New rentals in Metro Vancouver a long time coming
After decades of few apartments built in Lower Mainland, a rental recovery will take time
Any new housing development in Metro Vancouver functions as a Rorschach test. To wit, the grand opening of a new mixed-use apartment in downtown Cloverdale in Surrey, B.C. this week.
On one hand, it's a new purpose-built rental building, meaning all 97 units in it will be explicitly for renters for decades to come.
But there were nearly 2,000 applications for those 97 golden tickets. Some of those applications probably came from people living a couple kilometres away in Clayton Heights — where the City of Surrey has told 175 homeowners they'll face daily fines of $500 if they continue to house people in illegal secondary suites.
And there's the fact the Cloverdale apartment building was just the second purpose-built rental for all of Surrey in the last 30 years: a period where the city's population grew by over 360,000 people.
"This is encouraging obviously. It's something that's been needed," said David Hutniak, CEO of Landlord BC, a landlord advocacy group.
But why was there a gap in building new rental units in Surrey — and so many other Metro Vancouver communities — for so many years?
Rental construction halted
If you think about a classic rental apartment, a certain vision comes to mind: something mid-sized, with an antiquated name, that looks like it was built in the 1950 or 1960s.
There's a reason for that, says Gordon Price, the longtime former director of Simon Fraser University's City Program.
"Two things happened which basically brought traditional rental construction to a halt: the first was basically government got out of the various tax subsidies and incentives that they had," he said.
However, the more significant change was the introduction of laws allowing stratas, ushering the construction of condominiums, the first of which came to B.C. in 1966.
"[For developers], it made so much more economic sense. Rather than trying to get a lesser return with a renter building, you could basically build a condo, sell it, get out and move on."
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With low interest rates and home ownership out of reach for many British Columbians, Price said there's now plenty of motivation to build rentals. But motivation isn't enough.
"It's a complex question of how you get a good enough return to justify building rental," he said. Price cited the reduced amount of land and tax incentives, relative to decades ago, as complicating factors for encouraging private companies to invest.
"It's not just flicking a switch and saying we want more rental."
Changes coming slowly
Yet each month, more rental stock is approved in Metro Vancouver than some entire years during the 1990s and 2000s.
In Port Moody, there's a proposal in front of city council to build a 142-unit rental building, the city's first in 31 years, a block from an Evergreen Line station. In North Vancouver, council just approved 175 new rental units in a new 23-storey apartment.
That will come as a relief to the City of Vancouver, which has been quietly encouraging municipalities outside Vancouver to build more rental housing so the region's stock is more spread out.
"Now I can safely say I could visit every mayor in [Metro Vancouver] and purpose-built rental is a top priority for them. That's a good first step," said Hutniak.
But with apartment vacancy rates under one per cent for the region, it will take a while for new rentals to be something more than dropping a pebble into a very large pond.
"This is a complex issue. You don't just take a 180 overnight," said Hutniak.
"There's work to be done, but we're trending in the right direction."