Vancouver renters under pressure as landlords are persuaded to sell

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Bob Wilson was an old-school landlord, the kind who'd rather learn how to fix a clogged drain himself than call in a plumber.

The retired firefighter owned and meticulously managed the character three-storey on leafy Barclay Street in Vancouver's West End for 40 years, until he sold it last year for an offer he couldn't refuse.

And he did refuse many offers. His love of his tenants, the building and his desire to keep working kept him in the landlord business.

"I am friends with almost all of them – even my new tenants I'd seem to become friends with," says 80-year-old Mr. Wilson. "A fireman is always helping people, so you can't change that. I love that stuff, doing them favours if they needed something. It was fantastic for me."

He worked for 30 years as a firefighter, but he managed several small properties around the city. When he was a teenager, his basketball coach advised him to buy real estate in the West End because it would always be desirable and it had nowhere to grow, surrounded by water and the downtown to the east. His investments earned him a decent income for a lifetime.

"I'm adequate smart, I guess, but mostly I worked hard and I was lucky."

Out of all his properties, the one at 1131 Barclay St. was the one he loved the most. He'd purchased it from the family that had built it, and he maintained it like it was his own home. He even named it Taja Apartments, after his kids' initials. Because it was well maintained, it drew a lot of interest in the past several years as property prices soared and rental properties became sound investments. He began to hear from commercial brokers who had clients, offshore and local, who were prepared to pay a lot of money. He rejected them all, but in the past year, he received an offer he couldn't refuse.

A local property management company, Belmont (Barclay Mews 1) Ltd., offered him $482,142 a unit. With 28 units, that works out to $13.5-million. It is one of the biggest sales of its type in Vancouver, according to the listing broker who finally persuaded Mr. Wilson to sell.

"This is not a story about a developer coming in and kicking anyone out," says listing agent Charlie Hughes. "The building was run well, bought by a local owner-operator. Nothing dramatic in the deal – all parties were happy in the end."

Mr. Hughes works for Marcus & Millichap, a major commercial-investment real estate brokerage in the United States, listed on the New York Stock Exchange. They set up shop in Vancouver 18 months ago, because they know that Vancouver is one of the highest-priced markets in the world.

"The opportunities are obviously tremendous," says Mike Guinan-Browne, who also works for Marcus & Millichap and represented the buyer in the sale.

But as prices climb, it's only going to get tougher for landlords to provide affordable housing for the average wage earner and seniors. Small apartment blocks at 1059 and 1075 Nelson St. received recent assessments that increased by 365 per cent. Both three-storey walk-ups went from last year's value of roughly $7.8-million to $28.56-million. They are located just off the Burrard Street corridor, where recent rezoning is allowing significantly higher density.

By comparison, Mr. Wilson's former property at 1131 Barclay St., which is not rezoned for higher density, only went up $3-million in value, from $7.763-million to $10.535-million – still a considerable spike.

Acting mayor Raymond Louie says the city is doing what it can to deal with the demand.

"We've tried to limit speculation, by telling the community out there that you should not speculate. There is no guarantee that the city is automatically going to allow for densification on specific properties, even though it might be included as part of a policy going forward."

He's part of a working group, which includes the Urban Development Institute, urging the province to change legislation that assesses properties based on their potential use instead of current use. He says if taxes were based on current use, landlords wouldn't be facing astronomical tax hikes.

"[The province] is the one saying, 'Build, build, build.' Housing is their responsibility. What are they doing to deal with the escalation of these prices? They put in a tax for foreign ownership. And [loans to] help first-time buyers. But how much are they helping the renters in our cities?"

The new owners of 1131 Barclay St. have no plans to "reno-vict" anyone, says Mr. Wilson and the agent, Mr. Hughes. However, like any smart investor, they will update the units as they become available, and bring rents in line with market values. His long-time tenants are paying $1,000 or $1,100 a month.

"I do worry about my tenants, and they have all talked to me about this, and I say, 'call me, I can give you advice,'" says Mr. Wilson. "I do like the new owners. I think they will do things right. So far, it's a win-win.

"But will they try to get the rents up? Definitely. Definitely.

"I don't know where it's going [for the city]. I really don't. Rents will go up – they have to. So there will be a day when the government, the owners and the tenants will have to figure this out."