Wesgroup’s master-planned River District community in the southeastern corner of Vancouver is so unique an opportunity Brad Jones left his post as vice-president of development at Adera Developments to take the lead on building it out.
It’s been a long journey since receiving city approvals on the former industrial land in 2006, and they’re only one quarter of the way through developing it. In the five years since Jones joined Wesgroup as vice-president of development, the town centre has gone from a mud pit to restaurants and shops and 1,000 residents.
Ultimately, the centre of the community will have 250,000 square feet of retail and 25 acres of parks. When the entire project is built-out, around 17,000 residents will live there.
It’s big enough that it has its own heating utility — developer-owned and publicly regulated.
Wesgroup is a 50-year-old, family-owned development company involved in residential, commercial and industrial projects.
40 active projects at River District
At River District, it has about 40 active projects underway, including a 119-unit rental under construction that will be part of a total 750,000 square feet of rental housing once the project completes.
Of that, 20 per cent is affordable as part of a deal with the City of Vancouver; Wesgroup gives the city the land to build-out through the Vancouver Affordable Housing Agency (VAHA) or other partner agencies. VAHA has a mandate to deliver 2,500 housing units by 2021 and there are four VAHA buildings under construction at River District.
Wesgroup launched presales for the 268-unit condo tower Paradigm on Jan. 25; it is now a little more than half sold. The company closed its sales centres for about two months during the pandemic, before slowly reopening with safety protocols in place.
The company is also marketing the 257-unit Mode condo, a higher-end project with larger unit sizes and closer to the town centre.
Amenities are important to the marketing of the River District because it’s missing the rapid transit piece. However, there are plans underway for a new express bus which will get commuters to the Marine Drive Canada Line station in about 15 minutes, said Jones.
Who is buying River District condos?
“We took a bit of a different approach with Paradigm and targeted it more to that younger buyer, that first-time home buyer wanting to get into the market and have a convenient lifestyle, close walk to parks and shops, all of that,” said Jones, an urban planner by trade.
Jones said buyers tend to be end-users as opposed to investors.
It’s also getting buyers from within the same family, seeking to live near each other without being in the same building. He’s seeing many young buyers from around the area, residents that grew up in Burnaby or Champlain Heights or Victoria Drive.
They’re often dual-income couples, working in jobs between downtown Vancouver and the growing region.
“One person might work in Surrey or at a Richmond distribution centre, and the other one downtown.”
Wesgroup “controlling our own destiny”
Jones’ hiring was part of a major growth spurt for Wesgroup in recent years, after a corporate restructuring. The company has in-house interior design, marketing, construction, sales, property management and acquisitions teams which total about 215 staff.
“With our land base and our land portfolio, basically we are controlling our own destiny,” said Jones. “We don’t need to buy land to meet our corporate growth objectives: we own it all. So it was really just about building the team to build-out the pace and the portfolio that we want.”
The inclusion of rental was a natural part of the portfolio, almost all of it managed by the company. Wesgroup brings in property management companies to manage the stratas. Aside from a River District rental building which it finished and then sold to CAPREIT, it tends to manage its rental properties, both commercial and housing.
The beginning of the pandemic, when some activists were calling for a rent strike, was a stressful time, said Jones. However, once provincial and federal governments launched support programs, the crisis was averted. He said about 15 to 20 per cent of Wesgroup’s renters applied for some form of rent relief.
“The first month was a huge unknown and as the eviction ban came in place, there was a bit of an uprising of ‘Nobody is going to pay rent’,” he said. “It was a really weird time, and a nerve-wracking time for people with larger portfolios I think.
“We had fairly strong rent collection, we worked with every tenant individually and worked out ways to handle every situation, whether a business or residential tenant. The government programs, the CERB (Canada Emergency Response Benefit) has been huge.
“When that came into place, there was a big turnaround in rent payment across the region. It was incredibly effective and the same with the B.C. (Temporary Rental Supplement) benefit.”
Wesgroup moves into apartment sector
Like other developers, as the condo market started to soften in the last couple of years Wesgroup has shifted to rental where it makes sense.
Government incentive programs, including the Canada Mortgage and Housing Corporation’s Rental Construction Financing Initiative, have helped with the decision, offering attractive low-cost loans in exchange for rental housing.
As well, the City of Vancouver has added around 3,600 new rental units in the past decade, mostly the result of incentive programs. The city waives development fees in exchange for a covenant on the new buildings to maintain them as rental for at least 60 years, with affordable rent rates.
“With our company structure and generational term thinking in terms of our real estate portfolio, rental is a big focus of how we want to grow, it’s a big desire for us. So we saw it as an opportunity to deliver in one of the most affordable parts of the city new rental stock that we would own.
“For the first time in decades, there was an incentive to do it and it was needed because the value gap between building a rental asset and selling condos was just too great, so something had to bridge that gap a bit,” said Jones.
“If there is an opportunity to get density bonuses or something like that, we still will convert something we were thinking about as condo to rental, if it makes sense for us just because it’s a portfolio growth goal of ours.”
Bureaucratic delays hit River District
While he said there have been “thoughtful” rental policies adopted by city councils, there is still a quagmire of bureaucracy involving conflicting policies between different government departments. It’s part of the reason a massive project like River District takes so long.
The provincial building code might contradict the Vancouver building code for example, or the CMHC definition of affordable might be at odds with a municipality’s definition.
Many developers have complained that the various policies are a time-consuming obstacle course that needs to be streamlined.
“You end up in this weird place where you are trying to make sure you are meeting three or four different policies, which are well intended on their own, but the big difference — and the gap to being super successful — is going to be making it a lot smoother to get through the process on this stuff.” Jones said.
“To take a wood-frame rental building through the permit process to build it, you’re still five to six years before you’re moving somebody in.”