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Health, tech sectors key to developing new downtown Surrey

The most challenging part of transitioning from a low-rise suburban commercial district to a vert...

IMAGE: The City Centre development by Lark Group is one of the key components of a plan to create a new downtown for Surrey, B.C. Several buildings at City Centre are opened, and others are under development at the city's Health and Technology District. (Courtesy Lark Group)

The City Centre development by Lark Group is one of the key components of a plan to create a new downtown for Surrey, B.C. Several buildings at City Centre are open and others are under development at the city’s Health and Technology District. (Courtesy Lark Group)

The most challenging part of transitioning from a low-rise suburban commercial district to a vertical and vibrant downtown is building textured, interesting streets and developments that draw both residents and workers.

As president and CEO of Surrey City Development Corporation (SCDC), Michael Heeney’s job is to create a critical mass of jobs at Surrey city centre, the key to a fully functional, dynamic downtown.

The SCDC is a for-profit real estate development company that operates independently from its sole shareholder, the City of Surrey. Incorporated in 2007, SCDC pays dividends from the sale and leasing of city-owned land. It has partnered with several private developers to facilitate development of key city centre projects.

B.C.’s second-largest city is on track to becoming a major business centre, said Heeney. It serves a rapidly growing population south of the Fraser River, linked by SkyTrain to downtown Vancouver. The goal is to attract some of those downtown jobs to Surrey,and build the density needed to create that vibrancy.

Another major challenge is its physical size, an area two-and-a-half times the size of Vancouver. The suburb currently comprises six “town centres” reliant on strip malls and big box retailers, and car thoroughfares for getting around.

SkyTrain links to downtown Vancouver

The new city centre in the north part of Surrey is possible because of SkyTrain stations, which connect residents to downtown Vancouver via a half-hour commute.

Transit-oriented developments that have anchored the centre include architect Bing Thom’s Surrey Public Library and Simon Fraser University’s Surrey campus, and Surrey City Hall — all striking architectural designs.

The city specifically chose bold architecture to set the tone for its new downtown and because it’s more affordable than transit hubs in Vancouver, several towers have popped up in recent years. However, there’s still a long way to go.

“I think 10 years from now, you will be considered a genius for investing in Surrey. Right now, it’s early. But, the scale of what I’m talking about takes years to build, so thinking 10 years ahead isn’t crazy.

“People say Microsoft and Apple are building in downtown (Vancouver) and tech companies will want to be close to each other. But, the reality is 10 years from now, those 20- and 30-somethings will be older and not want to be downtown anymore, and won’t have the most competitive locations for their offices.

“You need to think one step ahead.”

Lark Group recognized Surrey’s potential

Developer Lark Group was one of the first entrants to Surrey centre. It’s bringing health-tech jobs to the emerging city centre with its multi-phase Health and Technology District, as well as the upcoming Legion Veterans Village, a two-tower complex offering support for veterans and first responders and 500 residential units, both market-rate and affordable rental homes.

The developer benefits from some extremely early strategic property investment and also being in the right place at the right time.

For several years, the city worked to develop an economy based on innovation and technology industries. Targeting the tech sector made sense: the region is already a draw for technology talent and as a work destination for the tech sector, it could help develop a solid tax base.

Lark Group was poised to step in. The 44-year-old firm is based in Surrey and has roots in the health care and technology sectors, and has led major renovations and expansions of hospitals throughout the province, and the development of medical buildings and care homes, including the upcoming Dogwood Lodge complex in South Vancouver.

It had also purchased substantial property adjacent to the Surrey Memorial Hospital in 2004, when land values were much lower.

Surrey Health and Technology District

When the province invested $500 million into a new critical care tower at the hospital in 2012, Lark Group partnered with the city and others in health care to develop the Health and Technology District.

Lark Group opened the 12-storey City Centre 1 in 2014, which quickly filled with more than 100 health clinics and tech startups. In 2018, the 185,000-square-foot, 12-storey City Centre 2 was completed, landing tech company Safe Software as a major tenant over five floors  and 60,000-square-foot City Centre 3, a 130,000-square-foot, 10-storey LEED Gold certified building is under construction and more than 60 per cent sold.

The design process for buildings four and five is underway. When complete, the district will comprise eight buildings, connected to the region by King George SkyTrain station.

“When they saw the property across the street from Surrey Memorial Hospital was available, they began to assemble that land,” said Rowena Rizzotti, vice-president of health care and innovation for Lark Group. “That was many years ago, but they anticipated that it would become valuable and useful at some point in the future.

“Usually space around a hospital is valuable. The hospitals just always end up outgrowing themselves — they need services and spaces outside the hospital, particularly as we are trying to move to community-based programming.

“So I do have to say there was a stroke of brilliance on behalf of the Lark Group and there was also a bit of luck in the concept of innovation and technology coming into Surrey. ”

Changing the suburban perception

Going forward, part of the challenge, she said, is changing the public’s perception of a suburban community to a destination place with a culture of its own — the standard story for North American suburbs. The cultural shift is happening, albeit slowly.

Rizzotti has a 35-year career in health care, and prior to joining Lark, she oversaw the critical care tower at Surrey Memorial Hospital in 2012, one of the largest health-care infrastructure projects at the time.

“We had to hire hundreds of staff and physicians and Surrey didn’t have the best reputation for attracting health care professionals at that time. Now, that’s completely shifted. I’m thrilled to see that that part of Surrey’s reputation is slowly, over time, disappearing.”

The vertically integrated real estate company is involved in residential, commercial and industrial projects in B.C., and plans to take its specialized health care and tech model to other provinces.

“Coming from a health care background, I never thought I’d be in real estate, but sometimes I feel like a realtor. I am touring people all the time,” Rizzoti said.

“I have people come in from other countries and they want to understand this whole innovation cluster, these ecosystems, and how you can have these different features, and all this mixed-use.

“How does it work? How do you put it together? How do I assemble the right partners? So, now we have a number of projects in the pipeline that we are working on developing here in B.C. and also elsewhere.”

Once built out, Lark’s Health and Technology District is expected to bring 15,000 jobs to Surrey’s downtown.

“Let’s use Surrey’s assets, such a large land base, diversity in population, growth for families, and all these young entrepreneurs, which will be our future,” she said. “Let’s look at how we can use all of those assets instead of looking at Surrey as being in the shadows of Vancouver.”

More density in the Surrey core

Heeney worries the core is still not sufficiently concentrated.

He wants to see greater density of office space, particularly on a former recreation centre site known as Centre Block. The site, owned by the city and Simon Fraser University, is adjacent to the City Centre SkyTrain station, and has development potential for two million square feet of space.

The SCDC completed a master plan last year and is submitting for rezoning this year. It will be one of the corporation’s final projects. The city announced in June it would dissolve the SCDC and transition real estate assets and operations to the city.

Heeney believes the key to Centre Block’s success will be a major tenant, such as offices for senior government, which typically requires 10s of thousands of square feet of space, or more.

“One of my big pushes before I depart, is to try and get as much momentum as I possibly can for this project,” he said. “The challenge is generating an order of magnitude of adjacent office development, to really tip the balance, and create that critical mass for a central business district — that’s the big challenge.

“We would like to position ourselves so that should government decide they want this development as part of their economic post-COVID recovery program, we can move quickly. Surrey has a proven track record of being able to deliver public projects faster than anyone else, so they know we’re good at that.”

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