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Development Boom in Surrey

unimaginative2

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In shaky times, a B.C. city centres itself

In Surrey, cheaper land, a quick SkyTrain ride from downtown Vancouver keep development wheels spinning

PETER MITHAM

Special to The Globe and Mail

January 27, 2009

SURREY, B.C. -- With fire and financial disasters having hit its residential projects in recent months, Surrey's central district would seem to be teetering on the edge.

Commercial developments continue to proceed, however, thanks to lower land costs and transportation infrastructure in the fastest-growing municipality in British Columbia's Lower Mainland.

Toronto-based Blackwood Partners Inc. was bullish enough that it paid $245.8-million in 2007 for the landmark Central City complex in Surrey's City Centre area, a project originally built for the province on a site that still has development potential.

Just east of Central City, Berezan Management Ltd. of Langley, B.C., has announced plans for a $1.6-billion complex boasting four million square feet, including a 55-storey office and hotel complex, and four residential towers atop a retail and entertainment centre.

To the west, Dundee Real Estate Investment Trust and General Electric Co.'s GE Real Estate, both of Toronto, have plans for 650,000 square feet of office space in a four-tower development, including 400,000 square feet of residential. The first office tower could be up by 2010.

The backbone of the various projects is rapid transit - the 22-year-old SkyTrain line that runs from the Vancouver waterfront across the Fraser River to Surrey. An anchor for residential development in the past, it's now seen as an impetus for the redevelopment of the City Centre area, long known as the notorious Whalley neighbourhood. A synonym for crime and a lack of urban sophistication, Whalley forms part of an area adjacent to SkyTrain that regional planners have tagged for Metro Vancouver's second urban core, a 45-minute transit ride from downtown Vancouver.

The dreams are being realized. The final three stations of the SkyTrain line serving Surrey's City Centre are hubs for commercial development. Surrey is reviewing more than 53 applications for development in the City Centre area, 12 of which have significant commercial components.

"Private developers are now coming into Surrey as GE has done," said Darrell Hurst, principal of Corporate Real Estate Advisory Services with Avison Young (Canada) Inc. in Vancouver, and one of the brokers handling leasing for the GE/Dundee project adjacent to the Gateway SkyTrain station.

Mr. Hurst said the time that's required to commute into Vancouver from Surrey and Langley, a further 20 kilometres to the east, makes Surrey attractive to office developers, because its central location is increasingly accessible by transit. (The province plans to extend SkyTrain to Langley, among other service improvements.) And, while major office projects in downtown Vancouver are on hold because landlords can't secure the base rents exceeding $45 a square foot that would make them viable, commercial projects in Burnaby and Surrey continue to move forward.

The land is cheap, allowing rents to be as much as $10 to $15 a square foot less than in downtown Vancouver, and the transit connections are appealing as gas prices rise.

Mr. Hurst points to Burnaby as a harbinger of what's taking shape in Surrey. "It's tripled in size in the last 10 to 15 years and it's certainly outgrown, in terms of office space, the downtown core," Mr. Hurst said. "There's been more office space development in Burnaby over the last 10 years than there has in the downtown core [in Vancouver]. We see that continuing."

Highlighting transit's role in Surrey's development plans is the fact that the area around Central City has surpassed Surrey's historical business core, Guildford, as the site for new commercial development.

Central City's completion in 2002 added 1.5 million square feet of commercial space, including 875,000 square feet of office space that doubled Surrey's office inventory overnight. Billed "a triple-A building in a triple-B neighbourhood" by Insurance Corp. of British Columbia, which developed the project, the complex is almost fully leased.

City Centre has about 1.4 million square feet of office space versus Guildford's 600,000 square feet, and continues to see demand for office space of 50,000 square feet to 100,000 square feet a year.

Transit connections were fundamental to Surrey Mayor Dianne Watts' announcement that its municipal offices would relocate to the City Centre area. They're currently located nowhere close to urban amenities and require a lengthy commute for many staff. "You've got 2,000 people right now in the middle of nowhere that have to drive everywhere, so moving that to the downtown core offers [staff] opportunities," she said. "You're putting 2,000 people ... close to SkyTrain, close to the transportation corridors."

Ms. Watts adds that the area has long been designated as the next metropolitan core in Metro Vancouver's long-standing Livable Region Strategic Plan. A civic presence in the area promises to enhance the status the burgeoning commercial and residential developments are creating. A performing arts centre, regional library and other civic amenities are slated for the City Centre area.

"I just think it's really important that the City of Surrey have a presence in the city centre," Ms. Watts said. "Basically, it's building the metropolitan core and part of building that is having a civic presence there."

That's not to say that commercial projects will face a cakewalk in terms of development. David Goodman, a broker with Macdonald Commercial Real Estate Services Ltd., said the appetite for development sites in Surrey fell last fall as much as anywhere else in Metro Vancouver.

"Things are much slower, or on hold. And we're no exception," he said. "Developers really just want to stay solvent rather than look at properties."

Buyer interest in a one-acre site Mr. Goodman is listing opposite the Central City development has dropped, and he expects new construction in the area to be slower than anticipated as financing options remain limited.

"Whether it will happen or not in these times that we're living in or whether it'll be put off three or four years, who knows? It's hard to say," he said. "There's going to be many more shoes to drop before this thing is over."

John Hayes, managing director for Blackwood Partners, remains unconcerned, however. "Since acquiring Central City, the asset has performed well; we have leased more than 100,000 square feet of the vacancy we inherited on closing." he said. "Despite the troubling economic times, we still view Surrey as a significant growth area going forward."
 

taal

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So is this similar to the relation we have with MCC, VCC, and slowly Markham?

The only difference I can see is that there isn't as intense office development here which is probably not a good thing i.e. you don't really see much in the way of office space being developed in MCC, VCC (not yet at least).

Instead what we have in the GTA are commercial nodes and residential nodes with a few exceptions i.e.:
downtown (doesn't really count)
NYCC (very little new commercial development)
MCC (very little new commercial development)
STC (very little new commercial development)

And then commercial nodes developing at an outstanding pace i.e.
Airport center
Vaughn in general (not so much concentrated in VCC, although that's the future plan)
Markham (again, spread out).

Maybe that's how Vancouver's suburbs got it right. They're more concentrated and mix residential and commercial together.


Actually when I stop and think about it, maybe Vancouver is where Toronto (GTA) was many many years ago - Burnaby/surrey can be compared to MCC and STC (many years in the past) when office and residential development both took place. Probably given 10/20 years land in the suburbs will become too expensive and office development will move to other areas (like what has happened here around the airport, vaughn and markham).
 

Hipster Duck

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^Vancouver can also be compared to Toronto 30 years ago in that it is always in the process of expanding rapid transit. Once they cut the ribbon on the Millennium line they were already running the EAs for the Canada line. Now with construction on the Canada line in full swing, it seems as if they are working on prepping for the Evergreen line. I expect that once the Evergreen line is under construction they will be holding EAs for the Broadway extension of the Millennium line to UBC, etc.

The other great thing about Vancouver's transit planning is that they really made ALRT technology work for them. While the SRT represents the day that transit planning died in Toronto, Vancouverites have used the technology to its full potential, pushing computer-controlled trains down the line every 90 seconds. Meanwhile, we stand in the cold at Kennedy station for 5 minutes waiting for the ATU hack to thread the 4 aging cars slowly onto the platform.
 

officedweller

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AT present, I would say that NYCC and MCC both have more commercial office space than Surrey does (and also more than the current other town centre - Metrotown). Not sure if Scarborough would have more, but it may do so.


FYI - here's a link to the project at Gateway Station:

http://www.da-architects.ca/projects/gateway-business-park-surrey-bc/



Overview
This development is designated as mixed-use with office space, restaurants, retail, high-rise residential building, underground parking, and offers significant public access open space. This project is designed to achieve the LEED Gold level of sustainable implementation, starting with offering recycling space on site. Some of the issues addressed in the design will be water efficiency and conservation through rainwater harvesting and re-use. A vital part of the storm water management initiative will be green roofs. This project is in collaberation with MCM Partnership.
 
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taal

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Yep, that's way I retracted my original comment without deleting it :)

This resembles development in the GTA many years ago when NYC, SCC, MCC were growing.

Regarding transit.

The Vancouver area seems to have done a better job servicing the outer regions but not so much the inner regions.

But when you stop and think about it, that's not surprising.

There is so little in the way of office space in downtown Vancouver, or Vancouver all together it probably works out well for their region.
 

officedweller

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That's right, commuting patterns around Vancouver are much more spread out than TO because we don't have the big head offices that TO does. Mind you, with all the business parks around Mississauga and Markham these days, TO's patterns have also changed, but downtown remains very very dominant.
 

wyliepoon

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While the SRT represents the day that transit planning died in Toronto, Vancouverites have used the technology to its full potential, pushing computer-controlled trains down the line every 90 seconds. Meanwhile, we stand in the cold at Kennedy station for 5 minutes waiting for the ATU hack to thread the 4 aging cars slowly onto the platform.
How often does the Skytrain break down? The SRT is prone to breakdowns mostly because of the winter weather (and the TTC's refusal to clear snow along the track, even though, if I remember correctly, snow clearing technology was built into ICTS tracks with cables that can be heated to melt snow), which is more severe than on the west coast.

I wonder how often Detroit's People Mover breaks down. I've taken two rides on the DPM, both times during the winter, and there were no delays. Looks like the TTC is the only 1st generation ICTS operator to have run the system into the ground.
 

Brandon716

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I was in Surrey one year ago and was surprised at the amount of projects and growth going on. Its certainly got some pretty tall structures going up.
 

unimaginative2

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Hipster Duck: The Evergreen Line just got its funding in the federal budget.

The Evergreen Line has an interesting planning history. It was originally supposed to be built with Skytrain technology, and the Millennium line was designed to accommodate it. The NDP government then decided to change the technology to light rail. More recently, however, the new government studied the route again and determined that the vastly higher ridership provided by the transfer-free and higher-speed Skytrain system, plus the lower operating costs of automatic operation, more than outweighed the somewhat higher capital cost.
 
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officedweller

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During the recent snow storms in BC, SkyTrain was slowed down with major delays but kept running for the most part. Frequency was way down and the added crowds due to the snow didn't help. In heavy snow conditions, they tend to have an operator on board each train.

Current breakdowns tend to be related to the age of the system related to switches - these systems are being upgraded.

Here's TransLink's "snow plan" for SkyTrain:

http://buzzer.translink.ca/index.php/2009/01/skytrains-snow-plan/
 
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