By Murray McNeill

A British Columbia developer plans to build another 2,000 apartment units in Winnipeg during the next five years, but it's not because the province is promising relief from rent controls, an official with the company said yesterday.

"It doesn't make any difference," Kris Mailman, owner and CEO of Broadstreet Properties Ltd., said of the provincial government's plans to give the owners of new rental units an additional five-year holiday from rent controls.

New units are currently exempt from rent controls for the first 15 years, but the government introduced legislation Wednesday that raises the exemption to 20 years in the hopes it will spur construction of more units.

However, Mailman said it's construction costs, not rent controls, that determine whether new rental units get built. Because Broadstreet does all its own construction and uses wood-frame construction rather than the more costly masonry construction, it's able to keep its costs low enough to make it economically feasible to build new rental units in Winnipeg, he explained.

The Campbell River-based firm has built 554 new one- and two-bedroom apartments in Winnipeg in the last two years and Mailman said the plan is to built another 400 or so per year for each of the next five years.

He said that with an overall vacancy rate of only 1.1 per cent in Winnipeg, the company has had no difficulty finding tenants for its new apartments. He said all 351 suites in its seven-building development on Leila Avenue are now leased, and all but 34 of the 203 units in its new four-building development on Quail Ridge Road are leased.

Broadstreet has been far and away the most active developer in the residential rental market in Winnipeg in recent years.

According to the latest rental market survey by Canada Mortgage and Housing Corp., there were only 246 new rental units built in Winnipeg between 1996 and last spring.

Dianne Himbeault, CMHC's senior market analyst for Manitoba, said most of the new Broadstreet units would not have been included in that total, so clearly there hasn't been a lot of other new apartment construction going on in the city in the last 10 years.

Like Mailman, Himbeault said she doesn't think extending the rent-control holiday by another five years will, by itself, lead to a surge in new rental-unit construction.

"There are a lot of other factors besides rent controls that are hindering new construction," she said. "Certainly it would help the business decision, but it's just one piece of the puzzle."

She agreed construction costs are a big part of the decision-making process for most developers and investors. Return on investment is another, and the dearth of new rental-unit construction across Canada in recent years indicates many investors feel they are better off investing in something else besides new rental properties.

Bob Shaer, president of A.S.H. Management Group Ltd. and a former president of the Professional Property Managers Association, said in an interview the main reason more new rental units aren't being built is because with the high cost of new construction it's difficult for developers and property managers to keep rental rates for new units low enough to compete with the artificially low rates being charged for most existing units.

Shaer said doing away with rent controls would allow rents on existing units to rise to more appropriate levels, making new units more price-competitive and, therefore, more feasible.

Finance Minister Greg Selinger said earlier this month the province won't abolish rent controls because seniors and other low-income earners can't afford to pay substantially higher rents.

Shaer agreed, but said one of the ways to address that problem is for governments to provide more financial assistance to low-income earners so they can afford higher rents. Another is to provide government grants to the private sector to rehabilitate more run-down rental properties.