Development in downtown Sydney quietly moving ahead, officials say

Despite a large construction project creating a new Nova Scotia Community College campus in downtown Sydney, several proposed residential and commercial developments in the neighbourhood have not materialized.

Officials say most of them will likely get underway soon, now that market forces and government measures are helping developers to get around the high cost of construction that has been exacerbated over the last few years in large part by the pandemic.

Eldon MacDonald, who represents the downtown area in Cape Breton Regional Municipality's District 5, said most of the projects proposed over the last few years are likely still going ahead.

"They've gone quiet, I think, in regards to the public realm, but I don't know how quiet it is in the office rooms of the developers," he said.

Like many communities, Sydney is facing a housing crisis, but municipal staff and in some cases the developers themselves have said the problem is figuring out how to make projects affordable in light of steep increases in construction costs, MacDonald said.

"Some of those costs have come back down ... and now we have inflation in the last year that has gone up, so those build numbers over the last several years have been kind of bouncing around," he said.

"You'll still hear some of the developers say that some of those prices are up 60 per cent of what they used to be and now inflation ... on top of that, so it's really made it difficult for projects to look at numbers and understand where their bottom line needs to be in regards to rental for each tenant."

A year ago, a developer based in Bedford, N.S., won the right to negotiate a deal that could result in several residential and commercial buildings on the former Royal Cape Breton Yacht Club property on Sydney's downtown waterfront.

MacDonald said the company is still negotiating with the municipality and is expected to come up with a plan within the next six months.

The municipality had been working on reducing the number of vacant properties in the downtown core in 2018, but the pandemic set back some of the plans private developers had proposed, he said.

A residential and commercial mix was pitched for the old Cape Breton Post building on Dorchester Street, but the owners decided to focus on the former Smart Shop building on Charlotte Street, instead, MacDonald said.

Now that that building is renovated and open, attention might turn back to the Dorchester Street property, he said.

A developer bought the former Via Rail station on Dodd Street and tore it down, with plans for a residential and commercial project and that is still ongoing, although it's been held up by high costs due to the pandemic, MacDonald said.

There also had been talk of developing the old Lyceum building on George Street, but that one has stalled, he said.

CBRM is also putting a park on Intercolonial Street up for private housing, but it is still being surveyed before going out to a request for proposals.

J. Francis Investments owner Craig Boudreau, who has plans to build a residential/commercial building on the former Jasper's restaurant lot on George Street, said since the pandemic, developers have been dealing with labour shortages, supply chain issues and inflation.

But the main factor holding things up is the building costs have doubled, he said.

"We're all dealing with the same issues," Boudreau said. "Every other developer I know, it's the cost of construction.

"You've seen it with the hospitals. You see it with the government, how much the cost of the hospitals they were going to build four years ago is now $20 million more or whatever. There's significant increases."

Supply chains have also been disrupted, with some parts either unavailable or on a months-long back order.

"There's various odd things that are still hard for the contractors to source," Boudreau said.

"You can't get things like a fire door or something. It might be six, eight months before you can get it."

The market has also changed rapidly and the vacancy rate is quite low.

Boudreau said that makes it more attractive for developers.

"The demand is extraordinarily high and the rent that you're able to get is higher than it's ever been," he said.

And recently, governments eliminated the federal and provincial taxes on new housing construction, which Boudreau said will make a big difference.

"Basically, you're saving 15 per cent off of your cost of construction with residential builds, so I suspect that you're going to start seeing these developments move a little quicker now," he said.

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