This article was originally published on RENX.ca.
With a federal election in full swing, and a new “tariff-gate” popping up seemingly every other week, focus on the Canadian housing crisis has unfortunately waned. Regardless, no matter where the Canadian economy ends up through the trade-war, housing will be an essential component of a strong economic strategy. Policy makers will earn great benefit from finding ways to incent building with Canadian inputs – “made in Canada” should apply to real estate also.
The vast majority of Canadian housing stock is built by the private sector. We have the expertise, talent and track record; we know how to build very well. Despite attention from policy makers across the country, many outdated processes and regulations at the municipal level continue to impede the private sector from reaching its full potential. Nevertheless, we are seeing progressive new approaches and initiatives in different jurisdictions that we can take inspiration and learn from (some of which was undoubtedly spurred on by the national Housing Accelerator Fund).
Here are notable new policies and action plans that started to take shape over the last two years and are having strong and positive impacts on the industry across the country.
Transit-Oriented Developments and Flexible Land Use and Zoning Policies
While transit-oriented development policies are not a new concept, especially for cities like Toronto and Montreal, Vancouver and Ottawa have both recently established new incentive programs for developers to encourage higher density multi-unit housing developments near transit stations.
Vancouver also rolled out historic zoning changes in residential neighbourhoods, that would allow townhouses, laneway houses and secondary suites to be built on residential properties previously zoned exclusively for single-family homes. This makes it much easier for developers to create new housing in established neighborhoods without the need for complex rezoning procedures. Another welcomed move from the City of Vancouver was the elimination of minimum parking requirements for all land uses.
In Atlantic Canada, new policies to encourage multi-unit housing development also have gained momentum in 2024. In Halifax for example, to increase housing in new residential buildings, the City removed unit-mix requirements such as percentage ground floor retail requirements, and eliminating on-site parking requirements. Yes, eliminating parking requirements is something I do love and makes a big difference for project’s feasibility.
In Toronto, the latest excitement has been about the City’s adoption of the Major Streets plan which would allow multi-unit residential housing built up to six-storeys across major transit-oriented streets across the city. The industry is eagerly waiting to see what happens with the current appeal. Think of how nice a consistent gentle density similar to we see across neighbourhoods and main streets in London, Paris and New York, would be for Toronto. It would be game changing for the city landscape of Canada’s largest city and would speed up the development of much needed missing middles rental housing across many different neighbourhoods.
From office conversions and modular construction
Converting office building into residential building is not an easy or cost-efficient endeavor to take on, yet it's often discussed as something we should be considering more, as our major cities are still struggling with high office vacancy rates on highly accessible transit notes. Calgary is the city we can and should take lessons from. Calgary a city that has been struggling with office vacancy for more than a decade, which was exacerbated by COVID, is now offering very straight forward financial incentive to developers who converted office space to residential. This office conversion incentive program was also done in concert with relaxed parking requirements, increased floor area rations and changes to zoning laws. Two conversions have been completed so far under this program, and about a dozen are in the pipeline. Something we will be watching closely.
In 2024, Calgary has also taken a progressive approach by incentivizing new and innovative housing models. The city’s Modular Housing Incentive Program provides financial support to developers who utilize modular construction methods, which allow for faster and more cost-effective building processes.
In Ontario, with innovative new models coming from within the private sector, modular housing construction systems will be a critical key to unlocking more mid-rise housing development faster, especially as we face ongoing construction labour and cost challenges. Modular building systems significantly reduce construction time by integrating design, manufacturing, and installation processes off-site. First National provided the construction financing for a 50-unit apartment building in Niagara Falls, Ontario, that was the first to use a new modular precast construction system by Stubbe’s - which resulted in the project being completed in less than a year from breaking ground, and six months ahead of schedule, and the developer now has a 123 unit apartment well underway using the same construction system.
We expect to see continued growth in the modular manufacturing space in the coming years. Modular housing offers a viable solution to Canada’s housing needs by drastically reducing construction timelines (development periods cut by 60%, or more!), and offering a more efficient and sustainable construction method with manufacturing occurring inside (out of the elements) in a more controlled environment.
Shifting to a “how can I help” mindset
Lastly, in Edmonton, where development approvals are notably fast, 1/5 of the time of it takes in Toronto as comparison, the City continues to try new things to push housing forward faster. They implemented an e-permitting system where developers can easily submit permits applications online, track progress and receive approvals. In the last two years, they also overhauled a long-time exclusionary zoning bylaw and replaced it with city-wide zoning by-law to allow up to 8-units on any residential property, including three-story apartment buildings, townhouses, rowhouses, or multiplexes. This zoning bylaw for residential lots, goes beyond what any other city in the country has done to date.
In a recent podcast conversation I had with Marlon Bray, Executive Vice President of Clarke Construction Management, he talks about a lot about these examples and sums it up well. In Edmonton the mentality is “How do I help you get to the end. Let’s get it built together, let’s work together and get it built to the end.”
With the current sentiment shift on Canadian patriotism and building a stronger economy, there is no better time than now to rethink and retool how we do things and how we can work better together to build more housing faster.
Let’s seize this moment of “made in Canada”, Canadian Patriotism, as an opportunity to break down our own internal barriers to housing development. We all need to work better together if we are serious about building more housing faster.
About Aaron Cameron
Aaron has been part of First National Financial since 2009, bringing almost two decades of experience working in commercial real estate in Canada. In his role as Vice President of Commercial Operations, he brings a deep understanding of the challenges and complexities of commercial lending, from inception to discharge, and oversees First National’s commercial mortgage division from sales and servicing to product development, investor relations and customer service. His experience across all asset classes, commercial deal types, products and precedents gives him a unique perspective. Aaron is also the co-creator and host of The Commercial Real Estate Podcast, offering a platform for industry leaders to share stories and commentary about the intersection of economics, politics and relationships in real estate.