Fredericton is a step closer to getting another large multi-unit apartment building.

Rezoning to allow a new 32-unit building on Forest Hill road passed first and second reading at City Council Monday night.

The Fredericton Rentals Gorham Real Estate development will house mostly two and three

bedroom apartments costing about $1,400 to $1,800 a month.

"We purchased this land about 12 years ago and this was a long term goal," said developer Amy Gorham.

Two single family homes and two duplexes owned by the Gorham Real Estate will be torn down to make way for the new development.

"We've already spoken to all of our tenants and we hope to relocate them. We have 48 other properties in Fredericton so we should be able to find them another location," Gorham said.

The new building will be near the university and the micro-unit development by Micro Boutique Living Inc.

Coun. Bruce Grandy, chair of the development committee, says building more high-end developments is the answer to boosting the vacancy rate. (Philip Drost/CBC)

The City has faced scrutiny for the number of high-end developments being built with little or no affordable housing units. But Coun. Bruce Grandy, chair of the development committee, says building more is the answer to boosting the vacancy rate.

"We could actually double what we did in development last year in multi-unit buildings and the vacancy rate will still be low, and that shows you how much of a demand there is for apartment living here," Grandy said.

Last year was record breaking for the number of developments in the city. Nearly 200 apartment units were started in the first half of 2019, which is more than all of 2017. Still the vacancy rate in the city is below two per cent.

"There's a tipping point here," said Grandy, "and the tipping point is the vacancy rate."

The rezoning still needs to pass third reading at city council. If that happens, construction is expected to begin in the spring.