Business Edge: Redevelopment proves heritage site saver
Vancouver spurs projects with incentive program
By Monte Stewart – Business Edge
Published: 07/20/2006
Old is new again in Vancouver as developers try to preserve heritage buildings and deflate ballooning construction costs.
Heritage building redevelopment is on the rise, says Larry Beasley, the City of Vancouver’s director of planning. There are 28 heritage redevelopment projects, worth $300 million, either underway or in the planning stages downtown and in Chinatown.
Most projects are residential, he adds.
“We want to save heritage sites in downtown particularly – especially in the central business district,” says Beasley.
The city, which has had a heritage conservation program in place since 1983, is doing its part to spur demand by offering an incentive program – particularly in the heritage district along Hastings Street.
Incentives include density transfers, whereby a developer can transfer density from a heritage site to another location, property tax abatement, and $50,000 façade grants to restore building frontages.
Beasley says heritage redevelopment has increased lately because high land prices have spurred property owners to do something with heritage sites, and the density transfers have become accepted since they were introduced 10 to 15 years ago.
The incentives have also virtually eliminated fights between groups trying to save heritage buildings and city hall. Beasley says the city was in a quandary because it is legally required to buy heritage sites if owners oppose their redevelopment.
“In the past, we were losing heritage buildings left and right and there was nothing the municipality could do about it,” says Beasley.
Developers say it’s much cheaper to spruce up an old building than erect a new one. Demand is also high among homeowners.
“Nobody wants to live like their neighbour,” says Bob Rennie of Rennie Marketing Systems. “(A retro condo) is something different.”
Rennie, whose firm sold market condos in the Woodward’s department store mixed-use redevelopment on the Downtown East Side, says a heritage building’s appeal is all about character. Municipal policies, he adds, will be critical to maintaining developers’ interest in rejuvenating heritage buildings.
“You can’t take (heritage buildings) away, so as long as the bonus and structure is in place, it incentivizes the developer to do it,” says Rennie. “But with today’s construction costs, we’re going to see that market slowing down, too.”
However, the slowdown looks like it will arrive slowly – as long as there is adequate supply of properties to redevelop.
Ward McAllister, the Urban Development Institute’s national president, says the City of Vancouver’s heritage advisory panel is doing a fantastic job of providing an inventory of heritage buildings and encouraging developers to maintain and recycle them.
“All you have to do is drive through Yaletown and Gastown and wait to see what happens on the Downtown East Side,” says McAllister. “There is a huge amount of acquisitions going on down there right now and that whole area, all of those heritage buildings, will be re-claimed and re-formed and will be fantastic contributors to the overall community.”
He adds there is massive developer appeal because heritage-building redevelopers know the market and the costs involved.
But McAllister, also president and CEO of Vancouver-based Ledingham McAllister, a residential, industrial, office and commercial developer, says heritage building redevelopment is not for everyone. “It really is a very segregated market to a very specialized group,” he says.
Robert Fung of the Vancouver-based Salient Group and Rick Ilich of Richmond-based Townline Homes Inc., are two developers who are taking the specialization test.
They are both active in the Crosstown neighbourhood, located on the downward sloping north end of Beatty Street – which is within walking distance of Woodward’s, Gastown, Chinatown, the city’s entertainment district and the downtown waterfront.
“It’s kind of personality-driven,” says Fung about developers’ willingness to specialize in heritage buildings. “I really like these buildings and what they have the potential do in their neighbourhood.”
He says heritage building redevelopment has become a specialized field because large development companies tend not to get involved with older structures. With a heritage building, he says, construction costs are less predictable because unforeseen issues can emerge during construction, while a brand new building’s costs can be confirmed once a developer signs contracts with builders.
The planning and construction processes also take longer and developers have to be more “hands-on.”
As a result, many developers stop working with heritage buildings after one or two projects.
Heritage redevelopment is highly specialized because it is very different from conventional development, adds city planner Beasley.
Developers must deal with land uses, height restrictions and other factors that don’t apply to new buildings.
Fung says the City of Vancouver is the leading jurisdiction in Canada when it comes to providing incentives for redeveloping heritage buildings, and it’s very difficult to work in other municipalities – that’s why Salient works primarily in Vancouver.
In addition to the Bowman Block, Salient is redeveloping five buildings in three separate projects, including Terminus and Gaolers Mews along Water Street in Gastown; the Flack and Paris buildings on Hastings Street; and the Trapp building, which housed the former Army and Navy department store – and has been vacant for 31 years – at 668 Columbia Street in New Westminster.
The Trapp site, formerly owned by a family that Fung declined to identify, will contain approximately 75 condos and 10,000 sq. ft. of commercial space.
Other downtown heritage redevelopment projects include the Jameson House in the 800 block of West Hastings Street, which involves preserving the Ceperley Rounsfell building built in 1921; and retaining the façade of the 1929-era Chamber of Mines building. A new tower will also be built with 10 storeys of commercial space, including shops and a restaurant, and 25 storeys of apartments with underground parking.
One project just off downtown is the Shaughnessy Mansions redevelopment, at West 15th Avenue and Granville Street, which includes 36 luxury condos.
Fung says there are many heritage buildings that have the potential to be redeveloped, but several buildings have reached the point where they can’t be refurbished – either because of past criminal activity or the way they were built in the first place.
Several other family-owned properties have been stalled because their owners have not invested in their redevelopment, and Fung questions how long they can remain vacant before developers prefer to build brand-new buildings instead.
(Monte Stewart can be reached at monte@businessedge.ca)
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