Development cost charges for industrial developers in Metro Vancouver can add more than $8 to the square-foot-cost of construction, according to a survey released October 20 by NAIOP, which represents major commercial and industrial developers in the region.

The 12th annual development cost survey, and the sixth to focus on the industrial sector, drew information from 20 municipalities across the Lower Mainland. The survey used a baseline of a 100,000 square foot industrial warehouse on 5.5 acres of land that required rezoning and subdivision. It is the direct municipal development cost charges (DCCs), separate from any rezoning fees, that really stand out.

The survey found, for example, that the DCCs in Richmond totalled $896,000 for the 100,000 square foot building, or $8.96 per square foot. This is higher than the average annual industrial lease rate in Metro Vancouver, which ranges from $6.50 to $8.50 per square foot.  In Vancouver, the DCCs for the same building would be $417,000, which is nearly double the rate from 2009, when the last industrial cost survey was taken.  In five of the municipalities surveyed, the per-square-foot cost of DCCs was more than $4, and the rate had risen in half of the municipalities surveyed, NAIOP found.

“It is surprising to see costs go up that much, given that we have been in a fairly turbulent time for the market,” said survey author Graeme Silvera, a vice-president at the Plenary Group,, “Most people are trying to control costs to make it better for business.”

For the full NAIOP development cost survey, see the November issue of Western Investor.