Latest Gastown households move in to homes that are intensely modern spaces behind a serenely Victorian facade

Michael Sasges
Sun

photographs, by Nic Lehoux, from the rear, or Blood Alley side, of the completed Terminus new-home project

Vancouver’s Gastown neighbourhood, interior and exterior

The Terminus hotel, for example, was built in 1889. The Stanley and New Fountain hotels across the alley were built in 1907

In our homes, by our comparative novelty culturally, the opportunity to juxtapose old and new, later century and earlier, one design period and another, is limited — the pairing, for example, of a mid-century modern Womb chair and ottoman with the restored bay window of a Victorian railway hotel framing an Edwardian warehouse.

That’s why it’s a pleasure to show you photographs from the recently completed Terminus new-home project on Water Street in Vancouver‘s Gastown neighbourhood.

The 46 Terminus households will reside in spaces ranging in size from 623 square feet to 1,624 square feet.

They are now moving in.

The developer is The Salient Group; the architect, Acton Ostry, and the interior designer, Evoke International Design Inc.

Acton Ostry commissioned most of the photography published here and inside, for inclusion in submissions to architectural competitions.

The firm’s assignment to Vancouver photographer Nic Lehoux, Mark Ostry says, was “Capture the sculptural character of complex spaces.”

The Terminus homes envelop their occupants in innovative, sustainable design, behind old-as-they-get Gastown facades. (The restored bay windows in the front-of-building homes were installed almost 110 years ago.) The homes are heated and cooled geo-thermally.

They are emphatically linear, their outside walls equally boundaries between households and canvases for tempering the linearity with European kitchens and bathrooms and artful millwork.

The adjacent Terminus and Grand hotels are lending their facades to the new Terminus building.

The former was destroyed by fire in 1998, with only its Water Street facade saved. The latter was neglected for years and had been largely demolished, the exception its Water Street facade.

The households moving into the Terminus received a memorable housewarming gift last week: a mention of their new homes in the Wall Street Journal newspaper.

CITY HALL’S HERITAGE INCENTIVES HELPED PUT NEW HOMES IN OLD BUILDING

The Terminus developer, Robert Fung of the Salient Group, is worried about the opportunity to do another Terminus.

‘With the City [of Vancouver] putting its heritage-incentive program under review, I’m concerned that projects like the Terminus may – repeat, may – not happen again.

‘The value to the buyer in these projects is unparalleled. Due to the heritage incentives assisting in the cost, the developer is able to sell the suites at less than what they cost to build. In this case, homebuyers truly get much more than they paid for.’

The heritage-preservation incentives that city hall now is reviewing were passed by previous councils ‘to facilitate the conservation and rehabilitation of heritage buildings’ in the Vancouver’s first neighbourhoods, Gastown, Chinatown, Victory Square and Hastings Street between Cambie Street and Heatley Avenue, a city hall report says.

THERE WERE THREE PARTS TO THE PROGRAM:

– Grants to the owners of heritage properties to improve their properties’ exteriors.

– Property-tax exemptions.

– Sellable density.

”A frequently used incentive is granting of bonus density in exchange for the rehabilitation and legal protection of a heritage building,” a city hall primer on this incentive says.

‘When it is not possible to use this bonus density by adding more development on the same site as the heritage building, council or the Development Permit Board may authorize it to be made available for transfer to another site where there is opportunity for additional development.

‘The sale of transferable heritage density generates funds for the owner of the heritage site; this helps defray rehabilitation costs.’

Salient sold out the Terminus in June, 2006, but some buyers have decided not to close. (No news there these days!)

A RECENT HISTORY

Blood Alley’s history is more recent than many of the structures that back on to it.

The Terminus hotel, for example, was built in 1889. The Stanley and New Fountain hotels across the alley were built in 1907.

Blood Alley, however, was created in the middle 1970s. In the words of one city hall document, the “significant public realm improvements” done then “included the brick and granite pavement and planters [and] lighting treatment.”

When built, the Stanley and the

New Fountain were separate hotels, but were combined, again in the 1970s, as housing for the destitute and impoverished.

The City of Vancouver now owns the combined buildings. The Portland Hotel Society manages them.

© Copyright (c) The Vancouver Sun

Sun

Last month, and on behalf of Vancouver Sun readers, the wizards at Landcor Data Corp. passed almost 466,000 Lower Mainland residential addresses through the company’s proprietary property-valuation software.

Then, the purpose of the exercise was to answer a question on the minds of many: are we well or poorly served by the B.C. government’s decision to ”cap” assessments at the lesser of two values, the July, 2008 value from BC Assessment or the July, 2007 value?

The conclusion? The value of Lower Mainland homes in January was more likely than not within five per cent of the value BC Assessment gave it in July, 2007, meaning the assessment freeze allows most B.C. homeowners to pay tax on property values that reflect the current market conditions.

This month, Landcor repeated the exercise, but with a different purpose: To generate “last seen” residential values to help identify just how much market values have deteriorated.

THE CONCLUSIONS:

[1] The majority of detached-residence values throughout the Lower Mainland are within three per cent, plus or minus, of May and June, 2007 values, averaging from $380,000 in Abbotsford to $1.135 million in West Vancouver.

[2] Apartment and townhouse values, not in all locations, but certainly in Abbotsford, Surrey, Delta, Port Moody, Maple Ridge and Pitt Meadows are very close to values seen in 2008, meaning their values have held better than detached values, likely due to the relative affordability of attached residency. Values range from $200,000 to $340,000.

The study had some surprises and unexpected trends.

“If you look specifically at Vancouver, both attached and detached values are most similar to July 07 and August 07 market values,” comments Rudy Nielsen, founder and president of Landcor. ”This is very much in line with what I expected to see, given the findings from last month’s article.

”However, segments like West Vancouver attached homes are reflecting values dating back to September, 2006, meaning a drastic correction is taking place in that market.

He goes on to explain that “what is telling from this information is that the majority of market values are holding better than most had expected. We are coming down from some unreasonably high market values, but the sky has not fallen the way a lot of people have predicted.”

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Sun

Walking the talk at the Anderson Walk new-home project, Chris Tsakumis reports Epta Properties is changing with the times, big and small. An Internet blog will chronicle construction to boost customer confidence. Smaller homes and back-to-basic finishes also created better-for-these-times prices. ‘Our expectations had to change on what we could sell the product for,’ he says. ‘Price point is what everything is coming down to and we decided to build what was practical.’ Photograph by: Glenn Baglo, Vancouver Sun

ANDERSON WALK

Project: 51 single-family homes (28 in first release)

Location: 14645 Winter Crescent, south Surrey

Size Range: 2,500 sq. ft. – 2,800 sq. ft.

Price Range: $590,000 -$640,000

Developer: Epta Properties

Interior Designer: TD Swansburg Design Studio

Exterior Designer: Tynan Design

Sales Release: April 5

Occupancy: Homes are built after they are sold

Web: andersonwalk.ca or www.eptaproperties.com

Telephone: 604-270-1890

– – –

The “reality check” of today’s retreating new-home prices and sales is forcing local developers and builders to seek innovative responses, ranging from offering buyer incentives to exiting the build-to-sell market.

On Tuesday, for example, and over breakfast, a rental-property broker will introduce members of the local development fraternity and their builders to a subject history suggests they would prefer not to examine.

”Ready for Rental” is the name of the seminar, organized by the Urban Development Institute. The presenter is David (”We’ve just sold our fourth building this year”) Goodman.

Local developers and builders, in this decade, mostly assemble property for eventual new-home additions to the property and, then, to sell a finished product, home by home and not building by building, and only rarely to assume a landlord function.

The blow to new-home-buyer confidence delivered by the international recession, however, is forcing a review of that business model.

Industry leaders like Ward McAllister (Ledingham McAllister) thinks buyer interest hasn’t so much as crashed as frozen up.

“It’s like everything’s been held in suspended animation,” he was quoted as saying. McAllister said he was at a recent gathering of Lower Mainland developers and posed the question how many were starting new condo projects for 2009? The answer was zero.

So how is the industry responding?

They are starting to think outside the box to deal with their properties and old stock.

More and more are considering building rental apartments or enquire with B.C. Housing into whether some of their sites can be used for future social housing projects.

Epta Properties is one such developer finding innovative ways to deal with the slowdown. A single-family housing project in south Surrey, called Anderson Walk, is being downsizing from larger, more expensive homes to smaller, more affordable ones.

As well Epta’s proposal to build a 17-storey luxury condo project on Johnson Road, in White Rock, is being scrapped. Instead, the developer is at city hall requesting a zoning change in order to build a seniors independent living complex.

“It (the seniors complex) just makes more sense,” says Epta vice-president Chris Tsakumis.

“Seniors are saying to us finally someone is coming to build something for us in the core.”

But the project that has already received the green light is Anderson Walk — where homes that would have been larger and selling in the $700,000 to $720,000 price range are now smaller with a starting price of $590,000. (Upgrades to granite countertops, hardwood floors instead of engineered laminate and closet organizers would, of course, increase the base price. Stainless steel appliances are included.)

“It is a reality check.,” says Tsakumis. “You have to be realistic on what you think you can sell. Our expectations had to change on what we could sell the product for. Price point is what everything is coming down to and we decided to build what was practical.

“Each developer is different. Some still have expectations beyond what they should expect. We’re realizing it’s better to build product that fits the market.”

That means the first release at Anderson Walk, in south Surrey, will be marketed towards one of the few buyers out there — the first-time buyer. And unlike the boom years when buyers were lined up outside the door and a developer couldn’t build fast enough the company is constructing the homes as they are sold.

This also works to the consumer’s favour as well, says Tsakumis, who notes: “In a slowing market this gives people the opportunity to sell their homes first.”

In total 51 three-storey homes will be built at Anderson Walk but in the first phase only 28 are being released, with sales starting April 5. The second phase homes will be larger, around 3, 800 sq. ft., and will be directly adjacent to Anderson Creek, which runs parallel to the project, located just off Highway 99 on the west side.

Tsakumis feels, despite the economic downturn, the west side of Highway 99 will fare better than new builds happening elsewhere in south Surrey, such as the newly created neighbourhood of Morgan Creek.

“The west side is more established and older whereas the newer area is not so well-entrenched. Eventually it will do well but there is so much development there it’s created some confusion,” he says.

The only other project nearby Anderson Walk is Parklane’s South Porte, but with a bigger product on the market at a higher price he doesn’t see that as competition for Epta Properties.

The first 28 buyers at Anderson Walk will also get some incentives the company was able to negotiate with Best Buy and Shaw. All will receive $3,500 in home electronics free as well as the set-up and three months free Shaw TV, HGTV and high speed internet with no obligations should they choose not to continue the service after the three months.

As well, all of the first homebuyers will receive a free design consultation with with Teresa Ryback, of TD Swansburg Design Studio.

Another new approach Epta Properties is trying with Anderson Walk is creating a regular video blog on the website showing the progression of construction. It’s all about being as “transparent and open” as possible so consumers can feel confident with the product they are getting, says Tsakumis.

© Copyright (c) The Vancouver Sun

The Sun hears from a panel of experts who share their predictions about the Lower Mainland’s property market in the months ahead

Sun

As long as we keep getting immigrants into Canada, and the wealth keeps coming in, and the talent keeps coming in — this is heaven on earth — they will pay anything for it. Patsy Hui

My sense is [prices] haven’t stabilized yet.

They have further to fall. You need to get change in sales before you get change in prices. Sales always lead prices.

Tsur Somerville

Most people in the homebuilding industry here do consider that housing is too expensive in Greater Vancouver.

And one of the benefits, perhaps, of this correction is that prices are coming down. Michael Audain

Q: On prices, do you think they will stabilize any time soon, have you seen any signs of that?

Michael Audain: I think the first thing to deal with is volume. The volume of sales was as low as I can remember it in about 27 years for October, November, December and January. The market was almost frozen. But we’ve noted in [the past month] the volume does seem to be picking up.

I think the price stabilization comes later. You have to have volume for a while, and to get volume people need to get their prices down to a level that the consumer thinks that they’re a bit of a bargain. There is a lack of confidence in the market and a belief that prices will continue to fall.

But I’m fairly confident — based on other market corrections I’ve lived through and traded through in the Greater Vancouver area — that by the third-quarter we’ll see price stabilization, if not price increases.

Patsy Hui: I don’t think anybody in this world — and I’m talking about the world this time because it’s a worldwide thing — can really tell you what’s going to happen and when it’s going to stabilize. I’d like to tell buyers that it’s already doing so, but I honestly always tell my clients to purchase. There’s only two criteria: First, that you can afford the payments for the next five years; and also that you love the place.

Just trade up, trade down, but stay in the market — 25 years later it’s your retirement income. We actually encourage this as a great time to buy. Interest rates this morning, I have a client telling me he got 2.4 per cent. Why wouldn’t you buy?

Tsur Somerville: My sense is they haven’t stabilized yet. They have further to fall. You need to get change in sales before you get change in prices. Sales always lead prices.

We saw in this market that sales started dropping before prices started dropping, and [a recovery] is going to, in a way, work the same process. The early indications suggest the decline has slowed dramatically and sales are much closer to having sort of bottomed out, but that’s not the same as turning around.

MA: Another indication of a direction of the public interest is that our sales offices have been very busy over the last two or three weeks.

I have no difficulty in advising close friends and family to buy a home now, with interest rates down at levels that I would never have thought believable and with the price corrections that have already happened in the market. So I strongly believe that if someone is to buy a home, in five years from now it’s going to look like a very smart decision. If they’re not prepared to live in that condo or single-family home for five years, then they should not be buying. That’s what I tell them.

…….

Q: Are people easily getting pre-approved for mortgages? That is one of the concerns being raised about whether, in fact, credit is moving, banks are lending.

PH: The only hiccup is [in] commercial [real estate]. For commercial, [banks] are starting to really, really make it very difficult.

MA: We’re finding that people who have employment have no trouble getting mortgages from banks and credit unions. We’re very fortunate in Vancouver, because I don’t think that is the case in the United States.

TS: When you’re looking on the investment side, from what I hear and what I’ve been told, the banks are much stricter on providing funds for people who are not going to be owner-occupiers. So there’s a piece that was an important piece of driving the market in the [past]. [Investment property] is a market where the financing is really hard to get. The investment side is completely dried up.

……..

Q: To see higher volumes of sales this spring, what do you see as the key factor that will bring buyers back?

MA: I think you can only freeze the market, as I mentioned before, for so long. And then there is a need for people to secure accommodation. And also, lets face it, people who have participated in the market over time have done very well. They have found, undoubtedly, their home has been their best investment.

Q: So you’re only losing if you look back at nine months ago when you didn’t sell your house?

TS: People do that. We did some research on what people’s reference point was for deciding on losses, and the reference point doesn’t necessarily turn out to be the price they purchased, but what was the maximum they could have made, which at some level doesn’t make any sense at all. But there’s that psychology out there, and I think it shows up particularly when you get these turning points.

MA: People like me who have been around for quite a long time in Greater Vancouver have experienced incredible appreciation. So I can tell people that I own a house in West Vancouver that has appreciated 17-fold since I originally bought it. So if I’ve had that experience, no wonder I’m going to advise a lot of young people to get into a home ownership position.

Q: What’s the likelihood of that kind of market growth being repeated?

MA: Oh, I believe in the future of British Columbia and most particularly Vancouver, very much so. That’s why in recent years our market has appreciated as much, because we have attracted a lot of people to our shores. That has driven the price of housing to quite high levels.

The other thing that has occurred is that many people have bought residences in Vancouver just like we would buy summer cottages.

Q: Since you mention that the investment market is struggling most, what does that mean for prices?

TS: The investment piece is still very small in the overall market. It’s highly concentrated in certain product types — downtown condos, certain suburban high-rise buildings. Overall, it’s not a big story. Going forward, we don’t really understand what is going to happen to those properties.

People will buy and sell them depending on what city is attractive or not attractive, or what city they want to be in. I don’t think we really know what’s going to happen to those condos over time.

A lot of local investors bought condos, and some of those people are going to be squeezed, and we don’t know what’s going to happen with them. You’ve got people with pre-sales that are under water. In segments of the market, there are still a lot of questions.

MA: There are different types of investors. There are people who you might call investors, but who only occupy the home part of the year. It’s not their principal residence. There are other people who buy condominiums to rent on a long-term basis, which is wonderful because it’s creating rental housing. And then there are those who buy to flip the property. I think those are more the “froth”, so to speak. They will get hurt in a market correction.

Q: Patsy, what do you see on the ground in terms of buying for occupation or investment?

PH: I’ve never dealt with flippers. I always advise my clients: Own your own home.

Everybody witnessed how Vancouver has changed. I came in 1970, and [it has] changed, believe me, and it will yet again. Because I think we were born in 1986 after Expo ended. We are like a toddler right now. And I think by this time next year, the world will really get to know us after 2010.

To make a long story short, basically, this is a baby as far as an international city is concerned. It sounds totally unaffordable for Canadian people, which was the same thing when I first went into the market.

I was a new immigrant in 1973. I’d only been here for 21/2 years. I ended up with my own 8,000-square-foot lot, six-year-old home, two-piece ensuite, gleaming hardwood floors. That’s [the] immigrants’ dream. As long as we keep getting immigrants into Canada, and the wealth keeps coming in, and the talent keeps coming in . . . this is heaven on earth. They will pay anything for it.

……..

Q: Tsur, what’s the expectations around the Olympics?

TS: I think anything that’s good about the Olympics, in terms of the economy, has happened already. I think what the Olympics has brought us is a certain kind of infrastructure that we might not have gotten already — the convention centre, a gateway project, the RAV line. That’s where long-term benefits are going to be.

I think what Patsy’s talking about about immigrants is really important in that part of what gives Vancouver, in the long run, a certain amount of strength is that Canada’s an attractive destination to come to . . . there are a limited number of places that people are going to go. We’ve got this basic growth. Even if we have a downturn, there is a base to help us grow out of it more quickly than might be the case otherwise.

MA: I think one of the interesting things about this market correction is that there has been relatively little overbuilding compared to other corrections I remember — such as what occurred in the early 1980s and the late 1990s.

This time, the banks have insisted on pre-sales, and as a consequence, right now we have a very low inventory of completed, unsold condominiums. Of course, people are now stopping building. Housing starts are down about 50 per cent from a year ago, and I think quite a few of my colleagues will take a bit of a holiday from building until the market strengthens again.

……….

Q: Is there anything governments, the provincial government in particular, can do vis a vis making housing a little more affordable?

MA: Yes, the provincial government needs to help first-time buyers. We find even a couple with full-time jobs, in many cases, haven’t been able to save for a down payment. So I think there’s a role for the government. We [once] had a home-purchase grant for first-time buyers — it was an incentive to help them get into their first home. I think that’s a role, and I would recommend that really as a way right now to increase employment in the province. You are going to be surprised at how low housing starts are going to be in the next few months. There’s no quicker way of firing up an economy than getting the housing sector going, much quicker than getting public works going.

PH: It’s not just homeowners we’re dealing with. We should be really looking into helping people, local people, invest right back [into rental properties].

Think again, what tax incentive is there to the homeowner to provide more affordable rental places so young people can actually save more money?

TS: I think the easiest thing to do on affordability is get rid of the property transfer tax for first-time buyers. Your cost of capital for that particular piece is really high. And getting rid of it for first-time buyers would not be a major hit on the provincial treasury. But that’s a short-term, one-time fix. How do we move forward? Doing things to streamline the regulatory process to make it easier to do certain types of development are going to have long-run effects, but that’s not a quick solution. Accelerate that process, remove the uncertainty. The clearer it’s going to be for developers, the less of their own equity they’re going to have to put up to go through that process, the quicker that process happens. It doesn’t mean you get rid of regulations, but streamlining that process is something that will have a long-term benefit.

On the other hand, we have poor renters who are in really difficult straits when you think of their ability to live reasonably close to work and have a reasonable percentage of their income going to housing. Given the land prices we have in this city, probably a more aggressive social housing policy is really going to be important.

If you look at other really land-constrained environments, such as Hong Kong and Singapore, they have very aggressive social housing programs. It’s not clear to me that the number of people who are truly priced out of the market — as opposed to being delayed for two years, or instead of owning a condo in downtown Vancouver end up in Burnaby — that doesn’t strike me as the acute issue.

MA: I’d just like to point out that most people in the homebuilding industry here do consider that housing is too expensive in Greater Vancouver. And one of the benefits, perhaps, of this correction is that prices are coming down. Also, the costs of new construction will come down. Construction costs are coming down, our finance costs — the interest we pay the banks is coming down — and also land prices will eventually come down a bit.

But one thing isn’t coming down, and that is the imposts we pay to municipalities. For instance, in Richmond we’re building wood-frame apartments for young people, first-time buyers. We’re paying over $28,000 per unit to the City of Richmond. In south Surrey, we’re paying over $25,000 per unit to the city for development-cost charges, again for homes we’re trying to sell to first-time buyers.

This is really counter to the whole idea of making housing more affordable.

© Copyright (c) The Vancouver Sun

Continuing trend may cost city $12m: councillor

Catherine Rolfsen and Derrick Penner
Sun

Cancelled Ritz-Carlton downtown project is another casualty of the economic slump. Photograph by: Steve Bosch, Vancouver Sun

The value of building permits issued by the City of Vancouver last month was less than half that of the January prior, and that represents an ongoing trend that could cost the city $12 million in yearly revenue, according to Coun. Raymond Louie.

A monthly update from city building official William Johnston, issued earlier this month, shows that in January of this year there was construction permit revenue from 34 new units in the city, compared to 78 in January 2008.

“The value of building permits issued in January 2009 was approximately 29 per cent lower than the previous month and 54 per cent lower than the value for January 2008,” reads a statement from Johnston accompanying the statistics.

Coun. Geoff Meggs called the news “grim,” pointing out that January was the second consecutive month with significant building permit declines. “It’s really slumped. And the slump continues,” he said.

Louie said the city typically makes about $24 million from building permit fees every year, but is anticipating a “significant drop” in that revenue. “If that holds for the entire year, and it’s a 54-per-cent drop in comparison to 2008, then that represents about a $12-million drop in permit fee revenue to the city,” he said.

Louie said he hopes the losses won’t mean higher property taxes, but can instead be covered by cost-saving measures being considered by city manager Penny Ballem. Those include a review of current city expenditures and hiring and pay freezes.

The problem is not isolated to Vancouver. Other municipalities around the region have been bracing for the prospect of builders scaling back their activities and paying fewer fees for development and building permits.

The City of Surrey has budgeted to receive $13.5 million in fees this year from its building department, down substantially from the estimated $16 million it took in last year, Vivienne Wilke, the city’s general manager of finance and technology, said in an interview.

However, Jean Lamontagne, Surrey‘s general manager of planning, said permit activity in January was only about one quarter of the level experienced in January 2008. In February, Lamontagne said activity to date has been about 40 per cent of the level it saw in the same month a year ago. “For us, we could see some trends start last year,” Lamontagne said. “We anticipate industrial, commercial and institutional [permit] activity to be about the same as last year, but residential will be down, we’re targeting about half the value of last year.”

Richmond also prepared for a drop of about $900,000 in revenue from its building department, city spokesman Ted Townsend said, budgeting for about $2.8 million in revenue from about $3.6 million a year ago. “So we’ve adopted a fairly frugal budget, really tightening spending in order to minimize the overall impact on people,” Townsend said, adding he did not readily have a figure on building activity in the municipality.

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