Booming Surrey Takes Centre Stage in Metro Vancouver
02 Jun 2022 5 Minute
Downtown Vancouver has traditionally been viewed as the premier market for real estate investment and development in British Columbia, especially in the office and multi-family sectors. That’s about to change.
With office rental rates hitting new highs and new construction being absorbed at a record pace, businesses are finding it increasingly difficult to lease suitable office space downtown.
On the multifamily front, the popularity of remote and hybrid work has grown due to the pandemic. There has been a marked shift in living preferences, with many people moving to cities and suburbs outside Vancouver, where housing is relatively more affordable and spacious.
Surrey, on the other hand, is a primary beneficiary of all these trends and could supplant downtown Vancouver in the top spot for investors, residents and businesses in the near future.
Surrey City Centre
Everything’s Coming Up Surrey
In Surrey, the purpose-built rental apartments had 0.6% vacancy in 2021, while new home and condo listings saw the highest month-over-month volume increase in 20 years in February 2022.
“The cost of housing is rising everywhere,” says Jim Szabo, CBRE’s Vice Chairman of Capital Markets, “but it’s marginally more reasonable in Surrey. And that’s attractive to people. With more people moving out to places like Surrey, the need for rental housing there is big.
“We’re seeing new concrete towers not just in Surrey’s City Centre, but also in Fleetwood and Guildwood and other areas outside the City Centre,” he adds. “With the extension of the SkyTrain, you’re going to see more growth, especially along the transit line.”
Sustained low apartment vacancy in Surrey is largely due its significant population growth over the last few years.
Ranking among the fastest growing cities in the province, Surrey’s population expanded at a rate of 9.7% between 2016 and 2021 and the city continues to see a record number of new residents (nearly 1,000 each month).
“The population growth here is huge,” says Elizabeth Model, Vice Chairman of Downtown Surrey’s Business Improvement Association (BIA). “And that population needs support from services and businesses – businesses that are starting to find head offices in the Fraser Valley because they recognize the value of this population growth.”
As young talent and families move into outlying suburban nodes like Surrey, there is increased demand to create complete neighbourhoods with convenient access to quality employment, schools, services, and other community amenities. “Employers want to be close to their employees,” Szabo says.
At Central City, for instance, there are plans for significant mixed-use development. There is approximately 8 million square feet of excess density on the site, part of which will be a major office tower, in addition to several residential towers.
“And that will draw companies into the city,” says Szabo. “That’s in addition to the existing 1.2 million sq ft. of office and service-related retail that is already on site.”
Surrey’s population and development boom is a testament to decades of forward thinking.
The city has transformed significantly over the last two decades, making substantial strides in economic investment and real estate development, mainly driven by the expansion of Simon Fraser University (SFU) and the Surrey Memorial Hospital.
“The City Centre is really an interesting blend of new developments, higher education, youth, population growth, retail, and an emerging med-tech industry,” says Model. “The programs that SFU is working on – the technologies that they are creating and the education they are making available to youth - have really made this a promising and dynamic area for long-term investment.”
University of British Columbia (UBC) recently announced its expansion into Surrey, acquiring a $70 million parcel of land near Surrey Memorial Hospital. This is just one part of a significant science and technology industry forming in Surrey’s Innovation Corridor, creating synergies between local businesses, Surrey Memorial Hospital, and both SFU and UBC.
"Surrey is quickly becoming a leader in B.C.," says Model, "And some of the growth around the med-tech sector has been absolutely phenomenal.”
She points to a first-of-its-kind partnership between Lark Group and the Royal Canadian Legion to develop a $312-million integrated centre for veterans and first responders experiencing post-traumatic stress disorder (PTSD), a trailblazing innovation in Canada.
Home is Where the Units are Built
Real estate developers are also taking notice of Surrey’s emergence as a national economic force, as evidenced by the number of mixed-use residential projects that are currently in development in the City Centre.
Surrey has experienced nine consecutive years of record-breaking construction, with total building permits exceeding $2 billion in 2021. Developers like Anthem and Concord Pacific are transforming large parcels of land in the City Centre into complete communities, including condo and multifamily rental, high-end tenant amenities, park space, and retail and commercial amenities, all surrounding SkyTrain stations that offer convenient rapid transit throughout Metro Vancouver.
“The presales of condo towers in Surrey’s City Centre have been remarkable,” says Szabo. “They’re hitting pricing that’s equivalent to Burnaby and New Westminster, exceeding $1,000 per square foot. There’s not really a significant price differential or discount anymore between Surrey and some of the other suburban markets. In the last year, Surrey has really come into its own.”
Surrey is no longer just a suburban town centre – it is attracting significant investment into high-density residential, commercial, mixed-use, and institutional development. Surrey’s location, affordability, development incentives, and economic expansion will continue to fuel interest from developers, transforming Surrey into a mixed-use downtown core all its own.
“It helps that Surrey is very openminded when it comes to development, which is attractive to investors,” says Szabo. “One of the more recent policy amendments that they’ve come up with is a fast-tracked rezoning process, which is unheard of in any other municipality.
“This will make Surrey a magnet for opportunity and an increasingly significant player in British Columbia, and Canada in general.”
Paul Gemmel, Senior Vice President, Capital Markets, is set to retire at the end of 2022, bringing an end to a 27-year legacy that has shaped the city’s multifamily market and facilitated over $4 billion of commercial property transactions.
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