Tracking the action
Bifurcation of Vancouver’s non-residential real estate market is evident in new statistics from CBRE Ltd., which highlight the shares specific regions of Canada have of new construction.
Toronto gets a shout-out for office construction, claiming 46.5% of all new development in Canada in 2017’s third quarter. Vancouver lags behind with just 15.5% of all office construction, or a piddling 1.6 million square feet.
The tables turn, however, when it comes to industrial real estate, which CBRE says has been on a “yearlong bull run” with 11.7 million square feet under development countrywide. This is only slightly more than the 10.3 million square feet of office development. Vancouver, however, is industrial king, claiming 39.1% of new space versus Toronto with 35.7% of new construction.
Vancouver’s share works out to nearly 4.6 million square feet, much of it speculative. Nevertheless, a dearth of space means that 42% has commitments and absorption of the rest should continue. (The average absorption rate for the year is more than one million square feet per quarter; so long as there’s space, there’s absorption.)
Colliers International, for its part, points out that demand is so great that strata-titled units at Annacis West Business Centre, 1600 and 1610 Derwent Way in Delta, have been quickly snapped up by former tenants. PCI Developments Corp. engaged in what Colliers terms “a creative approach to a real estate investment,” because PCI bought the strata-titled property – formerly held by a single owner and leased to tenants – expressly for sale, knowing the strength of the market.
While other builders have successfully developed and then sold strata-titled properties, PCI avoided the hassle of construction while still reaping what Colliers says “appears to be an excellent return.”
A case in point is 6-1600 Derwent Way, a 3,811-square-foot unit with an assessed value of $386,600.
BC Assessment Authority records indicate that it sold for $618,910 on February 3, 2017. The unit is now listed for sale with Jones Lang LaSalle for $988,000.
Surrey squeeze
Surrey’s East Clayton neighbourhood was originally proposed 20 years ago as an environment-friendly neighbourhood that would have twice the density of a traditional subdivision. Provision was made for secondary suites and coach houses, as well as green infrastructure to handle storm water and other concerns.
Ground broke in 2002, and today the development has far exceeded expectations – so much so that in the past three years Surrey has received 7,600 complaints regarding parking violations despite the fact that each residence has two parking spots, with a third possible, and 1.25 on-street parking spaces.
An additional 400 complaints have been received related to illegal suites.
Recently, the complaints led to notices being sent to 175 units advising them to comply with city bylaws or shut down.
With homelessness in Surrey now totalling 602 residents, up from 403 in 2014 (a 49% increase), critics say the move to shut down the units doesn’t make sense.
“The density model in Clayton Heights is the model for the future so there is a certain irony that instead of focusing on housing Surrey families, we’re focusing on their cars,” said David Hutniak, CEO of LandlordBC, in a statement calling for the immediate legalization of the non-
compliant suites.
But he said last week that extra density means congestion if transportation networks don’t keep pace.
“Surrey obviously needs transit,” Hutniak said. “We continue to want to support the community, the city and the mayor to advocate for transit – that’s a major reason that there’s these challenges in that community.… They’re ahead of the curve, but because of cars, people are getting evicted, which is really unfortunate.”
Surrey reports that enforcement measures are on hold pending a staff report on the situation. The delay aims to prevent the estimated 300 residents in the subject units from becoming homeless in the event suites shut down. •
