Expected Assessed Value Changes In 2022

In November, BC Assessment provided a summary of assessment changes that they were planning to institute for the 2022 roll values in comparison to the 2021 roll values for ICI properties. We have paraphrased BCA’s comments for ease of reading. Our comments are in italics, with our advice at the end.

Retail

The majority of assessments have generally increased by 0-5%, with some increasing 25-30%. In summary:

  • Rental Rates – Stable for Vancouver Core, with suburban rents seeing more substantial increases.
  • Capitalization Rates – Stable with mild decreases in the Fraser Valley.
  • Vacancy Rates – High rates used by BCA in 2021 have been reduced, which results in higher values.

The pandemic has somewhat stabilized as per the most recent report (11/28/21) by the BC CDC, with case rates elevated overall but declining provincially. The new increases in cases from the Omicron variant will not be reflected in the 2022 assessments as the state and condition is at October 31st. Retail has been resilient in the core areas, despite reported foot traffic reductions of up to 76% (November Western Investor, pg. 6).

Office

This has seen a moderate increase in value everywhere but downtown Vancouver, with most increases being 5%-10% except for downtown offices, which have gone up 25%-45% despite the lack of workers returning to the office. In summary:

  • Rental Rates – Slight increases in downtown Vancouver, stable elsewhere.
  • Capitalization Rates – Slight decreases throughout. Downtown Vancouver and Burnaby seeing bigger decreases.

Agents report that the market for office remains strong despite lower foot traffic and the ongoing pandemic. Reported turmoil over remote work seems to have had little effect on values. With subleases forming the majority of commercial vacancies (Colliers, Q3 Office Market Report), offices may be filling up with people who were unable to afford a lease pre-pandemic.

Commercial Land

Assessed values have increased everywhere except Vancouver downtown, by as much as 30% in some cases. Land has seen large increases outside of the City of Vancouver, which itself has seen changes up to 15%. Core areas such as Burnaby and Richmond have seen up to 30% increases, with suburban areas like Langley and Chilliwack seeing more moderate increases around 10-15%.

With retail rents returning to pre-pandemic levels (JLL Q3 Retail Insights), demand for retail land should stay strong.

Industrial

Continued strong demand led to BC Assessment increasing many property values, with the majority between 20%-25%. Values everywhere are going up. In summary:

  • Rental – Moderate increases in core areas, substantial increases in Fraser Valley.
  • Capitalization Rates – Stable in core areas, with some decrease in outlying regions.

Extremely high demand has driven an explosion of industrial property. This is the fifth consecutive quarter without a single vacancy in the 100,000sf+ range and the second consecutive quarter without vacancies in the 50,000sf+ range (Colliers Q3 Industrial Market Report). Historically, cap rates were low as rental levels were below market. With rising rents, should cap rates increase?

Industrial Land

Increases have been applied by BCA. The majority of increases are in the 20-25% range, with Vancouver and Richmond being a little less. Increases are up to 40% in Burnaby.

Industrial land has been at a premium on the North Shore and in Vancouver for some time now, meaning they have increased less. With the scarcity of industrial land now hitting even outlying areas, we can expect prices to rise until enough inventory becomes available to meet demand.

Multifamily

Multifamily remains in high demand, with increased sales activity in 2021. The market was reported to be stable with modest increases throughout the lower mainland. The majority of assessments increased from 0-5%, with some increasing up to 20%. In summary:

  • Rental – Flat to moderate increases in core areas, with some decreases. Fraser valley rentals increased substantially.
  • Capitalization Rates – Flat throughout the lower mainland.

Continued remote work policies may be contributing to rising rental rates in Fraser Valley as they allow people to move out of the cores.

Summary

Some points to note.

  • Whenever BC Assessment increases or decreases the values, the question is whether the differential is correct.
  • A rise in assessment will not necessarily result in a similar increase in taxes.
  • Even if the % increase seems fine, the original value may have been high.
  • If you have never had a tax review on a property, it is recommended as it establishes a base for future assessment years.

Call us if you require further elaboration or require assistance with your assessments.

Peter Austin, BSc., AACI, Carb

Ph:      604-733-3232

Email: paustin@telus.netur property now and in the future.

Peter Austin, BSc., AACI., C.Arb.

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