Pricing for strata office space at Bosa Development Corp.’s 320 Granville Street tower continues to draw attention, but as Chuck We of Oxford Properties Group recently told commercial real estate association NAIOP, it might not be kind to downtown landlords.
“When BC Assessment sees that office space is now worth north of $2,000 a foot, that works back into their land valuations,” We said. “So when you go ahead and rezone they’ll happily collect taxes on that basis.”
It’s not just tax assessments that could be affected; community amenity contributions (CACs) are also linked to property values.
The discussions regarding them are often long and hard, as the negotiations regarding the former post office site in the 300-block of West Georgia highlight.
Moreover, the cost to residential developers can be significant, boosting what finished units cost and, ultimately, market value – the lift that’s critical to CAC negotiations.
City planning staff acknowledge the connection, unless land costs reflect the yet-to-be-negotiated CACs.With the latest numbers from market research firm Urban Analytics Inc. indicating square-foot pricing for condos surging toward $3,000 downtown, developers are anxious, and new city policies regarding CACs aren’t calming them.
Vancouver council has ditched CAC negotiations for low-density rental projects and embraced standard fees for pure commercial developments, but negotiations remain for large rental projects and commercial strata rezonings.
How escalating prices influence CACs concerns Urban Development Institute president and CEO Anne McMullin.
“We look forward to a continued collaboration with the city to improve CAC negotiations and move to more fixed fees when possible,” she said.