Inside The Cost-Profit Analysis Of Three-Bedroom Units In Metro Vancouver

In Metro Vancouver, three-bedroom apartments are seeing low profit margins for developers due to high construction costs and limited demand for apartment-style family units. These larger units, often mandated by local zoning regulations, cost approximately $882,000 each to build but bring minimal returns compared to smaller, one-bedroom or studio units. This financial burden has made three-bedroom apartments financially unappealing to developers.

Many developers cover the low returns on three-bedroom units by inflating prices of one- and two-bedroom units. For instance, rents in Vancouver average about $4,000 for three-bedroom units, which are difficult to sustain without increasing prices in other unit types. While larger apartments are essential for family housing needs, the market demand leans toward townhouses and single-family homes, which offer more space and privacy.

The city’s requirement for a certain percentage of “family-sized” units forces developers to include three-bedroom units despite these challenges. As a result, these units are subsidized by one-bedroom apartments, and potential returns fall below sustainable levels. Developers argue that the preference for family-sized housing could be better met through other formats, like townhouses, where demand is naturally higher.

This financial imbalance impacts housing affordability overall. Without changes to development mandates, families will likely continue facing limited and expensive three-bedroom apartment options in Metro Vancouver.