Lower Mainland real estate developers leveraging for a piece of the potential boom in Northern British Columbia should prepare for sticker shock prices.
From Kitimat to Prince George, industrial land often lists at $1 million per acre or more, comparable to Vancouver and about twice the price as in the Fraser Valley. Northern property taxes may also raise eyebrows: Kitimat industrial property taxes are more than three times higher than Vancouver. In Fort St. John, property taxes on retail property are 40 per cent above Richmond and Surrey.
An Altus Group survey found that a $5 million light industrial property in Kitimat would carry an annual property tax of more than $283,000, In Fort St. John it would be $191,000. The same property in the City of Vancouver would be taxed at $84,231 and it would be $71,282 in Surrey, considered the fastest-growing city in B.C.
Northern real estate agents point to the lack of industrial and commercial land for the soaring prices. In Kitimat, framed by mountains and the ocean, most of the industrial land is already owned by Rio Tinto Alcan and there are no big industrial sites with land for development. Fort St. John is hemmed in by the Agriculture Land Reserve and has a shortage of serviced commercial and industrial sites.
In Fort St. John, considered in the heart of B.C.’s northern liquefied natural gas (LNG) bonanza, commercial land values have doubled since 2012.
Two years ago, commercial property in the city of 21,000 was selling for $12 to $15 per-square-foot, noted Ron Rodgers, owner-broker of Northeast B.C. Realty Ltd. “The current asking prices for commercial property appear to now be in the $25 per square foot to $29 per square foot range,” Rodgers said.
At this price, an acre of commercial land would be more than $1 million.
In Kitimat, where Re/Max Kitimat has one of the few industrial properties listed at $2.19 million for .87 acres, the city is moving to soften the property tax hit.
A year ago, Kitimat council passed a bylaw providing tax exemption on improvements to industrial and commercial properties. Offices, retail stores, warehouses, hotels and motels are all eligible. The Commercial Zone Revitalization Tax Exemption Program encourages new construction and renovations by offering a five-year tax exemption on the increase in assessed value, to a maximum of $2 million.
However, an optional destination for industrial investor may be in Terrace, the northwest service and retail centre a half-hour drive east of Kitimat. There, the city has opened the 2,400-acre “shovel ready” Skeena Industrial Development Park. One-acre lots start at $10,000, but average around $25,000.
Gord Robson, an agent with Avison Young in Vancouver, who has been helping direct clients into the northwest B.C. real estate market, said the Skeena park may represent the best industrial deal in the northwest.
