Capital flows exert the force that keeps the vortex that is Vancouver’s housing market roiling, drawing in all comers. Whether its investors looking for a safe haven, developers trying to make a buck or employers just trying to attract staff, it all comes back to housing.
The first two points came to the fore during a discussion at the Vancouver Real Estate Forum featuring Vancouver chief planner Gil Kelley, Wesgroup executive vice-president David Wesik and his counterpart Darren Kwiatkowski of Shape Properties Corp.
Asked by moderator Andy Ramlo how the city expects to build 73,000 affordable housing units by 2027 – or about 8,000 a year – Kelley said the challenge isn’t to build more units but to build affordable units.
“Vancouver has actually been producing each year since the recession more housing than our population growth would justify,” he said. “The difference there is that really it’s produced largely as an investment commodity, which is not necessarily a bad thing on the development side, but what we’re finding is a lot of Vancouver families and middle-income folks are just sort of squeezed out of the ownership equation.”
The goal of 8,000 units, Kelley added, isn’t rooted in economics but in a sense of what’s needed “to have enough headroom in there and to create rental and to create deeper affordability.”
Vancouver housing starts have averaged 5,036 annually over the past decade, peaking at 9,759 in 2016.
Wesik pointed out that boosting that number isn’t getting any easier.
“Pro formas sucked over the past 12 months, particularly with the cost inflation,” he said. “Everything’s gotten harder: the cost story, the approval timelines, carrying costs, available liquidity. What’s allowing this all to happen is that ever-rising top line.”
When price appreciation slows down, Wesik said, a number of projects will stall.
“It’s the revenue that’s been propelling this forward,” he said.
Vancouver was chuffed at news Amazon would bring 3,000 jobs to office space planned for the former post office site on Georgia Street. The expansion is even larger than the 2,000-person complex Amazon announced for Boston a day later, announcements seen as consolations after both cities lost out on HQ2.
The cost of housing was a key reason many observers felt Vancouver’s bid for HQ2 would fail, and the impact an additional 3,000 tech jobs will have on the city’s tight housing market won’t ease conditions – if they come.
“It’s a shallow market. The talent pool isn’t very deep when you’re trying to get people to come from outside markets,” Roz McQueen, leasing executive for Westbank Corp., told commercial real estate association NAIOP little more than a week before the Amazon announcement.
Her comments echoed those of PCI Group principal Dan Turner, who said housing costs make it tough to import workers to build office and residential towers at the heart of a province with $75 billion worth of major projects on the go and an additional $294 billion worth proposed.
“You talk to the contractors, and they’re maxed out. There’s no more trades in Vancouver,” Turner said. “But with our cost of living and our low vacancy rate on housing, it really makes it almost impossible to bring in outside trades.”
Vancouver recently trumpeted a 30% reduction in wait times at its development and building services centre despite an 85% increase in rezoning applications last year and approval of a record 1,700-plus social housing units.
Processing times didn’t improve May 1 when activists stormed the building services office under the slogan “Our Homes Can’t Wait,” forcing staff from their desks.
The protest coincided with a report on homelessness in the city, which has continued to increase despite Mayor Gregor Robertson’s pledge to end street homelessness by 2015.
The city counted 2,181 homeless individuals March 13-14, up 2% from last year. More than half had been homeless for less than a year. •