As the residential condo sector in South Surrey and White Rock continues strong, the commercial and industrial side is struggling to keep up with increased rent, lack of options and a shortage of available land.
One of the flashpoints has been along Marine Drive in White Rock, a commercial street known for locally run restaurants and shops. White Rock city councillor David Chesney said in the past few months as many as six restaurants have closed down. He said there’s a number of contributing factors from poor marketing to high parking rates and traffic congestion steering tourists away. He said when it comes to real estate’s role, one aspect sticks out.
“I’m under the impression from what some people have told me that a lot of the commercial property along the waterfront has been bought by offshore investors,” he said. “So they don’t care if it sits empty or it falls apart.”
Chesney mentioned an empty home tax like Vancouver’s might help alleviate some of the problems; however it would have to apply to commercial in this case. He added with no incentive to have a new tenant move in, the area gets a run-down feel and tourists head to other areas.
Janet Wait, the owner of Jan’s on the Beach, located on Marine Drive close to the White Rock Pier, agreed with Chesney’s assessment.
“There are some overseas landlords that have raised the rents lately, but there’s also some local landlords doing it too. Deluxe on East Beach has been sitting empty for three years. They raised the rent on that, so the restaurant couldn’t afford to stay there and they moved out and it’s still empty.”
The high rent is apparently not universal, however. Western Investor found prime vacant restaurant retail space on White Rock’s Marine Drive – kitty-corner from the landmark pier – from $14 per square foot on an annual lease basis, comparable to lease rates in north Surrey and lower than in White Rock’s uptown strip along 152nd Street.
Retail developers are moving into White Rock and South Surrey, but they are just not building close to the beach, according to a report from Lee & Associates of Vancouver.
Bosa Properties will begin sales on the second phase of Miramar Village, a mixed-use retail and residential development in uptown White Rock later this year. Landmark Premiere Properties acquired a 2.5-acre site, also in the city’s uptown area, for the construction of Foster Martin, composed of three mixed-use residential towers with 25,000 square feet of retail space beneath 330 condominiums.
The renovation of Semiahmoo mall is gaining momentum as First Capital re-merchandises around the former Zellers at 16th Avenue and 152nd Street in White Rock, Lee & Associates noted.
In South Surrey, Grandview Central Shopping Centre is in the final stages of construction and is anchored by the recently opened Real Canadian Superstore as well as Goodlife Fitness and Shoppers Drug Mart. These retailers join a market of over one million square feet of existing retail within a one-kilometre radius of the southeast corner of 24th Avenue and 160th Street.
Meanwhile, the industrial real estate sector appears to be getting lost in the shuffle.
Land being used for industrial purposes in the City of Surrey has dropped sharply since 2009, when 4,608 acres were being utilizedm, to 2,820 at the end of 2015. The city’s website now cautions “as land values increase over time, areas zoned for industrial use face pressure from commercial and residential development.”
Fraser Valley Real Estate Board president Charles Wiebe acknowledged the entire region’s commercial and industrial real estate sector is currently challenged by a lack of inventory.
“We’ve seen the cost of the industrial market go up due to lack of supply, and that is prevalent throughout the Fraser Valley.”
A lot of old office and retail space is sitting vacant as investors and businesses tend to focus on new developments with mixed-use layouts, Wiebe added.
Condos are “hot”
Concerning residential real estate, Re/Max agent Matt Morrow said the detached-house market in South Surrey and White Rock has “cooled,” which is at least an understatement.
Detached sales plunged 68.8 per cent in January compared to a year earlier, though the average house price has risen 25 per cent in the same period, to $1.4 million.
Morrow said buyers haven’t disappeared, they’ve just moved onto townhomes and condos, where multiple bids are now common.
“Our market right now is insanely hot in the lower end,” Morrow said referring to sales of lower-priced strata homes.
Morrow said he has 18 strata buyers “willing to pull the trigger” but there is a lack of inventory. “I’m out writing an offer every second night and losing most of them.”
The average price for an apartment condo in South Surrey and White Rock shot up 14 per cent from December to January. At $423,000, it is now 21.8 per cent higher than a year ago, real estate board stats show.
Average prices for townhomes in the area sit at $623,300, up 31 per cent from a year ago, but still half the price of a detached house in the same neighbourhood.
Ryan Blue, another Re/Max realtor who sells in the South Surrey-White Rock area, said Vancouverites eager to get into the housing market could do so if they’re willing to cross the Fraser River, and forget buying a house.
With the house prices in the city of Vancouver at Canada-wide highs, homes are much more affordable in South Surrey-White Rock, he said.
“The biggest thing I have found for my clients is the value of what you get for your money,” said Blue. “For the price of a studio in downtown [Vancouver] you can get a three-bedroom townhouse with a yard [in South Surrey].”