How Vancouver small businesses are navigating redevelopment

This is the second instalment in our quick two-part series on building redevelopment in Vancouver, specifically how shifting zoning policies, high costs, and the social push to build more housing translates to the availability of commercial space and the health of business areas. You can read part one of our coverage, focusing on a mini-mall at Fraser and Kingsway that’s being converted into a 24-storey tower, here.

To get a sense of how building redevelopment was affecting businesses in different neighbourhoods, Vancity Lookout spoke with the executive directors of five different business improvement associations (BIA) in some of Vancouver’s prominent neighbourhood commercial districts.

Vancouver’s business areas are represented by 22 BIAs, non-profit groups made up of property and business owners who work to promote and improve their commercial area. It’s important to keep in mind that BIAs not only represent business tenants in their area but also building owners. 

In some cases, there are success stories with building redevelopment, which include positive trickle-down effects from new commercial units that provide much-needed space and induce a positive shift in the neighbourhood.

Patricia Barnes with the East Village, or Hastings North BIA, brought up the example of Blue Cross Pet Hospital, a local veterinary clinic established nearly 80 years ago that had outgrown its space in an older building. They were able to move into the ground floor of a new development that went up a few blocks east of their old location on Hastings. Meanwhile, a new vet practice has been able to take over at their old premises. 

“Not only is that good for [Blue Cross], being in a much bigger space, but it’s good for the businesses that have been struggling through development, because now they have a busy veterinary clinic there that brings all the local people up further east along [Hastings],” Barnes explained. 

“The shame is, you lose maybe some of the character of the old buildings. But many of those old buildings, they needed to be changed over. It gets very hard to continue to exist in [those old buildings] because of new requirements from the city, and the upgrading and renovation that's needed, and all the permitting it requires,” Barnes said. 

A common theme among the BIAs we spoke to revolved around high costs for small businesses, who are struggling amidst adverse economic conditions that have persisted beyond the pandemic.

“We do have very loyal local residents and customers [in Hastings North], so that has helped us. But just like everywhere, it's still pretty tough out there,” Barnes reflected. 

There are also the impacts of rezoning, through neighbourhood plans at the city level and transit-oriented development legislation from the province. Specifically, expensive leases in new buildings and increasing property taxes make it difficult for independent businesses to succeed, West End BIA director Teri Smith told Vancity Lookout.

“As soon as the West End Community Plan was adopted [in 2013], the areas that were allowed to be upzoned automatically increased the value of the land. And so the property assessments automatically increase significantly, which has an impact on property tax. Increased property taxes doesn't necessarily equate to business viability, so small businesses tend to get displaced in those situations through redevelopment and through increased property taxation and costs,” Smith explained.

Redevelopments do create new commercial opportunities, Smith said, but those opportunities tend to favour certain types of retailers.

“One of the things that you do start to see [with building redevelopment] is different types of businesses coming into a neighbourhood. It's no longer the small, independent, or mom-and-pop type businesses, it will lean more towards larger, businesses,” Smith said, because the rent for those new storefronts is significantly higher.

However, the city’s data on independent and chain businesses — collected as part of their storefront inventory in 2023 — shows that independents still make up about 77% of all occupied storefronts, with the Downtown core having the highest concentration of chain businesses.

• Dive deeper: Dustin Godfrey looked specifically at the plight of independent grocery stores, which are struggling much more than their big box competitors, in a recent report for Vancity Lookout.

Businesses in the Downtown Eastside (DTES) face their own challenges, specifically around high vacancies. While not a unique problem (vacancy stood around 11% city-wide in 2023), the area has the highest commercial vacancy rates in the city, according to Landon Hoyt with Hastings Crossing BIA. Vacancy rates for Hastings Crossing (30%), Strathcona (22%), and Chinatown (20%) — the BIAs that cover the DTES area — were the three highest rates in the city, according to 2023 data.

“Every vacant storefront really speaks to some of the challenges overall that we face in the community,” Hoyt told Vancity Lookout. 

Hoyt described how commercial landlords in his neighbourhood may be advertising rents at or near city-wide market rates, tenants are often able to negotiate lower lease rates due to prevailing issues around safety, cleaning, and poverty in the neighbourhood. That means landlords may advertise lease rates around $60-$80 a square foot but end up getting a third or a quarter of that because they just need to rent the space, Hoyt explained.

There can be policy challenges as well, like at the new 10-storey non-market social housing building at 58 West Hastings, which opened in June 2024. It’s the single largest social housing building in the Downtown Eastside, according to Urbanized, and is very wide, spanning nearly half the southern block of West Hastings between Carrall and Abbott. 

It’s built on city-owned land, leased for 99 years to the Vancouver Chinatown Foundation, the charitable organization that led the project. While most of the non-residential space will be occupied by a large public health clinic, it also features a 5,500 sq. ft. commercial restaurant space on the ground level. 

All these ground level spaces have been vacant since the building opened, Hoyt said, which causes other issues and doesn’t contribute any liveliness to the street front. The clinic, operated by Vancouver Coastal Health, is scheduled to open sometime in 2025. But there’s also no tenant for the restaurant space yet.

This may be because, as a leaseholder on city-owned property, the foundation is required to sublease the commercial space at market rates. As Hoyt explained, it’s not a realistic or practical expectation in the area. 

“It’s a totally flawed policy that the city has, and that makes absolutely no sense whatsoever… they see it as a revenue generating opportunity,” Hoyt said.

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