
Vancouver Developers Plan Taller Buildings, Remain Wary of Costs
The City of Vancouver’s recent decision to loosen building-height restrictions has prompted a number of developers to revise their development applications, Postmedia reported.
The policy shift has allowed developers to seek approval for additional floors and units, increasing potential revenue for the multi-residential However, industry experts remain cautious about the financial feasibility of such projects.
The city reduced the number of view cones, which are designed to prevent projects from objecting North Shore mountain vistas from Vancouver vantage points. Despite the city’s highly-sought after move, some industry professionals question how much of the newly approved density will actually be built, Postmedia and other media outlets have reported.
Michael Geller, a longtime developer, urban planner, and retired architect, highlighted the challenges associated with high-rise developments.
“The thing about doing bigger, taller buildings isn’t only that they are more expensive to build, but there is an all-or-nothing proposition to them,” Geller told Postmedia.
He explained that financing a 60-storey tower is significantly more difficult than funding three separate, smaller buildings with the same total number of units.
James Cheng, a Vancouver-based architect, stressed that maximizing density does not always equate to higher net income.
“Maximum density is not the only answer to increasing profits,” Cheng told Postmedia.
He pointed to several cancelled projects as evidence that larger buildings are not always financially viable.
“Our current Vancouver-area markets are being hit with this triple whammy: building too big, no market to absorb it, and it is inefficient to build,” he told Postmedia.
While some developers are hesitant, others see opportunity in the city’s relaxed policies. Richard Bernstein, principal at Chris Dikeakos Architects, noted that increased building heights could help developers offset rising costs.
“It still might make sense [to go higher] if the developer bought the site many years ago when land costs were much lower,” Bernstein told Postmedia.
Despite the potential for higher returns, financial risks remain. Jim Szabo, vice-chairman of CBRE Canada, acknowledged the benefits of increased density but pointed out the economic hurdles. “It was great to see the city removing view cones resulting in a meaningful increase in density,” Szabo told Postmedia.
However, he cautioned that escalating costs could deter developers.
“The equity required and the risk profile more than doubles,” he told Postmedia. “Very few developers can or are willing to play in this field, meaning very few of these high-density projects will get built.”
- ◦Development
- ◦Policy/Gov't