Vancouver rental housing completions are down by 30% this year: report

Nov 19 2019, 1:11 pm

A new report adds to the growing chorus of concerns over the shortage of new market rental housing supply in Metro Vancouver, particularly in the City of Vancouver.

According to the Goodman Report’s rental housing update, construction completions for occupancy within Vancouver will actually be down by about 30% year-over-year, with 947 units across 14 buildings expected to reach completion in 2019 — compared to 1,364 units finished in 2018.

While the region’s namesake city is falling behind, the suburbs are picking up speed with rental housing completions in the suburban cities now growing six times year-over-year.

Surrey comes second with 624 new units across three buildings completed this year, followed by Burnaby with 357 new units across two buildings.

North Vancouver City, being a small jurisdiction, punches above its weight, with 170 new units across three projects.

Major additions were also experienced in New Westminster, with 548 units completed in 2019. But analysts warn there is a slowdown in the number of new proposed projects, as New Westminster’s municipal government recently initiated a below-market units requirement as a condition of rezoning, which is pushing many projects into becoming financially unfeasible.

Metro Vancouver rental housing update

Metro Vancouver rental housing update, November 2019. (Goodman Report)

Across the entire region, there are about 20,213 units across 200 development sites in the pipeline — either proposed, approved, or under construction. Just 5,067 units across 50 sites are actually under construction and scheduled for completion over the next three years — an average of 1,689 units per year.

The vast majority of these units, totalling 15,146 units across 150 sites, are either proposed or approved. If they are built, they will require about three to seven years before completion and occupancy — an average of about 2,163 units per year over seven years.

If achieved, the real number of regional projects would only be aligned with the City of Vancouver’s own goals of building 20,000 market rental homes over 10 years between 2018 and 2027, underscoring the need for significantly more rental supply across the region. To date, just 2,502 market rental units have been approved since the housing strategy came into force.

Vancouver, including UBC, has 8,433 units across 104 sites in the pipeline, the most of any jurisdiction, followed by Coquitlam with 3,632 units across 19 sites, North Vancouver City with 2,021 units across 21 sites, North Vancouver District with 830 units across 12 sites, Port Moody with 692 units across six sites, and West Vancouver with 637 units across six sites.

But the worst-performing municipalities for rental housing are in the suburbs, specifically Pitt Meadows, Richmond, and especially Delta, which completed zero rental units this year and has zero in the pipeline.

Analysts have indicated municipal policies are a major detriment to new rental housing supply, but they also note the provincial government’s recent policy of reducing the allowable rental increase formula for new construction has had an impact as well.

“While this well-intentioned measure was meant to protect those currently living in affordable units, it has had a negative effect on the valuation of future new purpose-built rentals,” reads the report.

“If a building comes to be worth less while costs continue to escalate, the results are projects shelved or reimagined (back to condos?), design reconfiguration and delays, or simply selling and moving on.”

The rental vacancy rate both within Vancouver and across the region is hovering at around 1%.