Developers shift focus to rental unit growth

Zoning, transit also highlighted as part of annual industry forecast

The development industry focused its annual forecast on how to build more rental housing as well as the impact of government zoning and transit on affordability.

For many years, the Urban Development Institute’s January luncheon has been a go-to event for developers, agents and brokers looking to hear what is next.

“Home ownership is still very much a core value of our society,” said Brian McCauley, president of Concert Properties.

However, “we are starting to see a shift in attitude of rental as acceptable accommodation.”

While 69 per cent of Canadians own their home, one of the highest rates in the industrialized world, “there is no question that renters account for a much higher rate in cities,” said McCauley.

Rental households account for 30 per cent across Canada, but, in Vancouver and Toronto, they represent more than 50 per cent.

With unaffordable prices across all kinds of housing and millennial debt rising, there is an acute shortage of rental options, said McCauley.

“There is a very high percentage of renters who have high income levels as well.”

McCauley said Concert has some 5,000 rental units between Victoria, Metro Vancouver and Toronto, and “there is only one unit available. The demand is insatiable.”

On the financing side, there is also strong interest from pension plans, insurance companies and private investors to back rental housing, said McCauley, adding that in Canada, “75 per cent of rental housing stock is over 30 years old.”

Despite this buzz and the emergence of various municipal programs to provide incentives, McCauley said the situation in Vancouver is behind other cities.

He compared the 1,800 rental units approved by the City of Vancouver in 2016 to the 14,000 in Seattle.

“There are many things conspiring against new residential rental in Vancouver,” McCauley said.

“We want to protect affordability for those units that do exist, but (policies including) rate of change and tenant relocation make it a challenge to intensify replacing older housing stock.”

More generally, McCauley cited statistics showing that condo sales in 2016 for Metro Vancouver hit just under 19,000, representing a 53 per cent increase compared to 2015, even though it was a “tale of two halves” with 13,000 sales in the first half of the year and under 6,000 in the second half.

Despite this stark split in sales, average prices for concrete condos even in the last quarter were up 22 per cent year-on-year.

More mixed-use development needs to happen so that commercial and industrial sites don’t become “monozones,” said Andrew Grant, president of PCI Developments Corp.

Allowing for residential and retail sites around key transit stations is policy that can ease affordability.