Being interviewed today for the soon-to-be-published Langley Magazine reminded me that it has been quite awhile since I updated this Langley Report. It would have been nice to just refer the reporter to this website. But with it being a year old, and with my predictions being not quite as accurate as I had planned, I think I should get on with a new one - and try to again with a few new predictions.
One of those predictions was that with all the residential construction going on, by 2003 the competition for buyers was going to catch up with the developers and they were soon going to have to reduce prices and/or come up with innovative marketing ideas to attract diminishig those buyers. So far, into the 3rd quarter of 2003, that hasn't proven to be true. I was off by 6 or 8 months. The demand has remained strong.
Only now are we beginning to see price adjustments coming about. Even though there continues to be a strong demand for new - as well as for older- housing - developers bringing new housing on the market are beginning to offer their product at a little less price than the neighbour down the street.
I don't suppose it will be too noticable through to the end of this year, but by 2004 I'm sure we will have considerably more housing units available than we will have people to buy them. Something willhave to give. Along with all the new housing will come a need for more retail space. Our land assemblly on the NW corner of Fraser Highway and the Bypass Extension (209th St.)is well under construction with a new Safeway store scheduled to open in October. The majority of the surrounding stores were leased long before construction started. Other, smaller plazas, are on the drawing boards and should begin popping up in and around the new residential areas. The enivitable result of so many new commercial developments coming on is that the newer ones, to some extent, draw from the older - and not so older - ones. Just abour every commercial plaza in our area has at least one fairly large vacancy. Still, most plazas are probably still operating at a 90% - 95% occupancy. No new office projects are contemplated. The office vacancy rate is still quite high - and the rates quite reasonable, if you're a tenant. It will be a couple of more years before any spec office space will be built. For example, the 3-story office building designed to go into Logan Creek (200th and 62nd Ave.), now has a shiny new Brick Store on the site.
Still, with all the new residences being built, it creates a need for small professional office and retail space - dentists, laywers, hair dressers, video rentals and the like. But they naturally want to be in the area where the new homes are going up. So small neighbourhood plazas should do well over the next few years. For some inexplicable reason industrial development is pretty much stagnant. This too contravenes my 2002 prediction in which I forecasted that demand would remain strong. Even though the local economy is doing fairly well, there is very little demand for industrial lease space. And, oddly enough, when a small industrial unit is required, there is very little available. With land and construction costs rising daily, it makes it almost impossible to build industrial buildings that one can lease out at a rate that is profitable for the builder. Added to that, with the interest rates remaining low, most potential tenants would sooner buy that lease. However, no land owner is prepared to risk building a strata warehousing complex without first knowing that they have buyers willing to pay the new prices of $85 to $95 p.s.f. This report usually focuses on Langley. But I thought it might be of interest to pay a little attention to our sleepy neighbouring community where some interesting things are beginning to happen.
Commercially speaking, Cloverdale has been a pretty quiet little burg for the last 20 or 30 years. A good place to shoot the occasional commercial or T.V. production but very limited interest in it as a retai/office centre.
Can it remain that way for much longer? a) The industrial park to the north has been very successful and filled up quite rapidly. b) Fraser Downs Race Track is about to get it's slot machines. (Whether this will impact economically on the town is anyone's guess, but it is definetly activity). c) Kwantlen College is commencing construction. Look to the south and east of # 10. Highway and 180th St. And d) Housing! My lord, there's housing. Look anywhere west of 168th St. It would seem that the people moving into this new area are more apt to head downtown for supplies than the former residents who live to the east. Those latter dwellers tend to be Langley oriented but the western newcomers will have to head through town to get to Langley.
It is quite possible that Cloverdale will finally have it's day in 2004.
If you would like a more comprehensive overview of the market in Vancouver and the Lower Mainland check out this link to Royal LePage Advisors under http://www.royallepage.com ThatÂ’s this year's look at the commercial real estate market in and around Langley. To sum up let me stick my neck out and and make a few more predictions:
OFFICE DEVELOPMENT
CLOVERDALE
1) New housing prices will begin to fall by the end of this year.
2) No one will begin a new office building, unless they are at least 60% tenanted in advance
3) Commercial retail/office plazas should do well.
4) The demand for small industrial lease and strata space will, by the Fall, pick up again but will there anywhere to put those tenants and buyers?
5) Cloverdale may be the long-overdue hotspot over the next few years.
So say I. (But with 3 out of 5 last year, it's possible that I might still be out just a bit).