Purpose-built rental units face hurdles: industry
Developers put off by rising land values and competing housing policies
Developers, including some who have been reaping the gains of skyrocketing pre-sale condo prices across Metro Vancouver, say more rental stock needs to be built.
City planners, the lenders who finance projects and, of course, would-be tenants all agree adding purpose-built, rental units can temper the housing crisis.
But escalating land values as well as conflicting and competing housing policies are conspiring to make this a challenge, according to a panel moderated by Cynthia Jagger of HQ Commercial at a real estate conference hosted by Queen’s University in Vancouver on Tuesday.
Andrew Grant, president of Vancouver-based PCI Developments Corporation, said larger, mixed-use projects, such as the Marine Gateway PCI built at the south end of the Cambie Street Corridor, which includes market residential towers, retail and commercial space, allow for some easy integrating of rental buildings. He also said at its 388 Kaslo project in Hastings-Sunrise, PCI tapped the City of Vancouver’s Rental 100 program, which gives developers incentives — such as waived fees, additional density and faster processing — for constructing rental buildings instead of market condos.
“Those all made it attractive to do,” said Grant.
Despite this, he feels, “it would be harder (to choose building rental) today with what’s happened in the condo market,” which has seen escalating land prices and a scarcity of pre-sale units.
He added that PCI recently dropped a plan to build a rental building with 215 units in downtown Vancouver. “It was (a project) supported by senior management (at the city), but at the mid-levels, there were conflicts with policy that made it impossible to go ahead.”
Grant declined to be more specific about the project, but suggested it might be helpful if the city had a rental housing advocate “within the planning department, spanning different departments to bridge challenges and expedite rental housing.”
“In my experience, policy and lower level bureaucracy can sometimes trip up plans, and an advocate could overcome some of these problems.”
There are other examples of developers with plans to build rental units, but who have stepped away, according to HQ Commercial’s Jagger.
There should be no community amenity contributions or CACs charged by the city to developers for allowing rental buildings, said David Wesik, executive vicepresident at Wesgroup Properties, which is targeting an increase in rental projects from one to two out of five in the next five years.
The CAC payments are in-kind or in cash and go toward the city’s building of community spaces such as daycare facilities and parks.
However, negotiations over how much should be paid to the city can be heated when developers feel they are already putting less in their own pockets and taking longer to see a return when they build rental units as compared to pre-sale condos.
Brian McCauley, president of Concert Properties, who gave a keynote address, said with “competing city policies on affordable housing, how much to contribute to nearby transit projects, whether CACs are to be paid, and what trumps what ... we joke that it could take seven or eight years to get shovels in the ground at Langara Gardens,” a property it co-owns that will see the upgrading of 300plus rental units.