Promotional supplement
VA N COU VE R C H A P T E R 13th annual
Regional
METRO VANCOUVER
CHAPTER
Office
Development Cost Survey Fall 2012
2012 Highlights
The Vancouver Chapter of the Commercial Real Estate Development Association (NAIOP) is pleased to present the 2012 edition of their Commercial Development “Report Card”
NAIOP will be acknowledging the municipalities that have excelled in creating environments positive to business creation. The 3 categories of awards are: Most Improved – The most improvement compared he Vancouver Chapter of to previous survey results the Commercial Real Estate Most Fiscally Responsible Development Association (NAIOP) – Cost increases kept in line V A overall N C inflation OUVER C H A is P pleased T E R to present the 2012 edition with Most Business Friendly of their Commercial Development – Implementation of policies to support “Report Card” the creation of new job spaces Economic growth continues at
T
The awards will be presented at the October 18th breakfast meeting
This year’s winners are: Most Improved (Joint award) – Port Moody and the City of Surrey – these cities recorded an overall drop in costs of 18% and 19% from the previous survey results in 2010 Most Fiscally Responsible (Joint Award) – City of North Vancouver and West Vancouver – these cities have managed to limit cost increases to a rate that is below the average GR ATER VA COUVER rate ofEinflation since theNsurvey’s inception in the year 2000 Most Business Friendly – City of Chilliwack – In 2011 City Council established an Industrial Revitalization Tax Exemption program wherein Construction of new industrial buildings with a value of construction in excess of $1 million (or an alteration/addition of an existing industrial building with the same value), can qualify to save on industrial property taxes for five years with this new industrial incentive.
Some Positive Highlights to Note: • Two municipalities managed to keep their cost increases below the rate of inflation over the 12 year period from 2000 to 2012 • Four municipalities had no cost increases since the last survey in 2010 and 7 municipalities reduced costs from 2% to just under 20% during this time period. This represents the best result in the survey’s 12 year history. • Business to Residential Tax ratio’s have remained relatively static since 2010 with roughly half of the municipalities meeting or exceeding the ideal ratio of 3 to 1.
Some Not-So Positive Highlights to Note: Processing times appear to be on the increase with 6 municipalities experiencing increases in approval timing offset by a decrease in one municipality
a measured pace with the US fall elections approaching and the local office market appears to have taken a pause in the first half of the year by posting roughly 100,000 square feet of negative absorption with a vacancy rate of 7.5%. The pause may be well justified as the market awaits what is sure to be an active period for the City’s local brokerage and interior design community, with the introduction of a combined 1.0 million square feet of new product scheduled for CHAPTER completion in the downtown core by 2014. Suburban markets continue to struggle with the five key local submarkets experiencing vacancy rates of 10% to over 19%. In 2001 when the Office Survey was started, the vacancy rate was roughly 9% and in 2002 roughly 1.0 million in new product was brought into the market. By late 2002, the vacancy rate shot up to 14% and it was 3 years before it again dipped below the 10% mark. We’ll see soon enough if history repeats itself. As an old Chinese proverb states: May we live in interesting times. We hope you find this years survey informative and we look forward to continuing to provide this service for many years to come. The Survey, which is distributed to 20 communities within the Lower Mainland, requires each municipality to identify the costs and processing times associated with the parameters of the case study outlined within this article. For 2012, the development project was, as per the previous Surveys, the construction of a 2 storey, 50,000 square foot office building on 2.5 acres of land requiring both subdivision and rezoning. In producing this annual publication, NAIOP strives to
2012 NAIOP VANCOUVER/BIV COMMERCIAL REAL ESTATE AWARDS OF EXCELLENCE
Office Lease winner for 2012: Containers on Terminal Columbia College, 428 Terminal Ave., Vancouver
Office Development winner for 2012: Broadway Tech Centre Bldg. #4
provide its membership and the business community as a whole with a reference tool that quantifies the costs and processing times associated with typical development projects within Metro Vancouver municipal jurisdictions. Moreover, we believe the Survey can be utilized by the municipalities, whose active participation makes this survey possible, as a gauge for how their own development costs and approval processes compare to their neighbours.
Index Survey Scenario........................... 3 Market Beat - Office Report........ 6 Market Highlights........................ 7 Municipal Fees............................. 8 Mill Rates.................................... 8 Municipal Fees and Approval Times........................................... 9 Future Trends............................. 12 Move Towards Green................. 13 2012 NAIOP Icon Profile............ 14 Comparative Tax Burden........... 15