Micro-suites snapped up, but not at $1,500 a month

When Kelowna developer Shane Worman announced plans last year for a 24-unit micro-housing complex, he suggested the monthly rents would be between $700 and $750.

And that’s exactly the range they were offered for when the units were ready for occupancy this spring.

“We had a lot of people expressing interest in the suites — more applications than we could accommodate,” Worman recalled Wednesday. “The suites were all filled up on May 1.”

But Worman doesn’t regret not setting a higher rent for the 320-square-foot suites, contained in a brightly coloured two-storey complex on Ethel Street, just south of Springfield Road.

“We were some of the first micro-suites to market, and we weren’t really sure what the market would support in terms of rents,” he said. “I just felt that something between $700 and $750 would be super-affordable.”

The rents charged for micro-suites became a political issue at Monday’s city council meeting. Some councillors said they’d heard that other micro-suite complexes around Kelowna were renting for as much as $1,500 a month.

Such high rents, they said, were particularly unfair because builders of micro-suites do not have to pay the city development cost charges. The provincial government has granted a DCC exemption for micro-suites in the expectation that would help create more affordable housing.

To date, the City of Kelowna has lost about $3.5 million in DCCs, intended to pay for public amenities like new roads and parks, because of the construction of micro-suite housing complexes.

But none of the micro-suites now available around Kelowna are renting for $1,500 a month, despite what was said at council.

The figure seems to be derived from a marketing campaign associated with a microsuite project at the corner of Ethel Street and Harvey Avenue that isn’t even under construction yet.

“It’s being suggested to potential investors that if they buy one of the suites, they may be able to rent it out for $1,500 a month in the future,” said Ryan Smith, a city planner. “So that figure needs to be approached with a little caution.”

Regardless, even after they claim the DCC exemption, there is no requirement on builders to offer micro-suites for rent at anything less than the going rate.

Rental rates are determined by many factors, including desirability of the building, its location, and overall supply and demand.

“We have a lot of new supply coming in the near future, something like 1,000 new (traditionally sized) rental units, and that’s going to definitely affect the market,” Smith said.