realtors are ‘having a field day’ with the broadway plan, but actual building lags
douglas todd: justifiably worried residents may have more time before the demolition crews and construction cranes transmogrify their neighbourhoods.
4 minute read
anxiety is rising within the 500 square blocks of vancouver's broadway plan, where more than 120 mostly rental tower projects are proposed. here, west broadway, looking east from granville street.
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tens of thousands of vancouver residents and beyond live in fear of being displaced or their communities distorted by colossal property development, including within the upzoned land of the broadway plan.
that’s where “realtors are having a field day,” says michael geller, vancouver community planner and property developer.
the same fears exist within the b.c. government’s transit-oriented-development zones — that is, property within 800 metres of skytrain stations and transit hubs, not to mention in the vicinity of scores of more highrise proposals peppered throughout metro vancouver.
residents within the broadway zone and around skytrain stations aren’t only afraid they’ll be forced out of their rentals, many are also wondering whether it’s simply time to move away from the coming chaos.
their resistance will be on display saturday at 1 p.m. at a “pause the plan!” rally on the north side of vancouver city hall, where citizens will urge city council to rethink the mammoth broadway plan.
paradoxically, in the midst of the turmoil caused by the city’s and province’s dramatic upzoning to address extreme unaffordability, not much new building is actually going on.
in other words, many residents might have more time than they think before the demolition crews, excavators, orange fences and construction cranes move in and transform their normally quiet streets and neighbourhoods.
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there are many reasons for the plodding pace.
one is that this year brings a general slowdown in housing construction in metro, partly due to higher interest rates.
a more specific reason related to the broadway corridor and vancouver is that it’s mostly real estate “speculators” who are making the initial moves for more towers, said geller.
most of the entrepreneurs trying to get in on the city’s radical new density allowances aren’t developers, says geller. they’re investors who wish to get councillors to approve their projects in the hopes that they can then sell them to developers.
more than 120 tower proposals have been made with the broadway plan. credit: screenshot of interactive map by stephen bohus
they’re speculating on big profits on land that has suddenly become much more expensive because governments have unilaterally approved towers in the 20-storey range on city blocks on which there were once just low-rise multiplexes or detached homes.
bob moore of dexter realty acknowledges many of those behind the projects are being “somewhat speculative or opportunistic.”
while land assemblers are buying up many housing lots to turn them into highrise sites, moore believes other applications are by long-term owners of older, three-storey rental walk-ups.
“these owners believe they can secure a 20-storey allowance themselves, so they can sell to a developer for a higher price,” said moore. “but … this strategy does not appear to be working out so well.”
the many towers being proposed under the broadway plan will forever change some character streets like this one on east 10th between fraser and main.
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in other words, the profit margins aren’t looking promising, including for the pension funds and real estate investment trusts (reits) expected to eventually buy and run the purpose-built rental towers.
“(building) starts are likely to be muted for the next little while,” said university of b.c. business professor thomas davidoff, including because of the understandable but “onerous” broadway plan requirement that builders must support displaced tenants.
“a combination of high interest rates and weakened rents — likely from a weaker economy and reduced immigration — currently makes both rental projects and condos less profitable than they were awhile ago,” said davidoff.
population-based demand for housing in b.c. and metro will likely decline in the short-term, concurs bryan yu, chief economist for central 1. while b.c.’s population had been growing at the record rate of 3.3 per cent a year due to international migration, yu expects it to slow to “one per cent per annum in the coming two years.”
there is something else causing developers to worry that they can’t make enough profit building inside the broadway corridor or around vancouver subway stations, said geller.
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and that is the giant sen̓áḵw project, geller said — the new rental skyscrapers under construction by the squamish nation on reserve land at the western end of the burrard bridge in kitsilano.
senakw’s initial 3,000 highrise units haven’t “faced the same financial challenges as most other projects since there is no land cost, compared to a land cost of $100 to $150 per square foot of buildable area for other projects,” said geller.
“when they are finished i expect the squamish nation and quadreal (an arm of the b.c. pension fund) will not want to allow them to sit empty too long. i predict that they will rent for less than other projects, especially since there is no parking. and that could upset the market a bit.”
the squamish nation’s 3,000 rental units next to the burrard bridge will be less expensive than those built under the broadway plan “since there is no land cost, compared to a land cost of $100 to $150 per square foot of buildable area for other projects,” says michael geller.
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moreover, the retired architect said, the sen̓áḵw highrises were able to start construction quickly because two years ago prime minister justin trudeau announced a “massive, $1.4-billion, low interest loan” for the project, which could eventually provide 6,000 units.
other builders aren’t able to get such favourable loans, geller said.
despite other expensive efforts by federal, provincial and civic governments to stimulate the building of houses, moore laments an additional problem: governments themselves often get in the way.
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“developers look for a stable and predictable environment. the last 2½ years has been anything but,” he said, with abrupt cost increases in not only interest rates, but also in taxes and building code demands.
these expenses “were not known two years ago when many developers put broadway plan sites under contract,” moore said. for instance, he said, the b.c. government is now “mandating accessibility standards for all new homes” in large condo and rental projects, “which reduces the number of units in a building.“
despite vancouver city council adopting the broadway plan 2½ years ago, moore also noted it was only this month that politicians got around to approving the first project: “it will be another 2 1/2 years before the first 20-storey rental building is ready for occupants.”
in other words, there is little doubt a juggernaut is marching toward the broadway corridor and other neighbourhoods.
but it’s moving slower than expected.
next week: how highrise financing works across metro vancouver.
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