often conflicts with the sustainable performance targets and our perception of well-being. Vladimir will explain the key parts of human physiology and state of mind that are involved in defining well-being in buildings, and outline a simple and clear strategy for achieving well performing and livable sustainable buildings.
Presenter: Vladimir Mikler, Principal, Integral Group
Biography: [more]

and much, much more.  Check it out here

Saturday, August 10, 2013

From today's Vancouver Sun: Some thoughts on Freiburg, which some say IS the greenest city in the world!

German town the picture of renewable energy

With commitment to initiatives, Freiburg im Breisgau reputed to be greenest city in the world

By Michael Geller, Special To The Sun August 10, 2013

Since Vancouver often talks about becoming the greenest city in the world, I decided to finish a recent tour of Germany with a visit to Freiburg, considered by many to be the world's current greenest city.
The trip did not start off well when I discovered shortly after arrival that while I was in Freiburg, my hotel reservation was in Freiberg! Who knew there were two cities in Germany with the same name? However, when I saw a Freiburg GREENCity Hot Spots map in the Tourist Information Office, I knew I had come to the right place.

Freiburg im Breisgau is the largest city in the Black Forest, a vibrant university town surrounded by mountain peaks and acres of vineyards.

Many of Freiburg's sustainability success stories are related to renewable energy initiatives. This is evident in the extensive use of solar panels on buildings and wind turbines on nearby hills.

The community's Cluster Green City initiative has brought together more than 120 companies and institutions active in energy-efficient design and construction, environmental technologies and sustainable transport. I very much enjoyed strolling around the historic old town, which features a system of "bachle" or open streams first built in the 12th century to keep the city clean and help fight fires. Today, they help keep the city cool in summer and provide enjoyment for young children.
I also spent time touring Quartier Vauban and Rieselfeld Urban District, two master-planned sustainable communities located at the termination of tram lines to the south and west of the city centre; and Bugginger Strasse 50, the world's first highrise residential building to reach Passive House energy standards through renovation.

Quartier Vauban is a neighbourhood with 5,000 residents, approximately four kilometres south of the Freiburg town centre. Started in the early 1990s, it was built as model sustainable community on the site of a former French military base.

The community is connected to the city centre by a tram that runs through its centre so that all homes are within easy walking distance of a tram stop. Transportation is primarily by foot or bicycle. I was told approximately 75 per cent of the households had chosen to live without a car.

Most of Vauban's residential streets are described as "stellplatzfrei" - literally "free from parking spaces." Vehicles are allowed down these streets at walking pace to pick up and deliver, but not to park, although I saw cars parked in many areas.

Each year, households are required to sign a declaration stating that they do not own a car, or if they do, they must buy a space in one of the multistorey "solar garages" at the periphery of the community.
On the main street leading into Vauban is the colourful Sun Ship, a large integrated office/retail building designed by architect Rolf Disch. Behind it is the equally colourful Solar Settlement. It claims to be the first housing community in the world in which all homes produce more energy than they consume. The solar energy surplus is sold back into the city's grid for a profit on every home.

Also by the entrance is the recently completed Green City Hotel. When I asked at the front desk what features made it particularly green, the staff looked at each other with a look of bewilderment.
With its cooperative lifestyle, fading wood-clad buildings, green roofs, extensive greenery growing everywhere, and generally unkempt landscape, Vauban felt very much like
a high density version of Hornby Island.

Rieselfeld had a much more conventional feel about it. In German, the word Rieselfeld means sewage farm, and this was the early history of the site.

It, too, is located at the end of a tram line that runs through the centre of the community. Construction of the first homes began in the early 1990s and the overall plan calls for approximately 12,000 residents in 4,200 apartments. In addition to housing, the community offers a wide range of social, cultural and educational facilities, including a church that is half Protestant and half Catholic.

The community plan devotes great importance to green spaces, playgrounds, bicycle paths and trafficcalmed streets where children are encouraged to play. It was wonderful to see so many scooters and children's bicycles parked outside the kindergarten and elementary school.
Like Vauban, nearly all housing is developed in three-to six-storey townhouse and apartment blocks.

Many of the buildings are quite small and were co-operatively developed by small groups who purchased land from the city. Unlike Vauban, cars are much more accepted and parking is provided in surface lots, underground garages and along streets in special areas identified by pervious pavers.

The community includes a mix of market and non-market housing for sale and for rent. It is interesting to note that a higher percentage of Germans have traditionally been prepared to rent, rather than own, especially when compared to North Americans. Like Vauban, all buildings are required to meet stringent energy codes with a reliance on renewable energy. I was told most of Vancouver's greenest buildings would not even meet minimum energy standards in Germany. While photographing a townhouse complex, a large truck pulled up and loaded something into the basement. It reminded me of the oil trucks that delivered to my house as a child. While I could not tell what this truck was delivering, I subsequently learned it was wood pellets for heating.
Most new buildings had large, prominent glass-walled stairwells, not unlike older Vancouver walk-up apartments, to encourage healthy exercise. Perhaps this is a feature we should reinvent.

One building had large photographs of people incorporated into the balcony designs. When I asked if they were residents, I was told they were the workers who built the project.

There is no doubt that Freiburg's designs focus on healthy living. There are higher energy standards and the city, like the country as a whole, is much more successful at integrating transportation and housing. These are lessons from which Vancouver can learn, especially if we truly want to become the greenest city in the world.

Michael Geller is a Vancouver-based architect, planner, real estate consultant and property developer. He also serves on the Adjunct Faculty of Simon Fraser University's Centre for Sustainable Community Development. Photos of German architecture can be found on his blog at and he can be reached at

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