Adam Cooper, Abstract Developments' Director of Community Planning & Development Services, discusses a wide variety of topics, including the status of the south Island's development industry, housing policy changes, and a market outlook. Citified.ca
Q&A with Abstract Developments' Adam Cooper on missing middle, building code changes and housing supply
Ten on the 10th
Published September 10, 2024
Citified's Ten on the 10th is a monthly question-and-answer segment connecting our readers with the insight and knowledge of Victoria's top real-estate and business professionals.
Ten on the Tenth is back after a summer break, and our September, 2024 segment features Adam Cooper, Director of Community Planning & Development at Abstract Developments. Adam also participated in a 2021 Ten on the 10th discussing housing delivery and affordability, which you can read here.
Asking the questions is Ross Marshall, Senior Vice President of the Victoria offices of commercial real-estate brokerage CBRE. As a leader in facilitating large-scale commercial real-estate transactions throughout the Capital Region – which include apartment complexes, industrial retail and office properties, and land/development opportunities – Ross and his team are at the forefront of market-leading real-estate transactions on Vancouver Island.
Would you like to be featured as part of a future Ten on the 10th Q&A? We'd like to hear from you.
With interest rates moving in the right direction, and let’s assume inflation also goes in the right direction, are you bullish, bearish, or where do you stand right now, as far as your willingness to pursue new projects?
Abstract is local to Victoria and we understand how special this place is. Our roots are here and our love of this place gives us optimism for Victoria and the CRD over the long run. We have placed our bets on one of the best communities and regions to live in the entire country. I find it can be easy to get caught up in negative self-talk about Canada, focusing on what could be better, like healthcare, transportation, support for homelessness and mental health issues. But at the end of the day and on balance, who is doing it better than Canada? And where would you most want to live in the vast lands we get to call home? For me, there is no clearer answer than on southern Vancouver Island. Perhaps growing up in Ontario gives me a deeper appreciation for how amazing it is to live on an island on the Pacific Ocean where you can explore the wilderness all day, see amazing concerts, and eat great food in a vibrant urban setting.
Having said that, it’s no secret that we are facing a locked-up market. Land and homes have not been transacting at the same pace and it is putting pressure on everyone in the industry. The declining interest rates are a very welcome short-term measure. Many Canadians are seeking relief and holding on to hope. I am optimistic that the recent inflation data will support additional rate reduction this fall, following another 0.25% drop on September 4th. My hope is that the Bank of Canada sends a strong signal to purchasers that the time to wait on the sidelines is over and that rate reductions will improve purchasing power and unlock the stalemate we find ourselves in.
What are the downsides to building missing middle housing, compared to using that land for higher density?
That is an interesting question. When the City of Victoria took the lead in launching the Missing Middle Housing Initiative (MMHI), many residents argued that the density was not appropriate (too high) for neighbourhoods. That said, the most obvious downside is that Victoria has limited land base to accommodate growth and it’s likely that in another 30 to 40 years, we will be re-evaluating what neighbourhoods should be all over again (maybe sooner!) and probably kicking ourselves for not thinking longer-term and allowing for even more density than what is permitted under MMHI or the Provincial Small-Scale Multi-Unit Housing (SSMUH) scheme.
That position of opposing density is interesting to me because there are clear examples of higher density housing in neighbourhoods that go mostly unnoticed and were probably not contested when built - but if were proposed today would be seen as completely unacceptable. Think of the towers along Beach Drive by the Oak Bay Beach Hotel or the three and four-storey apartment buildings along Beach Drive by Glen Lyon Norfolk or on Esplanade directly across from Willows Beach. To me, these are examples of significantly higher density housing than we see contemplated with missing middle housing, yet they blend into neighbourhoods and provide a better, more sustainable use of the land. Future iterations of land-use planning will certainly have to consider introducing more of these forms if we are to accommodate growth in a sustainable way.
How can we improve missing middle housing policies, to increase uptake by the development community?
In the spring of 2023 when Victoria launched its MMHI program I had the opportunity to present on it with Mayor Alto and Habitat for Humanity at a local builders conference. At that time, I made the following recommendations to improve the program, and many of these suggestions still hold true today:
- Eliminate as many processes as possible to deliver MMHI. For example, make it an as-of-right entitlement, which is exactly what the province did.
- Host a design competition to develop off-the-shelf plans that builders can use to eliminate the design process. This is actively being explored by the federal government and would be the equivalent of the “Vancouver special,” which was a common home design dating back several decades, that was cheap and easy for people to construct.
Reflecting on the program and having had so many changes happen to the planning framework in our province over the past year, the other more dramatic changes I would suggest would include:
- Allow for more neighbourhood servicing commercial space as-of-right. We need to have more walkable amenities in our communities. I shouldn’t have to get in the car to get my kids to daycare or pick up groceries. It’s interesting, because some of the most loved spaces in our communities are not permitted today. Think of places like Haultain Corners or the commercial nodes at Estevan and Cadboro Bay Road, Demitasse in Oak Bay or Township Coffee in Gordon Head. We have made it far too difficult to create these types of spaces.
- In partnership with the above idea, also consider completely eliminating parking requirements. In Victoria we benefit greatly from being a compact urban region, with excellent and expanding active transportation options. If we had more neighbourhood servicing retail and grocery spaces, it would also be more feasible to eliminate parking and use space for people rather than cars.
I’m not sure the general public is ready to accept more four-storey apartment buildings along the secondary corridors of our communities like Fairfield Road or Cedar Hill Road, but to me it seems like an inevitable evolution that we will continue to see higher density housing in places like this. The next iteration of missing middle is likely to include ideas like that.
What does the new BC Building Code accessibility requirement do to un-affordability? If all units are required to have accessibility measures, how does this impact the cost of housing?
The short answer to this question is that the new accessibility requirements fly in the face of affordability. While the intent is admirable, the implementation needs to be more nuanced. The challenge is that builders and developers sell homes on a price per square foot and as the size increases, so too does the cost.
By requiring units to be larger to accommodate turning radii for mobility devices, we are adding space to homes which has the direct impact of making them more costly. I would like to see the Province reconsider this change and look for ways to scale the requirements to be a percentage of homes with a requirement for a variety of unit types and sizes to be included. We should align the requirement to match the percentage of the population that require these types of interventions.
Additionally, because purchasing or renting a brand new home is the most expensive type of housing, the province may be better served to reduce the requirements on new homes and focus their efforts on retro-fit programs to existing stock to help make it accessible. The challenge is that we are asking new homes to solve too many problems: be energy efficient, be carbon neutral, be affordable, be accessible and don’t be too tall or too dense or we won’t approve them. Sometimes perfect is the enemy of good and we need to focus on short term solutions with an eye to evolving our housing market in a way that is sustainable and delivers the homes we need now.
What are developers doing to mitigate these new costs, or are we likely looking at an increased cost of new housing given the code-related changes?
The good news is that developers are creative by nature! We have to be flexible and nimble to roll with the constant influx of policy changes and shifting market conditions. I am aware that our Urban Development Institute industry association is actively working with provincial stakeholders to find creative solutions to reduce the impact of these changes on new homes.
I have heard suggestions on making homes flexible to meet the needs of those living with disabilities. This would mean they are built as traditional units, but can be easily modified to meet accessibility requirements. I am confident that if we work together we can deliver more accessible homes without creating a significant cost burden for new home owners, but this requires the province to listen, and to take a nuanced approach, compared to the blunt implementation of the current guidelines. If we proceed with the status quo and the planned implementation, I do believe we will see increased costs passed on to new home buyers.
The province has permitted developers to build residential projects as tall as six storeys with only one staircase. We’ve heard that while this is laudable for a number of reasons, limiting the unit counts to four per floor make it a challenge to deliver. Can you speak to this change to the building code, and whether you think developers in Greater Victoria will be able to take advantage of single egress designs?
The introduction of the single egress stair building is hot off the press and truthfully I haven’t had the chance to fully absorb what it will mean for housing providers. That said, it is important and appreciated that the Province is looking for solutions to make it easier to deliver housing.
There is one scenario where I do think the single egress stair building can solve a common planning problem in markets like Victoria, where we are primarily building infill housing: the orphaning off of single family lots when assembling land.
The fact of the matter is, not all land-owners are sellers – which is completely understandable! Not everyone wants to leave the home they have lived in or raised their family in for many years. The challenge is our planning policies discourage leaving one-off single-family-homes in isolation next to a multi-family building, primarily because of livability concerns for the existing residents and because historically it was nearly impossible to realize the vision of an official community plan (OCP) on one single-family-lot.
In my own experience trying to assemble land, there have been many circumstances a land assembly is coming together, but one lot is a hold-out and doesn’t want to join. With the introduction of the single egress stair building, the province may have unlocked a solution to ensuring that even a stand alone lot can now be developed to its highest and best use as imagined in our OCPs and we can now avoid the dreaded “orphaned lot” scenario.
In light of the current market, can you speak to where you believe there to be opportunities, as a developer? Are there specific markets in the region, or specific product types with a bullish outlook over the next year or two?
Like I said in the beginning, all long-term bets on Victoria feel solid to me, but if we are to break it down into the next year or two, I think it’s a more complex answer. As a result of higher interest rates and construction costs, developers will need to seek markets that offer premium revenue as an offsetting measure.
While downtown Victoria was often the gold standard for revenue, the recent changes to the Airbnb rules combined with our public health crises have shifted the premium locations to neighbourhoods that are outside of the traditional core. Recent changes to policies that allow for higher density housing outside of the core also support this shift.
In my mind, locations like Vic West, the Oak Bay Village, and the neighbourhoods and villages in Saanich offer great opportunities to address what purchasers want: access to great amenities like parks, schools and beaches, proximity to commercial nodes and a sense of community without the challenges that are facing other locations in the region.
Due to a challenging market, we’re seeing some development and new housing starts slow in the region. Can you speak to this trend and what it is doing to housing supply and the economy?
The current market conditions are definitely challenging to builders and developers and the knock-on impacts are bad for the broader economy. If projects fail to move from building permit approval into construction, there will be an increase in unemployment as the construction and real-estate sectors experience surplus labour. While the current market conditions are favourable to purchasers, the real issue around housing supply won’t be felt for several years, as declining home starts turn into declining home completions. If interest rates fall as predicted over the coming 24 months, we will see purchasing power improve and demand for homes sales will rise. The problem is, that just as demand is increasing, supply will be decreasing and I anticipate we are going to see price escalation as a result of demand outpacing the supply.
From Abstract’s perspective, we feel there will be a strong market in the coming years and we are pushing ahead with starting construction today - despite the challenging conditions - in order to meet the demand for new homes that we believe is coming. It’s our long-term confidence in the Victoria market, our commitment to quality that we feel will position us well to supply the market with new homes once conditions change.
Abstract is bullish on the townhome segment. Can you speak to why this form of development is so important in Victoria?
Historically, Victoria and the surrounding region’s built form could be characterized as “tall and sprawl,” meaning we have had lots of tall buildings and higher density in our downtown core surrounded primarily by single family homes. For a variety of reasons, this model is no longer viable, because of the lack of developable land due to our relatively small size, our local geography (mountains, oceans and rivers) and policies that protect important ecological and agricultural lands means we must in-fill and redevelop existing areas to accommodate our growth.
Townhomes and house-plexes can fill the space between the tall and sprawl built forms, offering purchasers the benefits of living in an established neighbourhood, while utilizing our scarce land resources in a more sustainable way. Townhomes are seen as an acceptable compromise by much of the public as they relate in scale to single-family homes more than mid-rise buildings, and in this way, they also balance the impacts of change on existing neighbourhoods and their residents.
From Abstract’s perspective, the changing policies which allow for townhomes in neighbourhoods creates an opportunity for us to bring our reputation for quality to this emerging market and to that end we are actively introducing a new campaign coined the “Abstract Townhome Collection” to celebrate the roll-out of several new townhome projects we are actively building across the CRD.
Abstract is celebrating 25 years in business this year. What would you say is your key to success?
While I have only been a small part of Abstract for the past eight years, there are a few things that permeate our culture that have led to our success in the Capital Region. First, our relentless pursuit of quality. The people at Abstract are focused on providing high quality homes in Victoria’s best neighbourhoods and they take pride in their work. We put significant effort into thinking about how people will live in the spaces we design, and we never cut corners. We obsess over details to add special touches that set us apart from the competition.
The second is that we are local! We understand what matters to Victoria residents because we live here too. We’re starting our families and putting down roots, we’re your neighbours and it’s important to us that when we drive by our past projects we feel proud of them. Lastly, I would say that we’re never complacent. Abstract has never been afraid to challenge the status quo, and in fact, we’ve been the pioneers of change for many parts of the region. I truly hope that our relentless optimism for Victoria and our stubbornness to persevere will power us along for the next 25 years, too. C
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