This year building permits in South Surrey have surpassed those in Surrey's Central district by a factor of three to one as developers lock on to one of hottest demographics in the region.
"The money is here," said Dean Bauman, a commercial realtor with Re/Max Colonial Pacific of White Rock, who has worked in the South Surrey market for years.
According to Bauman, the South Surrey-White Rock zone is luring wealthy homebuyers from across Metro Vancouver – and retail and office developers are taking the cue.
Some even compare the area with ultra-upscale West Vancouver, because both areas boast an average family income greater than $86,0000.
When West Vancouver-based Larco Developments envisioned a mixed-use lifestyle shopping centre in South Surrey – modelled on the expansion of its Park Royal Mall in West Vancouver – the aim was to create a "different vibe" from suburban strip retail, big boxes and walled-in shopping malls.
Instead, Larco's 10-acre, two-year-old Morgan Crossing became the harbinger for South Surrey's real estate boom.
Today, the Morgan Crossing mixed-use, pedestrian-friendly complex is a destination where brand-name retailers clamour for storefronts, more than 1,000 residents have moved into condominiums and businesses are buying office space at $350 per square foot. The Shops at Morgan Crossing, totalling 500,000 square feet of stores, is 95% leased and features such urban touchstones as a gourmet cooking school, Wi-Fi latte bars and high-profile fashion retailers.
Urban environment consultant and planner Michael Geller, who worked with Grosvenor on the smaller-scale but similarly themed High Street at South Pointe Exchange development in South Surrey, said such projects speak to how the area has changed from a place where the major attraction was affordable housing.
"Larco has recognized that many of the attributes of South Surrey are similar to the attributes of West Vancouver," Geller said.
Housing prices reflect the comparison. The average price of a detached house in South Surrey -White Rock is $1.05 million, compared with $619,000 in the rest of the Fraser Valley. A typical condo apartment in the south sells for $359,000, while it goes for $186,000 in Central Surrey.
The comparison with Central Surrey is telling. Central is where the new RCMP headquarters, a new city hall and library and the tallest condo towers between Vancouver and Calgary are being built, yet this year it trails South Surrey in overall permits and new-home construction.
Since 2009, 2,837 new homes have been built or started in South Surrey, compared with 1,582 in Central Surrey. And, for the first eight months of this year, total building permits in the south reached $31.7 million, compared with $10.5 million in the Central/Whalley area.
Centre ice for South Surrey development is the intersection of 24th Avenue and 160th Street. It is the location for Grandview Corners, the RioCan Real Estate Investment Trust retail development that houses both big-box and specialty merchants in a 514,000-square-foot complex very close to Morgan Crossing. It's rumoured that U.S. retail giant Target is eyeing Grandview Corners, as is Costco.
The centre ice nexus is more than retail. It's also the site of Metro Vancouver's largest office strata project and where a two-building office complex is now attempting to pre-lease space. The Morgan Gateway Business Park is an ambitious project by city-affiliated Surrey Development Corp. and a private developer, KNV Accountants. Plans call for a 110,000-square-foot office park in two phases near Highway 99 in South Surrey.
"We haven't got any pre-leases signed yet," said Andrew Laurie, senior associate, office leasing, with Cushman & Wakefield Ltd.
Laurie said per-square-foot lease rates for the LEED-standard complex will be in the $20-to-$24 range. Tax and operating costs will add another $10 per square foot.
There are some doubts about the office market in South Surrey. Avison Young notes that mid-year vacancy rates hit a six-year high of 9.2%. With roughly 300,000 square feet of new space planned, there are concerns that some projects might be shelved. Laurie is not among them.
"We have been told that [Morgan Gateway] is going ahead, regardless."
Laurie added that, despite a strong precedent in the area, there are no plans to offer strata sales at Morgan Gateway.
The 150,000-square-foot Grosvenor Business Centre near Morgan Crossing – the largest office strata project in the Lower Mainland – has nearly sold out at around $350 per square foot.
"We had 30% of the tower sold before it even broke ground," said Gord MacPherson of Re/Max Commercial Advantage.
He added that the "synergy" of the retail and residential mix at Morgan Crossing helped to draw office buyers that include doctors and other professionals.
Surrey's southern hot zone has also lured big-name residential developers like Adera Group, which is currently selling its Breeze townhomes next to Morgan Crossing. In all, 18 new residential projects are now marketing in the area.
"Our walking score [a Google formula that tracks how pedestrian-friendly an area is] is 80 out of a possible 100, which is amazing for a suburban neighbourhood," said Adera president Norm Coutie. "It's like Yaletown, but with golf and beaches."
The Achilles heel of South Surrey's growth is transportation. Locals say the real need is for faster links to Surrey's SkyTrain network. •