Consultation begins
Vancouver Mayor Gregor Robertson was quizzed following his recent address to the Urban Land Institute about how to get people on board with newer, denser forms of development.
“Vancouver’s history is all about change,” he replied. “We’ve seen the city grow from what was a forest, so it’s been a constant that the neighbourhoods have gotten more dense.”
Now, the Musqueam Indian Band – whose members actually saw the forest become a city – are seeking public input regarding its own development of 21 acres in Pacific Spirit Regional Park it received in 2008 as part of the province’s settlement process. The tract is zoned for low-intensity development of no more than four storeys and a standard floor-space ratio of 1.0, but the Musqueam want to develop the land to be a community centre for the eastern portion of the endowment lands.
“We feel that area should have more of a community feel to it,” said Wade Grant, the band’s economic development co-ordinator. “We hope it would be better for the Musqueam, but also, we hope, for the community.”
The band envisions a mix of low-rise development and towers of approximately 12 storeys (Grant emphasizes that there is no height defined as yet), with three acres retained as parkland. The orientation and form of construction is subject to public consultation that is scheduled to begin December 6.
“We want to create a relationship that’s built on mutual respect and recognition,” Grant said.
Comments posted online since 2008 suggest that the band will face opposition, with one alleging the settlement cuts the heart out of Pacific Spirit and another likening development to a “freight train.”
Rent or buy?
Canada Mortgage and Housing Corp. (CMHC) reports that, on average, rent for a one-bedroom apartment in Metro Vancouver is $220 to $450 a month cheaper than a mortgage on a one-bedroom condo. A two-bedroom unit is $320 to $750 a month cheaper to rent than to buy.
The comparison reflects CMHC’s calculation of average rents and mortgage payments based on average MLS apartment pricing from August 2012 assuming a 20% down-payment and 25-year amortization period with a five-year mortgage at 5.24% interest.
But with recent advertisements for Intergulf’s Kits 360 development promising a $299,000 studio for $838 a month, “less than you’d pay in rent” (given 25.8% down, and a 25-year amortization) and Cressey Development Corp. touting buying as an attractive alternative to renting thanks to equity preservation, developers are fighting back. A maximum difference of $200 exists between renting a one-bedroom unit in the Southeast False Creek neighbourhood for an average of $1,700 a month or buying one at Cressey’s Meccanica project (approximately $400,000), regardless of down payment size.
With new units typically commanding above-average rents, the upside for investors can be as good as for owners seeking to pay themselves rather than a landlord.
Structured outlook
The economic outlook Central 1 Credit Union chief economist Helmut Pastrick recently delivered to commercial real estate association NAIOP was offered plenty of wiggle room.
Summarizing a roundup of U.S. economic performance as the country heads toward the so-called fiscal cliff, Pastrick remarked: “We can’t anticipate shock events. But based on the information that feeds into these indexes, there’s no imminent recession ... in the U.S. economy over the next three to six months.”
Pastrick then noted that the Bank of Canada’s outlook for Canada’s economic performance gives the bank room to raise interest rates at the earliest possible moment. While few observers expect the bank to raise rates in 2013 (Pastrick himself doesn’t expect it before 2014), the bank wants to quench consumers’ appetite for debt before debts quash consumers.
“Notice how the Bank of Canada does have a pickup in the fourth quarter,” Pastrick said. “So, a weak third quarter, the bank is predicting only 1% growth, but in the fourth quarter, first quarter of next year and even in the second quarter the Bank of Canada has somewhat more robust growth.”
The bank’s latest forecast calls for economic growth of 2.3% in 2013.
“I don’t see that, at this point,” Pastrick said. “But the bank is quite anxious to raise rates. ... I interpret this as being the bank would like to raise rates somewhere in the middle of 2013.”
