The changing landscape of Waterloo real estate - Design by Taylor Gayowsky

Housing crunch: Inside the struggle for Waterloo’s real estate

Words by HG Watson & Justin Fauteux
Design by Taylor Gayowsky

Walk down King Street as it stretches across Waterloo. From Uptown to past the universities, the horizon is dotted with apartment buildings, cranes and sites for future projects.

“From a developers point of view, five years ago there were a few people who were putting up new builds.” Benajmin Bach is a real estate agent at Cushman & Wakefield. For the last few years he has blogged about the changing Waterloo real estate scene at benjaminbach.com. “In the last few years — probably going back to 2009 — a lot more groups have been involved [in putting up new builds].”

The phrase “changing landscape” isn’t just a metaphor for the changing real estate scene in Waterloo. The landscape is literally changing. The town is getting taller and small landlords are beginning to feel the push. In digging down into real estate, The Cord found that the forces at play are hungry for the growing class of renters that don’t seem to stop coming — students — and lacking the only thing they need to accommodate them: land.

In the 2011 update to the Student Accommodation Study (the City’s looksee into where students are living), the City of Waterloo estimated that student numbers would rise by 1,000 every year. This didn’t account for grad students (Wilfrid Laurier University Campus Master Plan predicts 4,000 more graduate students on campus by 2017). It also doesn’t mean 1,000 is a certainty. In 2010, University of Waterloo, WLU and the City of Waterloo predicted that 34,830 new students would arrive on campus. In actual fact, 38,985, did and of those students, 33,960 needed a place to sleep at night (For more facts and figures on the student housing boom, see pg. 2).

Jim Butler, vice president: finance and administration at WLU, estimates this year that the school was about 800 to 900 beds short for its freshman class. “We’re renting from the private sector,” he says, noting it was the only place where they could find the accommodation. It’s one of the factors that led to the school’s purchase of $59-million worth of real estate around the WLU campus. But the long-term goal is to turn the newly-acquired properties into university-zoned residences. “We’re losing money on [renting from the private sector],” added Butler.

Mike Milovick is another experienced Waterloo-based real estate agent. Over his 11-year career, he’s watched the market change dramatically. “All of a suddden we saw a big uptick in rent,” said Milovick. “Usually it was around $400 but it jumped about $65 to $75.” (For how much bang you get for your rental buck in Waterloo, click on to pg. 4). It’s not the only change.

Housing starts (the number of homes on which construction has started) fell in September all across Canada. Milovick thinks that in a few years, there will be zero in Waterloo. “Waterloo is out of employment and residential lands in the next three years.”

Smaller landlords now claim they are the ones feeling the brunt of this fight for land. Much of this anger has been directed at the rental housing licensing bylaw, which came into force this spring. “The city has made it so costly and onerous to be licensed, you have people willing to do it but now avoid doing so,” says Adam Hoffman, the owner of Hoffaco Property Management. Hoffman manages 83 properties, some of which fall under the new bylaw. “The impact on my portfolio has been an increased cost burden for the rental housing provider.”

He estimates that the rent increases on some of his properties is a difference of as little as $35 a month or as much as $200 a month, depending on how many upgrades had to be made to the property. To Hoffman, it’s clear who gets the advantage under the bylaw; the developers who are building high rises outside the grasp of the municipal legislation. “The smaller service provider is at disadvantage by having to provide additional fees the larger competitor doesn’t have to,” he said. “It’s like the City of Waterloo decided to pass legislation that benefits Starbucks at the expense of local coffeeshops.” (For some mythbusting of the rental housing licensing bylaw, turn to pg. 3).

Jeff Henry, city councillor for Ward 6, downplays any connection between the bylaw and large-scale residential development. “That’s a broader market forces matter that is entirely separate from rental housing,” he said, adding that he hadn’t seen any acceleration of the building trend. “That was happening from year to year and I would consider it to be separate from whether or not there is a bylaw.”

Yet, the City’s own statistics from the Student Accommodation Study seem to contradict Henry. In 2010 the amount of units under construction in Waterloo spiked at 1,474 — up from over 1,200 from the previous year. Meanwhile, the number of properties licensed as lodging houses — typically low rise buildings with shared facilities — has been steadily declining. In 2003 there were 139; in 2011 only 10 were. There are a number of factors that could account for this decline, one being a lack of property to even get licensed as a lodging house.

Yet the demand for housing continues unabated. “I believe [the vacancy rate] to be about 2.5 per cent in September,” says Milovick. The Canadian Housing and Mortgage and Housing Corporation says that a balanced market lies between three per cent and six per cent, which means Waterloo is teetering on the side of a shortage. New swanky residences like Luxe Waterloo are also creating demand for luxury apartments for student, which very well may price low-income families right out of the city (for our editors’ take on Waterloo’s urban future, see pg. 5).

This infograph illustrates the dramatically changing rental housing market in Waterloo over the past few years. All figures were taken from the 2011 update to the Student Accommodation Study.

Student rental housing infograph – Taylor Gayowsky

Mythbusters: Bylaw edition

Over the course of our reporting we found it was difficult to separate some of the facts from the urban legends about what exactly the controversial rental housing by-law entailed. We went to the best sources to sort out those pesky grey areas.

ONLY FOUR BEDROOMS ALLOWED

One of the most-widely reported aspects of the bylaw was that it would limit houses to four bedrooms. Which is true. But it also isn’t. “There are different classifications for houses,” Jeff Henry, City Councillor for Ward 6 tells us. A Class C license for lodging houses is specifically for five rooms or more, and properties already recognized as lodging houses have been grandfathered in to the program. As to whether you can get the classification depends on a whole host of other variables. “Zoning is the number one factor,” says Jim Barry, Director of By-Law Enforcement for the City of Waterloo, “and it requires higher building and fire codes.”

RENTS WILL GO UP BECAUSE OF INCREASED COSTS

We spoke to Gay Slinger, a staff lawyer at Waterloo Regional Community Legal Services, who assured us that a landlord cannot simply up and change the rent in the middle of a tenancy because of increased financial burden. “Any kind of increase to sitting tenancies has to comply with the Residential Tenancies Act.” That means it can only happen once a year, with 90 days notice and it has to be within the provincial guidelines. Right now the provincial government maxes out the rent increases at 2.5 per cent. That said, there’s nothing to stop a landlord from upping the rent in between tenancies to recover costs. It’s why the person living in your place before you could have paid $400 a month, while you’re paying $600.

THE CITY CAN SHUT DOWN THE LANDLORD’S BUSINESS

Section 13.6 of the bylaw states that if a landlord continues to carry on business without a license, the Court can shut them down. However, in this case the business is renting properties to tenants; and the only administrative body that can end a tenancy is the Landlord Tenant Board under the Residential Tenancies Act. As the bylaw only went into enforcement this spring, we still don’t know how this will play out, but it is definitely something to keep an eye on.

To market, to market

The CCE did a little apartment hunting to see how far your money actually gets you in the Waterloo rental market.

$613.47-$675
Luxe Waterloo
Who says living like a student means you can’t do it in style? Luxe Waterloo is part of a new wave of high-end student residences that come equipped with flat screen TVs, brand new appliances, granite counters and ensuite bathrooms. You still have to have roommates, but for $675 a month you only have to share with three other people as opposed to four or five. (luxewaterloo.com).
PROS: Has basically everything you ever need.
CONS: Might be difficult to leave your house and actually go to class. Plus that price point isn’t necessarily friendly to the budget-conscious person.

$530-$560
One bed in an apartment building
The mid-range gets you into an apartment unit that you’ll share. Several listed are nice, though not quite as high-end as Luxe. In some you’ll also be sharing a bathroom or other amenities with your new flatmates.
PROS: Easier to find availability in these due to the number built in the area for the student market.
CONS: For slightly more, you get the added perks that a high-end building has to offer, and for slightly less you save some money without giving up much.

$485-$495
A cozy bedroom in a house
In the $495 range, bedrooms in shared houses are the norm. On inwaterloo.com, the home of VIP Student Housing, one unit on Hickory St. included laundry, parking and internet — but you still have to pay your water bill, and have up to four other roommates.
PROS: Cheaper, for a start. Plus you get some of the amenities promised by the higher end facilities.
CONS: It’s a student house which can be a pro depending on how you look at it. Regardless, expect to be cleaning up a lot after parties and your roomies 2 a.m. munchies attack.

$400
Shared apartments further afield
There is a place where the rent is reasonable and — shocker — you could even afford an apartment all on your very own. Kitchener gets a bad rap, but venture out of the bubble and you’ll find a revitalized downtown that the hipsters haven’t quite yet discovered, which means rents are still on the reasonable side.
PROS: More bang for your buck
CONS: The distance will be frustrating for people who like going out in their PJs — but keep in mind, the area is well served by the GRT.

URBAN FUTURE
Two views on a brave new Waterloo

It’s no secret that the populations of Wilfrid Laurier University and the University of Waterloo have exploded over the past decade. And, as common sense dictates, there needs to be some place for all these students to live when they leave their on-campus residences.

The student demographic, is of course, just one segment of Waterloo’s population, yet it seems it’s been the one that’s affected the most change. The university area has undergone such a dramatic transformation that a graduate of 2008 would barely recognize the majority of the King Street and University Avenue area.

As condos and student-dedicated apartment buildings begin to dominate the area and in turn provide a new core and cityscape to Waterloo, we must take a step back and ask ourselves, “are we moving too fast?”

Yes, there is an imminent need to house the thousands upon thousands of students that call Waterloo home — even if it is for only eight months of the year. And despite whatever protest may exist, the time of single, detached, five-person houses is indeed over. But as the drive to “urbanize the student ghetto” moves forward, and luxury condos are built to draw a more diverse demographic to the area, this means one simple, yet very important thing.

The university section of Waterloo is going to be much more densely populated.

As obvious as that statement seems, it appears to be being overlooked as re-developments move forward and 12-storey apartment buildings are built on seemingly every corner. As great as it will be to be able to provide housing for such a large group of people, does the infrastructure exist to allow them to live comfortably?

Anyone that’s tried to take a bus or patronize a business along King Street during the height of the school year will tell you it doesn’t. This is why before we go ahead and build high-rise luxury condos and exponentially increase the possible number of people that can live in the area, we need to look at the kind of development going on.

Simply building places for people to live is not the proper way to re-develop a nieghbourhood. The current Uptown retail core is already overrun and as apartment buildings continue to creep up King Street, things will only get worse. This is why we need to see less simple apartment and condo developments and more mixed-use planning.

While it is indeed inevitable that most of Waterloo’s development will be moving skyward, the need for supportive infrastructure needs to become a far more prevalent part of the conversation.

The future is up.

Real estate is becoming a scarce commodity. It’s possible that no municipality has felt this as keenly as K-W. The population boom brought on by the successful tech industry and two universities means that people are scrambling for a place to live and developers are scrambling to build it for them. But with land not coming freely (or cheaply) there is no other place to go.

Except up.

When you talk about the high-rises beginning to dot the Waterloo skyline, it’s likely you’ll be met with anger or sadness. People don’t want places going to the students, or they lament the loss of cheaper housing.

In a recent Toronto Star column, urban theorist and Spacing editor Shawn Micallef wrote, “if we build the Annex, Little Italy or Riverdale again, Toronto will sprawl to Orillia.” It’s true of Toronto and it’s true of Waterloo. While houses are nice, the only way to meet the demands of a growing population is to build where real estate still exists — that means up.

Expanding upwards doesn’t have to be a bad thing. Micallef points out in his article that Paris is essentially a city of mid-rise condos. The same is true of New York and London. Apartments and condos aren’t a sign that culture is going to die. It’s a sign that new people who will build new cultures are moving in.

What makes Waterloo unique is that much of the high-rise boom is focused on students, who are by nature a transient population. The answer to this seems simple enough — rather than create apartments specifically for students, create multi-use condos that students and residents can use. With the amount of business and amenities in this area, it’s a natural fit for anyone moving into the city. Not to mention that people with full-time jobs are much more likely to be willing to pay the higher rents found in so-called luxury accommodations.

It wouldn’t hurt to have some more input on design either. After all, if the future is indeed up then we should at least have some well-designed things to look up to. It would be nice to see a developer take their cues from the “Marilyn” building in downtown Mississauga or classical brownstone apartment design.

Whatever happens, the skyline and the makeup of Waterloo is changing. We can either dig our heels in and fight change or we can work with it and, look up.