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The campaign to live smaller has come to Vancouver.

The city's first laneway house to be installed on a permanent site attracted a crowd of more than 1,000 to a two-day open house over the weekend.

If it's an indication of demand for the 500- to 750-square-foot homes, then business may soon be booming for developers in the business of building these prefab constructions.

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The first laneway house to be installed since zoning approval was passed last summer is McGill House, a 710-square-foot contemporary design home that sits to the rear of a house at 2703 McGill St., on the city's east side. The house is the creation of Bryn Davidson's Lanefab custom development company, which has been in business for about a year and a half.

Mr. Davidson is a LEED-accredited architect and mechanical engineer who started the business with partner Mat Turner, after design and construction work dried up because of the recession. Prior to Lanefab, Mr. Davidson had been working as an independent designer on sustainable residential projects in Ontario and Alaska.

"It was in the midst of the recession, we were suddenly without work, and at the same time, the City of Vancouver was talking about fast-tracking this lane house policy as part of their EcoDensity strategy," he says. "So, just over a year ago, we started working to create Lanefab and we worked on designs that would be ready for when they did pass the bylaw."

What Mr. Davidson didn't expect was the outpouring of interest the minute he opened the doors for a peak inside McGill House, which is owned by Manuel and Agnes Mendoza, who live in the main house. Mr. Mendoza is a bridal gown designer who owns a long-established store in downtown Vancouver.

McGill House could easily rent for around $1,700 a month - a fact not lost on Vancouver homeowners looking for a revenue stream. They were willing to line up down the lane to view the sleek, modern laneway house that will be ready for rental by June 1.

"There are quite a few potential projects coming out of the woodwork after this weekend," says Mr. Davidson, who has given many tours and talks this past year about his designs.

Approval for laneway houses was passed last July, after several years of public meetings attended by stakeholders such as Mr. Davidson who could benefit from the initiative. Laneway housing was made a priority when the city adopted its EcoDensity charter two years ago.

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For many, the laneway house (also known as a microhouse) could become a way to offset the high price of Vancouver real estate. In order to purchase a laneway house, the customer must already own a house on a suitable property. A few people who came to view McGill House mistakenly thought they could own the laneway house outright, Mr. Davidson says. Laneway houses are intended to be small one- or two-bedroom microhouses on a lot that's at least 33 feet wide and has plenty of room for another structure. Oftentimes, they occupy the space where a garage would have been built.

"That's the caveat - the price doesn't include the land," Mr. Davidson says. "You have to already own a $600,000 property."

In Vancouver, about 66,000 thousand houses or roughly 85 per cent of properties qualify for laneway homes. Because the houses are so small, they can easily be built as prefabricated panels, then constructed on site. Lanefab contracts out the panel work and does the design, construction, permits and hook-ups, such as hydro, for about $190,000 to $230,000 a house, depending on lot size.

The city has issued more than 60 permits for laneway houses. Another Vancouver company, Smallworks, has a factory that produces the panels. The company has taken out seven building permits for laneway houses. It offers a time-lapse video of a prefab house being built on its website (

It's a revenue opportunity that's relatively inexpensive to build. Customers see it as a boost to the property's overall worth that also offers housing to either renters or family members, such as kids who are attending university but can't afford to live independently. Mr. Davidson does not see the laneway house replacing the basement suite. Instead, he sees it complementing Vancouver's long-standing love affair with the basement suite mortgage helper.

"Given the property values now and the cost of a mortgage, and the cash flow required to pay for a $1-million property, you'll see both lane houses and basement suites."

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Clients most suitable to the housing are long-time homeowners who don't have big mortgages and have a lot of equity.

"I think about one-third of people [who want one]are people who just want revenue property," Mr. Davidson says. "They have a lot of equity, but not a lot of cash flow. Another one-third are people who want it for family - either kids moving back home to care for parents, or people who have a family member who can't afford a condo but can afford a laneway house. And the last one-third is people who want to downsize and move in themselves. They rent out their main house."

Lanefab has a dozen more projects in the works, including one for a young couple who plan on renting out their larger house and moving into their laneway home.

"In Vancouver in particular, people have become much more acclimated to living in more compact dwellings than many other places in North America, where the suburban model is still the norm. For many people, the idea of having a well-designed small space is very appealing."

For Simon Fraser University instructor Darren Jukes, the addition of a 750-square-foot laneway house to his 33- by 122-foot property at 23rd Avenue and Heather Street is a "no brainer." In the next month or so, construction will begin on an Arts and Crafts design laneway house on his property after about a year of planning. The price tag will wind up in the $180,000-to-$200,000 range, he says.

"For me, there are a couple of things," he says. "I like investing in an asset basically, and this is a way you can do it in Vancouver. And to have the flexibility of having a family member move in there, or potentially rent it out. I haven't decided what to do with it yet.

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"The alternative is you try to find another piece of real estate in Vancouver, which is another barrier of entry."

Mr. Jukes purchased his home three years ago, at one of the market peaks.

"The fact that prices are as high as they are, it's definitely motivation around here, trying to make better use of property that already exists. I also like the fact that I can see in the Lower Mainland that there are only a certain number of directions we can go. And if we don't want to start building massive condos all over the place, then we are making better use of real estate that we already have. It's a pretty clever alternative."

Mr. Davidson has put his money where his mouth is. He and his wife, a transportation planner, have lived in a 360-square-foot condo on the east side of the city for the past few years. It had been completely gutted and redesigned in order to operate as an efficient, usable and contemporary designed space. He used his experience in recreating and living in the studio condo when designing McGill House. After all, 360 square feet could get a little crowded for two people.

"Our relationship survived and is in much better shape than I expected considering we lived in it while renovating it," he says, laughing.

In terms of living space, he learned the importance of decent storage to keep bikes and clutter out of sight, as well as an open, flexible plan. The linear galley kitchen in his condo is almost identical to the McGill House kitchen. The couple also installed a raised bed that offers storage underneath and an overhead clearance from the ceiling of about four feet.

"It goes from disaster to clean in about 15 minutes," Mr. Davidson says. "And we do a lot of entertaining. We can do a dinner party for 10."

There are other benefits to small living.

"It's nice because our mortgage and condo fees together are half of what we were paying before in rent," says Mr. Davidson, who plans to put the condo on the market next month for $250,000.

His mantra has long been that we don't need huge spaces in order to live well.

He has another motive for working on the EcoDensity initiative.

"I grew up in Northern California and watched the sprawl from Sacramento come outward like a tidal wave and engulf the old, small communities.

"And here we are, the first city to really adopt [EcoDensity]as a policy for the majority of properties throughout the city."

Special to The Globe and Mail

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