Is the conversion of the Harbour Towers Hotel to rental units something to cheer about?

By V Adams

Background
City Council has decided to approve the conversion of the 189-room Harbour Towers Hotel in James Bay into a residential rental property with 219 studios, one and two-bedroom units.

Although Mayor Helps and the James Bay Neighbourhood Association President are elated, this plan is nothing to cheer about—not in this tight rental market with a near zero vacancy rate.

The cheering depends on whether you are a real estate investor in Harbour Towers Ltd. of Vancouver (the owner); a renovation contractor; a prospective tenant; or a nearby condo owner.

Built in 1973, this property was once a multi-family apartment building. Later, it was sold and refurbished as a hotel. Although James Bay saw the completion of the ten-storey Oswego Hotel (an 80-room fragmented-ownership property), things would change by 2008. The Great Recession took its toll not only on property owners, but also on hotel operators who experienced a slowdown in the conference and tourism market. By 2013, a new trend emerged. Many hoteliers were obliged to sell to other investors interested in picking up these commercial travel-accommodation properties. Converting hotels into a red-hot residential real estate investment market also meant profiting from a rental shortage and an ultra-low vacancy rate.

In 2015, the Harbour Towers Hotel was purchased by the current owner who paid $23 million for the property (assessed at $18.6 million in 2016). Given that the City‘s residential market increased by 20.2 percent in assessment value over 2015-16, it’s easy to see why the shift from commercial to residential use was proposed.

Tenants (the majority of householders in the city and the neighbourhood) face soaring rents. For them, this Council decision is a hollow victory. 

What will the re-purposing of this property mean?
Here’s what speakers at the public hearing in Council Chambers on September 7 pointed out: a) the loss of public access to a much-needed fitness centre and a popular dining facility; b) the loss of 189 reasonably-priced hotel rooms for visitors 1; c) the loss of many hospitality and housekeeping jobs in the City, and 4) lack of affordable rental housing units.

The Harbour Towers “make-over” promises: an additional 30 housing units to a total of 219; sprinklers throughout; a private refurbished pool and fitness center with 219 bike racks for tenants only; plus 179 parking stalls—in what many residents see as one of the most desirable, walkable, and unaffordable rental neighbourhoods in the City.

While the City touts a 20-year rental housing agreement with the owner, all the housing units are “market rentals.” In other words, despite the City’s 2016 call to “Make Victoria More Affordable,” not one of these rental units will be considered affordable, i.e. the maximum rental threshold of 30 percent of a tenant’s monthly income.

In fact, 78 percent of the refurbished Harbour Tower units will be 300 sq.ft. studio and slightly larger one-bedroom units which command premium rents in Victoria. These type of units have seen the highest rent increases in the City (according to the Fall 2016, CMHC Rental Market Report for Victoria CMA, p. 19).

Commenting in the September 7, 2017 Times Colonist, the owner of a 300 sq.ft. reconditioned downtown Janion condo (formerly a hotel property), stated her unit “is not suitable for long-term accommodation.” She rents it profitably on Airbnb to tourists in the summer and to students over the winter months. Perhaps the housing crisis in this City begs for an answer—is affordable, decent and safe housing available only to tourists and affluent home-owners?

Unanswered Questions
No elected official dared answer this one: Why will tenants of Harbour Towers be obliged to pay premium rents to live in a non-earthquake-proof building?

Or this one: Are higher-income households the only ones who deserve housing protection by living in a tower built to withstand the hazards of two fault lines lying beneath this City?

REFERENCE NOTE: This is one of a dozen hotel properties converted over the past five years in Victoria. James Bay saw the 2014 conversion of the Queen Victoria Hotel (now Q Apartments with premium rents, owned by Concert Properties). Older accommodation properties like the Shamrock Motel will soon be demolished to erect the Tapestry Tower (an upscale independent living retirement complex owned by Concert Properties). Just a stone’s throw from the Harbour Hotel conversion project is the redevelopment plan for the more than half-century-old, 33-room Admiral Inn.

 

 

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