It could be two years before soil is turned and work begins to transform University Heights Shopping Centre because the project’s proponent has gone back to the drawing board.
Facing increased development cost charges imposed by Saanich, a rich community amenity package and the desire to have some affordable housing options on site, Vancouver-based Wesbild is tweaking its project and crunching numbers to see if there’s a way to make the mixed-use development financially viable.
“When you keep layering on costs, when do you say ‘uncle?’ ” asked Steve Forrest, Wesbild’s senior vice-president of real estate. “To be clear, we are not there yet. We are really just trying to value-engineer to make the numbers work.”
The original plan, unveiled in late 2017, called for a major overhaul of the Saanich mall, which Wesbild Holdings bought in 2015 for about $50 million.
Wesbild planned as many as 367 residential rental units and 192,000 square feet of commercial space, in addition to Home Depot’s 78,000 square feet.
The mall was built through the 1970s and 1980s, with Home Depot added in 2005.
Forrest said any revised plan would still have that kind of mix, but they will look at shifting some density, likely reducing the amount of commercial space and adding more residential units.
They will be dropping the height of one proposed tower to six storeys from the original eight and reconsidering traffic patterns to access the site. But all of that will be looked at through the lens of whether or not redevelopment makes financial sense.
Forrest said what may make sense right now may not in two years when they might be ready to break ground.
“It all comes down to the dollar,” he said. “That’s one of the pitfalls of too many stops and starts. What may look good today may not look good tomorrow.”
Forrest said in an ideal world they would have a revised plan for the community to comment on within six months, and if that went well they could be at work on the site within a year.
“But if we get buy-in from all parties, it’s more likely it would be two years before construction starts,” he said.
Plans suggest that during construction Home Depot would be untouched, and the other anchor, Save-on-Foods, would stay where it is. The rest of the mall would be rebuilt and a new residential structure built along Cedar Hill Road.
Saanich Mayor Fred Haynes called the project an important one, noting everyone understands the region faces a housing shortage. But having said that he acknowledged that the numbers have to make sense for Wesbild to continue. “It would be wonderful to see it go forward, but we do understand that it has to make sense for the fiscal performance of the applicant and it has to make sense for the neighbourhood,” said Haynes. “We would all like to see it moving more quickly, but these things do take time.”
Forrest said Wesbild is hoping Saanich may be flexible on the development cost charges — perhaps grandfathering the project to be held to the older lower rate — and will take into account the number of rental units it intends to introduce into the market when considering the community amenity package.
The region’s rental vacancy rate remains very low hovering just above one per cent.
Dennie Linkert, owner of Complete Residential, which manages several hundred rental properties in the region, said the need for rental housing remains acute, especially near the University of Victoria.
“Honestly, I wouldn’t want to be looking for rental housing right now,” she said.
Forrest hopes that works in Wesbild’s favour when it comes to dealing with Saanich, but he noted the overall cost can overshadow the need for any project.
“We are dealing with the reality that we can only achieve so much revenue against the costs to build that it starts to make the case of do we build this at all?” said Forrest.