That’s what developers are saying in my Globe story, which was published Dec. 24.
With the British Columbia condo market in a deep freeze, developers are looking at constructing a form of housing that hasn’t attracted their interest for 35 years – rental apartment buildings.
Major developers say they are looking at ways to make rental work, in order to keep their companies in gear at a time when it appears that no one is willing to buy.
The province’s development association, the Urban Development Institute, is even putting on a workshop in January to help builders understand the ins and outs of building rental apartments. With construction costs coming down and rents going up, they say the concept of rental is starting to look good.
“The public is just scared to death,” said Ward McAllister of Ledingham McAllister, which has 22 condo projects under construction. “And right now the rental market is tight, so the income is good and the construction-cost side is coming down.”
Some developers are looking to cities or the province for help.
Shayne Ramsay, chief executive officer of BC Housing, said the organization is getting dozens of calls from developers wanting to know if the province is interested in their sites for rental projects.
Mr. Ramsay said it’s not something the province has done in the past, but Housing Minister Rich Coleman has made rental-housing development a priority.
“I think it’s one of the big untapped markets,” Mr. Ramsay said.
Cities, which have been struggling for decades to hang on to or create affordable housing for residents, also seem willing to listen.
Mr. McAllister said he is talking with three Lower Mainland municipalities willing to consider the possibility of temporarily forgoing property taxes or development charges in return for buildings that developers promise to keep as rental for 10 years or more.
Purpose-built rental buildings have become a precious commodity throughout Canada after the postwar apartment-building boom came to a halt in the early 1970s when the federal government cancelled tax incentives that had been aimed at encouraging apartment construction.
Since then, cities have lobbied intensively for a return of the tax incentives, to no avail.
Both Vancouver and Richmond have put moratoriums on the demolition of rental apartments in the past two years, and Vancouver has recently taken the unusual step of building its own rental apartments above a community centre in central-city Mount Pleasant.
The most recent figures from the Canadian Mortgage and Housing Corp. showed a 0.5-per-cent vacancy rate for the Vancouver region, with rents having gone up about 7 per cent in the past year.
But there are also some developers who think they can potentially build apartments even without outside assistance.
David Negrin, head of the development arm at Aquilini Investment Group, said the company is considering converting its Richards project to a rental building, providing the numbers work out.
Aquilini started marketing the 238-unit downtown project in October, just as condo sales ground to a halt. The company sold 33 units in the initial phase and, since then “nobody’s buying,” Mr. Negrin said.
He said for rental to work out, a company has to have paid a reasonable price for the land, construction costs have to keep coming down, rents have to be reasonable, and currently skittish banks have to agree to finance them. He said that all four are coming into line for Aquilini.
“We’re out tendering and prices have dropped about 30 per cent. What we’re seeing now is 1997, ’98 pricing,” he said. He is looking for prices to come down a little more in order to go ahead with plans to build rental.
Former Vancouver planning director Larry Beasley, a University of British Columbia professor and a strong advocate for city-aided projects to create low-cost housing, said it’s a good time for cities to jump at offers from developers to build rental housing.
Even if municipalities can only get buildings that are guaranteed to remain as rentals for 10 years, that will give them time to come up with more types of what he calls “third sector” housing. Such projects are not strictly private and not social housing, but a mix of the two where governments help reduce the cost of specific projects in return for guarantees that they will be available at low cost to lower-income renters or buyers.