Panatch Group breaks ground on 64-unit Richmond rental building

Panatch Group has broken ground on a five-storey, 64-unit rental building at No. 3 and Francis roads in Richmond, on a site that had sat empty for about a decade. The development will include seven moderately affordable units and about 6,000 square feet of ground-floor retail space.

The company bought the remediated former gas-station property at 8008 Francis Rd. in March 2023 and applied for rezoning and development approval that November. Final development approval came in June and a building permit was issued Aug. 11.

Kush Panatch, the company's president and founder, said purpose-built rental housing has a market while presale condominiums remain slow. He said rents have fallen and construction costs have risen during the approval process, making the economics difficult, but described the project as a generational, long-term investment. He said the company averages about 20 years holding a property.

Andrew Howard, mortgage origination director with Canada ICI, said fewer presales have made condominium financing more difficult while rental development is receiving a major push across Canada, aided by Canadian Mortgage and Housing Corporation insurance. He said the Francis Road project has a strong borrower, familiarity with the Richmond market, CMHC-insured financing and a lender experienced in construction lending. Richmond's limited supply of purpose-built rentals also improves its viability, he said.

Colin Pope, a director with Coast Capital Savings, said rental projects are being completed quietly while condominium presales receive more advertising. He said financing remains available to strong borrowers with track records, strong balance sheets and commitments to long-term ownership, despite recent high-profile Richmond bankruptcies and court-ordered sales involving the Atmosphere development and Duck Island site, where Richmond Night Market has been held.

Pope said the CMHC-backed loan uses a program that has encouraged new rental construction for about four years, with higher leverage, better pricing and less risk because of insurance, though it has strict eligibility requirements. Panatch estimated the CMHC insurance for the Francis Road project cost about $1 million.

The below-market homes will include two studios, two one-bedroom units and three two-bedroom units. Kristina Kovacs, Panatch Group's vice-president of development, said tenants will be selected using BC Housing income limits and maximum rents cannot exceed 30 per cent of those limits. The market-rental component will have 10 studios, 22 one-bedroom units and 25 two-bedroom units.