This article was written and published in the 2016 Year-End Goodman Report.
The shortfall in rentals hasn’t been merely a Vancouver problem. Municipal governments outside the city’s borders haven’t been coping well with their aging rental stock either. Though a bonanza for rental owners in terms of soaring valuations and sharply escalating rents, the dire shortage in the region has been disruptive, indeed disheartening, to segments of society needing affordability. These include students, young families and seniors, as well as employers looking to attract and retain talent. New supplies of market rentals would help ease these severe pressures.
After almost a 40-year hiatus, which saw little in the way of new purpose-built market rentals anywhere in the area, the City of Vancouver and some suburban municipalities are at last gearing up and facilitating their development.
The Goodman Report has just conducted a comprehensive internal survey enumerating the new rental developments in various stages throughout Metro Vancouver. This report is broken down by municipality, classifying projects as under construction, approved or proposed. It also distinguishes Vancouver from all the other municipalities. Below are our summarized findings.
An impervious asset class
Despite new purpose-built product now in the pipeline amounting to 9,470 units throughout Metro Vancouver, demand will continue to outstrip supply by far. It’s anticipated that the regional population will increase by an average of 35,000 per year until 2040. The Goodman Report expects local landlords to remain insulated from any apparent decline in tenant demand or softening of rents. Considering strong absorption of emerging product (primarily condo rentals), the red tape facing developers that results in an exhausting three-year approval process, and the ongoing battles over land use, we should not expect the following matrix to show any notable improvement over the next five years. Since 2010, total suite count has increased only 4% in Vancouver (averaging just 371 units per year) and 3.2% in Vancouver census metropolitan area (CMA) (averaging 568 per year).