A softening real estate market could lead to a slowdown in the construction of rental units in Coquitlam, a city staff report warns.
During a committee meeting Monday, council heard there are currently 3,600 purpose-built and 550 non-market rental units in the approval process or under construction. But the majority of those units are attached to larger housing developments and could be delayed if real estate sales continue to slide, the report said.
“Nearly all new market rental units are proposed by applicants building large-scale highrise condo projects,” according to the document. “If the market for condominiums softens and developments are delayed, this will lead to a slowdown in the construction of rental units as the projects are typically constructed together.”
Two projects in the Burquitlam area have already been delayed.
In June, The Vancouver Sun reported that Ledingham McAllister would be postponing the launch of pre-sales for three highrise projects, including one in Coquitlam, which included 105 purpose-built and 15 below-market rental units. The report came a week after Townline confirmed it would also be temporarily holding off on launching pre-sales for its 38-storey Meridian project, which featured 54 purpose-built and nine below-market rentals.
“Given the recent evidence of a slowing housing market, staff is continuing to monitor the uptake of rental incentives,” the report said.
The document presented to council Monday, titled “Housing Affordability Strategy 2019 Initiatives and Emerging Issues,” also identified the difficulty in attracting developers of rentals to medium-density areas.
Jacint Simon, Coquitlam’s housing planner, told council that since the inception of Coquitlam's Housing Affordability Strategy, almost all rental units have been included on properties designated for high density.
“Our rental incentives for medium-density residential lands proved insufficient for the development industry,” he said Monday.
Only one standalone, purpose-built, medium-density rental building has been constructed since the launch of the Housing Affordability Strategy, a figure staff said the city would like to see increase.
But new incentives may be necessary, said Andrew Merrill, Coquitlam’s manager of community planning. He noted that it is easier for developers of large, high-density projects to take advantage of the city’s rental incentives because they have the ability to build higher. But medium-density wood-frame construction is limited to six storeys under current B.C. Building Codes, a standard that could be changed to as high as 12 storeys in the coming years.
Location is also important, Merrill said.
The city’s lone standalone rental building was constructed on Charland Avenue in the Austin Heights neighbourhood, a significant distance from rapid transit, where land values are considerably higher, he said.
“We recognize that land costs in a number of our core areas near SkyTrain can be prohibitive for both rental or wood frame projects,” Merrill said. “There is greater opportunity along the edge of the shoulders or along our major corridors.”