Land Values: What are all the empty pockets of land in Vancouver waiting for?

Vacant spaces aren't just a local phenomenon—city dwellers are equally perplexed by empty lots in other cities.

Credit: iStock

Vacant spaces aren’t just a local phenomenon—city dwellers are equally perplexed by empty lots in other cities

In a city like Vancouver, touted with nauseating frequency as a Number One Place to Visit, Live, Invest, you’d think that every inch of space would be spoken for and maximized.

It can feel like this must be true, as every new building project works its way through an agonizing steeplechase to get approved—as if every metre of height and every protruding corner will be the last straw for this so-so-so crowded city.

However, as anyone who has lived here longer than a month knows, that’s not really the case. There are squares, rectangles, slices, whole blocks of mystifyingly empty land throughout our supposedly high-priced, packed-to-the-gills metropolis.

And nowhere is it more noticeable than when that vacant space is located along a prime neighbourhood shopping cluster—a stretch of street that needs lots of life and activity in order to thrive.

Among these spots: the emptied-out Safeway site on West 10th, the closure of which severely damaged that small but important commercial strip; the almost decade-old half block next to the London Drugs on East Hastings; another half-block at West 7th and Granville that remains solidly vacant (a “community garden” on one half, the papered over windows of the former Zonda Nellis store on the other) five years after the company that owns the properties got a development permit to build; the perpetually vacant lot on high-rent Robson Street near Broughton; a couple of blocks on Dunbar; and multiple sites all along Main Street.

Each of these blank storefronts or cleared lots has an outsized impact on business along the shopping streets around it, and on life in the neighbourhood in general.

“It is devastating for the area,” says Patricia Barnes, the executive director of the East Village Business Improvement Association, which has faced a decade of dealing with that empty half-block owned by London Drugs, which sits in the heart of the business community. “It creates an empty space. People kind of stop, and don’t continue on.” (Recent news suggests that some kind of development is finally about to start here.)

It’s not just a Vancouver phenomenon, of course. When I asked my Twitter followers to tell me about the most puzzling piece of empty land in their neighbourhood, I received responses from a long list of cities, including Toronto, Winnipeg, Calgary and Victoria, among many others.

It’s a big enough problem in some places that politicians have muttered about charging an “empty storefront” tax. Vancouver’s recently departed mayor, Kennedy Stewart, threw the idea out during last fall’s election campaign. Former New York mayor Bill de Blasio floated such a tax in both 2019 and 2020. The town of Jackson, Tennessee, imposed a system of escalating fines for vacant commercial properties in 2019. Montreal residents and business operators have also been fretting about vacant stores there for the last couple of years.

But fines only work if you make the assumption (okay, a somewhat common one) that empty storefronts are all about evil property owners/developers who don’t care about the city’s health at all and are quite content to pay the taxes on their vacant land, feasting on the certainty that their asset is increasing steadily in value.

This might seem like the case for empty 2301 Granville, where owners Aoyuan International applied for a city development permit in 2017 and were marketing condos for the site at some point after that. That land increased in value by $1.39 million over the last two years, while the taxes paid on it during that time came to a little under $400,000.

As it turns out, Aoyuan was caught up in the Chinese financial crisis, which led the company to cancel that project and sell a Burnaby site.

Those familiar with commercial real estate in the city say that the story of that Granville site is not surprising. It seems that every vacant store or lot has its own similar-but-different set of circumstances leading to its complete stall.

“There is a host of reasons why things aren’t happening on those sites,” said Kirk Kuester, an executive vice-president with Colliers International in Vancouver. “It could be a situation on the owner’s side: ‘I missed the market and now I want to sell for yesterday’s price.'” Or it could be an environmental problem (sites of former gas stations and drycleaning operations are particularly difficult and can take years to resolve). Or it could be that an owner or developer has gotten lost in the city’s permitting labyrinth. Or they’re afraid of putting in short-term tenants. Or who knows.

It’s a big decision to let an investment sit empty after you’ve put hundreds of thousands of dollars into it—or even millions. But it might make financial sense to some, says Kuester. “If it’s sitting, it’s because the owners believe there’s a higher and better use associated with waiting.”

The giant building on Broadway that used to house Mountain Equipment Co-op, for example, has sat vacant for several years while owner Jon Stovell waited for the city to come out with its Broadway Plan, which will allow him much more density for the site. Concord Pacific will likely hold off on doing anything with the former Molson Brewery site for a century if that’s what it takes to see the city come around to changing it from industrial to commercial/residential zoning.

Those who don’t blame developers are likely to instead blame city hall for many of the slowdowns—and with some reason. There is a never-ending list of woeful tales about projects held up for months or years as the city’s many departments fail to come to consensus on what’s allowed.

At Strand Development, Mike Mackay and his team make a point of trying to keep properties rented out. “It’s just good corporate citizenship to maintain some vibrancy on the street,” says Mackay, whose company has been building a lot of new rental around the city, along with commercial/industrial in the Mount Pleasant industrial zone. “It’s a brand risk for us if we don’t.”

Plus, he says, it only makes sense to keep cash flow coming. Mackay’s company had a four-storey project ready to go in that Mount Pleasant zone a year ago, then decided to re-apply last year for a seven-storey building after a change in city policies allowed for more density. Before the shift, Strand had emptied out the commercial spaces on the site, which included operations like Motorino Electric and City Side Winery. But the company refilled them after deciding to apply for the new project, since it could still take up to two years before construction could start. New tenants looking for relatively cheaper rents leased there, including the nonprofit Food Stash and Leon Cycle.

Some landowners are hesitant about short-term renting, or find it difficult to get tenants who are willing to sign a lease that has a demolition clause. Some are unfamiliar with the idea of renting out to pop-up operations, which several landlords in Vancouver have been experimenting with. Or they don’t know how to access those operators who might be interested in shorter-term leases. That’s a barrier that Lewis Silberberg, a commercial real-estate broker who has done contract work for the city on problems with commercial vacancies, has noticed.

Silberberg is a great believer in tackling empty storefronts as a way to sustain the health and vitality of shopping areas. But, he says, each site needs a tailored assessment. And maybe even some specialized help—particularly for the many smaller landlords that are surprisingly numerous in Vancouver—in figuring out how to attract a good tenant for a short-term lease, or how to get through the city’s obstacle course, or to see the advantages of filling the space sooner. Because the issue might not be a landowner who is holding out for a better deal or getting tangled up in city permits. The issue could be a landowner who isn’t making the best decisions.

“The first step is to ask, ‘Why is there a vacancy?'” says Silberberg. From there, you need to figure out what kind of help is the best. “I don’t think you can assume that because you’re a landlord, you know what you’re doing.”