Joanne Lee-Young, Vancouver Sun
October 25, 2017
Not enough new rental buildings are being constructed in Metro Vancouver even though there are signs that more fresh projects are in the pipeline than in recent years, according to a local commercial realtor.
The latest Goodman Report, published by Vancouver-based HQ Commercial, points to various reasons for the rental shortage, including that more people are looking to rent because they feel owning a home is out of reach.
It also blames the City of Vancouver’s approval process for slowing down the construction of needed rental units.
There was a 23-per-cent drop in the number of apartment buildings sold in Metro Vancouver, from 148 to 114, during the first nine months of 2017 compared to the same period last year.
However, the overall dollar volume in 2017 increased by 35 per cent as developers sought aging apartment buildings for their redevelopment potential, according to the report.
“Many developers are currently looking to acquire older, mostly low-density and inefficient purpose-built rentals, co-ops and strata complexes for the redevelopment of rental or market housing,” the report states.
It estimates 28 of the 114 apartment buildings sold in 2017 (25 per cent) will be redeveloped rather than held.
In addition to some of the oft-cited reasons for rises in residential sale prices and rental rates (i.e., low interest rates, strong immigration, limited land, investors competing with end-users, etc.), the report also mentioned the more recent impact of mortgage stress-testing forcing less-wealthy, would-be homebuyers to rent for longer.
Put together, it means that even though the number of new rental units is slowly increasing compared to previous years, the result is muted and might even be hard to sustain, it said.
The report sketched a pipeline for new rental units that looked at buildings in five categories: completed, under construction, approved, proposed, and cancelled. In Vancouver, there are 89 projects totalling 7,724 units that were either recently completed, under construction, approved or proposed. Even if all were developed, most wouldn’t be available until 2022 at the earliest, said the report.
For 2017, “we calculate that only 837 suites consisting of seven projects will be added to Vancouver’s inventory.” For the suburbs, “there are 70 projects numbering 8,454 suites in various approval stages.”
In addition, the report warns: “The proposed projects noted could quickly disappear should public officials adopt punitive policies (such as high community amenity contributions … paid by developers at rezoning) that create disincentives for developers to build rentals.”