One thing was clear at the January 23 Urban Development Institute’s (UDI) annual forecast luncheon: local developers are not happy with government. The mood was sour, the anger was palpable, and it’s all government’s fault.
“I’m getting sick of this bullshit,” exclaimed Beau Jarvis, the institute’s chair and president of Wesgroup Properties LP, in the clearest expression of discontent.
Together with Chuck We, senior vice-president, Western Canada, with Hudson Pacific Properties Inc., and past UDI chair Jon Stovell, president of Reliance Properties Ltd., the audience was treated to calls for the end of rezonings, rolling back the market-cooling measures of the past four years and railing against well-intentioned policies at cross-purposes with reality.
We offered the most positive take on the year ahead, thanks to the solid state of commercial real estate. With landlords like Oxford Properties Group taking lease rates approaching $70 a square foot, the commercial market is enjoying good times that seem set to only get better thanks to development well below what forecasts say is needed.
Vancouver alone claims to need 57 million square feet of additional commercial development by 2050, We said, of which 50 million square feet would be office space. That would more than double the city’s current office inventory, and then there’s the question of where to house the 175,000 workers who will occupy the space.
“If you go to Disneyland you get a FastPass. There has to be a way to make it simpler,” he said, going on to propose elimination of rezonings.
“Just agree that it’s going to be a more dense community.”
Jarvis took up the strain, saying community planning processes should determine what’s allowed and obviate a need for developers to seek rezoning. Anything else creates uncertainties (this columnist remembers city staff remarking towards the end of the Mount Pleasant planning process that whatever the plan said, it could change at rezoning).
“Once you’ve done the consultation for the [official community plan], the neighbourhood plan … you implement from that point forward,” Jarvis said. “Our housing problem is significantly fixed if we just attack that one piece of low-hanging fruit. Get rid of rezonings.”
The real cost
Prices at the local farmers market are typically higher than the grocery store charges, and consumers are often told they’re simply being asked to pay “the real cost of farming.”
But many shoppers who’ll gladly hand over their hard-earned cash to a farmer likely take issue with the high cost of housing, claiming Vancouver is increasingly unaffordable.
Jarvis told UDI members during their annual forecast luncheon that it’s about time people faced up to the real cost of housing people. He took particular aim at policies designed to create affordable rentals.
“The private sector is being forced to keep old buildings standing that are at the end of their useful lives, all the while operating in an environment of capped revenues and increasing taxes and costs with no ceiling whatsoever,” he said.
This year’s 7% increase in property taxes within Vancouver and a 30% to 50% rise in property insurance premiums are two examples that stand in stark contrast to the 2.6% increase in rents the province allows landlords to charge tenants this year.
This month, Vancouver has decreased the maximum rent builders can charge tenants of three-bedroom units built under its rental incentive program. (The rents reflect average rents reported by Canada Mortgage and Housing Corp.)
“At a point in time on the graph, your costs outpace the revenues,” Jarvis said, “so it’s a losing proposition. It’s a death sentence.” •