Everything you need to know about starting your business in this gorgeous community in British Columbia
Located in southwest British Columbia, Fraser Valley is a beautiful and diverse community with a rich history. The narrow valley lies along the Fraser River that stretches from the Cascade Mountains to the Pacific Ocean. There are plenty of places to explore in Fraser Valley – from the breathtaking beaches to the west to the many parks and attractions within the community and even in nearby Vancouver.
Living in the valley has many advantages, including the high quality of life, affordable housing, and plenty of community amenities, attractions, and recreational activities. Fraser Valley itself includes the communities of:
- Abbotsford
- Boston Bar
- Chilliwack
- Harrison Hot Springs
- Hope
- Kent
- Mission
- Yale
- Areas north of Harrison Lake
- Areas on the east side of Pitt Lake
As such, there are plenty of opportunities for businesses to thrive in this area populated by more than 295,934 residents as of 2016. Fraser Valley’s local economy is largely based on agriculture and forestry. In fact, the area is known for its farmlands and food production.
Other industries in the area are diverse and thriving as can be seen through the local land use. Land use in the Fraser Valley is mixed: there are urban and industrial areas and urbanized regions but there are also golf courses, dairy farms, and agricultural land. Other notable industries in Fraser Valley include construction, manufacturing, tourism, transportation, retail, and service.
While Fraser Valley’s real estate sales dropped by nearly 7% in November 2022 compared to the previous month due to high interest rates, there has been a slight decrease in property prices. For single-family homes, list prices were down 2.2%; for townhouses, the decrease was 1.3%.; and for condos/apartments, prices were lower by 1.8% compared to October 2022.
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WHAT KIND OF COMMERCIAL PROPERTY SHOULD YOU BE INVESTING IN?
If you’re planning on starting or expanding your business in Fraser Valley, BC, you’ll need to shop for commercial properties. Before choosing the location and getting all the paperwork done, the first thing you have to consider is what kind of property you should be investing in. Of course, this relies on the kind of business venture you want to establish or explore.
In Canada, there are 6 types of commercial properties. They include:
- Retail properties
- Accessibility
- Parking facilities
- Convenience
- The presence of “anchor tenants”
Determine if there are well-established tenants nearby that drive traffic to the property. These “anchor tenants” are businesses that are most likely to renew their lease when their term expires. - The property owner’s plans for growth and expansion
It helps you determine if the possibilities of your businesses’ growth aligns with the space you’re planning to invest in. - Office properties
- Urban office buildings are located within the city and can be high-rises to skyscrapers.
- Suburban office buildings are typically located within office parks and are often not as tall as urban buildings.
- Accessible to public transport, shops, restaurants, and other conveniences, as office buildings in harder-to-reach areas are unattractive to tenants.
- Building’s facilities such as heating, air conditioning, natural lighting, parking spaces, and security are also as important as its location.
- Industrial properties
- Storage buildings
- Warehouses
- Factories
- Logistics management areas
- Other production and distribution facilities.
- Long lease contracts. Large companies that use or rent out industrial properties find it more expensive to relocate their warehouses and production sites. That’s why industrial properties tend to have longer lease terms compared to residential properties.
- Lower maintenance costs and easier liquidation. There is always a demand for large, industrial-use facilities, especially by other businesses and corporations who want to expand their businesses.
- Multi-family properties
- The highest multi-family property class is A because it often includes amenities like pools, spas, fitness centers, etc. They typically have the most expensive rents out of the three classes.
- Class B are of good quality but may offer fewer amenities than Class A.
- Class C properties are the most affordable but may come with outdated facilities and furnishings.
- Hotel properties
- Full-service hotels offer facilities and on-site amenities such as restaurants, lounge rooms, and convention rooms on top of room and bell service. Examples of full-service hotels include the Sheraton and Ritz Carlton.
- Limited service hotels typically do not provide the same services as full-service hotels.
- Extended stay hotels are characterized by bigger rooms with kitchenettes and other related conveniences. These establishments are ideal for travellers who intend to stay for more than a week.
- Land
- Greenfield land describes undeveloped lands that are used for agricultural purposes, such as farming, ranching, or orchard growing.
- Brownfield land is a tract of land that has been used for industrial or commercial purposes but can be transformed for re-use.
- Infill land is typically used for real estate development in urban locations.
Retail properties are commercially zoned real estate used exclusively for selling products and services. Retail properties include shopping malls, retail stores, shopping centers, and the like. Businesses that occupy retail properties typically lease the space and pay rent at specific intervals to the property owner.
Before you invest in a retail property, there are several things you need to consider:
It can also be helpful to learn more about the property’s zoning uses as well. These factors will be explained in more depth later on.
Office properties are great investments because they’re typically sold at relatively lower prices, have minimal ongoing maintenance requirements, and provide higher profit than other commercial properties.
Office properties can be single-tenant or multi-tenant buildings. As a potential buyer, you’ll need to make sure that the office property you want to purchase is in a good location – whether in an urban or suburban setting.
You’ll also need to make sure that the office property is:
Industrial properties are another type of commercial property. They can be:
This type of property is typically located outside urban areas but near major transportation routes for accessibility and transport cost savings.
Industrial properties are attractive to many investors because of the following benefits:
Another benefit of owning industrial properties is the lower maintenance costs and easier liquidation, as there is always a demand for large, industrial-use facilities, especially by other businesses and corporations who want to expand their businesses.
Multi-family properties are perhaps the most accessible type of commercial property for any first-time investor.
This type of real estate consists of five or more units and is split into three classes: A, B, and C.
Each class of multifamily properties can come in a variety of building sizes: low-rise, garden-style, mid-rise, or high-rise. Low-rise and garden-style properties are often found in suburban areas while mid- and high-rise properties with 5 or more stories are found in more densely populated areas.
The hotel and hospitality industry includes a variety of establishments including businesses that provide accommodation, meals, and other services for travellers. For now, the focus of this section are the three most common sub-categories found in Canada, which are the full-service, limited service, and extended stay hotels.
Land is another subtype of commercial real estate and is typically divided into 3 subtypes:
Other types of commercial real estate
Aside from the six main types, there are also other subtypes of commercial real estate in Fraser Valley.
- Entertainment, recreational, resort, and cultural properties are one subtype. Under this category, you’ll find golf courses, ski resorts, marinas, concert halls and theaters, recreational sports facilities, and the like.
- Institutional property belongs to another subtype. Universities, community colleges, schools, institutional residences, hospitals, and other institutional residences and facilities fall under this subtype.
GUIDE TO BUYING COMMERCIAL PROPERTY IN FRASER VALLEY
As with purchasing residential property, there are many things to consider when purchasing commercial real estate in Fraser Valley, BC.
Here are a few tips and guides to help you find the right commercial property and maximize deals available to you.
- Research Annual Property Taxes and Property Transfer Taxes (PTT) in British Columbia
- Determine your investment strategy
- Purchase commercial properties to keep until they appreciate in value.
- Purchase land so they can build their own property on it.
- Fix and flip, which is renovating property to sell for profit.
- Purchase commercial properties for their own business.
- Purchase commercial properties to do what’s called BRRRR, which stands for buy, rehabilitate, rent, refinance, and repeat.
- Consult an accountant
- Your accountant is there to make sure that you consider all hidden costs of purchasing and owning the property.
- Your accountant can sort out tax implications based on the local real estate market.
- Your accountant can help you determine your budget and assist in planning your operating costs, etc.
- You can consult your accountant whether you should label the purchase a corporate or personal transaction.
- Your accountant can help you with succession planning, transition financing, and how assets will be distributed if the business is sold.
- Apply for financing
- Look for the best financing package.
- Even as interest rate is one of the most important things you need to consider, you also need to think about how much the bank or lender is willing to finance.
- Avoid trying to impress lenders with overly optimistic forecasts. Future payment issues can increase your costs and reduce your financial legroom.
- Work with a seasoned real estate professional
- Find properties that fit your company’s needs.
- Understand the process of buying commercial properties in Fraser Valley, BC
- Advocate for you and your company’s best interests during negotiation.
- Accomplish paperwork.
- Make offers on your behalf.
- Foresee and avoid potential problems.
Once you’ve determined your line of business and have an idea about what type of commercial property you want to purchase, the next most important thing to help you get started is to figure out the financial side of things, including taxes.
As the owner or lessee of a property, you are required to pay annual property taxes for each of your properties. The amount of annual property tax you need to pay is determined by the current year’s tax rates and your property’s assessment. Assessment notices are typically sent at the start of the year showing how much your property’s assessed value is, after July 1st of the previous year.
In BC, you must also file and pay for a property transfer tax return when you purchase or gain an interest in a property that’s registered at the Land Title Office. In most cases, transactions involving PTTs are completed by a legal professional. Transactions that require PTTs include agreement for sale, life estate, foreclosure, lease, court order, quit claim, lease modification, prepaid lease, and forfeiture.
The tax is calculated based on the property’s fair market value, which includes the land and any improvements made to it. There are exemptions, of course, but the general property transfer tax rate is 1% to 3%, depending on the fair market value of your property. You can learn more about property transfer taxes on the official British Columbia government website.
Different commercial real estate investors have different strategies when purchasing properties.
Investors can:
On top of commercial property tax rates, you’ll also need to consider consulting an accountant to help get you started on the process. Before you go to a bank to apply for financing, you may want to work with an accountant to determine a number of things:
Applying for residential real estate financing can be challenging and doing the same for commercial real estate is no different. Banks will require documents, such as top-tier financial statements, your company’s profit data, and other similar documents.
If you’re going to apply for financing:
Purchasing your commercial property in Fraser Valley, BC does not end once you find the perfect location and when you get approved for financing. You’ll also need to have the property inspected as well as learn more about outstanding liens and obligations.
It’s important to work with a seasoned real estate professional familiar with the Fraser Valley commercial real estate market.
Commercial real estate agents n Fraser Valley, BC can help you:
Good agents will also help you expand your network.
QUESTIONS TO ASK BEFORE PURCHASING COMMERCIAL PROPERTY IN FRASER VALLEY, BC
Aside from the property type, financing, and taxes, there are other things you need to consider before purchasing a commercial property in Fraser Valley, BC. Here are some questions you need to ask yourself before purchasing commercial property in Fraser Valley:
?️ Should my business commit to this long-term decision?
Purchasing commercial property is vastly different from leasing long-term. While leases for commercial properties are often more flexible than for residential properties, they often run for at least five years. If you’re going to purchase commercial property, your stay might be even longer.
Before you even begin to contact a commercial real estate agent or determine your budget, you need to consider first this move is necessary for you and your business. Are you planning on expanding your business or do you want to move to a new space to attract more clients and customers? Will this move prove to be beneficial for the entire company?
?️ Do the pros of purchasing commercial real estate outweigh the cons?
The answer to this question really depends on your company or business situation. Among the pros of investing in commercial real estate in Fraser Valley, BC include:
- Higher income-generating potential
- Tenants who pay rent on time and do not damage your property
- Stable and logical pricing
- Decreased operating expenses
- Flexible lease terms
- Flexible buying options
As for cons, there are certain risks and monetary requirements needed to keep your commercial real estate investment up and running. Of course, there are pros and cons to every transaction, Therefore, consult your real estate agent so they can help you decide.
?️ Does the property have amenities and features that my company needs?
Once you’ve set your sights on the commercial property you want, consider the renovations or modifications needed to make it operable and fit for occupancy. If you plan on just renting the space, you will need to negotiate repairs and renovations with the property owner.
But if you plan on buying the space, you’ll have the freedom to renovate as you please, subject to building and zoning regulations. As the owner, however, you will have to employ an accredited inspection company to evaluate the property for defects and inspect for any environmental hazards.
WHY WORK WITH DON MUNRO?
If you’re planning on expanding your business venture to lovely British Columbia, let me, Don Munro, help you find the perfect commercial real estate in Fraser Valley and Metro Vancouver area. Call 604.817.7338 or contact me here to get started.
I have been in the business of selling real estate for more than 35 years and counting. Get professional advice as well as a great return on your investment when you work with me today.