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March 15, 2016

Why Build So Much So Fast?


Blogger and Grandview activist Jak King analyzed the city’s breakneck construction pace in a recent post.
He notes the projections in the 2013 Regional Context Statement which show the Vancouver population increasing from about 650,000 now to 765,000 by 2041 – a need for 97,500 housing units. However,

Vancouver City Council has approved a net increase from 2006-February 2016 totaling 32,849 housing units.
Now, a little math (can’t be avoided, I’m afraid).  For the period 2006-2041, the official projection was for an increase of 97,500 units.  With 32,849 already approved, that leaves 64,651 to approve in the period 2016-2041 – a requirement of 2,586 per year for the next 25 years.
However, we are approving far more than 2,586 a year.  The average over the last five years is 5,068 per year, and that rate is increasing so fast that the average for the last two full years (2014, 2015) is 5,984 building units per year – just about double what we actually need according to the City’s own estimates.

Are the population projections so wrong, or is this another example of capital seeking the relatively safe haven of Vancouver real-estate?

Clearly we need to slow down the approval process.  However, the graph of housing approvals from 2006 to 2016 indicates that the rate of approvals is actually accelerating rapidly, with 2016 already rushing towards another 6,000+ total.

In theory, this supply ought to exceed the demand and drive prices down, cropping the profits of developers to a razor-thin slice. Condo prices have been more or less flat until very recently. I’ve always believed that developers are the smartest guys in the room; are they setting themselves up for a price crash?

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Some doings a-transpirin’ up the Sea-to-Sky in Squamish:
A long-planned oceanfront development agreement moved another step closer this week with Council’s approval of a land transfer. The plan sells off 103 acres – the entire oceanfront peninsula – to a development team in exchange for $15 million in cash, a $10-million park, and an understanding to develop the entire site over a 20-year period.
Existing and full-built proposal are here:
 

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While it’s unclear what the long-term ramifications of private ownership of the peninsula will be, District Council and the Mayor obviously thought it was the only way anything was going to be developed on this land. Whether the District could have simply provided a long-term lease and kept the land will undoubtedly be debated.
It’s not a crime to make money, and real estate development is not a charity. Without the promise of profit, very little will actually get built. But did the District give up too much for too little? I’m curious to hear your thoughts.

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An interesting little item in yesterday’s Edmonton Journal about developer contributions for new infrastructure:

Road building rules around new Edmonton developments are about to get a revamp — but just how the jobs get funded may prove to be a speed bump.

work on the Anthony Henday around Edmonton

The city’s transportation committee received a report Wednesday outlining options to change the way highway penetrators — large roadways that serve as feeder routes into the city — are dealt with when subdivisions are built around them.

“Typically, subdivisions are built and land is dedicated for roads to carry that traffic through a four-lane road,” said transportation manager Dorian Wandzura. “In our agreement with the province around provincial highways that come farther into the city limits, they’ve asked for a bigger carrying capacity because they’re an extension of a provincial highway.
The report includes five roadways considered penetrators on the west and south parts of the city — Stony Plain Road, Whitemud Drive, 23rd Avenue, Terwillegar Drive and 50th Street. It recommends standardizing the system so developers are limited to dedicating land for six lanes of penetrators but also requiring developers to construct four of them.

Whitemud Drive

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Basically, the deeper a developer builds into the City of Edmonton, the more road capacity they are responsible for providing. Seems a fine way to incentivize greater development and sprawl outside the city limits and car-dependency inside it. Not surprisingly, some developers are opposed.

“Users can’t also pay for that because others are benefiting as well,” said Brad Armstrong, vice president of community development with Qualico Communities, a company that has a number of properties in various phases of development in the city.
Russell Dauk, who spoke on behalf of the Rohit Group, said developers are happy to share the cost of road building in areas where they are building homes. But since a six-lane road likely serves more people than just those moving into the homes, the cost should be spread to others in the region.
“Coun. Scott McKeen reminded that, for the city, that leaves one option. The only other option we have would be the general taxpayer,” said McKeen.
“Coun. Michael Oshry, who chairs the committee, also brought up the fact that developers should be working those costs into their business models, but agreed they have a valid argument if the cost is simply going to be shifted to home buyers. The committee agreed to let administration come up with amendments to the city’s arterial road policy and bring them to council.

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This is a very clumsy formula that essentially mandates sprawl in one form or another. It’s telling that simply not building more road capacity is not an option at all.  

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Upon completion of the new $50-million Delbrook Recreation Centre in North Vancouver (map here), the existing 40-year-old centre will be demolished and replaced with … something. In the grand scheme of Lower Mainland development, this is small potatoes, but this process of ‘figuring out’ what’s going to replace the old centre on the District-owned 1.7-hectare site is an interesting case study in managing expectations.  . The District of North Vancouver undertaking has paired up with Simon Fraser University’s Centre for Dialogue to engage local stakeholders about what their priorities are for the site. Last Thursday night, over 300 turned up to the Windsor House School gym to present their ideas and, let’s be honest, hope to persuade others to agree with them. Another 75 had to be turned away due to the venue’s limitations. . Site of Delbrook Lands – to be redeveloped  . The new recreation centre, located 400 meters down the street, was approved partially with the understanding that costs would be leveraged by new development at the old site. However, District representatives at the event, including the Mayor, insisted this was not a legal requirement.  . This site is located on two major arterials, one of which is a future part of the Frequent Transit Network, and about 600 meters north of Highway 1 access. It is an ideal place for some reasonable residential or mixed use to partially relieve the housing shortage endemic to the region. But the vocal majority preferred keeping it as some form of community or recreation-based use. Ironically, many claimed they were only thinking of the future in doing so.  . At my table, several older participants worried about the added traffic that new residential would bring, and were also worried about what they felt was any development option necessarily having to sell off some of the public land. I don’t subscribe to either of these fears, but recognize that the anger many residents express about more people/cars/chaos is real. The feeling of having no control over what they feel is happening is also real.  . The evening was a first step in determining what may happen with this piece of public land and event organizers ran things smoothly, respectful to all views and only a few soap-boxing trolls. It was a successful first step, and I’ll continue to participate.  . Sitting around a table with a half dozen strangers discussing the ‘fate’ of a piece of land is a fine lesson in both civics and tolerance. And if nothing else, whichever proponents eventually ‘lose’, this thoughtful and considerate engagement process will soften the blow of their inevitable disappointment.  .  . Read more »

From the Daily Scot:

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Continuing on with our look at beaten-down post-industrial cities on the rebound, Buffalo, New York recently peaked my interest after watching this short documentary on the cities renaissance by Katie Couric:
 

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The story is much the same as Cleveland: great historic architectural bones, cheap rents and real estate attracting millennials and tech startups, along with a wave of immigrant entrepreneurs adding to the cities culture.  Development is feeding off the energy: new hipster brewbars, restaurants and massive brownfield transformations adjacent to downtown are giving residents a reason to be proud once again of their town, while drawing those back home who bolted for greener pastures.
Canalside appears to be a new exciting precedent for residents and visitors alike of how a city can turn a neglected wasteland into a multi-use event and recreational space.  inspirational indeed.  More here:

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From the Daily Scot:

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I’ve been keeping my eye on the long-neglected and forgotten rust-belt cities of the U.S. for awhile now.  You know the ones: Pittsburgh, Buffalo, Detroit and the like.  With the trend of Millennials flocking in numbers to inner-city ‘hoods over the suburbs, I figured it was only a matter of time before they seek out the cheaper, gritty, post-industrial cities once considered the powerhouses of the nation.
The draws are many: cheap real estate and rents, great historic architecture, and walkable districts with great bones crying out for some love.  Judging from this article and video, Cleveland is one of those Rust Belt towns enjoying the spotlight once again and it appears Restaurants are the catalyst.

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I think these days you’re finding our developers lead at the ground floor with the restaurant, and everything fills out around it. Retail these days, as we all know because of the Internet, is a fairly precarious proposition ….

Rendering of a new Cleveland restaurant part of a mixed-use infill development.   (The Wolstein Group and Fairmount Properties).  Located along a new river boardwalk, the building will spill out onto a massive ground-level patio adjacent to boat-docking areas.  A rooftop-seating area will also provide al fresco dining.

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According to the author, Cleveland has embraced the “foodie” culture as more and more millennials moved downtown. Jobs and apartments are following close behind, spurring a development wave.  Again, it comes back to affordability, something we are severely struggling with here in Vancouver:

The kids that left Cleveland to be educated somewhere else would stay in Chicago, they’d go to San Francisco, Los Angeles or New York. Now those people are coming back to Cleveland. That’s the future,” said Bruell. “Look at what the cost of living in Cleveland is. It’s really affordable, and there is a sophistication here that exists in those markets, so you can practice your craft here and maybe buy a house, save some money and raise a family, which would be very difficult there.

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A pedestrian-only street in Downtown Cleveland home to series of bars and eateries.

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The Lower Mainland seems to be experiencing the opposite flow as young families and professionals are leaving the area for other locales, perhaps the Canadian version of a post-industrial town that can reinvent itself.  Hamilton, Windsor

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As PT editor, I’m bringing forward this comment in case readers miss this analysis from frequent commenter Guest on the post below – Will Densification Bring an End to Independent Business in Vancouver?  As always, he adds interesting and informed comments from a knowledgeable viewpoint on this city’s development.    . (There’s an open invitation to you, Guest, if you’d like to be a guest editor.  Hopeless pun unavoidable.)

 
There are a few factors at play:
– New vs old – New construction is expensive/valuable so rents/property taxes will be higher. The property taxes on highly assessed commercial spaces is probably one of the reasons for high vacancy rates for older existing buildings on Robson St. and Denman St.
– Design – Retail space is subject to design constraints on exterior appearance. The City could relax restrictions, and/or architects and the Urban Design Panel could allow facades that easily allow tenant modifications (i.e. flat facades, removable individual awnings instead of continuous awnings). I think the biggest culprit is the continuous awning – the uniformity deprives the retail frontages of individual character, and prevents the installation of unique signage.
Despite East is East’s experience, I note that the Dublin Gate Pub on Main St. in the new Central office block has a “personalized” façade (though I think it looks out of place on the modern building!)
– WRT large versus small spaces, I think that the majority of retail spaces under condo builds are small, awkward spaces unfit for large retail tenants (unless originally designed for them, such as L’Hermitage). That’s because of all the services/common areas for the condo building eating into the ground level floorplate. That’s also why you hear of people complaining that condo retail is littered with hairdressers and nail salons (which are often independent businesses!).
– Tenant mix is also tied to ownership structure – retail spaces that remain corporately owned by the developer tend to be more successful on retail mix – because it’s like a mall and the landlord can control the mix to make the project attractive to the community (i.e. drug store, grocer, coffee shop). The classic local example is Pacific Boulevard. The retail units on the north side were sold to small independent businesses as strata units (largely immigrant investors). For the first 10 years or so, the mix of “small businesses” was disappointing (including a button store). The retail on the south side was retained by Concord Pacific as landlord and more reputable “anchor” businesses such as Urban Fare and HSBC opened up.
It’s really an evolving environment. West Fourth probably used to be a lot cheaper than it is now – in both old and new buildings. There have even been a number of one storey retail buildings rebuilt as modern one storey retail buildings on that street. The incubator zones have moved to Main St. and Fraser St. from West 4th and Cambie (or even Granville). Gastown used to be an incubator area, but has taken off in recent years too.
For older buildings, I guess the bottom line is that you can’t pay incubator rent in a very popular area, and the popularity of different areas changes over time, and with the general trend of increasing population, more areas are becoming popular (and higher rent comes with that).
For new buildings, the high construction costs (translated to higher base rent) and the newly improved premises (translated to high property taxes (additional rent)) means that the space may sit vacant for some time until a tenant able or willing to pay the rent comes along.

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And as editor, I’ll add my own historic note.  The City’s requirement that retail development on some commercial streets, notably in the West End, be designed in 25-foot segments, with doors placed such that the spaces can be assembled or divided over time, found its origin on this half-block in the early 1980s:

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Up to the arrival of a building-permit application (roughly around 1983, if I recall), the block in the 1100-block Denman contained some well-loved local services – a hair salon, butcher shop and, notably, Pauline’s Books.  The redevelopment was for a single use: a Burger King (in a neighbourhood with almost no fast-food chains).  That was enough to cause outrage in the community.  But, further, the development permit proposed only interior changes,

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A great anecdote told by a first-hand observer – Ray Spaxman when he was Director of Planning – about attitudes to growth and development in the Vancouver of the 1980s:

 
 
This is an event that probably illustrates some of the good and not so good parts of the development control processes that we were developing in the mid 70’s and early 80’s. …
When I came to the City in 1973 one of the first priorities was to produce a Downtown Plan to guide change over the next 20 years or so.  …
As a result of years of community work in developing the Downtown Plan, we had overhauled the whole system from the overall vision of the Downtown through the urban design guidelines, from views, overall shaping and details of those things that made the place more liveable, like canopies and signage, to development control processes and zoning. Council.  …
Some strong feelings about development had been expressed by the community. They did not want to see the public realm go underground into malls and passageways. They wanted our mild climate to be experienced primarily at grade.  They were looking for neighbourly developments that emphasised good relationships between buildings and to the street. They wanted active pedestrian streets. They were looking for well designed buildings that enhanced the overall cohesive vision for the area, not  individual “stand outs.” At the time there was much debate about the height and shape of future highrises, the overall shape of Downtown and there was a strong lobby to retain the views of the mountains and especially the iconic “Lions” from important public places in and around Downtown.
Developers were informed about these policies when they came to ask about the city’s plans and generally went off to prepare their plans in that context.
At one time, (I cannot remember the exact date, as I write this draft), a development group came to my office with their proposal for development of the Georgia, Burrard, Alberni, Thurlow block. I do not yet recall what process they had been through but my recollection is that there had not been much contact with us before this meeting …

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The block today

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As I reviewed their presentation I began to see numerous features that were not compatible with the City’s plans for the Downtown. I described where their plans were in conflict and suggested they needed to revise accordingly. They were shocked that the grand plans that they were so proud of were not accepted by me. They said they would take their case straight to the Mayor. I said that was of course their right, but explained how our plans had come about and they could expect the Mayor to support those plans.
[I should explain here that the developers, while having a local development consultant advising them, were internationally renowned developers and architects from New York. They conveyed the sense that we were rather a small, unsophisticated sort of place that would be best advised to see the special benefits of their scheme.]
A few days later I briefed the mayor about their proposal and how it related to the city’s policies. The subsequent meeting with the developers was held in his office. …
At one moment, when we seemed unable to communicate with them and they continued to push us about how good their scheme was, the Mayor took them to the window, which looks north across downtown to the spectacular mountain ranges. Changing the tone somewhat, he described the scene and then asked them where their proposed big highrise would be seen from this point of view.
After some reflection, one of them said, something like this, “Well, if you look at the mountains behind Downtown you can see a couple of small but noticeable peaks sticking up. Do you see them?” The mayor said, “Yes, I do.  We call them the Lions.”  “Well,” said the developer, “Our tower would be right in front of them from this viewpoint.”
The Mayor suggested we return to the table and said he would like to summarise his position for them. He then came up with this description.
“I can summarise our position under three headings. I will call them the three Ms: they are Moles, Mountains and Monuments.”

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Forwarded to me by James Bligh …
“I saw this commercial at a movie theatre the other night and almost gagged.

First of all, it compares a Concord Pacific project to the Arc de Triomphe, the Bird’s Nest, and the Gherkin. What level of delusional hubris have these marketing teams achieved to think they can convince people that this project is going to live up to that kind of reputation? Second, note how quickly the ad pans over downtown Vancouver; you wouldn’t want to notice that ‘the arc’ looks just like every other tower on the peninsula now would you?” Read more »

 
Kenneth Chan writes in VanCity Buzz about the newly revised tower being proposed for 555 W Cordova.  To me, it seems to be an unusually detailed article, with illustrations galore.

Within the constraints of the new design principles, the building will be pushed back towards the rear of the development site next to Waterfront Station and rotated 90 degrees to open up the space on the West Cordova Street frontage to create a large plaza area. With the rotation, the building is positioned in an east-west axis instead of a north-south axis.
In addition to the shifting and rotation, the design of the building’s lower floors in relation to the cornices of both Waterfront Station and the adjacent Landing office building have changed. The ground level is now porous, as requested by the UDP, so that the public can walk through the site and see views of the harbour and mountains.

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