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Financial fault lines: The earthquake risk of Vancouver’s condo boom

A Skytrain travels in Vancouver in May, 2015. The more irregular buildings in the city’s skylines are the most at risk in the event of an earthquake.

DARRYL DYCK/The Globe and Mail

Driven by rising demand for condos amid soaring home prices, a new wave of costly – and often architecturally beautiful – high-rises is transforming the Vancouver skyline. But engineers say what some condo owners can't see could potentially cost them more than they expected.

Two plates of earth deep below the Pacific's surface about 100 kilometres off the British Columbia coast are threatening to cause a quake that would likely amount to the worst natural disaster in Canada's history. According to Natural Resources Canada, there is a one-in-three chance that massive earthquake will hit the West Coast in the next 50 years.

While Vancouver's skyscrapers adhere to a code designed to safely get people out of buildings in the event of an earthquake, engineers say that some structures could become uninhabitable after a powerful quake strikes.

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"The problem is, in my mind, that people are buying condos in these new buildings and don't realize that," said Perry Adebar, the head of civil engineering at the University of British Columbia, noting that the less uniform and more irregular the structure of a high-rise building is, the more likely it will be damaged.

"They figure that, surely it's designed well. To be totally clear, I don't think anybody realizes it. The more exciting and interesting your building is, the more likely you won't be able to use it after a significant earthquake."

As the price of single-family housing has soared to unprecedented levels in Vancouver, the number of new condominium sales has increased, along with prices. According to the Real Estate Board of Greater Vancouver, the benchmark price for a condo in July was $510,600 in the region, up 27.4 per cent from the same month in 2015.

Urban Analytics, a company that tracks real estate data, said in a recent report that demand for new condominiums has been strong through this year's second quarter, with more sales recorded in April, May and June than in any quarter since 2010. According to Urban Analytics, there were 3,439 concrete condominium units sold in the second quarter of this year. Sales in the first half of 2016 exceeded the number of sales when compared to the same time last year by 53 per cent. More high-rise condominiums are under construction and in development.

A report from the C.D. Howe Institute released last week warned that a massive earthquake in British Columbia could create a dire financial scenario in Canada. Insurance industry estimates peg expected losses from such a severe quake in the $75-billion range and some insurers say that number could be even higher.

According to the Insurance Bureau of Canada (IBC), fewer than half of B.C. residents have purchased earthquake insurance. In Vancouver, that rate is 55 per cent.

Aaron Sutherland, a spokesperson for IBC in Vancouver, says buildings typically have their own insurance and, if a structure is damaged, the deductible will be divided among the owners.

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"It's important to go out and discuss with your insurance representative and find out what you are protected for," Mr. Sutherland said. "You can purchase insurance to cover you for that deductible."

The City of Vancouver's building code is adapted from the provincial code, which is derived from the National Building Code of Canada. Patrick Ryan, the city's chief building official, says the building code has several provisions around environmental issues, energy, accessibility, fire and life safety, and seismic standards – particularly on how to deal with upgrades and retrofitting – that are unique to Vancouver.

When it comes to seismic provisions, the Vancouver code is meant to protect the lives of the occupants of a building, but does not mean the building will be serviceable after an event, Mr. Ryan said.

"The code is a minimum," he said. "You don't have to follow the minimum. If an owner chooses to overdesign a building, they can do that and there's no problem with that."

Vancouver also has an extra provision that requires a designated structural engineer to conduct the design work on larger buildings, including high-rise condos. Those designs are then peer-reviewed by a second engineer to ensure they are sound.

Still, Mr. Adebar says there are misconceptions about the building code.

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"There is a huge disconnect between what people think the building code achieves, people's expectations of how a building code will perform in an earthquake versus what we're doing when we write the building code and what our expectations are," he said.

Many buildings in Christchurch, New Zealand, were unusable after a 6.3-magnitude earthquake hit, with an epicentre just 10 kilometres from city, in 2011. That quake offered an important learning experience for Vancouver, says Andy Metten, a managing partner at Bush Bohlman and Partners, an engineering firm in Vancouver.

"Several fairly modern buildings – the Hotel Grand Chancellor for example – had to be demolished after the event. That building was leaning and had significant damage and a lot of that was felt to be due to the irregularity of the building," said Mr. Metten.

"Many buildings that were built quite recently were torn down. The issues are that the buildings with irregularities that are much more attractive from an aesthetic point of view do tend to perform not quite as well as those that are more regular."

Mr. Adebar, a member of the Standing Committee on Earthquake Design that advises on seismic standards for the building code, says today's building code does not provide any requirements or guidance on how to design a building so it will be more likely usable after an earthquake. Whether a building will be usable depends on many factors, including soil conditions and the architecture of the building. He says it is difficult for a layperson to distinguish what an irregular building is, and that not every building that appears irregular on the outside is the same internally. Many irregular buildings will be structurally normal on the inside, he says, thanks to good architecture and clever engineering.

"On the other hand, there are buildings that are as irregular internally as they seem externally, and these are the buildings that are much more likely to be damaged during an earthquake," he explained.

"Such buildings get built because architects do not appreciate the direct connection between structural irregularity and the likelihood that a building will be damaged during an earthquake, and engineers are constrained to design the building to meet the minimum requirements of the building code."

Maura Gatensby, a practice adviser with the Architectural Institute of British Columbia, an independent body that regulates the profession of architecture, says all buildings meet the same seismic standards in the end, regardless of architectural differences.

"All buildings are required to reach a certain level and there are certain things like irregularities that create issues for seismic [standards], but the code requires that you design to address it. It basically equalizes everything out and it will comply with the code," Ms. Gatensby said. "Everything ends up getting to the same level."

While aspects of some modern buildings are a concern, most of the focus has been on retrofitting older buildings that were constructed when previous building standards were in place.

Jeff Yathon, a civil engineering PhD candidate at UBC, has spent the last three years analyzing the designs of about 350 mid– and high-rise buildings constructed before 1980 in Vancouver, trying to determine how vulnerable the structures are. While he doesn't foresee building collapses in the event of a strong earthquake, he says it was slightly concerning that many similar buildings were often clustered in the one area because it is likely that if one is damaged, many will be.

Mr. Adebar hopes that the code continues to improve over the coming decades.

"I don't know the solutions, at least for the older buildings, but for the new buildings I think there is a solution and it's one of just everyone becoming aware of what the situation is," he said.

"I don't know how long it's going to take, but I think maybe 10 years from now, 20 years from now, our building code will have what it takes to guide designers so buildings not only save lives, but are actually usable after an earthquake."

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