Vancouver’s Housing Paradox: More Density May Be Worth Less To Developers

News| October 23, 2026| Joel Bowey

Metro Vancouver has spent years encouraging developers to build taller buildings and more homes. Now, some of the region’s most ambitious residential projects may be worth more if they are scaled back.

The economics have shifted so dramatically that some highrise sites could fetch more if redesigned for townhouses or lowrise apartments, according to Kirk Kuester of Colliers. Construction costs, weak condo sales and financing challenges have stranded once-profitable projects.

“I can tell you, they are everywhere. There’s millions square foot sites all over the place that just have no pathway forward,” Kuester told Connect’s CRE Vancouver event. “There’s no capital for them. There are no buyers for them.”

Approvals for additional density once increased land values, with developers competing for sites accommodating 500 or 600 homes. Today, Kuester said, the preferred project size has fallen to 100 to 200 units.

The slowdown is already showing up in construction activity. Canada Mortgage and Housing Corporation says condominium apartment starts in Vancouver fell 40% in the first half of 2026, the weakest first-half showing since 2011. Meanwhile, purpose-built rental housing now accounts for about 60% of new housing starts.

Panellists described a distressed Burnaby site planned for a 22-storey tower that reportedly sold for $5M to $6M, valued instead as a potential six-storey development. The sale reportedly wiped out the developer’s equity and left the lender facing a loss.

When The Numbers No Longer Work

Even sharply discounted land may not be enough to make larger developments profitable.

Conwest Developments has exited residential development over the past five or six years to concentrate on industrial properties, with partner Ben Taddei arguing that the margins on new housing projects no longer justify the risk.

“We have to make a profit on cost or a margin on revenue. And you cannot do that,” Taddei said.

He argues that affordable housing requirements and complicated building designs have made some of Vancouver’s largest proposed developments financially unworkable.

“I think areas like the Broadway corridor are going to be dead for a very, very long time,” Taddei said, estimating that the building designs alone could add $100 per SF to construction costs.

He contrasted them with simpler concrete towers of 90K to 100K SF, with smaller parking garages and a single residential use.

“And that will sell for probably more than the mixed use building,” he said. “It’s faster, cheaper, better product, in a better neighbourhood for the same money.”

Meanwhile, lenders are struggling to determine what development land is worth.

“I think they’re holding their nose a bit, quite frankly,” said Gagan Lalli of CMLS Financial. “They’ll do a residual analysis, which may be a bit lofty. But they have to do something because they don’t want to go and enter the insolvency world.”

With few conventional transactions to establish land values, Lalli said lenders are increasingly relying on distressed sales for comparisons. Some would rather continue supporting borrowers than force sales that could crystallize losses.

Kuester expects distressed land transactions to continue well into 2027, with opportunities emerging for investors willing to rethink stalled projects.

“There’s gonna be opportunities out there, mark my word,” he said. “And it’s gonna be associated with undoing a lot of the projects that today are just stuck.”

Pictured: Highrise development and Broadway Subway construction along Vancouver’s Broadway Corridor