Surrey, the Startup City

Jim Cox, Surrey City Development Corp. | BCBusiness
Surrey City Development Corp. CEO Jim Cox shows off a model of the 50-storey Civic 3 Plaza.

Booming population, new university campus, new city hall, new performing-arts centre and starchitect-designed library. No longer a punchline for smug Vancouverites, Surrey is the city of the future. And if Mayor Dianne Watts has her way, it will be a model for 21st-century city planners around the world

From his glass-enclosed office high above downtown Surrey, Jim Cox has a panoramic view all the way from Vancouver to Mt. Baker. The president and CEO of Surrey City Development Corp. is also looking upon the future.

Below him, there is the crane-dotted city rising from the ground—the half-built new city hall, a public plaza and the ground that will soon break on a 52-storey luxury residence with penthouses priced at $1.2 million. Nearby is Bing Thom’s two-year-old, $30-million angular library that leans forward like it’s riding a wave, the kind of architecture that stirs envy in non-residents.

Cox’s office is in Thom’s other project, built a decade ago, the Central City complex that houses an office tower, a shopping mall and an SFU campus, complete with a sky-high cathedral ceiling that feels like the faraway interior of a ship’s hull. It is awe-inspiring.

But down-to-earth Cox, who commutes an hour and a half each day from his home on Bowen Island, is a little uncomfortable with his floor-to-ceiling views.

“It’s a little opulent for me,” he says.

As the president of SCDC, Cox sees the creation of downtown Surrey as just one of nearly a dozen projects on the go around the city, a municipality nearly three times the size of Vancouver in terms of land mass and, judging by the full-speed development around me today, in scope and economic ambition as well. It all started with what is currently called Surrey City Centre. “Back in the day, we called it ‘Whalley.’ When all the buzz of surrounding construction is complete and the area is built out, we won’t even need a name for it,” says Cox. “We’ll just call it downtown.”

And not just a downtown as designed by city planners either, but an actual city with a booming population, commerce, thriving workforce and three SkyTrain station hubs surrounded by buses, streetcars and mixed-use towers. As the second metro core of B.C.’s Lower Mainland, Surrey is currently absorbing about a third of the region’s population growth. It is planning not only more infrastructure growth, but also a transformation into a barely recognizable version of its former self. New library. New medical facilities. New university campus. New city hall. New commercial, industrial and residential space. New major performing-arts facility. New recreation facilities. New roads. New transit. New jobs. There’s even talk of its own NHL team.

The Transformation

This dramatic transformation is energizing urban visionaries who recognize that the stars are truly aligned for a region that was for decades a regional punchline. To see Surrey morph into a real city, and to have a hand in it, is a once-in-a-generation opportunity for business and political leaders to steward the lives of millions—how they work, play and move. Early evidence of this consistent, meticulous attention to urban design is apparent the moment you step off Surrey Central SkyTrain station and into Surrey City Centre. This isn’t some off-the-shelf architectural generica, but a hub of proper design and flow between buildings and transit. The one glitch is the bus loop that confuses everything, but that’s reportedly temporary. A more urban bus stop is on the way. There is a sense of intent and a master plan, envisioned and implemented with an appreciation of the responsibility of such an opportunity.

“I raised the bar,” says Mayor Dianne Watts. “I said, ‘We want iconic architecture,’ because those buildings are going to be there 50 or 100 years from now. If you look at different cities, they always have the elements of iconic architecture. So, for me, it was very important.”

In her eight years as mayor, Watts has made it her mission to attract investment and jobs to the city, through lower taxes, the creation of infrastructure and major capital works projects, as well as streamlining the development process and offering incentives, such as those offered to clean-tech industries. In exchange for setting up shop in Surrey, those businesses were spared property taxes for the first three years, offered a business licence fee of $1 for the same amount of time and given a break on building-permit fees by 50 per cent. That’s just one example. Watts has been widely praised for her no-nonsense, uniquely progressive approach to steering Surrey into the 21st century and she plays a key role in its success. Surrey may not have pretty Vancouver’s mountain access or oceanfront properties, but it has great swaths of land, a young demographic and a government that’s keen to get down to business.

“She’s amazing,” says Cox. “I deal with politicians, and most of them don’t listen. She listens. She’s fairly demanding and she has all kinds of ideas.”

To ignore the transformation of Surrey would be to stick your head in the proverbial sand. The place is poised for growth, shifting from bedroom community into a young, self-contained city that will have the benefit of planning from the bottom up.

After building Central City several years ago, Bing Thom and his team were keen on weaving their vision through the entire narrative of the city’s construction. So Watts asked them to act as consultants on the master plan.

“They’ve got this incredibly progressive government, a good bureaucracy. It’s exciting,” says Michael Heeney, a principal at Bing Thom Architects Inc.

He says it’s also easier to work in Surrey, citing the fact that his firm designed and built the library in 18 months, about the time it would take just to get approvals in Vancouver.

The Surrey opportunity is global in scale—outside of China and the Arab states, how many cities get built from the ground up these days?

And that is exactly how Mayor Watts sees it. “I look at it as building a city,” she says. “We are seeing a huge [migration] shift from other areas of Metro Vancouver. When young professionals want to start raising a family, they come here.”

And they are coming, to the tune of about 1,200 people a month.

By 2041, the city’s population is expected to grow to 740,000, which will almost match Vancouver’s projected population of 770,000, according to Bing Thom Architects data.

As the affordable alternative to unaffordable Vancouver, Surrey has mushroomed to a population of almost half a million. While the median price of a house on Vancouver’s “up-and-coming” east side was $904,000 in May, the median price of a house in Surrey Central was $559,373. The price tag of an east Van condo? It hovers around $336,000, compared to $207,000 in Surrey. It’s a meaningful difference, especially when you consider that the average income in Metro Vancouver was $43,911 in 2009, according to Canada Revenue Agency’s latest data. As the mayor says, it’s the place where families go. As a result, one-third of Surrey’s population is under the age of 19, which means a built-in future workforce. The goal is to create a thriving metropolis where people can own a home, raise a family, go to school and, most importantly, work.

There are some who firmly believe Surrey’s population could outnumber Vancouver’s, although that’s up for debate. What we do know is that according to census figures, the centre of influence is shifting. In 1991, for example, Vancouver represented 29 per cent of the region’s population, Surrey just 15 per cent. By 2011, Vancouver accounted for 26 per cent of the population; Surrey 20 per cent.

Density grows the economy and there are signs of a shift there, too.

In terms of business growth, Vancouver and Surrey are on divergent paths. While the number of incorporated businesses in Vancouver has dropped by 11 per cent over the past five years, incorporated businesses in Surrey have risen by 10 per cent, according to B.C. Finance Ministry stats. Every year, says Watts, about 2,000 small businesses open in Surrey.

“And we know that small business is the backbone of any economy, so we are nurturing and fostering that piece,” she says. “In Surrey, we have a massive land base and the ability to grow and expand.”

Soaring highrise condos are part of the
planned Infinity Towers.

Surrey, Inc.

Then there’s the company generating the income for the expansion. Cox has had a long career planning financially viable projects for Marathon Properties Inc., such as the downtown luxury resort neighbourhood Coal Harbour in the 1990s. He’s also turned land into money for the Port Corporation, B.C. Rail and the City of Vancouver. He’s even helped churches turn their real estate assets into moneymaking ventures.

“We do real estate development for people who have land, but no real estate expertise. There are a lot of people like that,” he says.

Nearing retirement with 40 years of experience behind him, Cox wanted to be part of the Surrey transformation as a point of pride. He gets to play a part in the rebuilding of a city from the ground up.

“It’s going to be fun, to watch it get realized, a little like Coal Harbour for me. Even though I didn’t build it, I did the planning. And I love going down there and thinking, ‘I had something to do with this.’”

The City of Surrey hired Cox to generate income and develop communities that are dense and pedestrian-friendly, with transit access. As chief of SCDC, Cox oversees the purchase of properties and the adding of value, such as rezoning or infrastructure; the corporation then flips or helps develop them, turning the properties into income-generators (see p.52). Among other ventures, SCDC owns a couple of shopping malls, it’s co-developing the $100-million hotel complex in Surrey Centre and a 114-unit townhouse complex in South Surrey. The company is also constructing a brewery in Bridgeview and a 250-acre industrial park in Campbell Heights.

“Surrey prides itself on having the second-lowest taxes in the region, so they run a very efficient organization,” says Cox. “One of the ways they felt they could continue to do that was by making money from real-estate holdings. So they set up a company to do that. It’s innovative and very few cities have done that.”

The plan to grow Surrey has been bandied around since the 1990s, but it only started to take shape in the last few years. SkyTrain was expected to give Surrey major consumer traffic, and Surrey Place Mall underwent a major renovation in anticipation. But the plan backfired. Without more to do in the city, people went to Burnaby’s Metrotown instead.

“SkyTrain had been there 10 years and nothing was built around it,” says Bing Thom Architects’ Michael Heeney, who’d been working on a feasibility plan for a performing-arts centre in Surrey. “In some respects, it was pulling energy out of City Centre rather than bringing it to it.”

With prompting from Bing Thom Architects, the city realized it needed the infrastructure around those SkyTrain stations to entice consumers south of the Fraser River. After a deal was made with SFU to locate its new campus at City Centre, the momentum started, says Heeney. “That’s when the tide turned and people realized what could happen.”

But implementation of the full plan never seemed to go anywhere, until five years ago, when SCDC was formed, a privately run company wholly owned by the city.

“Why wasn’t city hall moving?” Cox asks, rhetorically. “I mean this politely, but nobody had responsibility for it. The planners would think about it, the city manager. But they are busy running huge departments. They have big, big jobs. For us, we said, ‘Damned rights.’

“What we did is quietly buy land in City Centre and assemble a fairly big portfolio, about two blocks. Then we sold it to Bosa Properties,” says Cox. “Bosa has a big development permit right now, so we made a lot of money from that.”

SCDC is assembling land this way, in small chunks, without taking on too much debt. The big blocks of land, surrounded by a new library and future public plaza, are an attractive draw for developers.

After five years, SCDC is making money, says Cox. The city still loans money for the down payments on land purchases, but the mortgage financing is done through banks. For example, the city is loaning the corporation $13.6 million to build 3 Civic Plaza, the 52-storey residence with the luxury hotel. Like most of the projects, SCDC is in partnership on that one with another developer—in this case, Century Group Lands Corp. The architect, Patrick Cotter, owns a share, too.

Instead of relying on taxes, the plan is to generate income by developing properties and selling them off, or holding on to them for rental income. In the first three years, SCDC acquired $2.6 million in debt from buying up properties. For the last couple of years, it has paid it off and then some, operating debt-free. If the board approves it, the corporation will soon be paying the city a dividend of around $4.5 million.

So why doesn’t every city jump on a similar strategy? Most do, to some degree, but shy away because of a feeling that cities shouldn’t be turning a profit. Doing so creates conflicts of interest, the thinking goes, and poses risk to a city’s role in providing for constituents.

But like most everybody who talks about Surrey, Cox gives full credit to Watts and her big-picture vision, such as changing the name of King George Highway to King George Boulevard, and creating South Fraser Perimeter Road to divert all that ugly truck traffic away from the heart of the city, making the streets walkable for the first time in Surrey’s car-loving history.

Surrey Mayor Dianne Watts awaits students
nd faculty at the Bing Thom-designed SFU

In Transit

Watts’s Surrey is the antithesis of the poorly conceived sprawl that was the suburban wasteland of strip malls, auto wreckers and cheap housing, a place that too often made the news for crime. She has plenty on her side: great swaths of buildable land, a population that’s increasing by 14,000 a year, a development community keen to capitalize on the growth and a leadership team that’s envisaged a master plan for a thriving core metropolis and six town centres, linked by SkyTrain and three streetcar lines, connecting City Centre to South Surrey, Langley and Guildford.

What the mayor still lacks are the transit dollars that will allow her to connect those dots. Transit, and where it goes, is key in determining the direction of such complex, unwieldy growth.

“Not knowing where those transportation corridors are, we are planning in a vacuum,” she says. “That’s what has been so frustrating for so long, in terms of transportation infrastructure. And that’s a significant element.”

If the competition for transit dollars is between Surrey and Vancouver’s desire for light rapid transit out to UBC, Surrey is making a strong ROI argument. Site Economics Ltd.’s Richard Wozny, a Vancouver-based consultant for large commercial development, believes that Surrey could be a hugely successful metropolis. For one thing, Surrey could boost its office space, in the way that Bellevue, Washington, has developed.

“Surrey has tremendous growth prospects,” he says. “But they do need transit. When you build infrastructure, such as a transit line, it should generally go in areas which will leverage the economic value of the infrastructure. And in transit, that means permitting large towers within 400 or 600 metres of every station.”

In other words, pouring money into a UBC line doesn’t make sense, because it’s a dead end, surrounded by water, with no capacity for growth. With the urban plan underway, every dollar spent on new transit in Surrey could potentially grow new development. The infrastructure would pay for itself.

“The goal in Vancouver is to move people as fast as you can from point A to point B, and that’s fine. That’s great,” says Watts. “But for us, the goal is around shaping and building a city and ensuring we are spurring on economic development and creating jobs.”

The Jobs

There are other reasons Surrey is a potential game-changer. And it starts with jobs.

Growth in employment is a flat- to downward-trending line in Vancouver. In a city of coffee shops and condos, the majority of post-university job listings tend to be heavy on baristas, real estate agents and retail clerks. Surrey has other plans for its youth, which comprise a third of its population. Wisely, the city plans to answer the intense demand for the growing technology industry, which is hiring people from Washington State because of the lack of qualified talent in Canada.

Bill Tam, president and CEO of the B.C. Technology Industry Association, says B.C. tech companies are facing the double threat of few homegrown tech graduates and the inability to import talent due to prohibitively priced real esate.

“We figure we’ll be adding about 4,000 new jobs in the sector. That’s been a pretty consistent trend in the last five or six years,” he says. “But the number of design engineers and science and tech people coming out of the system is probably going to be insufficient for what we need… across all of our sub-sectors.”

He describes “pressure points” where companies will have to face stark choices about whether to build up locally, or leave for other regions. “When you add cost of living and talent shortages, there’s the challenge,” he says, noting that several tech startups in the Lower Mainland have employees who prefer to live across the border and commute to work each day because of the high cost of Vancouver real estate.

If Watts has her way, Surrey will come to the rescue. There are already 25 aerospace-industry manufacturers in the city, she says, and she’d like to attract more. Surrey is also targeting the health-tech industry, with 180 health-related companies already set up in its compact downtown area. Earlier this year, Watts announced the creation of Innovation Boulevard, a corridor where health sciences will centralize within City Centre. There’s already the Jim Pattison Outpatient Centre and Surgery Centre, Centre for Child Development and BC Cancer Agency. A $500-million expansion of Surrey Memorial Hospital is underway, the largest in the province’s history. SFU, UBC and Kwantlen Polytechnic University are offering health training at their Surrey campuses.

Future So Bright

Let’s look forward to 2041, when the Surrey dream has been mostly realized. Its population is projected to be just slightly less than Vancouver’s. Ideally, it will have become recognized across Canada as a tech-industry hub, with a high percentage of its population educated white-collar workers who have a higher quality of life because of affordability. The direction of traffic is no longer mostly one way, with commuters going into Vancouver for work and returning at rush hour. Residents of Surrey work in Surrey. In fact, a good number of residents of Vancouver will likely work in Surrey, too.

“It’s going to become a much more pluralistic system,” says Andy Yan, a data analyst for Bing Thom Architects. “Vancouver won’t be the central city.”

That move away from working in the city was already well underway back in 2006, when the percentage of people who lived and worked in Surrey was already at 60 per cent. The percentage of people who lived and worked in Vancouver? A close 67 per cent. And the number of Surrey residents who commuted to Vancouver for work? Only 13.3 per cent.

In this scenario, Surrey’s downtown core, filled with students and office workers, is dense and bustling with new arts facilities, restaurants and stores. The SkyTrain line still ends in Surrey, but the connection is picked up by streetcars that take commuters to the six town centres. At a fraction of the cost of SkyTrain, the city could afford to build three streetcar lines, allowing for better connectivity, without compromising the Agricultural Land Reserve or office and industrial lands.

“There’s the urban sprawl piece,” says Mayor Watts. “We want it contained.”

Tech industries could anchor a huge industrial park like Campbell Heights, currently being built. The health-sciences and biomedical-tech industries will be centralized along Innovation Boulevard, a high-tech campus, punctuated with skyscrapers. Consequently, the education levels will have risen as well, as they are poised to do. Between 1996 and 2006 the number of people in Surrey with a bachelor’s degree, master’s or doctorate increased by 208 per cent, numbering 48,685 people, according to Statistics Canada. By 2041, that number will have quadrupled.

The demographics are already shifting, says Bing Thom Atchitects’ Heeney.

“If you took a snapshot of Surrey, mid 1990s, it had very low education levels. Just with the introduction of SFU, the number of university degrees has more than doubled. In just 10 years this has happened. So this change will happen fast.”

Because employees in the tech industry earn about 50 per cent more than the average British Columbian, the average income in Surrey will rise. On the heels of major firms like KPMG and PricewaterhouseCoopers, who have already set up offices in the city, other service industries will have moved in, now supported by major density. Buoyed not just by density, but lower price-per-foot, the area should attract the sort of anchor tenant that occupies around 200,000 square feet.

“It’s not just about relocating to a city. A company will want to make sure there is a quality of life for its employees. They also want to know they have access to a workforce—and an educated workforce—so there are all of those elements in place,” says Watts.

A Green Second City

Surrey City is also rising during the sustainability era, when creeks are cleaned up, not filled in and groves are as important as on-ramps. Mary Beth Rondeau, the city’s acting architect and design visionary, says she abhors the route of so many other suburbs trying to be urban by creating faux town squares, Disney-style. “I see Surrey wider and calmer and greener, not really edgy urban,” she says. “We are developing during the environmental era; we have a chance to not mess it up.” Not to mention seizing the powerful brand attribute of sustainability that’s within Surrey’s grasp if the ambitious vision is adhered to.

And judging by the aggressive entrepreneurial approach of SCDC, the second city should have the spanking clean look of a place where money is no object, like a Microsoft or Nike workplace campus. The ultimate goal, says Cox, is to have a diversified portfolio worth about $500 million. From that, he is aiming to generate an annual dividend of $17 million for the city, about 10 per cent of the city’s tax base. It’s why SCDC is purchasing income-generating properties in every sector.

“We’ll still do development, but we’ll also be a property manager,” says Cox.

He gets sentimental when looking a few years ahead, saying how Surrey is already well underway and doesn’t need him anymore. “For me, it’s realized already. I came out here primarily to get this company successful, and we are. We’re profitable. I did my job.” It’s why he plans to retire next year.

“I brought certain skills that were needed, but a different set of skills are required to carry it forward,” he adds. A set of skills that will in all likelihood be learned and honed in Surrey proper.