Market Spotlight: City of Vancouver CACs and Density Bonusing

The City of Vancouver has released an administrative report that provides information on Community Amenity Contributions (CACs) and Density Bonusing for 2014. These types of reports highlight some interesting market information. Of note, 2014 generated more than the previous two years combined, primarily as a result of the Oakridge Centre rezoning approval.

Here are few highlights:

  • In 2014, there were 50 approvals of additional density resulting in a net increase in floor area of 6,500,000 SF and total public benefit in the amount of $234 Million.
  • The rezoning of Oakridge Centre in May 2014 represents 60% of the density and CACs generated
  • 80% of the public benefits are provided as on-site contributions, and 20% were cash in-lieu
  • 95% of additional density approvals aligned with recently approved community plans
  • The heritage density bank has been drawn down to 800,000 SF, a 50% decrease since the creation of new heritage transfer density was put on hold in 2009
  • There were 14 approvals for secured market rental housing in 2014, or 1,073 apartment units

CAC report_2015 CAC report_2015_1CAC report_2015_3CAC report_2015_4

For those interested, the report provides a full list of all rezoning applications approved by Council in 2014 that generated additional density and public benefits.

26-storey Tower Proposed for Cambie and Smithe Corner Site

A rezoning application has been made for a site at 225 Smithe Street, at the Northwest corner of Smithe and Cambie in Downtown Vancouver. The plan calls for rezoning from the existing DD (Downtown) District to CD-1 to allow a 26-storey residential above office mixed-use building that includes:

    • four levels of commercial space totaling 27,000 SF;
    • a  building height of 286.8 ft;
    • a density of 11.85 FSR;
    • 114 residential units; and
    • 178 underground parking space

This rezoning application is being considered under the Rezoning Policy for the Central Business District (CBD) and CBD Shoulder.

225 Smith_1 225 Smithe

The site was previously owned by James Schouw and envisioned for a luxury 28-unit condo building called ‘Thalia‘, but was later sold under foreclosure to Boffo Developments in 2011. The purchase price at that time was $11,600,000.

The Inexorable Upward March of Land Prices

Just ask any developer; it’s becoming increasingly difficult to find sites to build condos or mixed-use developments in the City of Vancouver. Despite the buzz in the media about developers running City Hall, an burgeoning supply of single family land assemblies, and spot rezonings occurring all over the place, the vast majority of rezoning and development activity outside of Downtown Vancouver is presently confined to areas such as the Cambie Corridor and Southeast False Creek (“SEFC”), both of which are near transit and underwent lengthy master planning phases in the past 5-10 years to add moderate density; typically averaging 3.0 FSR or less. 15 of the 40 currently proposed rezoning applications in the City of Vancouver fall within these two areas alone. Furthermore, of the other 16 proposed rezoning applications that are located outside Downtown/Chinatown, none are for condo developments; none! The applications are all for market rental, social housing or institutional uses. Of course, this does not jive with the public perception that Vision Vancouver has granted spot rezonings for condo towers all over town, a view which does have some merit given pre-planning phase approvals for such developments as PCI’s Marine Gateway and Westbank’s Granville and 70th developments in the past few years. Nevertheless, more recent direction shows that the City has definitively pulled on the reins of both area plan policy work and speculative rezoning applications.

Outside of the Downtown, Cambie Corridor and SEFC areas, developers are facing scant opportunities to find land in a City that is becoming entrenched as a predominantly wealthy single family enclave with over 65% of land still dedicated to this lowest form of housing density that existed nearly 100 years ago. While City of Vancouver planning staff have made an attempt under Brian Jackson’s oversight to pursue gentle densification of various neighbourhoods in forms such as stacked townhouses and fee-simple rowhouses; it has been largely met with resistance by neighbourhood groups who, in many cases, oppose even the most benign forms of density that threaten the single-family neighbourhood ideal. Likewise, affordable housing activists have argued that $800K townhouses are not a solution, even in large areas where $2M houses are the only option for home-ownership. The end result is that positive planning processes such as that which commenced for Grandview-Woodlands in 2013 turn into endless community consultation and opportunities for redevelopment are deferred for several years.

In a time where rezoning and the public approval process in general is an increasingly contentious and politically sensitive endeavor, developers are fleeing to land where there is the least risk. And where is that? Pre-zoned land. Certain zoning types have become the primary target for many developers and investors over the past 5 years or so; including:

  • C-2 (mixed-use zoning on various arterials outside downtown)
  • C-3A (mixed-use zoning primarily in the Broadway/Mt. Pleasant areas)
  • RM-8 & RM-9 (new townhouse and 4-storey zones respectively. Marpole only so far)

Here is a quick look at sales of C-2 zoned properties in the City of Vancouver to show the effect of the aforementioned increase in demand for pre-zoned land.

For those unfamiliar with C-2 zoning, it is a commercial mixed-use zoning scattered throughout the City’s arterial streets (excluding Downtown). The C-2 zone allows a total density of 2.5 FSR and a total height of 4-storeys. What makes it one of the more sought after zones by developers is that it allows residential above the ground floor, and is found in wealthy established areas such as Dunbar and Kerrisdale, as well as emerging areas like Fraser Street and Kingsway. Existing commercial properties on any sites large enough to accommodate underground parking, and that do not have long-term leases in place are being snapped up all over the City.

C-2 Zone Land SalesThe sales show the difference in values between East Vancouver and the above-mentioned areas of the Westside, which of course support higher condo values and retail lease rates relative to East Van. More apparent however, is the increase in values city-wide. While previously averaging around $125 per buildable SF as recently as 2010, the average has now shot past $200 per SF, with recent trades in Kerrisdale well over $300 per buildable SF, and Main Street trades now being reported as high as $250 per BSF. $300 per BSF is a figure which is only supportable in an exclusive and already wealthy area that can justify condo sales approaching $1,000 per SF. The lack of available sites in these areas helps to create the exclusivity that supports the underlying sales, as opposed to areas like Cambie and SEFC where the areas have been, and still are, being inundated with new condo inventory. Speculation may also be a factor where investors are simply buying existing C-2 zoned income properties and holding them, but this has been less prevalent and is not included in the sales charted above.

The above price trend holds true for the C-3A zone, as well as other zones which allow the developer to proceed with only a development permit and avoid the lengthy rezoning process.

Land values for C-2 zoned properties and in other pre-zoned areas will continue to be in high demand for developers as long as the opportunities for rezoning remain limited as they are now, and as long as the City of Vancouver – both City Hall and it’s citizens, continue to support a future in which the majority of the City’s land area continues to be dedicated to a low-density, exclusive and unaffordable housing type – the single family home. Similar to single family lots, they aren’t really expanding these zones, and as they are redeveloped the supply diminishes while the demand grows stronger.

City of North Vancouver Seeks to Confirm Density Charge Policy

The City of North Vancouver council will be considering a policy report outlining a formalized density bonus and community benefits policy that was expected after the adoption of the new Official Community Plan back in April.

If endorsed by Council, the new policy will apply to all rezoning applications that seek an increase in bonusable density within the OCP guidelines. The bonus system breaks down into two categories:

  1. Category ‘A’ Bonus. An increase in density up to the OCP Schedule ‘A’ density, or effectively the baseline density for rezoning or sites that are already pre-zoned. The amenity contribution is $20.00 per SF of increased gross floor area above existing zoning.
  2. Category ‘B’ Bonus. An increase in density that exceeds the OCP Schedule ‘A’ density, up to a maximum bonus amount set out in the OCP. This type of bonus would only be for rezoning of higher density. Within the Category ‘B’, there are four paths to providing the requisite benefits, as follows:
    1. Amenity Contributions (CACs) – $140 per SF of increased density in the Lonsdale area; $110 per SF outside this area. City reserves right to negotiate a different rate in unique circumstances.
    2. Secured Rental Housing – Bonuses will be permitted for properties where the new project is secured as 100% market rental; however, mixed rental and condo development will now not be permitted on existing rental apartment sites.
    3. Employment Generating Use – Bonuses for commercial uses above 1.0 FSR will not be charged a contribution.
    4. Heritage Conservation – Bonuses may be offered outside of this policy in unique circumstances.

For those not familiar, here is a depiction of the above Bonus categories:

CNV_OCP Density

Two Tower Project Planned for Metrotown Site

As reported on this site, a prime piece of real estate was sold in Metrotown a couple of weeks ago, and now a proposal for the site by Belford Properties is seeking City of Burnaby Council approval to move to public hearing. The site is currently zoned RM-3 and improved with two walk-up apartment buildings. The proposal is to rezone the site for high-density development utilizing the RM-5s designation. Details include:

  • Two highrise towers (41-storeys on Beresford and 26-storeys to the South)
  • Low-rise townhouse, retail, childcare and strata office components
  • 479 residential units
  • Total density of 6.36 FAR (5.0 FAR residential, 1.36 FAR commercial/institutional)
  • 731 parking stalls

6380-6420 Silver

Market Recap: Rezoning of Two Major Downtown Sites

As was reported in the media late last week, two major rezoning inquiries are going before the City of Vancouver’s Standing Committee on City Finance and Services on Wednesday; one was expected and one was a bit of a surprise within the industry. The inquiry stage simply confirms Council’s approval to proceed to a formal rezoning application stage.

Sinclair Centre

  • 1.54 acre site
  • Proposal to increase the density and height for commercial uses
  • 1,100,000 SF of office space for Federal Gov’t (up from existing 390,000 SF)
  • A density of 17.0 – 20.0 FSR
  • Max height of 350 ft due to view cones (29 storeys)
  • Existing CD-1 zoning proposed to be amended

Sinclair Centre

Excerpt from the Policy Report explaining the heritage aspect:

The Sinclair Centre is comprised of four heritage buildings all listed on the City’s Heritage
Register:
  • the former Main Post Office (built in 1910) — Municipally Designated and Federally Recognized Heritage Building, listed as an ‘A’
  • the R.V. Winch Building (built in 1911) — Municipally Designated and Federally Recognized Heritage Building , listed as an ‘A
  • the Customs Examining Warehouse (built in 1913) — Vancouver Heritage Register, listed as an ‘A,’ and Federally Recognized Heritage Building , listed as an ‘A,
  • the Federal Building/Post Office Extension (built in 1936) — listed as a ‘B’ (but not designated).
  • In 1986 the four buildings were restored by the Federal Government. While the buildings were seismically upgraded, they would not meet today’s standards and some portions of the buildings received very modest upgrades

Post Office Site

  • 2.98 acre site acquired by bcIMC in 2013 for $159 Million
  • Rezoning to allow reuse and retention of the existing building, with new residential and commercial uses
  • Existing Post Office building would contain retail, office, hotel, residential lobbies
    and the blank granite walls would be modified to provide for pedestrian-oriented at-grade retail
  • New building above would contain office, hotel, and rental/condo housing
  • View cones limit building heights between 225 feet and 285 feet

349 W GeorgiaComment from the Policy Report on the heritage aspect:

Since 1958, the building was the City’s Central Post Office. Recently, the Post Office has relocated to a site near the airport. The building has heritage merit. It was identified in the “ Recent Landmarks–Post 40’s Inventory,” which was conducted in the early 90’s, as a Class ‘B’. Designed by a prominent architectural firm McCarter Nairne and Partners Architects, the design of the building subscribes to the general principles of the International Style of Modernism.

Rental Apartment Building Planned for South Vancouver

A rezoning application has been filed for a 12,500 SF C-1 zoned site at East 64th Avenue and Fraser Street for a 5-storey market rental building. The proposed rezoning would see the current C-1 zone go to CD-1 under the Rental 100 Secured Market Rental Housing Policy. The proposal is for a 5-storey mixed-use building that includes:

    • 37 secured market rental units;
    • commercial space at grade
    • a building height of 52 ft. ;
    • a density of 2.65 FSR; and
    • 28 underground parking spaces.

8209 Fraser 8209 Fraser_2

The site sits just one block from the Super 8 Motel, which is in preliminary planning for a rezoning and redevelopment, including multi-family housing.