Strata Office Is On The Rise In Surrey. Here’s Why.
Surrey’s strata office market is gaining steam, with a host of new developments under construction this year, including the city’s first and only micro strata office project. Colliers International associate VP Jason Teahen explains.
There’s been “huge interest” in the handful of strata office developments launched in Surrey City Centre and South Surrey, Jason tells us. In a low interest rate environment, and considering the cost to build out dedicated space, more businesses are seeing the value of owning a piece of a larger project. That’s what drove the success of City Centre I, a 180k SF strata office building by Lark Group (below) that caters to medical and business professionals. Phase 2, another 180k SF strata building—11 storeys, targeting LEED Gold—is about to launch. And a third (113k SF) is planned.
Strata office is increasingly attractive to developers, given the price per square foot being achieved for unfinished spaces (around $500) versus condos, an "extremely competitive" market in Surrey City Centre, Jason notes. Key projects he’s tracking include 3 Civic Plaza, a 50k SF building by Century Group (below) that’s part of a mixed-use development with 350 condos and a hotel. Kwantlen Polytechnic University is launching a 30k SF campus there. Also in City Centre, WestStone Group is building Evolve at West Village, with 8,500 SF of strata office/retail, and future phases to come as part of a West Village master plan.
Then there’s Maskeen Business Centre, Surrey’s first micro-office strata development. The brand-new three-storey building at 6321 King George Blvd (pictured below) includes 21 retail/office units (with both leasing and ownership options), some as small as 309 SF. Jason, who's working on the project, says it's been attracting a fair amount of interest from groups that previously wouldn’t have been able to buy into a strata project: small businesses, boutique investment firms, or accountants, lawyers or notaries seeking private office space.
Strata office is just one segment of a Surrey office market that’s coming off a solid 2015. Deal activity last year was up significantly compared to 2014, most notably Westminster Savings leaving New Westminster to take 65k SF at Surrey's Central City Tower. It was a significant transaction, says Jason, as it backfilled the majority of the space Coast Capital Savings Credit Union vacated when it moved to The HUB at King George Station, PCI Group’s 160k SF office project, in November. Coast Capital’s new HQ occupies 77% of the building (seen below). “That’s really helped the market from an overall vacancy perspective.”
Surrey’s Q4 vacancy rate was 13%, up slightly from Q3, owing to delivery of The HUB at King George Station. As Jason's team seeks to fill the remaining space there, they're monitoring progress on a proposed 27 km light rail system that would connect Surrey City Centre with Guildford Town Centre, Fleetwood Town Centre and Newton Town Centre—a potential game changer for Surrey's office market from an investment and leasing standpoint, says Jason. If the LRT comes to pass, employees who currently must drive or ride the bus will have the option of taking high-speed transit directly to the buildings where they work. "It will have a significant impact on the future of office in Surrey."