Office-to-hotel conversion for major Surrey tower mid-construction

Previous artistic rendering of City Centre 4 (left) and City Centre 5 (right) at 96826 137 Street, Surrey. (WA Architects/Lark Group)

Local developers Lark Group and ICT Group are making another sizeable pivot for the uses of their future City Centre-branded complex of office buildings in Surrey’s Health and Technology District (HTD), located at the south end of Surrey City Centre.

A new application by the developers calls for a major change of use for the future City Centre 4 office tower at 9686 137 Street, which is located just north of the existing City Centre 2 tower and Surrey Memorial Hospital.

SkyTrain King George Station and King George Hub are about a 10-minute walking distance to the north from the future tower site.

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As previously reported by Daily Hive Urbanized, construction on the 23-storey City Centre 4 office tower first began in Fall 2022. At the time, there were plans to provide City Centre 4 with 359,000 sq ft of commercial office space, including 75,000 sq ft of purpose-built wet lab space for life science, biomanufacturing, and research organizations.

Moreover, in Spring 2022, Surrey City Council approved a commercial mix of 266,000 sq ft of general office space, 43,000 sq ft of post-secondary education space, 21,500 sq ft of medical office space, 4,700 sq ft of restaurant space, and 25,800 sq ft of other commercial uses.

According to the new application submitted by the developers, nearly two years after site preparation and construction began, City Centre 4’s building uses will be revised to enable a significant tourist hotel.

The top 10 levels of this 23-storey office tower — between levels 14 and 23 — will be converted into hotel uses with a total of 230 guest rooms. It is noted that there will be no accessory uses to the hotel.

city centre 4 office tower 9686 137 Street surrey construction july 2024 1

Construction progress on Lark Group’s City Centre 4 tower, as of early July 2024. (Pierre Poilievre)

9682 137 Street Surrey City Centre 4 Health and Technology District Lark Group

Previous artistic rendering of City Centre 4 at 9686 137 Street, Surrey. (WA Architects/Lark Group)

Based on the previous approval, this tower will contain 638 vehicle parking stalls within its underground levels, but with the new major hotel uses, the vehicle parking capacity requirements will drop to 564 stalls, including the 184 stalls required for the hotel.

City of Surrey staff support the hotel uses as it is “an employment generator and will support the vision of the Medical District in the City Centre by providing convenient hotel accommodations for workers, patrons, and visitors to the Medical District.”

Surrey Memorial Hospital is set to see a major expansion over the coming years, and the growing cluster of clinic, medical research, general office, tech, institutional, and post-secondary uses in the area will help support the hotel uses, which is further aided by its close proximity to King George Station.

As well, there is a growing need for more hotel rooms in the region. According to a 2023 report by local tourism bureau Destination Vancouver, Metro Vancouver is facing a shortage of 20,000 hotel rooms over the coming decades, including 10,000 within Vancouver and 10,000 in other areas of the region outside of Vancouver. Without a meaningful increase in hotel room supply, the shortage will send hotel room rates to new heights, deter tourism, and impact many tourism-dependent jobs and the region’s ability to attract concerts, events, and festivals. The forecast of a seasonal shortage beginning in the peak season of 2026 will grow over the subsequent years.

In March 2024, Lark Group and ICT Group also announced a major change of use for its future City Centre 5 office tower, which was previously envisioned as an 18-storey office tower. As visualized in the original conceptual artistic renderings, City Centre 5 will be located immediately north of City Centre 4, sharing an internal plaza with the tower that is currently under construction.

City Centre 5 will now incorporate a significant student housing component of over 500 beds for both students and faculty as a partnership with Western Community College (WCC).

Previous artistic rendering of City Centre 4 (right) and City Centre 5 (left) at 9686 137 Street, Surrey. (WA Architects/Lark Group)

Previous artistic rendering of City Centre 4 (left) and City Centre 5 (right) at 9686 137 Street, Surrey. (WA Architects/Lark Group)

The mixed-use building of City Centre 5 will include not only student and faculty housing but also potential short-term housing space for local healthcare institutions. There will also be a cafe and a large dining hall supported by WCC’s Bachelor of Hospitality internships and practicums, resident support offices, a multi-purpose room, an Indigenous-focused reflection space, laundry facilities, student study, lounge and kitchen area, and bike storage spaces.

City Centre 5 is also under construction, with its completion scheduled for the third quarter of 2028.

Based on the original project timelines, City Centre 4 is expected to reach completion in late 2025.

The first three HTD buildings in existence by Lark Group and ICT Group — City Centre 1, City Centre 2, and City Centre 3 — have a combined total floor area of roughly 500,000 sq ft of various types of office space. Future phases of HTD on adjacent lots could add an additional million sq ft, generating employment spaces for 15,000 people or more. City Centre 1, the first building in HTD, reached completion about a decade ago.

Immediately to the west, the University of British Columbia (UBC) has formed a five-acre land assembly for the potential construction of a major mixed-use academic and residential campus, UBC Surrey.

city centre surrey heath and technology district lark group

Lark Group’s City Centre buildings in Surrey’s Health & Technology District, and the site of the future UBC Surrey campus. (Lark Group)

Site of the future City Centre 4 and City Centre 5 tower, adjacent to the Lark Group’s existing and future City Centre buildings in Surrey’s Health and Technology District. (Google Maps)

The various completed phases of Lark Group’s Health and Technology District, and the future City Centre 4 and City Centre 5 phases. (Lark Group)

Of course, there is currently a weakened demand for office space. According to commercial real estate firm CBRE, as of the end of the second quarter of 2024, the leased office space vacancy rate across Metro Vancouver is currently hovering at 9.7%, including a suburban office vacancy rate (areas in the region outside of the downtown Vancouver peninsula) of 8.4%. Although these represent heightened vacancies compared to pre-pandemic activity, this still represents the lowest office vacancy rate amongst major urban centres in Canada and the United States.

CBRE also states there is growing interest in office conversions to some other uses, with some new developments shifting mid-construction to either residential or hotel.

Major office-to-hotel conversions are also planned for the future 66-storey Citizen mixed-use tower and the 2023-built 48-storey Highline mixed-use tower, which are both located in the Metrotown district of Burnaby.

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