Municipal matters
A couple of weeks ago, deep in Charlotte County, New Brunswick, conversations with strangers quickly turned ugly when yours truly mentioned visiting from Vancouver. A fisheries biologist related the challenge of finding rental housing on the Sunshine Coast and how the lack of supply drove up rents. Another managed to buy an apartment, did well, but cashed out to buy a detached house by the sea – something impossible for her on the West Coast.
Condo marketer Bob Rennie told the Urban Development Institute (UDI) last year that Vancouver’s lack of affordability risked becoming the region’s brand. And so it has, as these two conversations attest.
With the latest figures from Canada Mortgage and Housing Corp. indicating an 18% drop in housing starts across the Vancouver census metropolitan area for the first half of 2017 compared with the year previous, housing stocks remain tight. Blame slow approval times at the municipal level, say many observers, tagging Vancouver (where apartment starts dropped 73%) as emblematic.
This is why Anne McMullin, president and CEO of the UDI, hailed last week’s appointment of Coquitlam-Maillardville MLA Selina Robinson as B.C.’s new minister of municipal affairs and housing.
“We had been recommending [they] combine housing with municipal affairs because, under Rich Coleman, the housing file was really only about social housing and housing the hard to house,” McMullin said. “To see it combined … is a very positive step.”
The next wave
Current estimates put the next wave of downtown office construction in Vancouver at 3.1 million square feet. Set to complete at 10 sites between 2019 and 2022, it will be the biggest addition of downtown space since 3.6 million square feet was added in 1984-87.
Given current market conditions, Ross Moore, senior vice-president in the Vancouver office of tenant representation firm Cresa Global Inc., believes the new space will drive rents higher in a market that’s seen little change in at least 15 years.
Back in January 2001, Sandy Cruickshank, now executive vice-president, Western Canada, with Triovest Realty Advisors Inc., told UDI’s annual forecast event that in the previous three years, effective rents had passed $20 a square foot, and even $30 at Waterfront Centre.
“We were leasing the project at effective rents in the mid-teens [10 years ago],” Cruickshank told UDI. “Today, as they are going through their renewal cycle, effective rents are up to 60% higher.”
Tech was a driver at that time. Cruickshank saw it continuing to grow in the Lower Mainland, while noting “it just may not be as robust as it was [in 2000].”
Today, tech accounts for about 40% of tenant demand in a market where Class A space averages 25 years old. An appetite for next-generation space, combined with construction costs, supports landlords’ hopes for higher rents.•
