Wednesday, November 28, 2012

The future of older rental apartment buildings

Frances Bula has a current posting regarding an older apartment building for sale in the West End.

West End apartment for sale: “Rented significantly below market – need upgrades”November 26th, 2012 · 13 Comments

Hope this one ends well. From a recent listing.
For Sale: 23-Suite West End Apartment Building
Prime West End! The Randi Lynn is a three storey plus penthouse 23-suite apartment building.  Only 3 blocks to Sunset Beach—a prime English Bay address in the heart of the popular West End district, offering tenants immediate proximity to the employment, entertainment, shopping, beaches and recreational areas of Vancouver’s downtown core. Rents significantly below market.  Needs upgrades.  

There were 12 comments Some are very thoughtful, but others reek of partisan mis-information. That being said, I decided to offer the following comment since I think this is an important topic.

There is a serious problem in Metro Vancouver related to older rental buildings that are in poor condition and under-utilizing the site relative to current zoning, and current rezonings elsewhere around the city.

While the City’s rate of change policy and requirement of 1 for 1 replacement of rental units would seem reasonable, especially from the point of view of renters, the realty is that very few older rental buildings are being redeveloped with a mix of condo and rental units since the numbers generally don’t work…not just in the West End but in other parts of the City.

In our report to the Mayor’s Affordable Housing Task Force we did look at the possiblity of ‘laneway apartments’ that might be added to some sites occupied by older buildings, and there could be some opportunities for this…but they too are limited.

As we generally seem to be accepting increased densitities around the City, I suspect that what will be needed is some further density increases in the RM zones where many of these buildings are located, if we want to see older rental units replaced by newer rental units (along with condominium units).

Now I can hear some of you gasp at the thought of newer units since you know they will likely be more expensive to rent than the older units. This is true…just like new cars are generally more expensive than old cars. However, at a certain point older cars are taken off the road since they are no longer roadworthy or worth the cost of maintaining.

Unfortunately we are not taking older apartment buildings ‘off the road’. Instead , in many cases, they are being allowed to further deteriorate, since the owners don’t want to renovate them for fear of being accused of ‘renovictions’, or they under-utilize the site and the costs for major redevelopment do not make sense.

I am in conversation with a number of apartment building owners who are interested in exploring whether they might be able to obtain approvals for an FSR above current zoning in order to redevelop their sites with a mix of new rental units and condominium units.

With a mix of rental and ownership units, they will not need the almost fivefold increase in density that the developer of 1401 Comox rental building sought…and ultimately received. But they will need some increase.
Otherwise, as noted above, in many instances the buildings will simply deteriorate (and yes, provide lower rents) until they burn down or fall down, or are destroyed in an earthquake, putting lots of tenants out on the street.

Then we will all ask why wasn’t this situation predicted and why didn’t we do something before it was too late?


Evan said...

Older apartment buildings are an invaluable resource for an interesting city. They provide places to live for the young, service workers, students, young families, and artists who produce most of the vitality of city living. Of course dangerous buildings should be torn down or renovated, but lets not decieve ourselves here- new construction is predominately luxury construction. The existing stock of moderately-priced rental housing is crucial to retaining the people who keep the coffee flowing, who sell clothes and shoes, and so on.

Michael Geller said...

fair comment Evan...although there is no reason why new rental housing need be 'luxury housing'. Indeed, micro units like the Burns Block demonstrate that there is a demand for more modest and affordable rental housing. We just have to be weaned off our obsession for granite countertops and the like!

Jon Petrie said...

Copied from Bula blog:

Michael writes: ” …at a certain point older cars are taken off the road since they are no longer roadworthy or worth the cost of maintaining. Unfortunately we are not taking older apartment buildings ‘off the road.’”

I question both the metaphor and the word “unfortunately.”

Buildings do need care, maintenance and every
forty years or so significant upgrades. Generally in my opinion, the urban human, physical and ecological fabric is better served if buildings are upgraded rather than torn down. And if increased density is desirable sometimes that density can be accomodated on site or density can be transferred to an adjacent site IF planners etc don’t get in the way.

A property I owned in California, a single family residence between 1904 and 1945, was converted into apartments (rentals) in 1945, and I organized the renovation and strata conversion of those units in the
1990′s — expanding without building department permission into the basement. It took a fight and some lucky misinterpretations of old documents from the 1945 renovation to get post facto approval for that basement expansion. (Permission in advance would almost certainly been denied or if granted would have required way too expensive alterations to the basic structure of the basement.)

I live now in a 1975 walk up located a few blocks north and east of Kingsway and Main. We in the building did a significant exterior renovation in 2005 — the worst building visually within a few blocks became the best. That renovation cost about 10% of what a new building would cost. The property was I think zoned 1.5 FSR in 1975, the same as it is today. Because of parking requirements the developer built to only 1.0 FSR. (The parking lot is half empty at peak occupancy.) At some point in the future it would make much more sense to sell the unused .5 FSR to a neighboring site along with some of our parking than to redevelop (two vacant lots immediately adjacent to my building). But if the City prevents the sale of density (and parking) to neighbors then probably the building will be knocked down.

Jon Petrie said...

Unusual for me to disagree with Michael -- now twice in one day:

Michael writes: "... micro units like the Burns Block demonstrate that there is a demand for more modest and affordable rental housing. We just have to be weaned off our obsession for granite counter tops and the like."

Granite versus non-granite is a distraction from the real issues.

A bottom end kitchen, like the ugly one's in the City's 1 Kingsway rentals, cost X dollars, jazzed up significantly with better appliances x dollars plus $7,000.

The Burns block costs per unit were relatively low not because of the absence of granite in the kitchens but because the units are tiny -- under 300 square feet. AND because no parking is provided. The parking at 1 Kingsway cost the City about $35,000 per parking place -- three parking places I would guess would be the equivalent in cost of installing granite counters rather than formica in each of the circa 98 units in the building.

For Burns block:

Alice @ caribbean travel said...
This comment has been removed by a blog administrator.
Michael Geller said...

Jon, I agree the older car metaphor may appear unfortunate...but my point is that we take unsafe cars off the road as well as those that are too expensive to maintain, but we're not dealing with unsafe or uneconomical rental housing.

Yes, we can spend money on rehabilitation but often the cost cannot be justified by rental increases. In other instances, we are not making the best use of the land. In both cases I think we do need to review applicable city policies and come up with solutions that work for owners, and for municipalities. Otherwise, the current situation will continue...

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