Understanding Rezoning and Multifamily Development Terms
Understanding key terms related to rezoning and multifamily development empowers landowners to:
Maximize Property Value: By comprehending zoning laws and development processes, landowners can identify opportunities to enhance their property's potential, leading to increased value and more profitable investments.
Navigate the Real Estate Sale Processes Effectively: Familiarity with relevant terminology enables landowners to efficiently manage rezoning applications and development permits, ensuring compliance with regulations and reducing the risk of costly delays or legal issues.
By mastering these terms, landowners can make informed decisions, capitalize on development opportunities, and safeguard their investments.
Glossary of Terms
Accessory Building: A smaller building on the same property as the main building, used for purposes that support the main building's function. For example, a detached garage or storage shed.
Accessory Use: An activity or purpose that supports the main use of a property. For instance, a parking lot for residents in an apartment building.
Air Space Parcel: A three-dimensional subdivision of real property, often used in mixed-use developments or strata properties.
Apartment: A building with four or more separate living units, all sharing at least one common entrance from the outside.
Base Density: The maximum floor space ratio (FSR) permitted on a site without any density bonusing.
Building Permit: An official authorization issued by the City of Vancouver that allows construction, demolition, or renovation work to proceed. Building permits ensure that proposed work complies with the Vancouver Building By-law, which covers safety standards, structural requirements, fire protection, accessibility, and energy efficiency. Different types of permits may be required depending on the scope of work, including development permits, plumbing permits, electrical permits, and gas permits.
CAC (Community Amenity Contribution): Voluntary contributions provided by property developers when city council grants development rights through rezoning.
Cap Rate (Capitalization Rate): The ratio between a property's net operating income (NOI) and its market value, used to estimate potential return on investment.
City of Vancouver Development, Buildings, and Licensing Department: This department oversees the review and issuance of Building Permits for construction, renovation, and demolition projects, ensuring compliance with building codes and regulations.
City of Vancouver Development and Building Services Centre: This department handles applications for Development Permits, which are required for new constructions, additions, or alterations to existing structures, and changes in land use. Processes ensure that proposed developments comply with zoning regulations and city policies.
City of Vancouver Planning Department: This department’s primary functions include creating policies for sustainable growth, reviewing development proposals, and engaging with the community to ensure that the city's evolution aligns with the needs and values of its residents. The department also collaborates with various advisory committees to inform decisions on zoning, transportation, and environmental initiatives.
City of Vancouver Rezoning Centre: Oversees applications to change the zoning classification of a property, which may alter its permitted uses or development potential. Property owners can apply to rezone sites in accordance with Council-approved policies. The City can also initiate re-zonings, typically on an area-wide basis. All rezoning applications are decided by City Council.
Comparables (Comps): These are recently sold properties with similar characteristics to a “Subject Property”. Analyzing comps helps in estimating a property's market value by comparing it to similar properties in the area.
Conditional Approval Use: A land use that may be allowed if certain conditions are met, as determined by city planning officials.
Current Use Value: The market value of a property based on its existing use and structures, without considering its potential development value under current zoning or possible rezoning opportunities. Common synonyms for "Current Use Value" include: Existing Use Value, As-Is Value, Present Use Value, Actual Use Value, and Current Market Value.
DCL (Development Cost Levy): A fee charged to new developments to help fund parks, childcare facilities, social housing, and engineering infrastructure.
Depth: The distance from the front to the back of a property lot. It's typically measured perpendicular to the frontage (street-facing width). The depth of a lot is a crucial dimension that affects development potential, building placement, and how effectively the land can be utilized for construction.
Development Permit: An official document from the city that allows you to proceed with a building project or change how a property is used.
Development Permit Board: A City of Vancouver administrative body that reviews and makes decisions on complex development applications. The Board consists of the Director of Planning, City Engineer, Director of Legal Services, and the City Manager (or their representatives). They evaluate development proposals that require special consideration due to size, location, or potential impact on the community.
Development Value: The estimated monetary worth of a property based on its highest and best use under current or potential zoning regulations, typically calculated by analyzing factors like maximum allowable density, location, market conditions, and development costs. This value often differs from the current use value and helps determine feasibility of redevelopment projects.
Direct Comparison Approach: A property valuation method that estimates a property's market value by analyzing recent sales of comparable properties in the same area. This approach is commonly used for residential properties, condominiums, and vacant land. Adjustments are made to account for differences between the subject property and the comparables, such as size, condition, and location, to arrive at a fair market value.
Dwelling Unit: A self-contained living space designed for one household, including areas for cooking, eating, sleeping, and sanitation.
Expense Ratio: The ratio of a property's operating expenses to its gross operating income.
Floor Space Ratio (FSR): A measurement that compares the total floor area of a building to the size of the property it's on. A higher FSR means a larger building relative to the property size. Can also be called "Floor Area Ratio", however City of Vancouver uses the term "FSR" in all bylaws.
Floor Space Ratio (FSR): The ratio of a building's total floor area to the size of the lot it's built on.
Frontage: The width of a property measured along the street or road it faces. This measurement is crucial for development planning as it affects access, visibility, and potential building width, and is often regulated by local zoning bylaws.
Future Value (FV): The value of an asset or cash at a specified date in the future, given a specified rate of return.
Gross Rent Multiplier (GRM): The ratio of a property's sale price to its gross rental income.
Height: The vertical distance from the base level of the property to a specific point on the building, often the roof. Most relevant is “Maximum Height” in zoning bylaws which often dictates how tall a structure can be.
Highest-and-Best Use (HBU): This principle determines the most profitable legal use of a property. It involves analyzing what use—whether residential, commercial, or mixed-use—would yield the highest value, considering legal, physical, and financial feasibility.
Income Approach: A real estate valuation method that estimates a property's market value based on the income it generates. This approach is particularly useful for appraising income-producing properties, such as rental apartments or commercial spaces. The valuation is calculated by dividing the property's net operating income (NOI) by the capitalization rate (cap rate), which reflects the expected rate of return on the investment.
Internal Rate of Return (IRR): The rate of return that measures how profitable an investment is over its entire lifetime, making it one of the most important metrics for evaluating real estate investments and comparing different opportunities. Some common synonyms for IRR are Yield, Return on Investment (ROI), Return on Capital, Rate of Return, or Annual Equivalent Rate (AER).
Investment Multiple: A metric that shows the total return on investment as a multiple of the initial investment. Calculated by dividing the total value returned to investors by the total value invested. Also known as the “Equity Multiple”, this is a common metric of evaluating real estate development returns.
Land Assembly: The process of combining multiple adjacent parcels of land into a single development site.
Laneway House: A detached residential building built on a single-family lot, typically facing the lane or back alley. In Vancouver, these small houses (generally limited to 1.5 stories) can be used as rental units or family housing, and are subject to specific size, height, and design requirements under the city's zoning bylaws.
Lock-Off Unit: Lock-off units are small, self-contained units with an external door and a shared internal door which can be locked, enabling both the principal dwelling unit and suite to be independent
Mixed-Use: A development that combines residential units with other uses such as retail stores, restaurants, or offices within the same building. In Vancouver, mixed-use developments typically feature ground-floor commercial spaces with residential units above, helping create vibrant, walkable neighborhoods while maximizing property value.
Multifamily: A real estate asset class comprising residential properties with multiple rental units, such as apartment buildings. This asset class is distinct from other commercial real estate sectors due to its unique operational characteristics including higher tenant turnover, intensive day-to-day management requirements, and specialized regulatory compliance needs related to residential tenancy laws.
Multiple Conversion Dwelling: A building originally designed for fewer units but later converted to contain multiple separate living units, without adding to the building's size.
Multiplex: A residential building containing multiple separate housing units—typically ranging from three to six strata-titled units—constructed on a single lot. These structures are designed to increase housing density within existing neighbourhoods, offering a more diverse range of housing options. Notably, under the city's R1-1 zoning regulations, a multiplex can accommodate up to eight units if all are designated as secured rental housing.
Net Operating Income (NOI): The annual income generated by an income-producing property after deducting operating expenses.
Net Present Value (NPV): The difference between the present value of cash inflows and outflows over a period of time.
Operating Expense Ratio (OER): The ratio of operating expenses to effective gross income.
Outright Approval Use: A land use that is automatically allowed under current zoning laws, as long as all regulations are followed.
Present Value (PV): The current worth of a future sum of money given a specified rate of return.
Principal Building: The main building on a property where the primary activity or use occurs.
Prior-to Letter: After the City of Vancouver Development and Building Services Centre reviews a development application, they may issue a "Prior-to Letter." This document outlines specific conditions or requirements that must be met before the development permit can be issued.
Pro Forma: A financial statement that projects the future financial performance of a real estate investment.
Purchase and Sale Agreement (PSA): A legally binding contract between a buyer and seller that outlines the terms and conditions for the purchase of real estate, including price, closing date, contingencies, and other key details of the transaction.
Residual Land Value: The estimated value of a piece of land calculated by determining how much a developer could earn from developing the property, then subtracting all costs (construction, fees, profit) from that amount. What remains is considered the land's residual value.
Return on Investment (ROI): A performance measure used to evaluate the efficiency of an investment.
Secondary Suite: A smaller, self-contained living unit within a larger home, such as a basement apartment, with its own kitchen and bathroom.
Setback: The minimum required distance between a property line and any building or structure on the lot, as specified by zoning bylaws. Setbacks help maintain spacing between buildings, ensure adequate light and air, and create consistent streetscapes.
Strata: A form of property ownership in British Columbia where individuals own their units (strata lots) and share ownership of common areas. Similar to condominiums in other jurisdictions.
Subject Conditions: Contingencies or conditions that must be met before a real estate contract becomes binding, such as financing approval, property inspection, or title search. These protect the buyer's interests by allowing them to back out of the deal if specific requirements aren't met.
Subject Property: Refers to the specific property being evaluated or discussed. It is the focus of the valuation and appraisal processes, where its characteristics, condition, and market value are analyzed. If your property is being evaluated, your property is the “Subject Property” which is lined up against the “Comparables” or “Comps”.
Tenant Improvement Allowance (TI): Funds provided by a landlord to a tenant to improve their rental space.
Townhouse: A building with four or more separate living units, each having its own private entrance from the outside.
Triple Net Lease (NNN): A lease agreement where the tenant pays all property expenses in addition to base rent.
Vacancy Rate: The percentage of all available units in a rental property that are vacant or unoccupied.
View Cone: A designated corridor that protects specific public views of natural and urban landmarks, such as the North Shore mountains and the downtown skyline. Established in 1989, these corridors impose height restrictions on developments to preserve these vistas. In July 2024, the city reviewed its view cone policy, resulting in the removal of 14 view cones and updates to 11 others to balance view preservation with development needs. View Cone is also called “View Corridor”.
Zoning Bylaws: Legal regulations established by the City of Vancouver that control land use and development. These bylaws specify what can be built on a property, including building height, density (FSR), setbacks, parking requirements, and permitted uses. Vancouver's Zoning and Development Bylaw is the primary document governing land use and development across the city, with different regulations for each zoning district.
Zoning Districts: Specific areas in the city with set rules about how land and buildings can be used, such as residential or commercial zones.
Zoning Envelope: The three-dimensional space on a property within which a building is permitted to be constructed.
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