Work on buildings in Vancouver, Surrey, Kelowna and Island halted

Cheryl Chan
Province

World-market turmoil continues to take its toll on B.C.’s condominium market as construction on one development after another is stopped or postponed.

V6A, a nine-storey mid-rise in Strathcona on the edge of Vancouver’s Chinatown, is the latest condo casualty, but developer Onni said the project is still a go.

“Currently, the construction aspect is on hold, but we’re still selling it, we’re still marketing it and we’re still moving forward,” development manager Alex Orr said Friday.

Construction began in June, but was stopped three weeks ago to make sure there are enough buyers.

“Obviously, the market has gotten more challenging,” he said. “We looked at slowing construction down so the sales and marketing program can catch up to ensure we have adequate sales.”

About 30 per cent of the 128-unit building has been sold and all purchasers have been informed of the stoppage, said Orr. The building is slated to be completed in mid- to late 2010.

According to media reports, B.C’s superintendent of real estate is investigating the project because some prospective buyers were not being told the project was on hold. The department could not be reached yesterday.

In Metro Vancouver, the global credit crunch has affected two Surrey projects, Infinity and Sky Towers, after developer Jung Developments Inc. sought bankruptcy protection a month after its major lender, U.S. investment bank Lehman Brothers, collapsed.

Lucaya, a $30-million condo development in Kelowna, shut down construction due to a financing shortage, while the developer for Capella, a $1.4-billion luxury project on Vancouver Island, has suspended sales and construction until market conditions improve.

Other projects, including the $500-million Ritz-Carlton hotel in downtown Vancouver and the 349-unit Evelyn in West Vancouver, attributed construction delays to other factors such as parkade redesign and stabilization issues.

Construction along North Vancouver‘s waterfront — the future site of a major development project that will include a conference centre, 108-room hotel, an office building and a 20-storey residential tower — also went silent earlier this month.

But developer Michael De Cotiis of Pinnacle International said the stoppage doesn’t have anything to do with economic woes.

“We are waiting for approval for subdivision and service approvals for water pipes and road construction,” he said.

De Cotiis said he expects construction to resume in three to four weeks and for the current project, a 12-storey highrise, to be completed by the target date of August 2009.

According to Ward McAllister, president and CEO of longtime Vancouver real estate and development company Ledingham McAllister, there may be more projects put on hold as banks demand stricter credit requirements.

“Presales are definitely not as brisk as in the past,” he said yesterday. “A lot of the banks are requiring a higher number of presale agreements [before construction can go ahead].”

But McAllister said the construction slowdown could eventually lead to a stabilization of the Vancouver real-estate market, as the supply of units begins to lag behind demand. Citing statistics that show about 58,000 people move to B.C. annually, McAllister said about 20,000 new units of housing are required each year.

“If units aren’t being built, there’s going to be a shortage very soon,” he said, adding that may lead to another sellers’ market.

© The Vancouver Province 2008

 

Proposed strategy would analyze market

Christina Montgomery
Province

With angry tenants taking to the streets and affordable housing topping the list of municipal election concerns, Vancouver — where half the population rents — will decide next week on a plan to spend $300,000 and six months on a rental-housing strategy.

One year ago, faced with low vacancy rates and increasing demolition of rental buildings, the city beefed up regulations on conversions of rental units. A rental crisis in the 1980s had led to the initial regulations.

At the same time, staff were asked to launch a “comprehensive” rental-housing study, review the “rate of change” regulations and report back by the end of 2009.

The proposed $300,000 strategy is a piece of that work, aimed at “preservation, replacement [and] monitoring of rental housing based on a thorough analysis and understanding of how the rental market works.”

According to a staff report tabled this month, there are 131,500 “renter households” in Vancouver, or half of all households.

It said 46 per cent of all rental housing in the region, and 27 per cent of all rental housing in the province, is in Vancouver.

Almost half of Vancouver‘s population lives in market rental housing. About 16 per cent of rentals are non-market, or social housing.

As of October 2007, the average rent for a Vancouver studio apartment was $760, and for a one-bedroom $900. Fewer than 700 units in the city rented for under $500.

Vancouver has the lowest vacancy rate in the region, at less than one per cent for four years, and it is projected to remain low.

The preferred vacancy rate is between two and three per cent.

In addition, rising property values have stressed the rental supply, given the higher return developers can earn from condo units.

Figures from 2007 show they can clear about a 40-per-cent return on investment in condos, but only about two per cent on rental units, the report notes.

If approved, the study will assess the rental market by evaluating the importance of purpose-built rental units and determine ways to preserve and expand that stock.

The extent to which rental condos and secondary suites provide an alternative to the traditional rental stock will also be examined.

© The Vancouver Province 2008

 

Media will do what it does, the banks will do what they do and buyers and sellers will do what they do, buy and sell

PETER SIMPSON
Sun

Hey, folks, do yourselves a huge favour and quit freakin’ out over the daily media reports on the topsy-turvy global economy.

I mean it, stop right now or, I swear, your head will explode.

Toronto-based analysts are elbowing each other out of the way to gain position, trying to capture the attention of a perked-up national media: “Pick me, pick me — I have a gloomier story to tell.”

The media, having had mostly bullish economic news to report until recently, are eating it up. I can sense the perverse glee in the tone of some stories, particularly the headlines.

Then again, this should surprise no one. Reports from the pin-strippers on Wall and Bay streets are juicy, heart-racing mind bombs — stuff that scares the bejeebers out of everyone, at all income levels.

A lifetime ago, I was a columnist for a Toronto daily newspaper with a story-positioning credo — “if it bleeds, it leads” — meaning the gorier the detail, the better the chance for front-page placement.

With so much economic bloodletting globally, a wise investment opportunity might be in tourniquet manufacturing.

Everyone — homeowners, builders, realtors and industrywatchers — can generally agree that real estate has taken us all on a dizzying uphill ride over the past half dozen or so years.

During a heady three-year span, from 2005 to 2007, real estate values climbed nearly 45 per cent in the Lower Mainland. Enormous equity gains were realized by homeowners, builders expanded operations significantly and busy realtors pocketed more in sales commissions than ever before.

Governments, too, took their heaping servings, and second helpings, from the gravy boat.

 

For the provincial government, windfalls from unprecedented levels of tax revenue, including the cash-cow property transfer tax; for the federal government, buckets full of GST remittances from the purchase of new homes; and for regional and municipal governments, an expanding — and lucrative — menu of development charges and “voluntary” contributions to citymanaged initiatives.

The flip side to this story was a challenging affordability gap as first-time homebuyers had a devil of a time taking that all-important first step onto the property ladder.

With the cost of development land climbing to extraordinarily high levels, an effective industry response to housing affordability was the introduction of space-efficient apartments and townhouses. This year, for example, 80 per cent of all Lower Mainland housing starts have been multi-residence.

Many projects sold out in a matter of hours. People camped out for days. If the guy or gal at the front of the line didn’t buy, behind them were plenty of people eager to plonk down their deposit money.

Yes, there was no shortage of impulse buying, but with the economy now front and centre on the world stage, the panic has been taken out of the purchase, and buyers can take their time looking for a home that matches their needs and income.

Recently, the developer of a $350-million, 1,400-residence condo project experienced financing problems, sought relief from creditors and is trying to attract a new financial partner to complete the Whalley project. Instead of hiding his challenges, the developer swiftly issued a one-page news release.

In Victoria, a $1.4-billion residential project has been put on hold until more is known about how the global economic uncertainty will impact that region’s housing market.

In Kelowna, a similar situation emerged. Will more planned projects not yet marketed be placed on the back burner? Probably.

Banks are exercising caution these days, and being vigilant in how they assess a development’s economics. I suspect this level of prudence will be the norm for some time. None of this is sinister, and nor are lenders being overly reactionary. It is simply sound business practice and totally expected.

Be thankful the Canadian banking system, with its conservative mortgage-lending practices, is solid. In fact, the World Economic Forum rates Canada’s banking system the most sound in the world.

If buyers are concerned about the completion or delivery status of their new homes, particularly pre-sale condominiums, they should contact their builders for updates and assurances.

Chances are, there will be absolutely nothing to fret over, but peace of mind is a wonderful tonic. In my view, the issue is not so much a warning of buyer beware, as it is buyer be aware.

Prospective homebuyers should be flocking to established core developers and builders who have experienced the peaksand-valleys cycles of housing markets over the years, and who enjoy long-standing relationships with Canadian blue-chip lending institutions.

I spent time at the Vancouver Home & Interior Design show at BC Place last week and spoke with some of the nearly 40,000 attendees who were eager to learn what’s new on the home front. Not one expressed serious personal concerns about the economy. Instead, the people, who represented virtually all demographic cohorts, were fixated on how they could improve their living environments. I took this stance as a positive attitude that can only help to boost overall confidence.

A builder friend attended a recent house party. A guest, trolling for empathy, lamented he should have sold his home six months ago. The builder responded, “And what, used the money to buy stocks?”

A home should not be treated like some kind of pork-belly futures. The best long-term investment you can make for your family is a home, so don’t send yourselves into a tizzy checking out its value every 20 minutes.

Barbara Gunn
Sun

The Keefer

Project location: Chinatown, Vancouver

Project size: 4 full-floor lofts

Residence size: 2,200 sq. ft. – 2,400 sq. ft.

Prices: $1.6 million – $3.9 million

Telephone: 604-408-2580

E-Mail: [email protected]

Web: thekeefer.com

Developer: Two By Four Developments Ltd.

Architect: Gair Williamson Architects Inc.

Interior design: apartments, Cynthia Penner, Box Design; common areas, Gair Williamson

Occupancy: Summer, 2009

VANCOUVER – Almost 100 years ago, Vancouver architects George Lister Thornton Sharp and Charles Joseph Thompson saw the doors open on the Keefer Street warehouse they had designed for the Vancouver Gas Company. But these were no ordinary architects, and this was no ordinary warehouse.

Sharp and Thompson would go on to design Burrard Bridge, the Vancouver Club, many of the inaugural buildings on the campus of the University of B.C. and the original art-deco Vancouver Art Gallery, where Sharp, also an artist, would exhibit his watercolours.

Over the years, records the UBC archives, the two would play “an important role in the development of the built environment of Vancouver.”

The Keefer Street building they erected in the heart of Chinatown in 1910 may have had a rather pedestrian purpose: as a warehouse and meter-repair shop for Vancouver Gas. But its look was anything but dull.

The façades on the four-storey Edwardian, notes the city of Vancouver‘s planning department, “were dressed up to make it appear more like an office building.” Glazed brick was selected. Wooden sash double-hung windows were installed. Decorative metal spandrels, timber mullions and cornices were put in place.

It was, in the words of another architect, one who is today putting his own design stamp on the free-standing structure, “a fairly elegant building.”

“It’s got great heritage,” says Gair Williamson of the building, which will soon house four edgy apartments, each occupying an entire floor. “You don’t come across buildings of this quality that you’re going to get to work with too often.”

Williamson, an award-winning architect who’s made it something of a mission to rehabilitate Vancouver heritage buildings, seems to share his predecessors’ passion for the Keefer Street building, but he also shares something else.

“They went to the same school I went to in London, I found out,” he says. “We all went to the Architectural Association [School of Architecture], 100 years apart.”

Today, slightly less than a century after the warehouse opened, Williamson and Cameron Watt of Two By Four Developments are teaming up to give new life to the old building. And when they are done, the building – they are calling it, simply, The Keefer – will speak to the past, and most certainly, to the present.

Their plan was undertaken through city hall’s Heritage Building Rehabilitation Program, which was put in place by the city for a five-year period to encourage the rehabilitation of heritage buildings in downtown Vancouver.

In exchange for restoring the building – Watt has enlisted noted contractor Heatherbrae to preserve the exterior brick, metalwork and windows, along with the interior timber beams and brick walls – the city agreed to heritage incentives, including a façade grant, a 10-year property tax exemption and bonus building density, which can then be sold to other developers.

“Once completed,” notes a report from the city planning department to council earlier this year, “this rehabilitation will not only restore the functionality and the historic character of the building, but will also be an important step in restoring the heritage character of an important street block in Chinatown.”

The restoration work will be significant, but so, too, will the cutting-edge – and in some cases, ground-breaking – touches envisioned by Watt and Williamson. The Keefer’s cornices are evocative of 1910, but its glass-bottom roof-top pool, “scissor-lift” underground parking and planned martini bar will be anything but heritage.

The ground level of The Keefer will consist of some 1,200 square feet of retail space – it will have a clean, modern look that Williamson says “celebrates the old building, rather than mimicking it” – and it’s here where Watt hopes to install a martini bar.

“The idea,” says Watt, “is to open a little lounge here for the residents of Strathcona or Gastown, whatever, a little place where you can come and have a drink and maybe a light meal…[It will be] kind of like something you’d see in Manhattan.”

Rising in the four storeys above – a fifth floor, housing a penthouse set slightly back from the front of the building, will be added to the structure – will be The Keefer’s residences, large, open-plan spaces with German-designed Bulthaup kitchens, private elevator access and expansive glazing on three sides. (“That’s really rare in Vancouver,” says Williamson of the windows.)

The homes on the second, third and fourth floors will have large indoor-outdoor patios on the east side of the building, but the 2,200-square-foot penthouse will have something considerably more noteworthy: an eight-by-40-foot pool with a glass bottom. That pool is being built by Steven’s Pools in North Vancouver, while the acrylic bottom, manufactured by a separate company in Colorado, will be delivered to Vancouver in one piece. As a glass-bottomed pool above a residential space, it is a first in B.C., says Watt, who, as the founder of the Canadian Springs water company, has more than a passing interest in water.

“You can swim the whole length of the hallway,” he says. “It’s for light, and it’s just fun. What a great feature this is, to look up and see people swimming above you.”

Another feature so far not replicated in Vancouver is the stacking underground car lift, something Watt envisioned to accommodate four vehicles in the narrow 25-foot-wide building. (The four cars will be positioned two abreast and on two levels on a moveable lift. “So you drive in,” says Williamson, “and if your car’s on the top, this [lift] goes down.”)

Watt notes that, before construction advances significantly, buyers may have the opportunity to modify the plans of their homes, adding that he didn’t hesitate to assign that construction to Heatherbrae.

“I felt they were the only ones qualified to take on such a specialized project,” he says. “I reasoned that any company that was capable of building the Olympic luge track in Whistler would be able to restore a 100-year-old warehouse and put a glass-bottomed pool on top of it.”

The Keefer, initially located some 60 feet from the shores of False Creek in order to receive barge-loads of coal from Vancouver Island (over the years, extensive fill altered the building’s relationship to the water) will have seen great changes in the century it has stood in Chinatown. Once a bustling, industrial area, the neighbourhood is not now without its social issues, but Williamson believes The Keefer to be a development that’s “opening up Chinatown.”

“I believe really strongly that there are enough visionary people in this city who will want to live here,” he says. “I mean, Cam wants to live here.”

Today, when he speaks of the building and its significance to the history of Vancouver, the architect seems to share a passion once felt by the company that commissioned its construction.

“When the Vancouver Gas Company built it, they were proud of it,” says Williamson. “You don’t hire Sharp and Thompson if you’re not interested in making some kind of architectural statement about who you are as a company.

“And now, we’ve come full circle.”

Sun

The drop in Canadian home prices in September may not be as severe as it seemed, TD Securities said on Wednesday, bolstering the case that the country is not headed for a U.S.-style housing meltdown.

TD, a unit of Toronto-Dominion Bank, argued in a report that home prices fell 1.3 percent in major Canadian markets in September, not the dramatic 6.2 percent drop that was reported by the Canadian Real Estate Association (CREA) last week.

CREA said the average house price fell to C$315,461 (about $252,000), dragged down by sales declines in Vancouver and Victoria, British Columbia, which offset rebounds in Calgary and Edmonton, Alberta. CREA said the fall came despite year-over-year gains in average home prices in 17 of 25 major Canadian markets.

TD crunched its own numbers and applied a weighting to each major city to fix “compositional shifts”, which it said were behind the distorted CREA view. It said the association has acknowledged the problem.

For example, if Vancouver was the only city that reported sales in one month, and the next month Montreal was the only city that reported, then it might seem that prices had fallen in half because Montreal prices are much less expensive than those in Vancouver.

TD fixed the weight of each city to year-earlier sales levels as of September 2007.

“We wanted to get rid of the whole compositional issue. We really just controlled for the allocation. When we did that we ended up with a 1 percent drop instead of a 6 percent drop,” said Eric Lascelles, chief economics and rates strategist at TD Securities.

“That’s not catastrophically different, but to me that’s a number that makes more sense. Yes the housing market is correcting moderately but it does not have the making of a U.S.-style correction.”

He said Canadian housing starts may fall below the 200,000 mark, home prices will continue to correct in some inflated cities, but there is no need to brace for big delinquencies or a hard drop in prices.

The TD calculations aren’t perfect, Lascelles acknowledged, because they do not eliminate some factors such as type and quality of home in each city.

Canadian housing data has shown signs of softness but nowhere near the slump that hit that United States, stemming from a crisis in the subprime mortgage sector.

($1=$1.25 Canadian)

(Reporting by Ka Yan Ng; Editing by Peter Galloway)

© Reuters 2008

There’s a light at the end of the housing tunnel, but it’s faint

Harvey Enchin
Sun

Your home may still be your castle, but it’s not worth what it was yesterday.

The latest housing outlook from Central 1 Credit Union economist Helmut Pastrick will not please homeowners, but would-be buyers can look forward to falling house prices in the months to come.

With residential sales expected to drop 30 per cent this year and another 18 per cent in 2009, median prices have declined by 12 per cent since last March and are likely to fall another 13 per cent in 2009 and a further five per cent in 2010, assuming market conditions begin to improve by then, the report says.

That might be a slightly optimistic timeline.

Vancouver is no stranger to real estate booms and busts. Given the uninterrupted advance in prices since the third quarter of 2002, it’s easy to forget that house prices rise and fall in tandem with the economy.

Residential real estate was a good place to be in 1975 when the average price of a detached home was $67,500 in nominal dollars. (The real-dollar equivalent would be $264,508, but we’ll stick to nominal dollar values in this column). By the first quarter of 1981, the price had nearly quadrupled to $233,500 with barely a hiccup in the interim. Then a long recession took the stuffing out of the real estate market. By the fourth quarter of 1982, the average price had fallen to $150,800, a drop of 35 per cent from the peak. And that wasn’t the worst of it. Housing prices did not recover until 1989.

The euphoria didn’t last long. After prices rose to $324,700 in 1990, another dip in the midst of an economic slump shaved 12 per cent from the average price by the first quarter of 1991. It took more than a year to recover to $329,000 in the second quarter of 1992.

The advance resumed until 1995 when prices topped out at $418,100 and a modest economic correction cut the average price by 7.5 per cent to $386,500 in 1996. Prices bounced around erratically for a time but finally turned the corner in the fourth quarter of 2000.

It sounds unbelievable but it was eight — count ‘em, eight years — before Vancouver prices surpassed the 1995 level. Finally, in the first quarter of 2003, the price reached $434,700 and never looked back — that is, until now.

Vancouver‘s housing history suggests prices can drop sharply and suddenly and take many years to rebound. Deflate today’s average price of $759,000 to factor out inflation and the real price comes to $193,689, suggesting an annual appreciation of 5.6 per cent if you held your property from 1975 to the present.

The University of B.C. Centre for Urban Economics and Real Estate (which compiled the statistics used above) has calculated Vancouver’s house annual appreciation over various periods: 1979-2008, 7.6 per cent; 1981-2008, 4.4 per cent; 1992-2008, 5.3 per cent and 2001-2008, 10.2 per cent.

It is clear that home ownership is not the high-yield road to riches. However, residential real estate is, for most people, the largest component of net worth.

Pastrick states the obvious when he says in his report that current market conditions are consistent with a housing recession and falling prices. But he notes this follows the longest expansion on record, one that drove prices up 100 per cent (in current dollars) from trough to peak.

The average price-cycle recession phase lasts 39 months, he says, but can be within a wide range of nine to 65 months. The housing market will turn around when supply no longer satisfies demand. With housing starts due to fall sharply over the next year or two, residential construction projects postponed because of financing difficulties, and improving affordability as a result of falling prices, there is a light at the end of the tunnel — but it’s faint and distant.

© The Vancouver Sun 2008