Comments to previous posts worthy of reprint here – the foreground.
Indeed, this whole thread to “The End of the Residential Highrise?” is impressive. (Alert: real, though technical, content!). An informed and helpful contribution to this subject – lightly edited.
It begins with Mike:
I’ve had discussions with various Green Party people on twitter on this topic who cite (Patrick) Condon and say four-storey low-rise is the path to happiness. But when I ask which single family-zoned neighbourhoods will have their zonings relaxed to allow for the number of low-rises needed I get little in the way of specifics.
Personally I would happily trade a ban on towers outside the core in exchange for relaxed zoning in single-family neighbourhoods across the city. Or if people insist on keeping their neighbourhoods untouched, then in exchange they get towers at transit hubs.
Vision has done a poor job of selling this, and opposition parties have made it worse by presenting “no towers and untouched neighbourhoods” as an implied option.
Patrick Condon responds:
For the record, I agree with Mike.
If you can’t do place-appropriate density, and you have already invested in Skytrain, then your fallback might have to be towers at transit stations. I get that.
I think most in the city agree that for reasons of sustainability, demographic shift, and affordability, we need lots of new housing. Our “Convenience Truth” work of 2010 proposed a doubling of the population of Vancouver by 2050, not for the heck of it, but to make the city more sustainable, affordable, and convenient.
My feeling, borne out by many many community meetings, is that a doubling of neighbourhood density is possible and politically acceptable without undue dependence on incompatible and expensive to build highrises.
I feel that renovating single-family homes for multiple dwellings is politically viable (already two rentals are allowed; I would move to making it legal to stratify and allowing four or five units with design review – a variation on what has been done since the ’90s in Kits).
I also advance the case for 4th Avenue style mid-rise on most arterials. It’s a lot cheaper to build than highrise, adds customers for stores, schools and transit, and doesn’t break when the big one hits.
And as Gordon has pointed out, we are already building these.
As for views, on the gently sloping terrain of Vancouver, you can still get them – with intelligent design. Fairview slopes proves that. And yes, and very clearly, for the record, in certain places like the Safeway parking lot site at Broadway and Commercial highrises are appropriate. It’s likely the only feasible way to phase in the density on this site anyway.
In fact the original plan, never tabled, for Grandview Woodland had exactly that: highrises in the parking lot, until certain folks at city hall got it in their heads to turn the district into Yaletown south.
Then, as Patrick notes, an expert reply from Richard Wittstock:
Patrick, four-storey buildings like those on most C-2 zoned arterials are NOT “much cheaper” to build than concrete mid- or high-rises. For typical wood-frame-above- concrete main floor and underground parking, hard construction costs are running about $220 per square foot (psf) on gross buildable area in Vancouver, somewhat less (say $190-$200 psf) in the suburbs. Highrise hard costs are around $240-$250 psf in Vancouver; about $220 psf in the suburbs.
More efficient unit sizes in highrise construction (achievable due to shallower suite depths/better availability of natural light in a slim tower floorplate) mean that on a per-suite basis, highrise construction costs are similar to those of wood frame.
And the densities achievable are hardly comparable. The anti-tower people love to push this fallacy that density similar to that of towers could be achieved in four-storey development. That is simply not even close to being true! The best you are going to achieve in four storeys (the C-2 form along West 4th as you reference) is about 2.7 FSR (floor space ratio), and that assumes building right to the property line, with no setbacks from the street or from side property lines. That density is where the small (100-foot height limit) “towers” of the Burrard Slopes C-3A district start, at 3.0 FSR, and most highrise projects today are achieving densities well upwards of 5.0 FSR (the 21-storey tower I am working on in New Westminster right now, hardly a skyscraper, is at 6.77 FSR).
And when you subtract, say, 0.75 FSR from each to account for the non-residential uses on the ground floor, you begin to appreciate how different the densities that we are talking about are. There is simply no way to accommodate the kind of growth we are experiencing in a four-storey form without massive displacement of existing residents (and businesses).
Without the higher density to create a significant up-lift in land value (and thereby the incentive for existing owners to sell or redevelop), there would be far less land put into the production of new housing. So by cutting the density in half, you are probably actually advocating to cut supply by three-fourths. If you do that, watch what happens to prices … look out!
It’s a fine academic exercise to look at the available undeveloped density along the arterials and note the large amount of capacity that lies fallow. But the harsh reality is that on most of these underdeveloped sites, the economic highest and best use of the property remains its current use, i.e. single-storey retail achieving a rent of $30-$40-$50+ per square foot, perhaps with a walk-up second floor containing some office space or apartments. A site only becomes viable for redevelopment when the land residual in a development proforma exceeds the capitalized value of the income that the buildings are generating. That is why redevelopment in these commercial nodes really only happens at a trickle, and contributes a basically insignificant amount to overall supply year over year.
So while the potential may exist in theory, at sub-3.0 FSR densities that potential will never be realized at a pace that will do anything to move the needle with respect to housing supply.
Finally, I believe it’s important to note also that if we hadn’t had the massive contributions to supply of the many projects around Southeast False Creek over the past five years, picking up where the now largely-built-out Downtown peninsula has left off (Downtown added 2,000 units per year consistently through the 90’s and 2000’s; however in recent times this has dropped to between 500 and 800/year), we would have seen significantly greater price escalation over the past five years. Likewise, Wall Financial’s two massive current East Vancouver projects (Strathcona Village and Central Park) which have contributed over 1,500 units to supply in the past 18 months, have served to keep a lid on prices between Main Street and Boundary Road (and eastward). If not for these large projects providing an outlet for the demand created by 6,000+ new residents every year in the City, our affordability situation would only be worse than it currently is.
Patrick Condon responds:
Thoughtful and expert reply. A couple of points in response. I ask the cost-per-square-foot question of as many developers as I can. My most recent responses: a Vancouver four-storey building, parking included, are about $165 psf vs $265 for concrete. I will keep asking.
I myself don’t say that you can get equal density with four storeys as towers, but with mid-rise you can come close, as they did at Arbutus Walk. I also say that an even density spread over more of the city is more sustainable than points of high density – and I use Copenhagen, Berlin, and Amsterdam as examples.
When we looked at intensifying the arterials in our “Convenience Truth” work, we accommodated for displacement. Your point about how difficult it is to dislodge single-storey commercial is well put, and yet, as Gordon has pointed out, more than two-thirds of current permit applications in the city are for this type of building.
You also don’t mention densification in the “fabric” areas of the city for which I see great potential, as demonstrated by the gradual but significant densification of places like Kitsilano.
I also understand your frustration with what you take to be an academic exercise. We took great pains to insure that this was not so by including a very large group of outside advisors well known in the business and policy world. One disturbing finding from that series of dialogues was that, as much as I pressed them, none of them could assure us that there was a link between supply and demand, i.e. that increasing supply would reduce or even moderate price. I would be very anxious to see proof that any single or any group of housing projects kept the lid on price, but have yet to see this.
I don’t think this is a reason to not build new housing. There are many other reasons to do so. But it was depressing to find our city so uncoupled from the traditional laws of supply and demand.
An earlier question asked about concrete and greenhouse gases (GHG). Globally concrete contributes about seven percent to GHG through high energy use to make Portland cement and the off gassing of CO2 during curing. I have not found the percentage of that attributable to buildings vs infrastructure and industry. I am aware, however, that “wood” mid-rise buildings use a lot of concrete for underground parking. Parking is of course a whole other issue.
Again, Richard Wittstock:
Patrick, a couple points in response:
(1) Construction costs – I don’t think you can build the kind of projects we are talking about in wood for $165 psf in the city. That is the figure that I am using for lower-density suburban four-storey wood projects with no ground-floor commercial. In Vancouver, you are 10%-15% higher ($180-$195) for four-storey, RM-style development over underground parking but with no ground floor commercial. Add in a concrete ground-floor commercial level, an extra level of underground parking to accommodate the higher density as you go from RM to C-2, and masonry exterior walls on the property line (along with higher-value (i.e. brick) exterior cladding that you would probably have to provide on the front) and I think you still get pretty close to the $220 psf. I quoted. Maybe that’s a bit high, but you’re certainly well over $200.
As for concrete costs, we are basically in agreement; I think the range is between $240 and $265 and highly dependent upon the size, spec and configuration, etc of the project. Concrete benefits significantly from economies of scale. Small concrete projects are very expensive, but as you get over, say, 120,000 square feet, the cost declines fairly quickly. I have always thought of 180,000 square feet as being the sweet spot for a tower in terms of economics.
(2) I like your idea of a more evenly-distributed, overall higher density. I have long advocated for the transformation of single-family districts into fee-simple European-style row housing as a way to keep young professional families within the City limits. And Arbutus Walk is a very attractive development form that should be used as a model more than it currently is. Maybe on the Jericho lands?
(3) Link between supply/demand and price levels – Prices will only fall when supply exceeds demand at a given price level. Unfortunately (or fortunately, depending upon your perspective), the combination of limited land availability, bottlenecks in getting developments approved, and the prudence of our development and lending decision-makers all work to ensure that this almost never happens in Vancouver.
We have a “baseline” demand of x units per year due to population growth/household formation. With everyone (including the City) working flat out, the industry is just able to meet that demand. If supply gets ahead of demand, the lenders’ presale requirements ensure that potential new supply is pushed out into the future so as not to compound an oversupply. Then the market continues to do its thing and any oversupply is mopped-up, and new projects in the pipeline are then metered out as demand permits. Developers will compete with each other and will lower prices to achieve sales and move projects forward, but only to the extent that the lenders’ minimum profit margin thresholds are met.
HOWEVER: If we can lower the threshold at which a project becomes economically-feasible, and we can entitle enough supply from competing developers, then we could see supply exceed demand causing prices to fall. The key to this, though, is the land cost per square foot buildable. Since other costs are hard to change, the objective has to be to lower the land cost per square foot that a developer is facing when he is assembling/acquiring land. Easier said than done of course, but if we can pre-zone large areas of the city for multi-family (as has been done in Norquay), then we would see adequate competition between land vendors which could push prices down to just a small premium over single-family lot values. Again, the key is supply.
I’m not optimistic that we could ever zone enough land or entitle enough projects (or reduce other costs such as Community Amenity Contributions and Development Cost Levys) to really move the needle on the cost structure that a developer is looking at. It would take enormous political will and capital. We are now seeing what happens when an administration tries to accomplish that. But that is the ONLY thing that will mitigate price escalation. While I can’t guarantee that prices will fall if we provide more supply, I can guarantee that they will rise more dramatically if we don’t.
I don’t believe that Vancouver is “uncoupled from the traditional laws of supply and demand”. In fact, I think it is precisely supply and demand that explains our market perfectly. In particular, we have a dramatic shortage of viable development land, which makes this land extremely expensive and thus the primary driver of the price of the end product. Profit margins are slim, pointing to the current situation as being reflective of a long-run equilibrium state.
(4) Final point – concrete and GHG’s … not something I know much about. However my comment would be that we should be taking into account (a) the fact that a concrete structure could have a lifespan ten times as long as a wood structure, and (b) that more dense, more compact development should result in lower GHG’s being emitted by the people that ultimately live in those structures. I believe that the GHG argument is a red herring thrown into the discussion by the anti-tower folks and that this shouldn’t be a factor in the discussion of the appropriate form of development.
And lastly (for the moment), Reilly:
One more response to Patrick: rising prices despite supply increases can be entirely consistent with “the traditional laws of supply and demand”*, because the demand curve is not fixed. In other words, demand may also be rising, so additional supply alone can’t guarantee lower prices.
Also, housing is an odd market where supply can induce additional demand through positive externalities (for example, a new development bringing services and retail to an area, which makes surrounding areas more attractive) – but that’s not something to discourage.
*As taught in UBC microeconomics courses a few years ago. I can only assume they were traditional.