Maroc - STOREYS.COM - A La Une - 21/Jun 01:57

Four Vancouver High-Rise Projects Set To Be Delayed Due To Weak Strata Market

The developers of four high-rise projects in Vancouver have requested more time from the City before proceeding to rezoning enactment, likely resulting in the projects being delayed.All four projects have received rezoning approval, but rezoning approvals are only in principle and developers must then meet certain conditions — such as finalizing designs, signing housing agreements, and paying fees — before the rezoning is enacted. All four projects are located in the West End of Vancouver, where the City began, during the COVID-19 pandemic, imposing a 24-month period in which developers had to to meet their rezoning conditions. If the conditions are not met by the given deadline, the City has the right to revoke the rezoning approval and send the application back to the public hearing stage. The City says that this was intended to expedite housing delivery.Unfortunately, at least in the case of these four projects, the move did not have the desired effect, although it's hard to fault the City, as the process of meeting rezoning conditions is largely driven by the applicant. It's also hard to fault the developers, who are facing escalating costs of various kinds, which have resulted in a surge in receiverships and foreclosures.For three of the four developers, this is the second time around they are seeking a deadline extension, with Council granting six-month extensions to them in October 2023 (instead of the 12-month extension they requested). On Tuesday, June 25, Council is set to consider granting the four developers an extension until May 31, 2026 — a date that was not specifically requested by the developers."The developers all asked for an extension of various degrees and the City decided to recommend a single common date for ease of tracking as well as in recognition of market and other factors noted in the report," Templar Tsang-Trinaistich, Issues Manager at the City of Vancouver, tells STOREYS. In a report to Council, Tsang-Trinaistich said that the developers cited "strata market conditions, escalating construction costs, more stringent lending criteria, and higher interest rates" in their extension requests. Recognizing the market conditions and the fact that they may not subside for some time, City staff recommended the May 31, 2026 date. The City notes that although the extension is to May 31, 2026, if approved by Council on Tuesday, developers can proceed with their projects anytime before that date.Another notable aspect of the situation is as it relates to community amenity contributions (CACs), which the City charges on rezoning applications, but does not actually collect until the rezoning enactment stage. In two of the four cases, the CACs exceed $30M, which cannot be renegotiated now without the project reverting back to the public hearing stage. The four developers and their projects are as follows.1450 W Georgia StreetDeveloper: Wesgroup PropertiesRezoning Approved: October 12, 2021Deadline + First Six-Month Extension: April 12, 2024CAC Payment: $8,900,000At 1450 W Georgia Street, Wesgroup, the developer behind the River District, is planning a 47-storey tower with 135 strata units and 162 rental units, according to a development application that was approved in September 2023. Wesgroup owns the property, currently occupied by a 25-storey apartment building constructed in 1955 called the Georgian Towers, under 1450 West Georgia Investments Ltd. and BC Assessment values the property at $87,783,600. "Given the unprecedented challenges that followed [the pandemic], including historic inflation and significant interest rate hikes, the viability of many projects was severely impacted," Brad Jones, Senior Vice President of Development at Wesgroup, said in a statement provided to STOREYS."This situation has been further compounded by soaring development cost charges from Metro Vancouver, which are set to increase by more than 300% over the next three years," Jones added. "Third-party studies have concluded that government fees, charges and taxes now make up 20 to 30% of the price of a home, which is impacting the viability of new housing projects across the country. We are pleased that the City is now taking a more pragmatic approach, proposing an extension to the enactment deadline for our project. This extension is crucial as it acknowledges the external factors influencing project timelines and viability. We are hopeful this shift will prevent years of work from going to waste and allow projects to move forward successfully."1157 Burrard StreetDeveloper: Prima PropertiesRezoning Approved: October 12, 2021Deadline + First Six-Month Extension: April 12, 2024CAC Payment: $10,600,000At 1157 Burrard Street, Prima is planning also planning a 47-storey tower, which would have 289 strata units, according to a development application approved in February 2023. The project has been named Monogram, according to the developer's website. The property is currently occupied by a community garden and Prima owns the property under Prima Properties (135) Ltd. BC Assessment data for the property is not available. Upon inquiry by STOREYS, Prima Properties declined to comment prior to Tuesday's Council meeting.1640-1650 Alberni StreetDeveloper: Landa GlobalRezoning Approved: December 9, 2021Deadline + Six-Month Extension: June 9, 2024CAC Payment: $32,700,000At 1640-1650 Alberni Street, Landa Global is planning a 43-storey tower with 211 strata units and 66 replacement rental units, according to a development application that was approved in September 2022. The property is currently occupied by a 15-storey rental building with 66 units that Landa owns under 1650 Alberni Residential Ltd. and 1650 Alberni Commercial Ltd. BC Assessment values the property at $71,108,000. Upon inquiry by STOREYS, Landa Global declined to comment. 1668-1684 Alberni StreetDeveloper: WestbankRezoning Approved: May 17, 2022CAC Payment: $37,041,000Directly next door to Landa Global's project, Westbank is planning a 40-storey tower with 128 strata units, according to a development application that was approved in January 2023. Westbank owns the property under 700 Bidwell Property Inc. Both 1668 Alberni Street and 1684 Alberni Street are currently occupied by two old strata buildings with 23 total units, each of which are valued by BC Assessment at between $1.5M to $2.8M. STOREYS reached out to Westbank on June 19, but did not receive a response by time of publication.