Vancouver’s modular housing not as inexpensive as it seems, argues real estate broker
Putting the low-density housing on a site zoned for a much higher building amounts to a lost opportunity — and that’s costing the city, says David Goodman.
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The principal of a Vancouver real estate brokerage firm is arguing that placing low-density temporary modular housing on a city-owned site at Main and Terminal is a poor use of city property, and the units will end up costing more than a conventional condominium building.
“Our concern is over the utilization of a very valuable, very prime resource, namely, a $30 to $35 million property,” said David Goodman of HQ Commercial and publisher of the Goodman Report, a newsletter detailing listings and trends in rental apartment building sales.
The city has built a 40-unit modular apartment building at Main and Terminal, a construction method that is faster and cheaper than conventional building methods.
The intention is to use the buildings to temporarily house people who are homeless or at risk of homelessness, using sites that are vacant as they await development.
The city disputes the way Goodman has calculated the cost of the program.
Goodman notes that a condo near the Main and Terminal site is selling for $1,000 per square foot. But he calculates that the modular units will cost the city $1,495 per square foot, when he factors in the “opportunity cost” to the city of underutilizing or not selling the land. The city will spend $3.5 million on construction costs, but that rises to $15 million, Goodman said, with the land cost.
“What could the city do with the land if it wasn’t putting trailers on it? They’ve taken an asset out of circulation,” he said, adding he supports the modular housing idea in principle but thinks this is the wrong location for it.
But because the city-owned site is currently sitting empty as it awaits development at some point in the future, only the construction costs of the modular housing should be counted, said Mukhtar Latif, chief housing officer for the City of Vancouver.
By that measure, Latif believes it’s a cost-effective and flexible solution to immediate housing needs.
“These homes provide a self-contained high quality home at a rent that is more affordable than market and is a better solution than alternative temporary housing options such as purchasing and refurbishing existing housing,” he wrote in an email to Metro.
The $85,000 cost of each 250-square foot unit is relatively cheap, Latif added, and the modules can be reused on other sites. Goodman calculated a similar cost per unit, at $87,500.
The density (5.0 FSR, or floor space ratio) currently allowed for the site means the city could put a 15-storey, 250-unit building on the site, Goodman argued. Alternatively, the city could sell the site to a private developer for $30 million and either require the developer to include social housing on the site, or take the money and build social housing elsewhere.
In contrast, the 40-unit, three-storey building the city has constructed on the site is just 1.65 FSR, and occupies only 35 per cent of the entire site, according to Goodman.