Businesses give city’s commercial rent controls the cold shoulder

Rent consultation

While the province revamped residential tenancy regulations last fall by eliminating a loophole allowing landlords to sign tenants to annual leases that would reset (rather than renew) at the end of each year, and nixing landlords’ ability to bring low rents in line with market rates in extraordinary circumstances, Vancouver staff were busy drafting changes to commercial lease policies.

A November Vancouver staff report proposed commercial rent control similar to what exists for residential tenancies, where landlords can hike rents no more than inflation plus 2% (this year, for example, the annual allowable rent increase when residential leases renew is 4%).

Staff encouraged city council to approve the proposal “in principle” prior to filing an official request with the province for the legislated changes that would make it a reality. In addition, staff proposed limiting the property taxes commercial tenants paid to the business portion rather than amounts levied on undeveloped density.

According to staff, the measures aimed to support small-business tenants, but it drew fire from major real estate organizations in the city, including the Urban Development Institute, Building Owners and Managers Association of BC and commercial real estate association NAIOP.

Yet the experience of the residential sector suggests that the proposal would actually work against small businesses by giving landlords less cash to maintain buildings, in turn encouraging shorter leases and greater retail turnover and boosting redevelopment pressures. Rather than preserving neighbourhood retail, an environment might well emerge where only national chains could bear the risk – as seen on Robson Street, West 4th in Kitsilano and other retail clusters. To address the loss of typical neighbourhood businesses to the evolution – some would say gentrification – of Chinatown, the city launched a “legacy business” study that is gathering feedback via an online survey through January 14.

Vancouver staff have tabled the measure pending consultation with the business community, but it won’t be forgotten as businesses mull the latest assessment notices and draft appeal strategies.

“It will kill new commercial development in Vancouver and perhaps the province as investors would lose confidence in having a stable government producing reasonable policies,” said Paul Sullivan, a principal specializing in property tax with the firm of Burgess Cawley Sullivan & Associates Ltd. in Vancouver.

Unleashed workspace

Place-making isn’t limited to retail complexes; office space is also becoming attuned to the changing ways occupants live. A glimpse of what future office space could look like in 2018 and beyond came through at various presentations this past fall, and, while work may be a dog’s life, that life isn’t staid.

“People, especially the start-ups or tech companies, they want to bring their pets into the office,” said Ross Moore, senior vice-president in the Vancouver office of tenant representation firm Cresa Global Inc. “Dogs in the elevator and the lobby aren’t ideal, but you are seeing those requests. I don’t know if that’s an amenity or not.”

Workers themselves expect gym space to measure up to the competition, and change rooms to be spa-like, Mark Trepp, a senior vice-president with Jones Lang LaSalle, observed, while Oxford Properties Group vice-president Chuck We said the social aspect of co-working space should not be underestimated. Younger workers want offices that cater to independent lifestyles, something that keeps them from sticking with one company.

“[Companies] can’t hire them because they won’t stay, so they’ll take a footprint in a WeWork,” We said, referring to the fast-growing co-working space manager. “It’s an intentional move to get access to that tenant talent. Maybe one day they’ll come work for them, maybe not, but at least they can have access to the innovators in the economy.”