Langley development will not have three-bedroom units, blames market demand

The developer of a six-storey rental building in Langley City is asking to kibosh its three-bedroom units, and the company blames the change on low demand due to expensive rents.

The building proposal had already been approved by council back in December, with 113 apartment units. The vast majority of the units were one- or two-bedrooms, but five were studio apartments and five were three-bedroom units.

But, now the developer wants council to let them nix the five large apartments, instead converting them into more one-bedroom units.

The reason: no one will want to rent them because they are too expensive.

Earlier this year, Tannin Developments began construction on the Hudson, a 113-unit apartment building on the corner of Michaud Crescent and 200th Street in Langley City. The spot had previously been occupied by seven BC Box-style houses.

But in June, the developer returned to council to ask for permission to remove the three-bedroom units from its plan, and replace them with one-bedroom apartments instead.

(The city needed to approve the change because the additional units pushed it over the density limit for land’s current zoning.)

“There’s not a lot of demand, people can’t afford it,” Carly Leakey, the chief operations officer for Tannin’s Canadian operations, told Langley City council on June 18.

“People are trying to squish into the smallest units available,” she said. “Three-bedroom and flex is just way over the demand right now.”

Tannin currently runs three rental buildings in the area, and has built seven developments in Langley City since 2007. But Leakey said the economics for larger units have been a problem.

Tannin is currently operating another apartment building near Carvolth Exchange, which is roughly 85% rented. But with three-bedroom units renting for between $3,240 to $3,890 a month, Leakey said, there have only been three applications for the building’s eight three-bedroom apartments.

The three-bedroom units in the company’s new Hudson development, which also included a flex room, would have been roughly 1,250 square feet in size, quite a bit larger than the three-bedroom units in Tannin’s Carvolth development.

Tannin hasn’t made the Hudson’s rental prices available yet, but it seems likely they will be even higher than the smaller three-bedroom units near Carvolth. And most earners in Langley City can’t pay $40,000 in rent each year.

The median income for Langley City households with two or more people was $90,000 after tax in 2020. To meet Canada’s affordable housing threshold, where a household spends less than a third of their income on housing, renters would likely need to make at least $159,000 a year to afford that three-bedroom unit.

Instead of housing families, Leakey suggested the three-bedroom units would likely see roommates living together, which she said would put more pressure on the building’s amenities, like parking, and on city infrastructure more generally.

“We feel like providing the one-bedroom units meets the increased housing needs, supportability needs, and reduces the pressure on the amenities that we’re providing,” Leakey said.

Of course, the big question is: why not just lower the rent?

Leakey said that in order to meet the affordability threshold, rents would need to be cut by about half, putting rent at roughly $2.30 per square foot. But Leakey said it cost more than $3 per square foot to construct the building.

“We’re empathetic to it, but as a society that’s what we’re seeing right now,” she said.

The building is not a designated affordable housing development, which are typically subsidized through BC Housing or other programs.

Leakey noted that the two-bedroom units would remain. She said those units, which are roughly 1,000 square feet and include a flex room, are larger than many other two-bedroom apartments, and meet the market demand for families.

Langley City staff noted that the municipality does not have any requirements for developers to include three-bedroom units in their buildings, but that the city’s housing needs report said there was a “significant need” for more rental units, especially family-sized units.

The report also indicates that Langley City needs more studio and one-bedroom apartments, making it “a tough situation,” director of development services Carl Johannsen said.

He did say that Langley City had some townhouse developments in the pipeline. Those would potentially add larger homes to the rental market. Other apartment proposals could also include three-bedroom units.

“I wouldn’t say it’s the end of the three-bedroom unit,” Johannsen said.

“It’s a conundrum,” he added. “How do we get families into ownership or suitable housing? How do we get singles and young households into a studio or one-bedroom?”

He noted the housing needs report is set to be updated in the next year, and will include a target for the number of new three-bedroom units in the city.

In Langley Township, politicians there voted to tackle the three-bedroom housing need in a different way. In late April, they voted to force developers to build more “family-friendly units.” New developments now need to make sure at least a quarter of the units have two-bedrooms or more, with a larger emphasis on three-bedroom apartments. The change would also ensure all units were at least 725 sq. ft.

(The Current interviewed UBC professor and housing expert Tom Davidoff about Langley Township’s family-friendly plan in early April.)

“The realities of demographics are changing, and more and more families are being raised in condos and we need to be providing space for them,” Township councillor Michael Pratt said at the time. “We’ve heard from industry and they have some concerns … but I think this is a step in the right direction.”

As Langley Township considered its three-bedroom rule, Annika Nunan from the Urban Development Institute warned that setting unit size requirements could force developers to build houses that are too large for families to afford—the same idea that prompted Tannin Developments to cut the three-bedroom units from the Hudson in Langley City.

The three-bedroom conundrum isn’t just present in Langley. In BC, the provincial government is looking to allow apartment buildings to have single-staircases—a design that builders and housing advocates say could reduce building costs and make three-bedroom layouts much more economical.

The problem also exists across Canada. Country-wide there are not enough three-bedroom rentals for those who might need them—and the rentals that exist are too expensive for most.

An analysis by CBC published in mid-June showed Canada as a whole only had 2,850 potentially vacant and affordable three-bedroom units. Metro Vancouver and Abbotsford-Mission were among a variety of Canadian cities that do not have any affordable three-bedroom units for rent.

The data also included an interactive chart to show what readers can afford in different communities based on their income.

Back in Langley City, council gave two readings to the proposal to remove the three-bedroom units from the Hudson development, with Couns. Mike Solyom and Leith White opposed. The change will go to a public hearing before being given final approval from council.