Kelowna’s rental apartment building boom has yet to boost vacancy rates - InfoNews

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Kelowna’s rental apartment building boom has yet to boost vacancy rates

PC Urban's 158-unit Lodges at Packing Junction is part of the rental apartment building boom in Kelowna.
October 30, 2019 - 5:17 PM

There have been about 1,400 new rental apartments built in Kelowna in the past two years, with even more to come.

But, given the fact that the vast majority of people moving to Kelowna are renters, there hasn’t yet been a noticeable impact on vacancy rates.

“A lot the growth we saw in the last census period, came out of rental housing,” James Moore, the city of Kelowna’s long range policy planning manager, told iNFOnews.ca.

He was referring to the fact that, during the 2011-16 census period, 73 per cent of new households in Kelowna were renters.

“I don’t know whether we’ll see that again in the next census period but, if what we’re seeing on the ground is any indication, it certainly suggests that rental housing is a major factor in the housing market right now and is right in line where we’re looking to push the community,” he said.

Putting an exact number on how many new rental units have been built is not a simple task.

There are apartment buildings that have been built strictly for rentals. Some developers even sign an agreement to keep them in the rental pool for 10 years in order to get tax breaks from the city.

Then there are the numerous supportive housing projects funded by B.C. Housing to provide accommodation for the homeless.

There is student housing at UBCO and Okanagan College, along with a huge and ever-changing pool of what is called secondary rentals – houses, basement suites and carriage houses.

The more than 1,500 student housing units on the UBCO campus are not counted in market rental statistics but more than 700 in Mission Group's U-District next door are included.
The more than 1,500 student housing units on the UBCO campus are not counted in market rental statistics but more than 700 in Mission Group's U-District next door are included.

The Canada Mortgage and Housing Corporation puts out an annual vacancy rate each November. In Kelowna, that climbed to 1.9 per cent in 2018 versus 0.2 per cent the year before. That survey only includes “purpose built” rental units. Those are buildings with more than three rental units – essentially apartment buildings.

Moore said in the spring of 2019 – the latest data available - there were 6,667 such units in the city. He also calculated about 1,400 new units have opened in the last two years – most, but not all, of which would be included in that total.

He estimated there are another 1,400 units “in-stream.” That means they’ve either been approved or are in the system waiting for approval but not yet occupied.

That does not include two recent applications. One is for 96 units for the former Art Knapp site on Springfield Road. Another is for a six-storey proposal on Harvey Avenue near Burtch Road.

The architect for that project would not say how many units are planned but these two could push the total in-stream to more than 1,600 units.

That includes the PC Urban Lodges at Packers Junction project at the corner of Clement Avenue and Richter Street that are currently under construction with 158 units.

But there is no guarantee that all the other in-stream units will be built or how long it might take for that to happen.

Shane Worman, for example, is the builder for the Art Knapp site. He said his company hasn’t yet decided on timing for the project.

Another 96 rental apartments are proposed for the former Art Knapp property on Springfield Road.
Another 96 rental apartments are proposed for the former Art Knapp property on Springfield Road.
Image Credit: Submitted/City of Kelowna

“Most likely, we will start at the front and work our way back,” he said. The apartments are at the back of the site behind retail and office buildings.

The boom in rental apartment construction doesn’t seem to have had much of an impact on the existing rental market yet.

LMP Management Ltd. manages almost 1,200 units for Stober Construction, including many under construction and in-stream at Central Green bordering Richter Street and Highway 97. In September, they had a vacancy rate of about one per cent.

Online rental agency PadMapper showed rents holding steady for one-bedroom apartments in September and dropping slightly for two-bedrooms. Still, rents are higher this year than last.

Some people in the industry believe when prices do start to fall, it will begin with older units.

That hasn’t yet proven true for Jabs Construction, one of the biggest builders of rental apartment buildings in the past and still maintains hundreds of units in buildings that are 30 to 40 years old. They have only three or four vacancies currently.

With the huge number of condominiums currently under construction and the growing tendency of people moving to Kelowna to be renters, there seems to be plenty of room for more rental apartments.

“If all things get realized and built, it represents a huge increase in the supply of purpose built rental, which we haven’t seen for a very long time,” Moore said.

There are 280 rental units in six buildings in the Mission Flats complex off KLO Road.
There are 280 rental units in six buildings in the Mission Flats complex off KLO Road.

To contact a reporter for this story, email Rob Munro or call 250-808-0143 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.

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