PROMOTIONAL SUPPLEMENT VANCOUVER CHAPTER 17TH ANNUAL Regional OFFICE M ETRO VANCOUVER CHAPTER Development Cost Survey Fall 2016 The Vancouver chapter of the Commercial Real Estate 2016 Highlights Development Association (NAIOP) is pleased to present NAIOP will be acknowledging four municipalities that have excelled the 2016 edition of its Office Development ”Report Card” in creating environments positive to business creation. The three categories of awards are: Centreview Most Improved VTheANCOUVER most improved compared CHAPTER to previous survey results Most Fiscally Responsible Cost increases kept in line with overall inflation Most Business-Friendly Implementation of policies to support the creation of new job spaces This year’s winners are: Most Improved: City of Maple Ridge has allowed for a 38% reduction in development fees from 2014 to 2016 (due to its incentive programs) and a 17% decrease in processing timing to 150 days. Most Fiscally Responsible: District of West Vancouver hasGREATER managed to keep VANCOUVER an annual CHAPTER average inflation rate of 1.49% for development fees over 16 years. Most Business-Friendly: City of North Vancouver for its policy to pre-zone certain areas of the city allowing bonus density for sites meeting green building standards. City of Maple Ridge for its policies supporting temporary tax exemption for new, green building commercial development in the town centre and rebates on development fees. District of North Vancouver for its policy to allow bonus density of 2% to 8% for sites where no ith the last quarter of 2016 well historical background of the increases rezoning is needed based on underway, the next edition of the (or decreases) compared to the historical Index meeting green building standards. W Commercial Cost of Business Survey equivalent annual average inflation rate OfficeDevelopmentScenario .....2–3 Some Positive Highlights to Note: is ready for your review. The survey, during that period. We are sure you EconomicImpactofCommercial •Sixmunicipalitieslowered which is distributed to 20 municipalities will find these particular results quite CACs in Downtown Vancouver .....4 their development costs within the Lower Mainland, requires informative. Move Towards Green. 5 •Ninemunicipalitiesheldtheir each municipality to identify the In producing this annual publication, MarketbeatOfficeSnapshot .....6–7 development costs below or costs and processing times associated NAIOP strives to provide its membership up to the rate of inflation DevelopmentExamples ����������������� 8–9 •Elevenmunicipalitiesreduced with the parameters of the case study and the business community as a whole MunicipalFees ................10 or maintained their application outlined within this article. For 2016, with a reference tool that quantifies the Timing. 11 the development project was, as per the costs and processing times associated processing times Mill Rates ....................12 previous surveys, the construction of a with typical development projects within Permit Data ������������������������������������� 13 Some Not-So-Positive two-storey, 50,000-square-foot office Metro Vancouver municipal jurisdictions. Highlights to Note: building on 2.5 acres of land requiring Moreover, we believe the survey can be Interview with Nat Bosa .........14 •Twomunicipalitiesincreasedtheir both subdivision and rezoning. utilized by the municipalities, whose Comparative Tax Burden .........15 development costs by over 175% Talking with the Winners .........16 •Fourmunicipalitiesincreased Just as the 2014 survey reported, we active participation makes this survey FutureTrends .................17 their application processing thought it would be interesting to show possible, as a gauge for their own times by 50% or more the costs we first reported back in 2000 development costs and approval processes CREA ....................18–19 at the survey’s inception to give some compared to those of their neighbours. 2 Regional Office Development Cost Survey — Fall 2016 M ETRO VANCOUVER CHAPTER ACKNOWLEDGEMENT NAIOP would like to Office Development Scenario acknowledge and thank all of VtheANCOUVER municipalities CHAPTE that tookR his year’s survey was based on an office by industry, and holds municipalities •2.5 acres part in this year’s Development Tdevelopment scenario, the construction accountable for delivering on promises Development proposal Cost Survey. Participation of a two-storey, 50,000-square-foot, Class to efficiently process development • Two-storey, 50,000-square-foot is voluntary and the time B office building on 2.5 acres of land. opportunities in their respective office building expended to respond to it can Municipalities received a “development jurisdictions. • Interior lot with 295 feet of frontage be significant, not unlike a proposal” where rezoning, subdivision, All municipalities were provided an on dedicated municipal roadway “real” development application. development permit and building permit opportunity to review and comment on • Net size of two acres after road and Development in any jurisdiction approvals would be required. They then the results prior to publication. Please note other dedications GREATERis a partnership VANCOUVER between CHAPTER reported on development costs and approval that the survey results are based solely on Required municipal processes business and the community. times according to their usual standards and the responses of the municipalities. The •Rezoning NAIOP is pleased to be in a processes. Metro Vancouver water and sewer charges, •Subdivision position to work, on behalf of Twenty municipalities were sent the returnable security deposits, and letters of •Development permit our members, with all of the survey representing a real-life situation in credit have been broken out as separate •Building permit Metro Vancouver jurisdictions a mock development scenario, intending items for comparative purposes but have Construction costs that participated in the for them to run this request through their not been included in totals due to regional • $132 PSF for the building publication of this information approval timeline and assess overall cost variation in methods for calculating these ($6.6 million) for the business community. requirements. items. • $12 PSF for site improvements NAIOP would also like to This level playing field provides Subject property is currently: ($600,000) acknowledge the contributions meaningful comparison to actual building •Not subdivided • $600,000 for street and drainage from Cushman & Wakefield and development permit requests made •Zoned residential improvements (not DCC rebatable) for the Marketbeat report. If you have any questions on the data, please contact the co-ordinator of the Cost of Business Survey, Christopher Correia, at christopher@ pacificlandgroup.ca. West Elevation East Elevation Regional Office Development Cost Survey — Fall 2016 3 M ETRO VANCOUVER CHAPTER Office Development Scenario V ANCOUVER CHAPTER GREATER VANCOUVER CHAPTER Second Floor Ground Floor NEXT ad final_Layout 1 16-11-08 8:41 PM Page 1 Our job? Save you money. Remediation is just a clean up... why spend more than necessary? Call now...Talk to the leaders in regulatory interpretation. Next Environmental Inc. Ask about our fixed price investigations and remediation. CONTAMINATED SITES SPECIALISTS Speed up your project... keep your costs down! CONTACT US TODAY: 604-419-3800 | nextenvironmental.com 4 Regional Office Development Cost Survey — Fall 2016 M ETRO VANCOUVER CHAPTER Economic Impact of Commercial CACsV ANCOUVER CHAPTEin R Downtown Vancouver ast May, NAIOP Vancouver released appear to be an additional revenue Key Findings from the Altus Lits report on the economic impact source to the city, the negative economic of community amenity contributions consequences of introducing such a tax Study of CACs in Vancouver (CACs). The report was commissioned on such an important economic activity to Altus Group Economic Consulting to should also be carefully considered,” The Office Sector Has a Tremendous Impact on B.C.’s Economy provide an assessment of the economic concludes Wylie. “The factors outlined in $2013 millions Jobs* benefitsGREATER of VANCOUVER downtown CHAPTE Vancouver’sR office the report, coupled with the substantial sector and the potential negative impacts of risks and low returns associated with office $969 9,205 the application of CACs to office rezoning development, are increasingly causing $884 developments in downtown Vancouver. our members looking to invest in office The CAC is a charge applied to private development to explore other options in rezoning applications within the city of major markets outside the province,” he Vancouver. The purpose is to address adds. growth costs, area deficiencies, and/or NAIOP Vancouver would like to other community needs and impacts. work with the city to determine how the Until recently, CACs or community current process can be improved so that $196 benefits typically have been applied only new office development, and its associated to residential or mixed-use rezoning economic and environmental benefits, are GDP Income and Profit Taxes** Jobs applications, despite the fact that office encouraged within the downtown core. * FTE-Persons Years of Employment development in downtown Vancouver is The report outlined the following ** Federal and Provincial not explicitly exempt. Recently, the City economic impacts of the office sector in of Vancouver has begun to negotiate downtown Vancouver (2013 figures).