Developers have been sounding an alarm for more than a year that city and provincial rules make it almost impossible to develop rental projects.
But Vancouver, where the vast majority of rental housing in the region has been built in the past five years, is seeing an increase in the number of pitches for apartment projects from developers – including some who haven’t built many – or any – rentals before.
“There has definitely been increasing interest from our clients in building rental the last few years and, in particular, the last year,” said development consultant Gary Pooni, who advises companies that range from large, experienced developers to relative newcomers. "It’s not just one thing leading to this, but many factors.
“There is uncertainty in the condo market, even though Vancouver’s [job] economics are strong. Also, some of these second-generation, newer development companies are looking at long-term assets. They see great demand in a market they know they’re going to be in for a long time.”
Added to that, rents throughout Metro Vancouver have risen sharply in recent years, while interest rates are back down again, making it more attractive to borrow for large projects.
And the difference is not just because of the City of Vancouver’s rental incentives, because some projects are going to rental without any kind of subsidy, said Dan Garrison, the city’s assistant director for housing policy.
“We are seeing quite a bit of interest, and some of the proposals are not through our [incentive programs].”
So a company like Coromandel Properties, formerly CM Bay Properties Ltd., that has built condos almost exclusively, proposed two rental buildings on 41st Avenue near Oakridge on its website in July.
Another, Aurmon Development Ltd., had pitched a 12-storey, 132-unit condo building near Olympic Village three years ago, but the hoarding outside the site now says it will be rental.
Developer Ian Gillespie, of Vancouver House and Shangri-La fame, has proposed a rental building for Broadway and Alma Street, while BentallGreenOak is proposing rental for the now-empty Safeway site on West Tenth Avenue in Point Grey, Mr. Pooni said.
The city’s website shows an application from a company called APCanada Investment Corp. for two rental apartments on south Oak Street, while the big Vancouver company Intracorp Homes recently announced it has partnered with a co-op group in Marpole to rebuild its units as well as providing additional rentals in a large, three-tower project.
That comes on top of a peak period of building involving rental projects proposed earlier. About 4,500 rental apartments were under construction as of May this year, according to statistics from Canada Mortgage and Housing Corp. and realtor Steve Saretsky. Another 500 new apartments are being started on average every month recently.
Some of this is because municipalities such as Burnaby, New Westminster and Vancouver require rental units as part of large projects. Another part is the result of a big effort by the province and the city of Vancouver to build non-profit housing that will be rented at below-market rates.
As of mid-June, the city had 4,000 non-profit and social-housing units approved or under construction, with another 900 in the application queue.
More units may be on the way, as well. Vancouver planners recently asked for permission to amend the zoning on big sites such as the former Oakridge bus barn and the Pearson-Dogwood lands near Cambie Street to incorporate more rentals under a pilot program to encourage projects that include units that can be rented at below-market rates.
A moderate-rental program has already generated 20 pilot projects, including a 28-storey tower at Broadway and Birch Street, a five-storey building in Kitsilano and two large projects on Hastings Street near Vancouver’s eastern boundary.
In spite of all that, rents in Vancouver show no sign yet of coming down.
According to a report this month from the Canadian Centre for Policy Alternatives, a two-bedroom apartment in the city rents for an average of $1,842 a month, meaning a person would need to earn slightly more than $35 an hour to afford it. For a one-bedroom unit at an average price of $1,389 a month, it’s $26.72 an hour.
A previous version of this story incorrectly identified developer BentallGreenOak as Bentall Kennedy, its pre-merger name.
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