Real estate outlook:

Residential growth won't

squeeze office space out, planner says

 (Prepared by Derrick Penner, Vancouver Sun)

Vancouver's co-director of planning, Larry Beasley, wants to dispel the myth that downtown is close to residential capacity, and that housing units are squeezing office space out of the city's core.

Instead, Beasley said on Wednesday that Vancouverites should prepare for downtown to grow by the equivalent of another Yaletown, and reach a population of 120,000 within 20 years. Expect the business sector to grow as well, Beasley predicted.

His Vancouver story was one of two city tales delivered to an audience at Canada Mortgage and Housing Corp.'s annual B.C. housing market outlook conference. Murray Dinwoodie, Surrey's general manager of planning and development, delivered the other.

Speaking to an audience of 560 realtors, developers and others, Beasley said it is housing that has been key to revitalizing downtown's nightlife, as well as its retail and business growth.

"The Vancouver model confirms that the seeding of life and energy through housing will spawn everything else the city needs to thrive, to compete and excel," Beasley said.

He added that there is room to continue growing the city's population without touching commercial space in the central business district, except in a couple of instances to preserve heritage buildings.

"[That] is a message I deliver to developers every day," he said. "Not even the conversion of offices or hotels [in the downtown core] is on our radar screen."

To add weight to his argument that condos aren't crowding out offices to make Vancouver a "resort city," Beasley said that since 2000, developers have built two million square feet of office space downtown -- a rate of about 400,000 per year, which is "nothing to be sniffed at."

The offices that are being built, he added, differ from the typical triple-A-class office towers of the 1970s or 1980s, because there is less demand for such space. Beasley noted that the size of Vancouver's average business office has shrunk to 7,000 square feet, compared with Toronto's average of 12,000 square feet.

Some of the demand for that business growth, Beasley added, has come from the external demand of people coming into Vancouver. He believes, however, a lot of the demand for office space is being generated from internal demand, either businesses locating where there employee are, or at least want to be associated with all the new housing being built downtown.

Dinwoodie said he was pleased to be in Vancouver talking to a largely Vancouver audience, considering that Surrey does play an important role in the region, and has recently surpassed Halifax as Canada's 10th largest city.

Dinwoodie noted that Surrey absorbs about 30 per cent of all Greater Vancouver's population growth, which has meant building some 27,000 new residential housing units over the past decade.

He added that the pace has been hectic, likening his position to that of the driver of a four-man bobsled.

"You're going down an icy track, you don't think about stopping, you're just hoping you can keep it on the rails, so to speak," Dinwoodie said. "In Surrey, it feels like that with all the activity going on."

Dinwoodie said Surrey's new residents are drawn by the availability of land to build housing and its relatively lower cost. While the city has become more expensive than communities further east into the Fraser Valley, he said new housing prices are 25-per-cent to 30-per-cent lower than Vancouver.

The housing, he added, has typically been in neighbourhoods with traditional ground-entry-oriented single-family homes.

He noted that in 2004, Surrey accounted for some 38 per cent of all single family homes built in the GVRD.

However, Dinwoodie said the city's housing mix is beginning to change with the city adopting new, smaller lot sizes for detached homes and encouraging townhouse and apartment construction as a means to keep housing affordable.

Surrey's goal, he said, is to focus future development within complete neighbourhood units built on sustainable development principles.

Such intense residential development has come at a cost. Dinwoodie noted that 70 per cent of Surrey's property tax revenues come from residential property and 28 per cent from business taxes, compared with Vancouver where 41 per cent of taxes are residential and 57 per cent are business taxes.

He added that one of the city's goals is to raise the business tax base to account for 40 per cent of its revenues.

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