This old apartment building typifies Vancouver’s struggle to renew rental housing

The listing for Granville Villa, a 65-unit apartment building in Vancouver, says clearly, “This property could eventually become a prime high-rise development site.”

When that eventually might manifest itself, however, isn’t so clear, noted a principal of the real estate company that listed the four-decades old building for an $18.5 million asking price earlier in May.

“It could be two years. It could be 10 years. It could be maybe not in our lifetime. We don’t know,” said David Goodman, a principal of HQ Real Estate Services, which specializes in apartment buildings.

Five years ago, a buyer could purchase an old apartment building in Vancouver, tear it down and redevelop the site with splashy new condos. But in 2007, the City of Vancouver, like many other urban municipalities, slapped a moratorium on rental apartment building demolitions. Actually, the moratorium allows demolitions but only if the demolished units are replaced by an equal number of new rental apartment units.

The moratorium has effectively “thrown the baby out with the bathwater,” Goodman said, noting that it has resulted in no new apartment construction in the city other than a few buildings of five or fewer units.

“There’s been no trickle down or trickle up effect in the city,” said Goodman, who with his son and partner, Mark, publishes the Goodman report, an online newsletter about Metro Vancouver’s apartment building market.

However, rental-housing advocate Tom Durning of the Tenant Resource and Advisory Centre said the moratorium is a popular piece of legislation that is working as intended. “It has to be done because of the Vancouver real estate market, the low vacancy rate,” Durning said.

Vancouver Vacancy Rate Lower Than Provincial Average

Metro Vancouver had an apartment vacancy rate of 1.4 per cent in October 2011, according to the most recent semi-annual report from the Canada Mortgage and Housing Corporation. (The next report is due in June). That compared with a B.C. average of 2.4 per cent for B.C. and 2.2 per cent on average for Canada’s major centres.

Durning wasn’t familiar with Granville Villa. However, from its description as a three-storey wood-frame building constructed in 1973, he said it is typical of Vancouver’s apartment rental stock.

“They’re the ones that are most under attack because they’re the ones that could be knocked down easily,” Durning said. “And they throw up condos. So where do the tenants go?”

Granville Villa occupies a 250-feet by 125-feet lot, about three quarters of an acre, at West 11th Avenue and Pine Street, in the city’s South Granville neighbourhood. Situated about one kilometre south of False Creek, “South Granville has evolved into one of Vancouver’s most prestigious shopping districts,” says a posting on the website of the South Granville Business Improvement Association.

It’s also a working class neighbourhood, Durning pointed out. “Don’t forget, in a building like that, people who are living in the Granville South area are your baristas, the guys that work at your gas stations, and all that,” he said.

Aging Apartments Increasingly Inefficient and Costly To Maintain

Buildings like Granville Villa are showing their age and becoming increasingly inefficient and costly to maintain, Goodman said. Even if the building could legally be converted to condos, a conversion wouldn’t be feasible because it would cost too much to retrofit it with all the modern accoutrements, such as in-suite washers and dryers, ensuite bathrooms, and new windows that modern buyers demand.

The lack of those features, though, helps keep rents affordable. The average monthly rent for Granville Villa’s 36 one-bedroom apartments is $909, well below the $1,100 that Durning said is the average for the city.

“It’s affordable but again it’s the owner who is subsidizing the tenants,” Goodman said. “And that probably is an inappropriate way of dealing with a problem.”

Durning speculated that the landlord might have simply allowed that subsidy by failing to take advantage of legal rent hikes. Such increases would have added up to 10 per cent in the last three years and totalled about 40 per cent going back to 2004, he said.

Goodman declined to identify who owns the building other than to say that is owned by the same family who built it. “They’re just moving on,” he said, adding that he couldn’t get in the details of why it is for sale either.

Durning did agree with Goodman that a large percentage — Goodman estimated 30 per cent — of condos are rented. “But they’re rented out at 30 to 40 per cent more than the average rental building,” Durning said.

More Housing Density Would Alleviate Housing Crunch

Another thing they agreed on is that more housing density in the neighbourhood would help alleviate the apartment housing crunch. However, Granville Villa’s RM3 zone only allows housing, which rules out any commercial development. The zone also restricts the maximum height of a building to 36.6 metres or about 12 storeys. Combined with other restrictions, such as on the length of buildings over 10.7 metres high, it wouldn’t be possible to build much more than the 65 units of apartments already on the site, Goodman said.

The B.C. government recently amended the building code to allow six-storey wood-frame buildings, an increase from the previous four-storey limit. But Goodman said he doubted any developer would opt for a taller wood-frame building in lieu of a more conventional concrete tower.

A solution that would enable the latter is “pretty easy,” he said. “And that is to densify the RM areas. The city’s growing. We can’t pretend that there’s land. There’s no land.” Vancouver is boxed in by water, mountains, farmland, Stanley Park, and the U.S. border, he noted.

Revitalizing areas like South Granville would involve creating “a vehicle where not only do you replace or attempt to replace some of the rentals but also allow densification on these sites so you could build market condos as well,” Goodman said.

Nimbyism Rampant in Vancouver

That’s easier said that done, said Durning who noted that nimbyism is more rampant in Vancouver than ever, on all sides of the political spectrum. For example, recent opposition to a high-density condo project elsewhere in Vancouver came not just from nearby home owners. Young renters in the neighbourhood were also worried the development would push up land prices and lead to rent increases, he said.

“It’s a new phenomenon (of) tenants trying to protect the neighbourhood from the rents going through the roof,” he said.

Goodman didn’t have a prescription for what density would be required to make Granville Villa a viable development site. He said he would leave that to the city, planners and the development community to come up with an appropriate number.

“It will happen and it’s just a matter of constructing policies that allow for condo development without penalizing the developer where they have to replace all the rentals,” Goodman said. “You just can’t do that.”

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