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Renderings of architect David Long's house conversion at 6162 Granville St., Vancouver. It takes a multiplex approach to the detached-house lot. The two-family house sits on a 66-foot lot and has been approved for conversion to a five-unit dwelling with a one-family infill house to the rear.DAE Design Architecture Everyday Inc.

It’s decision time for the city’s potentially transformative multiplex proposal, which will apply to about half the land base of Vancouver and goes to a public hearing this month.

The hearing is set for Sept. 14, and registration to speak opens on Sept. 1.

If the multiplex plan passes, as it’s expected to – likely with some modifications – Vancouver neighbourhoods now zoned for detached houses will no longer be off limits to multifamily buildings. Four units will be allowed on a 33-foot log and six or eight units on a 50-foot lot. The city plans to charge density bonus fees to curb escalating land values, and direct the money into amenities and infrastructure.

There are other big changes. If a homeowner wanted to rebuild their house but keep it as a detached house, they’d have to build smaller – as a disincentive for building big houses. And zoning would be simplified so that instead of nine different sets of regulations, there’d only be one.

The real estate and development community is divided about the zoning changes, which are expected to offer more housing choices for downsizers and anyone who wants to buy into a detached house neighbourhood. It remains to be seen if investors see opportunities in the multiplex, or if they are close to affordable for first-time buyers.

Most of the estimated 60,000 homes affected are south of 16th Avenue. But Shaughnessy, filled with mansions on lots that are from 1/4 acre in size to more than 35,000 square fee, and within a five-minute drive of downtown – will be exempt from the new zoning. The old part of Shaughnessy, bordered by West 16th Avenue, West King Edward Avenue, Oak Street and Arbutus Street, is protected as a Heritage Conservation Area.

To put that in perspective, Vancouver has on average about 29 dwellings per hectare – the approximate size of a city block. First Shaughnessy – the neighbourhood’s older section – averages nine or so dwellings per hectare, according to Simon Fraser University City Program director, Professor Andy Yan, citing census data.

While nobody envisions a housing price drop as a result of the new zoning there is similarly no agreement that the change will drive house prices upward.

Marketer Jacky Chan, founder and chief executive officer of BakerWest Real Estate, says his clients anticipate the changes will mean higher land values. Mr. Chan markets luxury presale condos but he’s also worked on low-density projects on the west side. He believes that it will “100-per-cent” increase the value of properties in the rezoned areas.

“With the new policy, it’s much better. You can build a new development with way more doors; from the old duplex going to quadplex, and now even six or eight doors, depending on how big the lot is. That will immediately increase the value of the land because of the density,” says Mr. Chan.

“It will just be a better economic model, and will also benefit new buyers and new users, because they are chopping it up into smaller pieces.”

As for the price point, he sees a small unit in a desirable area fetching a relatively high price.

“If we are doing it in Point Grey near Shaughnessy or South Granville area, any new builds, in order for them to be economically viable, we are looking at around $1,500 per square foot. So 1,000 square feet, it’s still $1.5-million.

“But that’s a lot less than $3-million.”

Luke Harrison, president of Catalyst Community Developments Society, doesn’t see the zoning switch capable of suddenly delivering fat profit margins. His argument is that if builders find it hard to make it work currently on a single-family lot, why would it work if the land price were to go higher?

There is a small possibility of “irrational exuberance” around land values, he says, such as what happened along the Cambie Corridor. But a Cambie-type project could involve dozens of units, while the multiplex is small scale. It pencils out for homeowners who’ve owned the property for decades, not developers who are paying a premium.

“There will certainly be people, probably realtors, that say, ‘now is a good time to sell because you’ve got extra density.’ But [a developer] who needs to unlock that value by way of development and building, they can’t afford to pay what lots and houses are today and sell the three or four units at the other end. So I don’t think this zoning will increase land values in any way.”

Development consultant Jeff Waters already works on multiplex conversions and he has done the calculations, called pro-formas, on multiplex projects. He agrees that the cost per door doesn’t work with any increased land value.

“I’m not surprised that there is a thought that the market value is going to increase,” says Mr. Waters.

“They are really fun developments, but they are tricky. I am doing some of my own developments in the interior; an infill, four- and a five-unit buildings over two lots.”

In Vancouver, a developer could be looking at almost $1-million “per door” in land cost. Add in construction costs, fees, permits, interest rates and the margin gets “incredibly tight,” he says.

“And there are a lot of pieces that add to the complexity of these projects, such as fire separation between units,” adds Mr. Waters.

It’s not the same as building a single-family house.

Architect Loy Leyland questions how such projects will be close to affordable. He says the only way he can see it working is if there was a pre-approved design to quicken the process, because every month of carrying costs adds significantly to the project.

“Whoever builds these will have to build them as cheaply as possible,” he adds.

Long-time realtor Lorne Goldman says that when duplexes were allowed on single-family lots there was hardly any uptake, so why would the multiplex be any different?

As well, the city’s extra fee for density will only be added onto the price of the unit.

And he says it’s difficult to sell units that don’t come with parking.

“As a real estate salesperson, I am telling you cars are still relevant despite the lofty goals of the city of Vancouver planning department. They have a vision but that vision isn’t being embraced by the consumer,” says Mr. Goldman.

Architect David Long is developing a U-shaped prototype for a seven-plex in his hometown Ladner, B.C., even though that city hasn’t approved the extra density on single-family lots. He’s been working on the design for a couple of years because Ladner is so short on missing middle housing.

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Rendering of Mr. Long's house conversion at 6162 Granville St.DAE Design Architecture Everyday Inc.

“We are pushing the boundary on it,” he says.

He’s also got a Vancouver multiplex under way that was recently approved.

As for Shaughnessy, Mr. Leyland, who’s built and renovated many Shaughnessy mansions, thinks there is opportunity to add gentle density that wouldn’t affect its heritage or livability. It could handle it, he says.

“It does in the big picture seem a little unfair that they would release the hounds to increase density all over Vancouver but leave Shaughnessy alone.

“You could easily hide low-rises amongst the trees. It’s very central.”

Mr. Harrison concurs. He can’t think of another neighbourhood in North America so sparsely densified within the urban core.

“We should figure that one out, because I think there is a big opportunity there, but it’s been this weird little city of Monaco in the middle of Vancouver that for some reason can’t be touched.”

Mr. Chan doesn’t see that happening any time soon.

“I see there is definitely development economic benefits by allowing the densification; however, I think a lot of the residents and owners in Shaughnessy would be majorly opposed to that.

“They are the people who want their big houses forever, with rooms the size of a full dwelling. That’s the reality of things, I think.

“And they are probably the same people that want to densify other people’s areas,” he says, laughing.

The city’s director of community planning, Neil Hrushowy, said in an e-mail that residential areas outside the city’s “RS” zones will be reviewed when work gets under way for the Vancouver Plan land use strategy. However, there is currently no intention to extend the work to the Shaughnessy neighbourhood.

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