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G R E A T E R V A N C O U V E R C H A P T E R

M E T R O V A N C O U V E R C H A P T E R

Promotional suPPlement

The Vancouver Chapter of the Commercial Real Estate Development Association (NAIOP) is pleased to present the 2012 edition of their Commercial Development “Report Card”

Fall 2012

Regional

Office Development cost Survey

13TH ANNUAl

2012 HighlightsNAIOP will be acknowledging the municipalities that have excelled in creating environments positive to business creation. The 3 categories of awards are:Most Improved – The most improvement compared

to previous survey resultsMost Fiscally Responsible – Cost increases kept in line

with overall inflationMost Business Friendly – Implementation of policies to support

the creation of new job spaces

The awards will be presented at the October 18th breakfast meeting

This year’s winners are:

Most Improved (Joint award) – Port Moody and the City of Surrey – these cities recorded an overall drop in costs of 18% and 19% from the previous survey results in 2010

Most Fiscally Responsible (Joint Award) – City of North Vancouver and West Vancouver – these cities have managed to limit cost increases to a rate that is below the average rate of inflation since the survey’s inception in the year 2000

Most Business Friendly – City of Chilliwack – In 2011 City Council established an Industrial Revitalization Tax Exemption program wherein Construction of new industrial buildings with a value of construction in excess of $1 million (or an alteration/addition of an existing industrial building with the same value), can qualify to save on industrial property taxes for five years with this new industrial incentive.

Some Positive Highlights to Note:

• Two municipalities managed to keep their cost increases below the rate of inflation over the 12 year period from 2000 to 2012

• Four municipalities had no cost increases since the last survey in 2010 and 7 municipalities reduced costs from 2% to just under 20% during this time period. This represents the best result in the survey’s 12 year history.

• Business to Residential Tax ratio’s have remained relatively static since 2010 with roughly half of the municipalities meeting or exceeding the ideal ratio of 3 to 1.

Some Not-So Positive Highlights to Note:

Processing times appear to be on the increase with 6 municipalities experiencing increases in approval timing offset by a decrease in one municipality

provide its membership and the business community as a whole with a reference tool that quantifies the costs and processing times associated with typical development projects within Metro Vancouver municipal jurisdictions. Moreover, we believe the Survey can be utilized by the municipalities, whose active participation makes this survey possible, as a gauge for how their own development costs and approval processes compare to their neighbours.

IndexSurvey Scenario .......................... 3Market Beat - Office Report ....... 6Market Highlights ....................... 7Municipal Fees ............................ 8Mill Rates ................................... 8Municipal Fees and Approval Times .......................................... 9Future Trends ............................ 12Move Towards Green ................ 132012 NAIOP Icon Profile ........... 14Comparative Tax Burden .......... 15

The Vancouver Chapter of the Commercial Real Estate

Development Association (NAIOP) is pleased to present the 2012 edition of their Commercial Development “Report Card”

Economic growth continues at a measured pace with the US fall elections approaching and the local office market appears to have taken a pause in the first half of the year by posting roughly 100,000 square feet of negative absorption with a vacancy rate of 7.5%.

The pause may be well justified as the market awaits what is sure to be an active period for the City’s local brokerage and interior design community, with the introduction of a combined 1.0 million square feet of new product scheduled for completion in the downtown core by 2014. Suburban markets continue to struggle with the five key local submarkets experiencing vacancy rates of 10% to over 19%.

In 2001 when the Office Survey was started, the vacancy rate was roughly 9% and in 2002 roughly 1.0 million in new product was brought into the market. By late 2002, the vacancy rate shot up to 14% and it was 3 years before it again dipped below the 10% mark. We’ll see soon enough if history repeats itself. As an old Chinese proverb states: May we live in interesting times. We hope you find this years survey informative and we look forward to continuing to provide this service for many years to come.

The Survey, which is distributed to 20 communities within the Lower Mainland, requires each municipality to identify the costs and processing times associated with the parameters of the case study outlined within this article. For 2012, the development project was, as per the previous Surveys, the construction of a 2 storey, 50,000 square foot office building on 2.5 acres of land requiring both subdivision and rezoning.

In producing this annual publication, NAIOP strives to

Office Lease winner for 2012: Containers on Terminal Columbia College, 428 Terminal Ave., Vancouver

Office Development winner for 2012: Broadway Tech Centre Bldg. #4

2012 NAIOP VANCOUVER/BIV COMMERCIAL REAL ESTATE AWARDS OF EXCELLENCE

Great Companies. Great Spaces.

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Our flexible approach has offered our partners - a mix of public and private companies, as well as government agencies - a custom approach to address their unique needs to relocate, consolidate or expand their operations into purpose-built, efficient, high-performance designed buildings.

At Wesgroup, we are dedicated to developing a space that meets your complete needs from the ground up. We

Wesgroup has many premiere and accessible development sites available throughout Metro Vancouver that provide an abundance of opportunity to grow your business operations in vibrant, transit-oriented developments.

For more information, please contact

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INDUSTRIAL | OFFICE | RETAIL

For more information please visit us online at wesgroup.ca

Corix | Fraser Health Authority | North Shore Credit Union | Vancouver Coastal Health Authority | Pharmasave | TransLink | Transit Police

Regional Office Development Cost Survey — Fall 2012 3




Office Development Scenario

This year’s survey was based on an office development scenario, the

construction of a 2 storey 50,000 square foot Class B office building on 2.5 acres of land. Municipalities received a “development proposal” where rezoning, subdivision, development permit and building permit approvals would be required. They then reported on development costs and approval times according to their usual standards and processes.

20 municipalities were sent the survey representing a real life situation in a mock development scenario, intending for them to run this request through their approval time line and assess overall cost requirements.

This level playing field provides meaningful comparison to actual building and development permit requests made by industry, and holds municipalities accountable for delivering on promises to efficiently process development opportunities in their respective jurisdictions.

VANCOUVER

City ofNORTH

VANCOUVER

WESTVANCOUVER

RICHMOND

WHITEROCK

SURREY

BURNABY

COQUITLA

M

City ofLANGLEY

Township ofLANGLEY

ABBOTSFORD

CHILLIWACK

C A N A D AU S A

Mission

NewWestminster

Port

Coqu

itlam

Pitt

Mea

dow

sM

aple

Rid

ge

DELTA

District ofNORTH VANCOUVER

Port

Moo

dy

L o w e r M a i n l a n d / F r a s e r V a l l e y

Continued on page 5

All municipalities were provided with an opportunity to review and comment on the results prior to publication. Please note that the Survey results are based solely on the responses of the municipalities. The Metro Vanacouver water and sewer charges, returnable security deposits, and letters of credit

have been broken out as separate items for comparative purposes but have not been included in totals due to regional variation in methods for calculating these items. (See detailed tables on pages 8)

20 municipalities were sent the survey

This document/email has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and /or its licensor(s). © 2012. All rights reserved. This communication is not intended to cause or induce breach of an existing listing agreement. Colliers Macaulay Nicolls Brokerage Inc. (Vancouver). *Personal Real Estate Corporation. PO #11312.

8291 92nd Street DeltaBuckingham Corporate Centre

INDUSTRIAL

RETAIL

13240 Worster Court Richmond

High exposure location.960 - 47,162 SF warehouse/office units.

First class office/production/technology. 19,000 - 41,708 SF.

1,400 - 10,000 SF of high quality retail located within strong commercial node.

100 - 2155 Dollarton Highway North Vancouver

Craig Kincaid-Smith$153.00-155.00/SF Don Viner

Sublease Todd Scarlett*

4806 - 4856 Hastings StreetMONTAGE Vancouver

15295 Highway 10 SurreySullivan Square

8018 Cambie Street VancouverMC2

New mixed-use strata development in Burnaby Heights — ready late 2013.

Sherman ScottSale/Lease Casey Pollard*

Sheldon Scott*Sale Casey Pollard*

$25.00-28.00/SF Drew Gilbertson

34150 South Fraser Way East Abbotsford

5,000 - 10,000 SF. High exposure location on South Fraser Way.

$14.00/SF Sean Ogilvie

51 Glacier Street Coquitlam

Rare Coquitlam industrial property.10,800 SF on 2.75 acres.

$5,200,000 Ewen Johnston

200 Granville Street, 19th Floor, Vancouver, BC, V6C 2R6 | 1 604 681 4111 | www.collierscanada.com

Accelerating success.When you choose to work with Colliers, you choose to work with the best. You can depend on our ability to draw on years of direct experience in the local market.

Darren Cannon*, Stuart Morrison*$7.25/SF Bruno Fiorvento*

9535 200th Street Langley

2.5 acres, approximately 15,000 SF build-to-suit opportunity in Port Kells. Vito DeCicco*Lease Chris Morrison*

Up to 147,378 SF landmark building, high exposure location.

3888 North Fraser Way Burnaby

4,980 - 54,145 SF warehouse/officein newly renovated building.

$8.50/SF Russ Bougie*

Up to 9,300 SF of retail across from Marine Drive Canada Line Station.

1344 Derwent Way Delta

110,868 SF office/warehouse space available March 2013.

Darren Cannon*$7.50/SF Stuart Morrison*

8257 92nd Street Delta

3,300 - 27,333 SF warehouse/office.

Don Viner$8.95/SF Stefan Morissette





Subject Property is currently:

• Not subdivided• Zoned Residential• 2.5 Acres• Development Proposal• 2 storey 50,000 square foot office

building• Interior lot with 295 feet of frontage on

dedicated municipal roadway• Net size of 2.0 acres after road and

other dedications• Required Municipal Processes• Rezoning• Subdivision• Development Permit• Building Permit • Construction Costs• $132 PSF for the Building ($6,600,000)• $12 PSF for site improvements ($600,000)• $600,000 for street and drainage

improvements (not DCC rebateable)

Continued from page 3

Office Development Scenario

This level playing field provides meaningful comparison to actual building and development permit requests

19th Floor, 885 West Georgia Street Vancouver, British Columbia V6C 3H4 Canada Telephone 604-891-3688 Fax 604-891-3788 www.kkbl.com

Our Commercial Real Estate practice group represents clients in a variety of complex real estate transactions and development matters including: the purchase and sale of shopping centres, office buildings and industrial parks; strata property development matters, including the preparation and filing of Disclosure Statements under the Real Estate Development Marketing Act; land assemblies, subdivision matters, including providing advice regarding

environmental and municipal require-ments; bare land strata developments, strata hotel and recreational develop-ments, and leasing transactions (industrial, office, retail, and First Nations). We also advise our real estate clients in connection with construction, takeout and inventory financings, and the structuring of joint ventures, co-ownership arrangements and real estate syndications of all types, including limited partnerships.

�e Commercial Real Estate Group of Koffman Kalef LLP are:

Standing left to right: Patrick J. Julian; Mark E. Wong; Andrew G. Kadler; Michael M. Kalef; Andrea J. Wales; Mark A. Bickford; Stan Wong Seated from left to right: Leslie A. Tucker; Daniel S. Remick; Morley Koffman, QC; Erin K. Tait

6 Regional Office Development Cost Survey — Fall 2012




Vancouver Office MarketSUBMARKET INVENTORY OVERALL VACANCY

RATEDIRECT VACANCY RATE

YTD LEASING ACTIVITY

UNDER CONSTRUCTION

YTD CONSTRUC-TION COMPLETIONS

CURRENT QUAR-TER OVERALL ABSORPTION

YTD OVERALL ABSORPTION

WTD. AVG. ALL CLASSES GROSS RENTAL RATE*

WTD. AVG. CLASS A GROSS RENTAL RATE*

Downtown Vancouver

23,999,047 3.5% 3.0% 1,038,264 1,170,792 22,500 12,020 31,978 $44.89 $52.28

Broadway Corridor 6,247,279 4.2% 3.6% 169,103 251,730 0 5,754 39,521 $34.66 $38.65

Central Total 30,246,326 3.7% 3.1% 1,207,367 1,422,522 22,500 17,774 71,499 $42.76 $49.44

Burnaby 9,842,715 9.6% 7.4% 581,896 581,000 0 (77,379) 39,922 $35.34 $38.29

Richmond 4,358,727 19.4% 18.8% 151,661 0 0 (34,771) (28,995) $23.81 $26.78

North Shore 1,523,825 9.8% 9.1% 54,927 0 0 (30,363) (38,328) $28.79 $35.81

New Westminster 1,085,600 11.8% 9.5% 122,012 395,000 46,453 17,257 88,552 $25.84 $29.93

Surrey/Langley 4,291,227 14.2% 13.1% 238,457 537,584 0 7,430 6,583 $28.16 $28.79

Suburban Total 21,102,094 12.7% 11.1% 1,148,953 1,513,584 46,453 (117,826) 67,734 $28.75 $31.28

TOTAL 51,348,420 7.4% 6.4% 2,356,320 2,936,106 68,953 (100,052) 139,233 $33.79 $36.41

* RENTAL RATES REFLECT ASKING $PSF/YEAR

Marketbeat: Vancouver Office ReportECONOMIC OVERVIEW

British Columbia’s (B.C.) economic growth got off to a slow start in

2012, following moderate performance in 2011, when GDP expanded by 2.9%. Growth cooled further than originally projected, with an estimated 2.3% quarterly growth rate as a result of a slowing housing market, weaker Asian export demand, and still-moderate U.S. economic growth. Average house prices in Vancouver were down 3.1% year-over-year in March, compared to a 20%-plus pace a year ago. Sales in the city are now running about 10% below the 10-year average, and new listings are somewhat elevated compared to historical norms. Additionally, the transition from the HST back to the PST/GST appears to be having a negative impact on the new home market. However, this year’s provincial budget attempted to ease the impact by introducing a first-time buyers’ grant for purchases of new primary residences by March 31, 2013. The condo market continues to lead new building activity, with units under construction up 32% year-over-year in Vancouver in February, and the number of newly completed and unoccupied units near the highest level in 12 years

Meanwhile, a cooling Chinese property market has sapped some momentum from recently robust forestry exports to that region. Lumber exports

to China surged 61% to more than $1 billion in 2011, but growth eased late in the year and activity should be more stable in 2012. The B.C. labour market remains choppy, but employment was up 1.6% year-over-year in March, led by growth in business services and manufacturing, according to BMO Capital Markets.

OFFICE MARKET OVERVIEWVancouver’s office market slowed

down in the second quarter of 2012, while still remaining positive from the end of 2011 and beginning of 2012 with a decrease in leasing activity and slight increase in vacancy. The second quarter saw negative 100,052 square feet (sf) of absorption, 926,904 sf of leasing activity, and a 0.4-percentage point decline in vacancy, down to 7.4%. For comparison, the vacancy rate was 7.1% during the prior quarter and 7.5% one year ago. Furthermore, 22,500 sf of new supply (two addition floors) was added to Vancouver’s office market at 1132 Hamilton in quaint Yaletown.

Though economic conditions remain weaker in suburban areas, positive signs are on the horizon, particularly in Burnaby, Surrey and New Westminster. Vancouver’s downtown core will also see the introduction of a combined 1.0 msf of new product scheduled for completion by 2014.

OUTlOOKWhile Vancouver’s office market

saw only one building enter the market

in first quarter, approximately 200,000 sf is planned for completion throughout the year, most of which has prelease commitments. Vacancy is expected to remain tight – and the market expensive – until more office towers are built. Given the substantial amount of new inventory anticipated to enter the market over the next three to four years, Vancouver’s office market is expected to progressively stabilize.

STATS ON THE GOQ2 2011 Q2 2012 Y-O-Y

CHANGE12 MONTH FORECAST

Overall Vacancy 7.4% 7.5% 0.1pp ▼

Direct Net Asking Rents (psf/yr) $19.79 $21.72 9.8%

YTD Leasing Activity (sf) 1,963,971 2,356,320 20.0% ▲

DIRECT RENTAL VS. VACANCY RATES

LEASING ACTIVITY

4.3

2.8

3.5

4.0

2.4





A Cushman & Wakefield Research Publication

Market HighlightsSignificant Q2 2012 LeaSe tranSactionS SUBMarKet tenant BUiLDing cLaSS SQUare feet

Broadway Tech Centre – Bldg 6 Burnaby Golder Associates A 135,000

580 Granville Street Financial Core Sophos A 35,908

858 Beatty Street Financial Core Microsoft A 35,894

Bentall V Financial Core Teck Cominco AAA 35,112

False Creek Research Park Broadway Corridor StemCell A 34,853

Significant Q2 2012 Sale Transactions SUBMARKET BUYER PURCHASE PRICE / $PSF SQUARE FEET

Bentall V Financial Core 550 Burrard Street Ltd. $396,000,000 583,000

401 West Georgia / 800 Burrard (50% interest) Financial Core CPP Investment Board $115,167,000 491,032

Esplanade Centre North Vancouver City of Vancouver $ 28,500,000 105,024

The Province Building Financial Core 929767 B.C. Ltd. $18,010,000 50,000

1028-1036 Hamilton Street Financial Core 1028 Hamilton (BT) Holdings Ltd. $14,525,000 30,000

Significant Q2 2012 Construction Completions SUBMARKET MAJOR TENANT COMPLETION DATE SQUARE FEET

1132 Hamilton Street Financial Core SPEC Q2 2012 22,500

Significant ProjectS UnDer conStrUction SUBMarKet Major tenant coMPLetion Date SQUare feet

Telus Garden Financial Core Telus Q2 2015 450,000

Metrotower III Burnaby Speculative Q2 2014 411,000

745 Thurlow Financial Core SNC Lavalin / McCarthy Tetrault Q2 2015 400,000

Brewery District – Building I New Westminster Translink Q2 2013 265,000

MNP Tower Financial Core Meyers Norris Penny Ltd. Q2 2014 265,000

Surrey City Hall Surrey City Hall Q2 2013 250,000

Broadway Tech Centre – Building IV Burnaby HSBC Q4 2012 170,000

* RENEWAL - NOT INCLUDED IN LEASING ACTIVITY STATISTICS

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Mill Rates2010 rank

2012 rank

Municipality commercial Mill rate

residential Mill rate

commercial to residential tax ratio

2 1 Chilliwack 9.45 4.46 2.12

3 2 Langley (City) 8.61 3.73 2.31

4 3 White Rock 8.71 3.56 2.45

5 4 Abbotsford 12.43 4.91 2.53

1 5 West Vancouver 4.75 1.81 2.62

9 6 Maple Ridge 11.75 4.09 2.87

6 7 Langley (Township) 9.48 3.20 2.96

7 8 Port Moody 9.84 3.31 2.98

8 9 Surrey 7.07 2.35 3.00

11 10 Mission 14.62 4.62 3.16

13 11 Pitt Meadows 11.85 3.73 3.18

10 12 Delta 10.71 3.33 3.22

15 13 Port Coquitlam 13.07 3.71 3.52

12 14 North Vancouver (District) 8.54 2.36 3.61

14 15 Richmond 7.54 2.00 3.77

16 16 New Westminster 13.55 3.54 3.82

18 17 North Vancouver (City) 9.14 2.38 3.84

19 18 Vancouver 8.78 2.02 4.35

17 19 Burnaby 10.10 2.23 4.52

20 20 Coquitlam 14.52 3.11 4.66

1 Sewer hookup costs are estimates only. Actual hookup done at cost. Chillwack and Port Moody are inspection fees, hookups done at actual cost. West Van costs dependent on location of meter and service depth

2 Development Permit Fee provided would be required if this building was to be located in the City Centre Planning Area. Outside of the City Centre a DP would not be required in most instances.

3 Assumes development in mainland area - If in Queensborough DCC charges of $260,500 would apply.

4 As in past surveys, Metro Vancouver / FVRD charges based on East Richmond as City has mul-tiple rate areas. West Richmond would be $25,250

5 Based on Area 1 DCCs. Area 2 DCCs would be $833,2666 Note Abbotsford DCC’s incorrectly reported as Rural in 2010. Based on Area A (urban) DCCs.

Township of Langley Sewer and Water Hookup Costs are charged back at actual cost7 Administration and Processing fee includes Landscape Street Improvement fee8 DCC’s based on Growth Area not infill which would be $43,000 lower# Based on 2012 Commercial mil rates with $7,800,000 of building/site improvements without land

cost which varies widely - see Mil Rate Table for additional details.

Increase from 2010 SurveyDecrease from 2010 Survey

Municipal Fees

Most Business Friendly: City of Chilliwack

2010 rank

2012 rank

Municipality Subdivision Permit

Site Profile

Building Permit

Servicing agreement administra-tion and Processing fees

Dcc charges

Dcc charges per Square foot

Sewer Hookup fees

Water Hookup fees

Landscap-ing / Street improvement fees

Develop-ment Permit fees

rezoning applica-tion fees

Metro regional Sewer and Water charges

returnable Security Deposits / Letters of credit

other fees

taxes # 2012 totaL (exclud-ing Metro regional charges & taxes)

2010 totaL

Percent-age change

2000 totals

Percent-age change from 2000

equivalent annual average inflation rate

1 1 Burnaby $2,500 $100 $67,681 $24,977 $0 $0.00 $19,805 $9,790 n/a $16,200 $7,175 $40,550 n/a $0 $78,780 $148,228 $137,815 8% $60,144 146% 7.88%

2 2 City of White Rock 3

$1,350 $0 $57,298 $18,000 $57,288 $1.15 $17,500 $5,000 $10,000 $2,000 $2,688 $40,550 n/a $0 $67,913 $171,124 $138,176 n/a $104,386 64% 7.88%

6 3 Port Moody 1 $3,033 $77 $44,863 $36,000 $55,143 $1.10 $177 $59 $11,000 $11,225 $12,002 $40,550 $1,150,000 $500 $76,757 $174,079 $215,327 -19% $101,475 72% 4.15%

4 4 Pitt Meadows 1 $1,630 $0 $59,400 $9,500 $115,298 $2.31 $8,030 $2,700 n/a $3,894 $4,119 $40,550 n/a $0 $92,458 $204,571 $195,031 5% $114,216 79% 9.14%

3 5 New Westminster 1,3

$705 $100 $51,530 $1,620 $97,500 $1.95 $25,000 $10,000 $28,800 $2,753 $3,601 $40,550 n/a $0 $105,720 $221,609 $148,726 49% $66,605 233% 10.53%

5 6 Chilliwack 1 $720 $50 $54,517 $8,000 $182,270 $3.65 $160 $80 $0 $581 $2,329 n/a n/a $0 $73,711 $248,707 $198,634 25% N/A N/A N/A

8 7 Delta $435 $0 $42,930 $24,000 $124,506 $2.49 $35,000 $30,000 $6,000 $1,100 $3,029 $40,550 n/a $0 $83,532 $267,000 $287,000 -7% $198,709 34% 2.50%

7 8 Maple Ridge 8 $2,422 $0 $45,088 $24,000 $165,530 $3.31 $23,600 $8,700 n/a $2,442 $5,590 $40,550 n/a $0 $91,658 $277,372 $267,520 4% $127,711 117% 6.67%

10 9 Port Coquitlam 5

$750 $75 $58,653 $24,000 $187,518 $3.75 $0 $0 n/a $1,200 $13,067 $40,550 110% of Landscape Cost

$0 $101,952 $285,263 $324,580 -12% $222,435 28% 2.10%

9 10 District of North Vancouver

$1,600 $0 $75,235 $25,595 $174,856 $3.50 $23,714 $25,125 $0 $3,600 $5,025 $30,250 n/a $595 $66,594 $335,345 $317,513 6% $238,648 41% 2.87%

12 11 Township of Langley 6

$1,760 $0 $50,807 $28,250 $252,835 $5.06 $0 $5,000 n/a $5,745 $10,000 $40,550 $128,400 $500 $73,954 $354,897 $360,587 -2% $161,415 120% 7.48%

13 12 Langley (City) 1

$1,100 $0 $57,180 $27,000 $214,699 $4.29 $27,000 $31,000 n/a $7,145 $4,512 $40,550 $0 $0 $67,119 $369,636 $361,239 2% $132,094 180% 8.95%

11 13 West Vancouver 1

$5,000 $0 $61,950 $20,500 $229,925 $4.60 $31,000 $15,000 $0 $0 $8,000 $30,250 n/a $0 $37,084 $371,375 $337,375 n/a $329,010 13% 1.02%

16 14 City of North Vancouver 7

$1,650 $100 $32,706 $46,125 $228,959 $4.58 $40,000 $18,000 $0 n/a $5,421 $30,250 n/a $25 $71,329 $372,986 $425,638 -12% $335,719 11% 0.87%

14 15 Mission1 $1,537 $100 $49,839 $30,000 $283,252 $5.67 $4,500 $1,100 n/a $2,365 $4,522 $3,725 n/a $0 $114,048 $377,215 $375,658 n/a N/A N/A N/A

15 16 Coquitlam $2,500 $0 $56,838 $0 $280,638 $5.61 $0 $0 $23,400 $5,983 $8,570 $40,550 n/a $0 $113,268 $377,929 $391,437 -3% $293,991 29% 2.10%

19 17 Surrey $1,876 $0 $56,789 $35,840 $361,500 $7.23 $0 $0 n/a $5,492 $5,614 $40,550 n/a $0 $55,149 $467,111 $568,513 -18% $280,375 67% 4.35%

18 18 Abbotsford 6 $1,800 $0 $43,810 $26,250 $420,326 $8.41 $50 $115 $50,818 $0 $3,914 $52,070 n/a $0 $96,967 $547,083 $547,095 0% N/A N/A N/A

20 19 Richmond 2,4 $765 $50 $54,705 $24,000 $561,000 $11.22 $11,800 $10,800 n/a $6,780 $2,375 $40,530 n/a $0 $58,778 $672,275 $668,623 1% $193,423 248% 10.94%

17 20 Vancouver $43,400 $0 $29,439 $0 $566,500 $11.33 $22,859 $34,845 $721 $13,344 $17,444 $22,150 $600,000 $3,849 $68,492 $732,401 $539,499 36% $202,460 262% 11.31%





Most Improved Municipality: Joint award – City of Port Moody and City of Surrey

Municipal Fees and Approval Times

Fee Changes 2010 to 2012

The graph below illustrates the percentage change in development fees levied by each

municipality between 2010 and 2012. Of the 20 municipalities that responded to the survey, 9 reported a wide range of increases ranging from 1% to just under 50%. Four municipalities held costs the same over the time period and seven municipalities reduced costs from 2% to just under 20%.

CPI Comparison March 2001 to March 2012

The Cities of North Vancouver and West Vancouver deserve kudos for limiting the increases in their fees to

less than the rate of inflation since 2001. A clear pattern can be observed with regards to development cost increase variations. The graphic shows that an initial cluster of municipalities managed to limit their increases to around 1.5 to 2.5 times CPI (primarily the suburban locations). The next clear grouping occurs at 4 to 5 times CPI (municipalities that have generally experienced higher growth) with one outlier at close to 6 times CPI. Over this time period, the “All Goods Consumer Price Index” in the Greater Vancouver Census Metropolitan Area increased by 1.79%. (Source: BC Stats)

7.88%

7.88%

4.15%

9.14%

10.53%

N/A

2.50%

6.67%

2.10%

2.87%

8.95%

1.02%

0.87%

N/A

2.10%

7.48%

4.35%

N/A

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00%

% Increase

Burnaby

City of White Rock

Port Moody

Pitt Meadows

New Westminster

Chilliwack

Delta

Maple Ridge

Port Coquitlam

District of North Vancouver

Langley (City)

West Vancouver

City of North Vancouver

Mission

Coquitlam

Township of Langley

Surrey

Abbotsford

Annual Increase Compared to CPI from 2000 (1.79%)

148,228

171,124

174,079

204,571

221,609

248,707

267,000

277,372

285,263

335,345

354,897

369,636

371,375

372,986

377,215

377,929

467,111

547,083

672,275

732,401

$0 $200,000 $400,000 $600,000 $800,000

Cost ($)

Burnaby

City of White Rock

Port Moody

Pitt Meadows

New Westminster

Chilliwack

Delta

Maple Ridge

Port Coquitlam


Township of Langley

Langley (City)

West Vancouver


Mission

Coquitlam

Surrey

Abbotsford

Richmond

Vancouver

Municipal Development Fees

8%

0%

-19%

5%

49%

25%

-7%

4%

-12%

6%

2%

0%

-12%

0%

-3%

-2%

-18%

0%

1%

36%

-30% -20% -10% 0% 10% 20% 30% 40% 50% 60%

% Change

Burnaby

City of White Rock

Port Moody

Pitt Meadows

New Westminster

Chilliwack

Delta

Maple Ridge

Port Coquitlam


Langley (City)

West Vancouver


Mission

Coquitlam

Township of Langley

Surrey

Abbotsford

Richmond

Vancouver

Percentage Change 2010 to 2012





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*Outside estimate inclusive of concurrent processing of rezoning, subdivision, DP and BP where allowed, not including pre-application review.

Timing

Increase from 2010 SurveyDecrease from 2010 Survey

2010 rank

2012 rank

Municipality Pre-application Design review (days)

rezoning Process (days)

Development Permit Process (days)

Subdivision approval (days)

Building Permit (days)

2012 approval timing*

2010 approval timing

Percentage change

Metro Vancouver

1 1 Chilliwack n/a 30-90 concurrent concurrent concurrent 90 90 0%

2 2 Langley (City) n/a 30-90 concurrent concurrent <30 120 120 0%

2 2 Township of Langley n/a 90-120 concurrent concurrent concurrent 120 120 0%

2 2 Surrey n/a 30-90 concurrent concurrent <30 120 120 0%

2 3 Burnaby n/a 120-150 concurrent concurrent <30 150 120 25%

3 2 Delta 2 90-120 concurrent concurrent <30 150 150 0%

5 3 Maple Ridge n/a 120-150 concurrent concurrent concurrent 150 210 -29%

3 3 Pitt Meadows 5 30-90 <30 concurrent <30 150 150 0%

4 3 Port Coquitlam n/a 120-150 concurrent concurrent concurrent 150 180 -17%

3 3 Richmond 5-10 120-150 concurrent concurrent concurrent 150 150 0%

1 4 Abbotsford 14 30-90 concurrent concurrent 30-90 180 90 100%

7 4 New Westminster 14 150-180 concurrent concurrent concurrent 180 270 -33%

4 4 Port Moody <30 150-180 concurrent concurrent concurrent 180 180 0%

4 5 Mission n/a 90-120 concurrent concurrent 30-90 210 180 17%

5 5 District of North Vancouver n/a 90-120 concurrent concurrent 30-90 210 210 0%

5 6 Coquitlam 15 90-120 concurrent concurrent 90-120 240 150 60%

6 6 City of North Vancouver 3 120-150 concurrent concurrent 30-90 240 240 0%

7 7 Vancouver 1 >180 30-90 concurrent concurrent 270 270 0%

7 7 West Vancouver n/a 150-180 concurrent concurrent 30-90 270 270 0%

4 8 City of White Rock n/.a 90-120 concurrent 90-120 30-90 330 180 83%





Environmental Site Assessments

Contamination Management

Environmental Planning

Construction Monitoring

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Municipal Fees and Approval Times

Fees and Schedule

The total fees levied by each municipality for the construction of a 50,000 square foot office building

development (as described on page 3) are presented on the left, above. On the right, the total approval times – from application date to Building Permit – are shown. Approval time frames shown can and will extend beyond the periods noted if the developer does not supply necessary information with the initial application or respond to requests for additional detail or clarification in a timely manner. Carrying costs (interest and taxes) represent a considerable component of pre-construction expenses and additional time spent in the municipal approval process increases those costs.

90

120

120

120

150

150

150

150

150

150

180

180

180

210

210

240

240

270

270

330

0 50 100 150 200 250 300 350 400

Days

Chilliwack

Langley (City)

Township of Langley

Surrey

Burnaby

Delta

Maple Ridge

Pitt Meadows

Port Coquitlam

Richmond

Abbotsford

New Westminster

Port Moody

Mission


Coquitlam


Vancouver

West Vancouver

City of White Rock

Municipal Approval Times

2.12

2.31

2.45

2.53

2.62

2.87

2.96

2.98

3.00

3.16

3.18

3.22

3.52

3.61

3.77

3.82

3.84

4.35

4.52

4.66

0.00 1.00 2.00 3.00 4.00 5.00

Ratio

Chilliwack

Langley (City)

White Rock

Abbotsford

West Vancouver

Maple Ridge

Langley (Township)

Port Moody

Surrey

Mission

Pitt Meadows

Delta

Port Coquitlam

North Vancouver (District)

Richmond

New Westminster

North Vancouver (City)

Vancouver

Burnaby

Coquitlam

Commercial to Residential Tax RatioMost Fiscally Responsible: Joint award – City of North Vancouver and City of West Vancouver





Future Trends

As an indication of what the future could bring, NAIOP included a section within its survey on

future policy directions and changes to existing policies that were under consideration at the time of publication.

This information comes with a general disclaimer that all or a majority of these potential changes are subject to either council or staff approval and final drafting. Below are some highlights of what could be coming in the near future to a jurisdiction near you.

AbbotsfordThe City is currently investigating a City initiative

to rezone the Industrial “City in the Country” (CICP) Lands. The City intends to pre-zone land and take the Rezoning to public hearing and consideration of third reading. The individual property owners in the CICP area will then need to complete the rezoning (adoption)

ChilliwackIn 2011 City Council established an Industrial

Revitalization Tax Exemption program to create an economic stimulus that will encourage industrial capital investment, expand the industrial tax base, create additional permanent employment opportunities and to reduce the need for our community residents to work outside of the area.

Construction of new industrial buildings with a value of construction in excess of $1 million (or an alteration/addition of an existing industrial building with the same value), can qualify to save on industrial property taxes for five years with this new industrial incentive.

New WestminsterThe city is working to update the Queensborough

Community Plan. The community plan update will result in new policies and future land use maps for the Queensborough neighbourhood. More information on the plans can be found at: www.newwestcity.ca/queensborough

In addition, last year City Council adopted the Sustainability Report Card. Replacing our old Smart Growth Development Checklist, the Report Card outlines priority items and scores projects based on sustainability performance. These scores better assist

Council in decision-making. Please see the guide and sample Sustainability Report Card attached to this email.

RichmondThe City is currently in the process of updating

the OCP. The OCP review included an employment land study.

VancouverFour industrial/commercial areas are undergoing

possible zoning changes, as a result of implementing directions in the Metro Core Jobs and Economy Land Use Plan: http://vancouver.ca/commsvcs/planning/corejobs/index.htm

Mount Pleasant Industrial Area - changes to the I-1 zone are being proposed to increase service and office uses while maintaining the industrial role for production, distribution and repair (PDR). Report to

Council - Summer/Fall 2012.Burrard Slopes Industrial Area - similarly, changes

to the IC-1 and IC-2 zones to increase service and office uses while maintaining the industrial role for production, distribution and repair (PDR). Start - Fall/Winter 2012.

Broadway Uptown Office District - C-3A zoned area under review as part of the Central Broadway Planning Program. Direction is to increase density and height for office buildings. Underway. http://vancouver.ca/commsvcs/planning/centralbroadway/index.htm

False Creek Flats Industrial Area - under study as part of the Eastern Core Strategy, to explore future land use and transportation options with a focus on increasing job space. Start - Fall 2012 http://vancouver.ca/commsvcs/currentplanning/fcflats/index.htm

Other policies for job areas can be found on the City website: http://vancouver.ca/commsvcs/guidelines/pol&guide.htm





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ACKNOWLEDGMENTNAIOP would like to acknowledge and thank all 20 municipalities who took part in this year’s Development Cost Survey. Participation is voluntary and the time expended to respond to it can be significant, not unlike a “real” development application. Development in any jurisdiction is a partnership between business and the community. NAIOP is pleased to be in a position to work, on behalf of our members, with all of the Metro Vancouver jurisdictions, which participated in the publication of this information for the business community.

NAIOP would also like to acknowledge the contributions from Walter Franci Architects for the preparation of the Drawing materials, Cushman and Wakefield for the Market Beat Report and Lawson Lundell for providing the municipal mill rate information.

ww.naiopvcr.com




Municipality green Building require-ments/Voluntary Measures

green Building incentives

comments

Burnaby 4 4 Green Building/LEED standards may be determined on a site specific basis with co-operation of developer, some reduction in parking for co-op car spaces

District of Maple Ridge 4 4 Guidelines and Tax exemption provided in Town Centre

New Westminster 4 All new development is required to complete a Sustainability Report Card, scores are used by Council in their decision making around projects

Port Coquitlam 4 4 Green roof (or equivalent) required where building area exceeds 5000 m2. Sustainability check-list in rezoning. Fast track Building Permit application for LEED Silver buildings.

City of North Vancouver 4 4 Minimum Energuide 80 or Ashrae 90.1 2007 required with deposit to ensure performance, pos-sible density bonusing approved by council on case-by-case basis

Port Moody 4 Sustainability Checklist for 4 pillars of Port Moody’s sustainability model: environmental, eco-nomic, social and cultural. required for all development proposals – requirement to achieve 25% better energy performance than MNECB

District of North Vancouver 4 4 Green Building strategy with floor space bonusing

Delta 4 4 Delta has developed a “green growth” index as a tool to identify the sustainability features of major new development projects. These features are reported to council and secured as part of development agreements

Vancouver 4 4 COV Green Building Strategy and Green Homes Program. Floor space exclusions granted for wall assemblies to remove penalty for constructing walls with higher energy efficiency

Richmond 4 Bylaw 8385 “Green Roofs & Other Options Involving Industrial Buildings” requires that office buildings outside of the City Centre, with a gross floor area of 2,000 m2 or more, to reduce the amount of storm water runoff by at least 20%.

City of Langley 4 Sustainability checklist to be completed with Rezoning/Development Permit and Subdivision applications

District of West Vancouver 4 Council views DP/DVP projects that achieve Energuide 80 rating favourably

Move Towards Green

As a ‘snapshot’ of the increasing move towards sustainability amongst the

municipalities, NAIOP has included a section within its survey on whether there are any sustainable/green building requirements (beyond the requirements in the BC Building Code) or incentives in place within each municipality. This year more than half (12 of the 20 municipalities who responded) confirmed they have requirements and/or incentives to promote sustainable building.

Some were voluntary measures covering all areas of sustainability or smart growth, others were mandatory actions on particular items such as stormwater management and green (planted) roofs for buildings over a certain size.

Most municipalities now require some form of sustainability reporting as part of their rezoning/ development application, and many of these are offering incentives including density bonusing, floor area exclusions, transfers, DCC and tax exemption, as well as fast tracking the permit process for “green” projects. In future, the expectation is that many of the processes that are now voluntary will be formalized, as municipalities raise the bar on what is considered green.





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NAIOP Icon Speaker Recipient for 2012

David is the first recipient of the Award of Excellence established by The Real Estate Institute of BC

This year’s Icon Speaker is David Podmore, Chairman and CEO of Concert Properties Ltd.

David will share his insights with NAIOP members at the chapter breakfast on December 20th, 2012. David has more than 33 years of experience in the real estate, development and construction industry. David co-founded Concert Properties Ltd with Jack Poole in 1989.

David holds a Bachelor’s Degree specializing in community and regional planning from the University of British Columbia and a Master’s Degree (Earth Sciences) specializing in urban planning from the University of Alberta. He is a Registered Professional Planner (MCIP), a professional member of the Real Estate Institute of British Columbia (RIBC) and a professional member of the Real Estate Institute of Canada (FRI). David has served as Chair of the British Columbia Institute of Technology (BCIT) Foundation, President of the Urban Development Institute of BC (Pacific Region), member of the BC Progress Board, Chair of the BC Children’s Hospital Foundation and spent eight years as a director of the Canadian Tourism Commission. He currently serves as a director of Fortis BC and Lifelabs Inc.

David is the first recipient of the Award of Excellence established by The Real Estate Institute of BC, and in 2003 he received the Community Service Award from Volunteer Vancouver. In 2005, David was awarded an Honorary Doctor of Technology from the British Columbia Institute of Technology.





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Comparative Tax Burden

While it may not be the primary consideration, a growing number of businesses are considering the impact of the

property tax burden, and the variations in that burden across the region, when making the decision on where to locate. Property taxes are not, for the most part, factored into per-square-foot lease prices but, like common area and maintenance (CAM) costs, they are paid in addition to the base lease rates.

Municipal property taxes pay for city services such as parks, roads, utilities, policing, fire protection and local improvements. Property tax rates within any municipality are impacted by two factors. The first is the value of the property being taxed and the second is the tax rate (mill rate) that the municipality applies to various property types. Municipalities ensure their ability to balance their budgets with their ability to adjust mill rates.

The property tax burden for businesses varies from jurisdiction to jurisdiction however, compared to residential tax rates, businesses (‘industrial’ and ‘commercial’ property designations) pay a significantly greater proportion of the property taxes.

For light industrial and commercial properties, research has indicated that the ideal median tax ratio (industrial/commercial tax rate to residential tax rate) is 3 to 1. Less than half the municipalities surveyed are in line with this ratio.

The caution in using this comparison is that it may be misleading in times of rapid appreciation of residential land values vs. commercial land values, in these circumstances, the ratio may appear to worsen but the taxes are simply being spread out amongst a higher residential value base while actual taxes paid for commercial properties could stay the same. To illustrate this in reality, NAIOP used the value of $7,800,000 from the scenario as a constant to calculate the level of taxes that the exemplar office building would pay in each municipality. Surprisingly, the highest absolute taxes were paid in Mission which ranked 10th on the median tax ratio table. The next 3 highest taxes consisted of Coquitlam which was expected given they had the worst ratio but also Port Coquitlam and New Westminster with ratios under 4 to 1, showing very clearly that a low ratio does not necessarily translate into a competitive tax level for local business. Even more surprising was that three of the cities (Burnaby, Vancouver and the City of North Vancouver) with the worst ratios had levels of taxation that were in the middle to the low end of the spectrum.

For 2012, the five municipalities with the lowest commercial to residential property tax burden (rated from lowest to highest) were:• Chilliwack• Langley (City)• White Rock• Abbotsford• West Vancouver

The five municipalities with the highest commercial to residential property tax burden (rated from highest to lowest) were:• Coquitlam• Burnaby• Vancouver• City of North Vancouver• City of New Westminster

Small and medium sized commercial businesses are essential to the socio-economic health of the community and contribute to the goal of building compact sustainable cities.

High municipal property taxes for these types of businesses have serious impacts on our city, neighbourhoods and employment opportunities for residents. Although, it is often said that businesses “don’t vote” in local elections, in reality they do cast a ballot, by making the decision to relocate to lower cost jurisdictions in which their business can thrive and contribute to the sustainability and vitality of their local communities.

NAIOP used the value of $7,800,000 from the scenario as a constant to calculate the level of taxes that the exemplar office building would pay in each municipality

NAIOP truly reflects the pulse of the commercial/industrial/development industry in Greater Vancouver. It provides its diverse membership with a valuable network of industry professionals, a powerful forum to exchange ideas, economic information and market news, and a collective voice to lobby for regulatory debate and change. NAIOP works for members year round to enhance market knowledge and exposure, to help streamline the industry, and provide a healthy sprinkling of camaraderie and fun. The Vancouver Chapter of NAIOP is one of 50 chapters within an extensive network that represents the interests of developers and owners of industrial, office and related commercial real estate throughout North America. NAIOP’s Award Winning annual Cost of Business Survey provides a benchmark for performance of over 21 municipalities in the Metro Vancouver area with respect to their development costs and ease of doing business.

• Local networking opportunities through monthly breakfast speaker series and events.

• Special events for Developing Leaders, under 35 years of age.

• A biennial Awards Gala, to recognize the best in the industry.

• Industry and market information—through breakfast speakers, special publications and its website www.naiopvcr.com

• The Annual Commercial and Industrial Development Report Card—which reviews the effectiveness of local municipalities in addressing office and industrial development projects.

• Educational opportunities—through seminars, webinars and symposiums, including the annual Developers’ Symposium.

• The “Icon Speaker” series, which provides access to the top tier of industry leaders.

• Weekly newsletters which keep the membership up to date on association happenings.

• Legislative voice with municipal and provincial officials— through our Development Issues and Government Affairs Committee.

The NAIOP Value Proposition:

For more information on NAIOP – Vancouver Chapter or any of its events,

Back: Don Harrison—GWL Realty Advisors Inc.; Stephanie Setchell—Farrell Estates Ltd.; Gordon Wylie—Ivanhoe Cambridge II Inc; Derek Jones—Concert Properties Limited Middle: Maury Dubuque—Colliers International; John Scott—CEI Architecture Planning Interiors; Geoff Heu—GWL Realty Advisors Inc.; Darlene Hyde—Executive Director; Ernest Hee—Boughton Law Corporation; Emel Tetiker—Support Services Unlimited; Chris MacCauley—CBRE Limited|Industrial Properties Front: Jennifer Podmore Russell—Deloitte; Graeme Silvera—Plenary Group; John Conicella—Wesgroup PropertiesNot Present: Pav Sikham, CA—KPMG LLP; James Delmotte— Grosvenor Americas

NAIOP’s Board of Directors for 2012:

John Conicella President

Why become a member of NAIOP?

NAIOP is the Commercial Real Estate Development Association, with more than 10,000 members across North America, who represent the interests of developers and owners of industrial, office and related commercial real estate. NAIOP’s Canadian network includes chapters in Vancouver, Calgary and Toronto.

13th annual office - naiopvcr.com · future trends ... and real estate syndications of all types,...

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