Land values continue to soar as Lower Mainland densifies

Barbara Yaffe: Land values continue to soar as Lower Mainland densifies

The value of land transactions targeted for high-density residential development soared in the first half of 2015 as Lower Mainland municipalities continued encouraging more-concentrated urban neighbourhoods.

Photograph by: Mark Van Manen , Vancouver Sun files

The value of land transactions targeted for high-density residential development soared in the first half of 2015 as Lower Mainland municipalities continued encouraging more-concentrated urban neighbourhoods.

Scott Curtis, manager of market intelligence for Colliers International, explained the intense activity reflects a desire by municipalities and developers in Metro Vancouver to “focus on highest and best use” — in other words, greater housing density in response to population growth, demand for affordable housing, and a limited housing stock.

According to Colliers’ recently released Metro Vancouver LandShare report, land sales worth $845 million were recorded in the first six months of this year — that is up 63 per cent from $519 million during the same period a year ago.

The number of transactions was the same in both years, but ever-higher land prices and intense competition propelled the valuation jump.

Multi-family development and land assemblies have become the new normal, particularly along arterial roads and near transit nodes.


Almost no one is building single-family homes — except, of course, on individual lots to replace older, demolished structures.

“With land values continuing to climb alongside construction costs, the cost to build a single-family home is quite high and (it is difficult to find economies of) scale,” says Curtis.

Which explains why a finite supply of detached homes in the region has grown so pricey, attracting bidding wars for the properties that do go on the block.

Of 200 land transactions recorded by Colliers in the first half of 2015, 26 per cent already were zoned for high-density development such as condominium or rental building construction.

The rest of the land eventually may be rezoned to allow for such development, or reserved for slightly lower-density multi-family development, such as row housing or townhouses. Vancouver is believed to have a shortage of this type of accommodation.

Curtis says, for the most part, it is locally based developers doing the buying. “That being said, international developers are setting up shop in Vancouver and participating in several large development across the region (which has) increased competition in the market.”

The Colliers report notes that municipalities, particularly Vancouver, Burnaby and Coquitlam, have been nurturing developments that promote “a live-play-work environment”.

It cites Oakridge Mall, Coquitlam Centre Mall and Brentwood Mall as areas where such combined residential, office and retail developments are being encouraged.

The Cambie Corridor, meanwhile, is preparing for development of “diverse housing options, such as townhomes and row homes.”

In the downtown core, the old Canada Post site is expected to accommodate market condominium and rental housing, in addition to office and retail space. And the Quality Inn on Howe St., now being used to house the homeless, is slated to be replaced by a 40-storey residential building.

Colliers points to a “newly gentrified area of East Vancouver” along the Kingsway Corridor north of 12th Ave. where rental and high-density residential condominium projects are planned.

The report points to Burnaby as “one of the most sought-after markets for investment,” with future growth expected in the Woodlands neighbourhood and the Lougheed Town Centre vicinity.

And a lot more density is coming to Surrey, where projections are that, by 2040, the 20-dwelling-per-acre standard in the municipality’s downtown core is to increase to 100 dwellings per acre.

Construction of more multi-family housing has become a necessity in this fast-growing region. Metro Vancouver’s population grew 9.3 per cent between 2006 and 2011.

While density has its challenges in terms of congestion, parking and noise, it is worth noting that the region is a virtual nature preserve by international standards. As of 2011, Metro Vancouver’s population per square kilometre totalled 802.

By contrast, Paris’ population per square kilometre is nearly 3,550 people, while the per-square-kilometre density in New Delhi is 11,300 people, and in Manila, 43,000. Nothing like a bit of comparative data to put our challenges into proper perspective.

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