"We needed a more central location," said McIver, adding that most of his brokers and potential clients already live south of the Fraser River.
iFreedom had been leasing 1,500 square feet of "Class B" space on Fraser Street at East 30th Avenue for $29 per square foot. Its new 2,800-square-foot Class A office in a Surrey costs $31 per square foot.
"We were able to upgrade the quality of our building and keep our square-foot cost about the same by moving out to Surrey," he said. "And we now have lots of free parking."
The move's paid off spectacularly during the first year. iFreedom now has 34 brokers, compared with a maximum of 15 in Vancouver. And, McIver said, the company is better located to serve its core clients: middle-income families.
"In Vancouver now people are either wealthy or they're poor," said McIver, who grew up in Vancouver but now lives in Burnaby. Many Vancouver families, he noted, move to Surrey for more affordable housing.
Home first
Being closer to home is key to why Vancouver businesses are decamping to B.C.'s second-largest city. According to Jordan McDonald, a former Vancouver commercial realtor who co-founded Frontline Real Estate in Surrey in 2010, many people first move their home to Surrey, then their business.
It is the "dynamic economy" of Surrey that attracted McDonald, who said many major companies are looking for satellite offices in a city that welcomes an estimated 1,000 new residents every month.
Frontline has grown from a staff of two to more than two dozen since it opened, and is "able to hire top Vancouver brokers for less money because they live in the Fraser Valley and don't want to commute to downtown [Vancouver] anymore," he said.
While less traffic congestion is often cited, Surrey's overall lower cost for doing business is likely a major lure for businesses. For instance, the city's business tax rate, at $15.90 for each $1,000 of assessed value, is the lowest of any Metro Vancouver municipality (it is $17.70 in Vancouver). And, while net commercial lease rates are similar to secondary Vancouver locations, Surrey space is often newer and demands less in taxes and operating costs, McDonald explained.
Lower DCCs
For office developers, Surrey ranks behind Vancouver, Richmond and even Abbotsford for development cost charges (DCCs) and overall civic fees. Based on rezoning and developing a 50,000-square-foot office building, a recent National Association of Industrial and Office Properties survey found it would cost $361,500 in DCCs in Surrey, compared with $566,500 in Vancouver.
The number of businesses moving from Vancouver to Surrey is hard to nail down, but Surrey is registering an average of 190 new businesses every month. Non-home-based businesses account for 36 per cent of all new business licences, according to Michael McGreer, an economic development analyst with the City of Surrey.
Growth pressure
While the expanded Port Mann Bridge will speed traffic across the Fraser, Surrey is feeling other growth pressures as an exploding population collides with a rush for development.
A current flashpoint is a proposal for a $100 million mega-casino and entertainment complex in South Surrey. The bid, by Gateway Casinos and BC Lottery Corp. near Highway 99 and 10th Avenue, would include restaurants, a hotel, a theatre and a 60,000 square-foot casino.
While the proposal has wide backing in the business community, it has also faced protests from local residents fearing a spike in crime and traffic and a loss of farmland.
The next public hearing is slated for mid-January; Surrey city council will vote on the proposal after that.
The casino protest could partly be a reaction to the amazing growth in South Surrey, where building permits eclipsed Central Surrey for the first time last year. In the first eight months of 2012, for example, total permit values in South Surrey reached $31.7 million, compared with $10.5 million in the Central District, according to the City of Surrey.
from Western Investor January 2013
