A record amount of rental housing is in various stages of development in Vancouver while other parts of the Lower Mainland are seeing renewed interest in buying or building rental projects.
Developers, consultants, appraisers and city planners are describing it as a rental renaissance.
The City of Vancouver approved a record 1,097 rental units in 2013, surpassing the previous record of 1,021 in 2012 and prompting Vancouver Mayor Gregor Robertson to tout the success of his rental stimulation programs, which provide city incentives.
Other factors, however, include higher costs of buying rental buildings compared with building new ones, consumer demand for higher-end suites and the fact that most of the purpose-built rental buildings have 30 or fewer units.
"If we want to grow in this market and we don't want to buy small, 30-unit, wood-frame buildings and we don't want to buy buildings above replacement cost, we really have no choice but to build," said Hollyburn Properties Ltd. vice-president Daniel Sander.
Hollyburn is seeking City of North Vancouver approval to build a 132-unit, 14-storey market rental project at 13th Street and Lonsdale Avenue.
"Major developers such as Bosa [Properties Inc.], Cressey and Wall Financial Corp. (TSX:WFC) have been building rentals and holding onto those buildings," said David Goodman, who is a principal at HQ Commercial and a co-publisher of the Goodman newsletter. "That shows interest in this asset class."
Michael Deighton, vice-president of acquisitions at Bosa Properties Inc., confirmed that his company is starting to get interested in owning rental properties. But he added that it's not a get-rich-quick proposition.
"If you take a long-term enough approach to it, like we do, you start to see the light at the end of the tunnel at about 15 years."
Developers are keen to build smaller apartments because the per-square-foot rental income is much higher for studio and one-bedroom suites than it is for larger units.
The downside of a proliferation of smaller units is that it makes it impossible for families to find appropriate units, said City of Vancouver general manager of planning Brian Jackson.
"We're trying to make sure we provide the opportunity for families to remain along major arterials, in the core and throughout Vancouver," he said.
"In the past we haven't pushed for the rental projects to have a higher number of two-bedroom units, but we're certainly doing this now."
Vancouver has 63 rental projects in various stages of development. Most units in those projects are smaller, but Jackson said the city has made recent strides to include larger units.
For example, he pointed out that 50% of the 290 social housing units at Oakridge will be either two- or three-bedroom.
Other future projects that include a substantial number of two-bedroom units are primarily condominiums. One-third of the 810 residential units that Jim Pattison Developments and Reliance Properties plan to build as part of the Burrard Gateway project at the corner of Burrard and Drake streets will be two-bedroom. But only eight, or about 9%, of the project's 87 rental units will have two bedrooms. •
