Purpose-built rental may not save B.C. developers

Experts say purpose-built rental projects in B.C. face weak economics as average asking rents fell to $2,630 in January (down 9.2% year-over-year) and Vancouver's rental vacancy rate rose to 3.7% last October.

B.C. developers who shifted from condo projects to purpose-built rental are encountering tougher economics than expected. Industry sources point to falling rents, lower immigration, high developer fees and tougher financing conditions as the main pressures. Major projects such as Sen̓áḵw and a large rental pipeline in Metro Vancouver mean observers will be watching how new supply affects local submarkets. What is known: - Average asking rent for purpose-built and condo apartments in Vancouver was $2,630 in January, down 9.2% from $2,896 a year earlier (Rentals.ca and Urbanation Inc.). - Vancouver’s rental vacancy rate was 3.7% last October, up from 1.6% a year earlier (CMHC). - Developers report financing and execution risk are higher for many groups, with some projects relying on government programs or CMHC lending while larger firms can still access conventional financing. Summary: Purpose-built rental is experiencing a near-term adjustment in B.C. driven by weaker rent growth, shifting immigration trends and a rise in new supply. Undetermined at this time.