Why does Vancouver build so many high-rises?
Why does Vancouver build so many high-rises?
Approval is so difficult that there's massive economies of scale
Somebody on r/dataisbeautiful asked why Vancouver and Toronto build so many high-rises:
The main story I take from this is that Toronto & Vancouver have gone all-in on high rises in a way that the US has not. Do you have any ideas about the regulatory landscape, buyer demographics, or other factors that make this difference so stark?
There's a number of factors:
Land is limited by ocean and mountains. Alain Bertaud observes that if you stand in downtown Vancouver and draw a circle with radius 25 km (a reasonable commute), less than 40% of that area is buildable land. So land is expensive, and it makes sense to allow more height and density.
Back in the 1980s and 1990s, Vancouver deliberately planned to provide livable urban density in the downtown area. Larry Beasley tells the story in the book Vancouverism.
Condo vs. purpose-built rental. In Canada, it's much easier than in the US to build condo projects where the apartments are purchased by individuals, who can then either live in them or rent them out. Compared to purpose-built rental buildings which are owned by an institution, like a pension fund or REIT, the big advantage of condo projects is that they can be partly financed through deposits from individual investors.
Massive economies of scale. In Vancouver, the city regulates new housing like it's a nuclear power plant, with a bookshelf full of regulatory requirements and a ton of micromanagement amounting to co-design. Getting through this process is extremely labor-intensive, and therefore slow, expensive, and risky. If you need to follow the same process for a small project and for a large project, it makes much more sense to go as big as possible, to spread the cost over more apartments. Ginger Gosnell-Myers: "It's easier to elect a pope than to approve a small rental apartment building in the city of Vancouver." Also called the Grand Bargain.
In Toronto and in Vancouver, municipal governments also tax new housing like it's a gold mine, exactly as described by Manville and Monkkonen in Unwanted Housing. Only big developers, who do big projects, can navigate through this process. Mario Polese, comparing Toronto and Montreal (which has much lower taxes on new housing):
The less visible consequence of impact fees is on the resources, time, and effort required to negotiate and to complete housing projects. The range of charges, for everything from water to transit, can mean that the developer will often need to deal with different agencies — transit authorities, school boards, and others — negotiating fees piece by piece, in addition to negotiating planning regulations with city officials, a bureaucratic steeple run that can take years. Entry into Toronto’s housing market as a builder requires not only deep pockets but also patience, negotiating skills, and technical know-how beyond the means of smaller players. The successive hikes in impact fees in the 1960s, 1970s, and beyond killed off much of Toronto’s remaining class of small building contractors. The predictable result is a market dominated by large property developers.
The big disadvantage of high-rise projects is that they take a very long time to plan, approve, and build. So they're not very responsive to market conditions. Small apartment buildings (e.g. four or six storeys) are much more suited to an elastic housing supply that responds rapidly to rising or falling prices and rents.
Personally I think we need two things: (1) make small apartment buildings legal everywhere (Burnaby is allowing four storeys), and (2) where land is especially expensive and it makes sense to build a high-rise, allow it to be somewhat taller.
More
Edward Glaeser, How Skyscrapers Can Save the City. Atlantic Monthly, March 2011. “Building up is more costly, especially when elevators start getting involved. And erecting a skyscraper in New York City involves additional costs (site preparation, legal fees, a fancy architect) that can push the price even higher. But many of these are fixed costs that don’t increase with the height of the building. In fact, once you’ve reached the seventh floor or so, building up has its own economic logic, since those fixed costs can be spread over more apartments. Just as the cost of a big factory can be covered by a sufficiently large production run, the cost of site preparation and a hotshot architect can be covered by building up.”
Keaton Jenner and Peter Tulip, What is the Cost-efficient Height for Apartment Buildings? Reserve Bank of Australia, August 2020. “A striking feature of Figures 7 and 8 is how costly it is to supply medium-density housing. It costs about $894,000 per apartment to replace detached houses with a three-storey building in Sydney. Two-storey apartments would cost much more. This is considerably more costly than providing high density. The reason is that land costs represent a large component of overall costs for low-rise apartments.”
Oh the Urbanity!, The Urbanist Myth that Just Won’t Die, January 2024. On Jan Gehl’s assertion that buildings shouldn’t be taller than five storeys. They live in Montreal, which actually does have a lot of low-rise apartment buildings. “Who decided that being able to talk to someone from your balcony is goal number one?”
An example of opposition to high-rises: Taz Loomans, 7 Reasons Why High-Rises Kill Livability, September 2014. She cites arguments that high-rises separate people from the street, reducing chance encounters. Is this more important than housing?
My 4-storey 18-unit has had to go to volunteer for management. The management companies say they aren't taking on buildings with less than 100 units any more, and prefer over 300.
With 128 new high-rises, I really wonder who is going to manage them.
Quick add: I'm basically 5 stories above the street, and have interacted from my window once in ten years - a few words with a neighbour across the street at the same level. My building is surrounded by taller buildings, most of the street is high-rise, and it means the street is busy enough that you actually pass people on every trip, and often cross paths with a neighbour and a hello. You actually need that density (8-12 stories) to have fair odds on one such encounter every few days.