PC Urban, a Vancouver-based real estate development and investment company specializing in British Columbia and Alberta, is currently focusing on the ever-growing demand for purpose-built residential rental units.
Its latest project, in partnership with Fiera Real Estate CORE Fund, comprises 153 rental apartments in a five-storey wood frame building in Victoria with retail space, a public plaza, a children’s play area, a rooftop amenity and public art.
The project, at the corner of Gorge and Irma streets, replaces six older single-family homes in the Burnside Gorge neighbourhood. Construction is set to begin this fall with completion expected in late 2023.
Brent Sawchyn, PC Urban Properties CEO, said the development community and municipal governments have awakened to the dramatic need to deliver more forms of housing.
Critical need for new rental housing
“Market housing – single-family homes, condominiums – in our major cities in Canada have gotten almost out of reach for a lot of people,” he said. “Because the various levels of government in the early ’80s took away incentives for the development community to deliver rental apartment homes, it’s almost become a bit of a lost skill set and a lost art.
“Since the early ’80s we really haven’t been building enough rental housing and now we find ourselves in all major cities across Canada with vacancy rates that are chronically low . . . in the case of Victoria, one per cent or lower.”
Sawchyn said people continue to move to Canada from other countries. The old stock of rental supply is 50 to 60 years old and many of the buildings are well past their lifespans. Until recently, there was simply not much new rental accommodation entering these markets.
“Even if the various authorities took off the shackles in terms of the approval process, we’re still going to have a hard time keeping up to get to a healthy vacancy rate to give people choices to help make this more affordable for people to live here,” said Sawchyn.
PC Urban currently has just over 1,000 rental apartment homes under construction in seven B.C. projects. There are two projects in the Victoria area, two projects in the Lower Mainland and three projects in Kelowna.
Low interest rates a boon for builders
Sawchyn said it helps development that interest rates are at or near historic lows.
“Delivering a rental building is more challenging than delivering a market condo and frankly it’s less lucrative at the end of the day,” he explained. “We build a project for rental housing and when it’s finished we have to self-assess and pay for GST, where in a market condominium you would be able to sell the unit and the GST is passed on to the purchaser.”
Condo purchasers, who are often first-time homebuyers, can also benefit from a variety of federal government policies to assist in their purchases.
“In the rental apartment building, we see none of that. We pay the same development cost charges as a market condo, yet when the project’s finished we’re subject to a cap on rental rate increases,” Sawchyn said. “It’s kind of strangely absurd as everyone recognizes the need for rental housing. . . . No one caps our expenses, if you follow me, but everyone caps our revenue.
“It becomes a real challenge and that’s where we need all levels of government to step up and help support this initiative so we can create more housing.”
Sawchyn said purpose-built rental will become a key pillar for PC Urban moving forward. In the past, the firm has focused on delivering industrial real estate and some office space.
“Our mission is to deliver a diversity of housing options throughout the province. As a company, we feel we have a social responsibility to deliver rental housing and we have more to come,” he said, adding the company will focus on B.C. because of the future demand expected in the market.
The new Victoria development
In the Victoria project, traffic calming measures will be implemented on Irma Street, as well as adding landscaping to enhance the streetscape and connections to cycling and pedestrian pathways.
Approximately half the units will be two- or three-bedroom homes.
“In Victoria, three out of every five people rent their home so enhancing the rental supply provides more housing choice and more homes for our residents,” Victoria Mayor Lisa Helps said in a statement. “We also welcome the addition of more purpose-built rental housing to help us to achieve our housing targets.”
PC Urban said the new development, close to the downtown core, will provide new housing to middle-income earners, with space suitable for a new neighbourhood coffee shop among other retail offerings.
The development will feature climate-conscious, low-impact design; beehive apiaries to support sustainability; Modo car-share vehicles, plus free car memberships; and EV Level 2 charging stations and electrical future-proofing so others can be added as required.
“Fiera is pleased to join our partner in this exciting, high-quality development in the underserved Victoria market,” William Secnik, SVP and fund manager, said in a statement.
“This investment positively supports our ESG goals and improves the portfolio’s diversification in Western Canada.”