REITs unexpectedly tapped for new tax measure

Advocates for the Canadian commercial real estate industry are asking the federal finance department to clarify why real estate investment trusts (REITs) have been included in a pending new tax measure. The 2 per cent tax on the repurchase of equity — also known as share buybacks — was first announced in the government’s fall economic statement last November with the promise of more details in the 2023-24 budget. Those elicited some surprise when they were released two weeks ago.

“We were not expecting it to apply to REITs. It makes little sense when REITs are required to distribute all their taxable income,” says Michael Brooks, chief executive officer of REALPAC, which counts REITs among its wider membership of prominent commercial real estate companies, property funds and investment managers. “Mutual fund trusts are exempted, which also makes the reasoning for the application to REITs murky.”

The tax has been framed as a similar measure to a new 1 per cent tax on the repurchase of equity that came into force in the United States in January 2023, but REITs are explicitly exempted from the U.S. levy. It’s generally assumed that’s in recognition of the structural differences between REITs and other types of publicly traded companies that issue dividend stocks.

For the latter, share buybacks could be a means to distribute excess cash with more favourable tax consequences for shareholders than if it was paid out as dividends since investors would be taxed on capital gains rather than on earnings on investment. However, the tax rules governing REITs already preclude that option. REITs are afforded a corporate tax exemption but, in turn, are required to pay out 85 to 100 per cent of their taxable income to investors through monthly distributions.

The resulting product offers a wide range of investors, including individuals and pension funds, indirect ownership of real estate assets with the benefit of professional management, along with the potential for higher dividends than they might earn from a comparable investment in dividend stocks. Erkan Yonder, an associate professor with the Jonathan Wener Centre for Real Estate and chair of the finance department at Concordia University’s John Molson School of Business, notes that REITs enjoy this special tax arrangement in 44 countries around the world, and suggests a tax on repurchasing equity would be something of an incursion on that status in Canada.

“Real estate is a capital-intensive investment so if REITs lose their tax benefit, this can create a wave of privatization,” he says. “Public REITs are very important to add transparency to the real estate markets.”

Oil and gas corporations thought to be Canadian government’s main concern

The budget document outlining Canada’s proposed new tax measures states that REITs, specified investment flow-through (SIFT) trusts and SIFT partnerships have been included “to ensure comparable treatment among different types of publicly traded businesses”.

As proposed, Canadian-resident companies that trade shares or units on Canadian exchanges would be subject to a 2 per cent tax on the net annual value of equity they repurchase through normal course or substantial issuer bids. There would be three general exceptions for: repurchasing debt-like preferred equity; share/unit buybacks related to specified corporate reorganizations and acquisitions; or a volume of buybacks totalling less than $1 million for the taxation year.

The budget estimates the tax should garner $2.475 billion between Jan. 1, 2024, when it is scheduled to take effect, and the end of the 2027-28 fiscal year. It also asserts: “Importantly, this would also encourage firms to reinvest in their workers and businesses.”

That is likewise a rationale for the U.S. tax, which was introduced as part of the multi-faceted Inflation Reduction Act (IRA). In part, the measure is aimed at encouraging companies to reinvest their profits in the various avenues for reducing greenhouse gas (GHG) emissions that the IRA enables.

Analysis from the U.S. Congressional Research Service charts the growing use of share buybacks and a particular uptick after the country’s tax laws were revised in 2018. This now far outdistances dividends as a mechanism for returning profits to shareholders with the total value of share buybacks pegged around USD $1 trillion in 2022 versus the USD $550 billion dispersed in dividends. Critics of the practice argue that it diverts reinvestment, spurs debt financing that can have longer-term destabilizing effects and disproportionately rewards major shareholders since taking shares off the market should push up the value of the remainder.

While tech and digital communications firms like Apple, Meta Platforms, Alphabet, Microsoft and Oracle are identified as the leading repurchasers of stock in the U.S., analysis from the accounting and tax services firm, Andersen, hypothesizes that the Canadian government may be more focused on public oil and gas corporations — noting that they “have been especially criticized for making record profits and issuing share buybacks instead of reinvesting their excess capital in clean energy”.

Yonder advises REIT managers are most likely to repurchase equity when they judge the market value of their stock to be out of sync with the value of their underlying real estate assets. That dissonance has been notable recently as investors ponder rising interest rates and the fallout of the COVID-19 pandemic in the office sector.

“REIT stock prices are more subject to misvaluation currently due to these uncertainties,” Yonder maintains. “Earnings management is less of an issue for REITs than other corporations, and stock repurchases are more tools for (addressing) undervalued stock. Taxing REIT repurchases makes things more complicated for REIT managers.”

“We will be following up with the federal department of finance to clarify and possibly seek an exemption,” Brooks affirms.

Barbara Carss is editor-in-chief of Canadian Property Management.

B.C. provides funding for more red seal training

B.C. is providing funding for more red seal training for jobs as automotive technicians, millwrights and welders on the Lower Mainland through a new Community and Employer Partnerships (CEP) project funded by the province.

“Skilled tradespeople are in high demand, so we’re removing barriers to skills training,” said Sheila Malcolmson, minister of Social Development and Poverty Reduction. “We’re funding Red Seal certification so people can secure good jobs in their communities.”

Ace Trades and Technical Institute (ATTI) is receiving more than $560,000 to deliver the automotive technicians, millwrights and welders training project on the Lower Mainland.

“ATTI is excited to provide participants with training that leads to technical skills, certification and practical experience that employers in the trades sector are looking for,” said Supneet Chawla, founder and CEO, ATTI. “This program supports people to achieve their trades-certification goals and gain the practical skills required to excel in their future careers.”

Participants will receive 10 weeks of essential employment and technical skills training, four weeks of work experience with local employers, and one week of followup support to prepare participants for work.

The first intake of full-time in-class training was April 3, 2023. The second intake will begin July 4 and third intake on Oct. 16. Anyone interested in finding out more about this or other CEP projects can contact their local WorkBC centre.

“It can be challenging for immigrants and newcomers to find and keep good-paying jobs, even when they have the experience from their home countries. This training will give more people the opportunity to become active members of the community and help them build a stronger and more prosperous future for their families,” said Rachna Singh, MLA for Surrey-Green Timbers.

BCCA awards celebrate construction month

The British Columbia Construction Association (BCCA) is celebrating the sixth annual Construction and Skilled Trades Month by recognizing excellence across the industry in three areas of priority: public sector procurement, culture change, and leadership.

“The construction industry is going full steam in an extremely challenging economic environment,” says Chris Atchison, BCCA president. “Every day they build the housing, schools, and hospitals that British Columbians rely on. They’re dedicated, but they’re not invincible. Construction Month is how we showcase the industry and recognize its contribution to our economy and society.”

The Builders Code honours five employers with Builders Code Champion Awards for leading the way in advancing the culture of BC’s industrial, commercial, and institutional construction sector.

The 2023 Builders Code Champions are:

Island Red Cedar Construction (Nanaimo) – Small Contractor of the Year
Lacey Construction (Deroche) – Community Champion
Houle Electric (Burnaby) – Contractor of the Year – and Workplace Culture Champion – (Large Company Category)
Kinetic Construction (Victoria) – Recruiting and Hiring Champion
RAM Consulting (Vancouver) – Workplace Culture Champion – (Medium Company Category).

Awards for public sector procurement honour public owners who consistently show leadership in the procurement of construction services:

Fraser Health, Provincial Health Services Authority, and Vancouver Coastal Health – Facilities Management Procurement Team
City of Victoria – Supply Management Services
BC Ministry of Citizen Services – Procurement Services.

The Leadership Awards recognize outstanding people and the companies they represent. The winners are:

Wayne Farey, Campbell Construction (Victoria)
Ryan Thran, Knappett Projects (Comox)
Julia Murrell, Kindred Construction (Vancouver)
Tyler Cameron, Acadia Mechanical (Terrace).

Information on the awards and other construction month events can be found at constructionmonth.ca.

ServiceMaster Clean®, ISSA, and GBAC to partner

It has been recently announced that ServiceMaster Clean®; ISSA, the worldwide cleaning industry association; and the Global Biorisk Advisory Council® (GBAC), a Division of ISSA, have partnered to certify nearly 400 ServiceMaster Clean franchises across the United States and Canada to the ISSA Cleaning Industry Management Standard (CIMS) Advanced by GBAC certification.

As part of the partnership, ServiceMaster Clean franchise owners providing commercial cleaning services will seek CIMS Advanced by GBAC certification, which describes the procedures and principles to be considered in designing and implementing quality management programs for cleaning organizations. Additionally, the certification provides third-party validation of the contractors’ cleaning, disinfection, and infection prevention protocols and procedures.

“This partnership demonstrates our commitment to providing healthy indoor environments for customers through proper cleaning and disinfecting,” said ServiceMaster Clean Interim President Joshua Ussiri.” The certification from ISSA and GBAC validates our processes and will serve as recognition of our brand’s commitment to delivering to our customers the highest standards of cleanliness throughout their facilities.”

“It is a pleasure to work with organizations like ServiceMaster Clean to help advance the health and safety of people in indoor environments,” said ISSA Executive Director John Barrett. “Upon completion of the CIMS Advanced by GBAC certification, each franchise will also become an ISSA member, which provides the opportunity to enjoy the many benefits of membership, including education and networking opportunities.”

Learn more and apply for CIMS Advanced by GBAC certification at cims.issa.com/certification-application/

Architecture grant supports Indigenous students

A new $120,000 grant aimed at encouraging Indigenous students’ participation in the architectural field was announced by the University of Calgary.

The grant is being funded by the Alberta Real Estate Foundation (AREF) and will support the university’s School of Architecture, Planning and Landscape (SAPL) to further develop its existing Indigenous Pathways Program while integrating Indigenous knowledge into the Bachelor of Design in City Innovation (BDCI), the school’s first undergraduate degree.

Sessional instructors and staff from the Indigenous community will also be recruited as a result of the funding, which helps to underscore the central mission and principles of the institution. Currently, the SAPL is the province’s only accredited architectural degree program.

“This project elevates real estate leadership in our province through inclusion, representation, and professional standards,” said AREF executive director Patti Morris. “As a foundation, we have the responsibility to explore how our funding programs can be a vehicle for reconciliation in our province. We are honored to invest in the education and empowerment of Indigenous leaders in real estate and related professions.”

A series of design workshops targeted at high school-age students will further support the recruiting aims of the new bachelor’s degree program, supplemented by a parallel outreach program. The school emphasized its intent to develop a curriculum that gives equal footing to both Indigenous and non-Indigenous thought and instruction.

“Meaningfully including Indigenous people’s unique perspective, and their inherent recognition of the importance of land and place, can situate all of our future students to be better informed, and become more thoughtful practitioners,” said SAPL Dean John Brown.

“In short, this proposal helps create a pathway for Indigenous youth to meaningfully participate in Alberta’s real estate-related industries and to ensure that all SAPL graduates have a better understanding of Indigenous ways of knowing in order to more sensitively and effectively address the unprecedented challenges of an increasingly complex future.”

Bold, memorable and whimsical

Designed by Vancouver-based interior design studio CHIL, The Dorian is inspired by both Oscar Wilde and the eclecticism of 19th century British interiors—think lots of brass, floor-to-ceiling wallpaper, and modern interpretations of tartans, houndstooths, and tweeds. Bold and directional, The Dorian is guided by the idea that a hotel should, above all, be memorable.

The Dorian is Calgary’s first and only lifestyle hotel, opened last summer, located in the heart of the city’s business district. Developed and owned by PBA Group, The Dorian marks the arrival of Marriott’s premium Autograph Collection into Alberta’s largest city.

The Dorian fills a gap in the city’s downtown hospitality market, which has largely been dominated by cookie-cutter corporate hotels tailored to business travelers. Along with 136 guestrooms and suites, The Dorian houses a street-accessible cafe by day and a lobby bar by night, plus a 27th-floor fine dining restaurant. The hotel is designed to function as a destination for both visitors and locals.

“What we’ve created is full of surprise, humour, and endless attention to detail,” said Adèle Rankin, principal and global design lead at CHIL. “From start to finish, we aimed to produce an experience at The Dorian that propels downtown Calgary’s hospitality scene forward.”

The Dorian’s name references The Picture of Dorian Gray, the iconic 1891 novel written by Oscar Wilde. Throughout The Dorian, eclectic material and colour choices evoke the interiors and fashions of Wilde’s era, along with his hallmark eccentricity and biting wit. Contrasting materials, bold colours, and the reinterpretation of traditional patterns such as tartans, houndstooths, and tweeds make for an experience that is richly layered, defined by contrasts, and underlined by a recurring sense of surprise.

“With The Dorian, we explored how bringing opposites together can create beauty,” said Rankin. “What made The Dorian such an engaging and exciting project is how unapologetically bold it is from start to finish.”

A recurring material throughout The Dorian, brass exudes a sense of historic character and serves to reference the era of the novel itself. Similarly, the Victorian period’s appreciation for saturated colours and bold patterning is further evoked with contrasting surface materials, like marble, dark wood, and floor-to-ceiling floral wallpaper.

In the guestrooms, custom wallcoverings are designed to match upholstered chairs and sofas, reflecting flair and whimsy, which is contrasted by understated brass accenting and leather headboards.

Suites contain expansive, independent sitting rooms that feature hardwood floors, custom-upholstered sofas, and unique artwork. The use of smart technology, like sensor lights on nightstands and bathroom counters, conveys The Dorian’s elevated level of experience and considered attention to detail.

The Dorian’s 27th floor is home to The Wilde, an upscale restaurant with seven-foot glass windows and an outdoor patio space. The Wilde offers visitors expansive views of Calgary’s downtown from inside an atmospheric interior.

Upon exiting the elevator, guests enter a moody lounge housing low acrylic tables, a cluster of overhead puck shaped lights, and bold carpeting. Another reference to The Picture of Dorian Gray, a series of digital screens display the movement of a peacock. In the dining space, dark wood floor, tiled pillars, custom lighting, and bespoke art exude a rich sense of atmosphere and depth. Maroon chairs and green benches nod to The Dorian’s historic inspirations, while brass accenting creates a thread of continuity with the lobby and other spaces.

The Dorian also features a 3,345 sq-ft ballroom, an executive boardroom, and prefunction areas. The recurring use of brass, from inlay detailing to ceiling coves, establishes a sense of continuity with the hotel’s other interior spaces.

“Throughout The Dorian, we’ve paid an incredible amount of attention to detail. From the materials to the light fixtures and even the art, we want visitors to feel that every moment was considered,” said Rankin.

TransLink partners on first housing project

TransLink and PCI Developments (PCI) announced a new partnership to build a proposed mixed-used development near the future Arbutus SkyTrain Station, on West Broadway and Arbutus.

Located next to the future terminus of the Broadway Subway, an incoming bus loop, and the Arbutus Greenway mixed-use walking and cycling path – this is the first development under TransLink’s Real Estate Development Program. This transit-oriented development will improve people’s access to sustainable transportation options, generate new long-term funding for transit services, and provide much-needed housing options.

“This partnership will help us build a new transit-oriented community, where people can more easily take transit, walk, or cycle,” says TransLink CEO Kevin Quinn. “This program will generate much-needed long-term revenue to expand and improve vital transit services, while aligning with local and provincial government goals to increase housing supply.”

TransLink and PCI own adjacent plots of land on the southeast corner of Arbutus and Broadway and have entered an equal development partnership. The proposed development would include:

30 storeys of mixed-use residential and commercial space.
Street-level retail and over 200 residential rental units, 20 per cent of which will be rented at below market rates and secured for moderate-income households.
Community space that will serve as the future home of the Ohel Ya’akov Community Kollel, a Jewish cultural, education, and neighbourhood centre.

“We are honoured to be partnering with TransLink on this significant transit-oriented, mixed-use development,” says PCI Developments president Tim Grant. “We are similarly excited about partnering with The Kollel in delivering their new community and worship premises – all in conjunction with desperately needed market and below-market rental housing in a sustainable development adjacent to Arbutus Station and the Arbutus Greenway.”

Changes impacting Ontario landlords and tenants

Ontario is investing $6.5 million to appoint an additional 40 adjudicators and hire five new staff members in an effort to improve service standards at the Landlord and Tenant Board (LTB). This increase more than doubles the number of full-time adjudicators currently serving landlords and tenants.

“Residents and rental housing providers deserve fast results, and government bureaucracy should not stand in the way,” said Attorney General Doug Downey. “That is why we’re investing millions of dollars to increase the number of adjudicators and staff at the Landlord and Tenant Board, so the board can continue its work to reduce its case load, improve client service and resolve disputes faster.”

The government is also proposing changes that would strengthen protections against evictions due to renovations, demolitions, and conversions, and “own use.” According to the brief, when evicting a tenant to use the unit themselves (or for their family), a landlord (or their family members) would have to move into the unit by a specific deadline.

When evicting a tenant to renovate the unit, landlords would be required to:

provide a report from a qualified person stating the unit must be vacant for renovations to take place
update the tenant on the status of the renovation in writing (if they plan to return)
give them a 60-day grace period to move back in, once the renovations are complete

If the landlord doesn’t allow the tenant to move back in at the same rent, the tenant would have two years after moving out, or six months after renovations are complete (whichever is longer), to apply to the Landlord and Tenant Board for a remedy.

When a tenant is in arrears of rent, they may enter into a repayment agreement with their landlord to pay the rent they owe and avoid eviction. To make it easier for both tenants and landlords, the government is proposing to require the use of the LTB’s plain language repayment agreement form to help ensure all parties better understand their rights and responsibilities.

The government is also consulting on changes to “help create a balanced framework governing municipal rental replacement by-laws.” For example, it is considering requiring replacement units for displaced tenants equipped with the same core features (e.g., number of bedrooms). The proposals would also give existing tenants the right to move into the new unit while paying the same rent. This would help protect affordable housing while encouraging the revitalization of older, deteriorating buildings and increasing rental housing supply.

More info available at: Ontario Strengthening Protections for Tenants | Ontario Newsroom

Cadillac Fairview rolls out decarbonization technology

Cadillac Fairview is implementing an AI-powered energy intelligence platform to cut energy consumption and carbon emissions across ten Toronto-area buildings worth 7.4 million square feet of office space.

Office towers include CF Toronto Eaton Centre and Toronto-Dominion Centre.

“Building a more sustainable future is foundational to everything we do at Cadillac Fairview,” commented Karen Jalon, vice president, sustainability, energy & smart technology, Cadillac Fairview. “As we continue our journey to net zero emissions, we’re proud to collaborate with innovative partners to advance towards our goals and support transformation.”

The supplier, SHIFT Energy, works with existing control systems and equipment to improve the energy performance of large-scale heating and cooling (HVAC) systems in office towers, hospitals, university and college campuses, shopping centres, sports arenas, and other large facilities. Demand management will also help Cadillac Fairview further manage peak pricing events associated with Ontario’s Global Adjustment.

Building operations account for nearly 30 per cent of global CO2 emissions. Heating and cooling of buildings is responsible for a significant portion of these emissions. Large facilities use a building automation system or building management system to manage HVAC systems but these lack the ability to optimize performance, leading to excessive energy use and higher carbon emissions. The new technology will improve the performance of HVAC systems, delivering energy savings and carbon emission reductions.

“This new agreement for 10 sites is SHIFT’s second engagement with CF, and we appreciate their vote of confidence in our HVAC energy efficiency and decarbonization technology,” said Dave Schriver, general manager with SHIFT Energy.

Ontario eyes permanency of virtual meetings, e-voting

Ontario is proposing to implement permanent changes under the Condo Act with respect to virtual meetings and e-voting under its newly announced Less Red Tape, Stronger Economy Act, 2023, which includes 42 measures in total.

If passed, amendments would come into force on October 1, 2023, allowing condos to hold meetings of directors and owners in a hybrid manner or by one or more telephonic or electronic means. The changes would also concern how notices are sent to owners. Corporations would be able to send notices to owners by email and communicate with them electronically.

According to Bill 91, bylaws may limit how such meetings are held and specify requirements that apply. A directors’ meeting must ensure all persons attending are able to communicate with each other instantly and simultaneously. All entitled persons attending an owner’s meeting must all be able to ‘reasonably participate.’

Owners would also be able to vote electronically or in-person. A condo’s bylaws might limit the means by which votes are conducted. Other changes concern record-keeping requirements with respect to ballots and instruments appointing a proxy for meetings of owners.

Bill 91 aims to further reduce red tape. Since 2018, burden reduction initiatives have saved businesses, not-for-profit organizations, municipalities, universities and colleges, school boards and hospitals nearly $700 million in net annual regulatory compliance costs.

Ontario lifts income threshold for incentives

More Ontario households will qualify for free energy-saving equipment and advice with a newly announced 16 per cent lift to the income threshold for the provincial Energy Affordability Program. This now opens the program to singles earning up to $42,437 annually or couples with a combined annual income of up to $60,014. The previous cut-offs were $36,584 for singles and $51,732 for couples.

The program is one of Ontario’s few remaining conservation and demand management (CDM) incentive offerings for residential electricity customers, and is available to utility account holders with low incomes and social housing providers. Both homeowners and tenants are eligible to participate, but tenants must also obtain consent from their landlord or property manager.

Through the comprehensive stream of the program, trained energy professionals conduct an assessment of participants’ homes and recommend the most appropriate upgrades from a range of potential choices, including:

ENERGY STAR certified LED light bulbs
High-efficiency showerheads
Faucet aerators
Drying line for clothes
Energy-efficient refrigerator
Window air conditioner
Smart power strip
Additional attic or basement insulation
Weatherstripping around doors and windows
Smart thermostats

Program administrators estimate that these gratis improvements could help customers lower their electricity costs by $100 to $750 annually depending on the combination of measures installed.

“As the home heating season continues, our government is helping families reduce their energy use and save money on their bills,” maintains Todd Smith, Ontario’s Minister of Energy. “With this update to the Energy Affordability Program, Ontario is ensuring access to free home energy-efficiency upgrades like insulation, smart thermostats, and energy-efficient refrigerators and air conditioners.”

As well, a broader range of households — with annual incomes up to $55,654 for singles or $67,409 for couples — can request a free kit with the following items:

LED light bulbs
Weather stripping
Handheld showerhead
Retractable clothesline
Faucet aerators
LED night light
Block heater timer

However, in its mid-term review of the 2021-24 CDM programming, which was released late last year, the Independent Electricity System Operator (IESO) reported that many potential beneficiaries were unaware of the program. “The application process and eligibility qualifications are unclear and create a barrier to participation,” it stated.

The revised income eligibility thresholds follows the IESO’s recommendation that they be reassessed “to determine if adjustments are required to address inflation”. The review also recommended enhanced marketing for the program and adding air-source heat pumps to the list of energy-saving equipment offered through the comprehensive stream of the program.

“Updates to the Energy Affordability Program will provide greater comfort and lower bills for income-eligible Ontarians,” says Chuck Farmer, the IESO’s vice president, planning, conservation and resource adequacy. “Energy efficiency programs like this reduce electricity demand and contribute to the overall reliability of Ontario’s power system.”

How digital twin technology can transform FM

The digital twin is a technology featured in many 2023 trends lists. A recent report by CNBC noted that “like artificial intelligence a few years ago, digital twin technology has tipped from highly specific applications into becoming a widespread management best practice.”

This is certainly true for FM and other important functions in the built environment space. Innovation in digital twin technology— virtual representations of physical objects—has the potential to create operationally rich, continuous data feeds across workplace, asset, and inventory systems.

Not rocket science

The origins of the technology were undoubtedly highly specific. In the early 1970s, NASA developed what it has described as a “living model” for the Apollo program. After Apollo 13’s oxygen tank exploded, forcing the crew to abort its mission to land on the moon, NASA ran multiple simulators to determine what had failed and equipped the physical lunar module with sensors that could capture the required data. According to the agency, doing this enabled “a continuous ingestion of data to model the events leading up to the accident for forensic analysis and exploration of next steps.”

Considering its NASA roots, it’s easy to understand why the technology is still somewhat misunderstood, maybe even mysticized. There is a lingering perception that digital twins are complicated and specialized, a technology that is right for someone else’s organization but not one’s own. But it’s not rocket science. A digital twin can be as simple or static as a 2-D CAD file and it doesn’t have to be identical. However, the more advanced a digital twin is, and the closer it resembles the real-world object, the powerful it can be.

A basic example of a digital twin is the virtual replica of an engine which captures pressure, temperature, vibration, and fuel efficiency information. Armed with this data, a user can take more accurate readings of the engine’s condition and make more informed decisions on its maintenance.

At the other end of the scale – and this is where it gets exciting for facility managers — a fully dynamic digital twin of a building (or portfolio of buildings) can bring together design, construction, and real-time operational data to simulate, predict, and inform decisions based on real-life conditions. By combining the sensor data from assets, spaces and different systems, and an intelligent analytics platform, a cloud-based digital twin has the potential to render a 3D replica of every door, elevate, AC unit, smoke alarm, and desk.

The four pillars

It’s important to think about digital twins as part of a maturity journey, where the technology develops in conjunction with the functions that oversee technology implementation, operations, and collaboration. This journey consists of four pillars:

initial asset data (e.g., asset registry and space inventory);
the visual model (i.e., 2D CAD and asset imagery);
operational data (e.g., space utilization and work orders); and
analytics (i.e., business intelligence and predictive analytics.)

The fourth pillar is impossible to realize without the other three in place, and only by integrating these four pillars can an organization develop a dynamic, fully 3D, identical digital twin.

Bridging the knowledge gap

A recent IBM survey of 4,000 global business leaders found that more than three-quarters plan to prioritize or invest in technology in 2023 despite the economic headwinds. Top among their reasons were better employee experience and to make their organizations more sustainable and resilient.

One of the ways that technology can do this is by providing business leaders a clear picture of the future, allowing them to anticipate challenges and adapt to changes — which helps explain the growing demand for digital twins, especially in the built environment. According to research firm Verdantix, interest in facility optimization and more predictive analytics has led to increased intent to spend on the technology. More than a third (31%) of organizations reported planned investment in digital twins over the next 12 months. Similarly, over a quarter (26%) said they are already using predictive analytics extensively, with one-fifth (20%) using it to some limited extent.

For many practitioners in the built environment, digital twins have the potential to not just look in the future but also help fill in the past. An endemic issue for facility managers is the lack of transparency, cohesion, and useful data throughout the building lifecycle, from design and construction phase and all the way through operations, which often results in the need for avoidable yet costly repairs or more significant changes to facility strategy.

Digital twins can act as a single source of truth. Capturing building information modelling data in a digital twin ensures crucial information isn’t lost in the handover and that users spot potential problems before they intensify or accumulate. During the operational phase, the digital also ensures that workplace, asset, and system data has a home, an especially important factor in an FM industry that sees the contractors (and potential data owners) responsible for maintenance and other services change frequently.

The enterprise metaverse

With its ability to capture, render, and analyze both historic and real-time data, digital twin technology of facilities can be seen as an anchor for all the IoT, smart building systems, and workplace platforms. Users can eliminate planning and operations blind spots by making it easier to connect asset and facilities data, enabling users to explore, locate, interact with, and report on space and asset data that was previously difficult to access as well as scenario plan in a digital safe space.

These are the qualities that have convinced McKinsey and others to describe digital twins as the enterprise metaverse, “a digital and often immersive environment that replicates and connects every aspect of an organization to optimize experiences and decision-making.” Unlike the metaverse as it’s more broadly understood, however, there is little skepticism around the application of digital twins and their usefulness.

Nick Stefanidakis has more than 20 years of progressive experience in the fields of real estate and facility management, mechanical and application engineering, and enterprise software deployments. In his current role, he leads business process design, technology consulting, and project management for IWMS, BIM, and IoT at Eptura, a global worktech company.

Rising office vacancy pairs with rent growth

The Canadian office market continued to empty out in the first quarter of 2023. CBRE Canada pegs the national vacancy rate at an all-time high of 17.7 per cent across the 10 regional markets it surveys — up 60 basis points since year-end 2022.

CBRE analysts theorize a “once-in-a-generation evolution” is unfolding, which is steadily leaving downtown Class B space behind. Notably, a slight 10 basis point dip in Calgary’s vacancy rate is attributed to the removal of office stock through the city’s conversion incentives.

Nationally, the quarter saw 2.7 million square feet of negative absorption, predominantly occurring in Toronto and Ottawa. On the flipside, Montreal recorded more than 236,000 square feet of positive absorption, all attributable to suburban activity. Vancouver is the only remaining market with a vacancy rate below 10 per cent, while downtown vacancy rates now surpass suburban levels in all markets except Toronto and Montreal.

Ottawa and Vancouver post the lowest downtown Class A vacancy rates in the country, at 9.9 per cent and 10.3 per cent respectively. Even so, Ottawa’s overall downtown vacancy rate of 13.2 per cent is a historical high for the nation’s capital. Toronto’s downtown Class A vacancy rate has climbed to 13.4 per cent, while Montreal’s sits at 14 per cent.

Despite overall positive absorption, an extra 121,000 square feet of space emptied out in downtown Montreal over the quarter. Toronto and Ottawa saw the largest influxes of sublet space during Q1, with sublets now accounting for nearly 29 per cent of vacant space in downtown Toronto.

Meanwhile, average Class A net rents continue to trend upward. Nationally, the average asking rent for downtown space was $29.79 per square foot (PSF), up from $26.75 psf in Q4 2022. Drilling down, downtown Class A space in Vancouver commanded an average of $47.96 psf in Vancouver, $36.88 psf in Toronto, $22.78 psf in Ottawa and $25.98 psf in Montreal.

That’s in keeping with the evolutionary scenario CBRE analysts posit, in which tenants are rightsizing for hybrid work arrangements that have fewer staff onsite, but are also looking for high-quality space. “Demand for cheap commodity space has evaporated and been replaced with the want for spaces that act as conductors for business productivity and development,” suggests CBRE chair Paul Morassutti.

Guelph to build $115-mil South End Community Centre

Guelph City Council approved an extra $35.5 million for the construction of the South End Community Centre (SECC). The total cost of the project is now $115.5 million.

The area of the city is growing fast with new housing and schools popping up over the past several years to serve various demographics. The concept for the centre has been talked about since the early 2000s, but was finally approved in October 2020.

The all-ages SECC will offer a variety of inclusive recreational opportunities with twin ice pads, an aquatic centre with a lap and teaching pool, double gymnasium, walking track and multi-purpose rooms.

Construction of the centre will include elements to support Guelph’s net-zero energy goals, significantly reducing the buildings carbon footprint and promoting sustainable practices that help align with the City’s Race To Zero.

The centre is expected to break ground this fall, off Clair Road and beside Bishop Macdonell Catholic High School, which is just north of the South End Community Park.

Completion is set for late 2026.

This artist rendering shows what the new community centre could look like. (City of Guelph)

Cleaning up your warehouse

As the seasons change, spring cleaning your warehouse just makes sense to boost safety and increase efficiency. Just like at home, the process basically involves clearing away unwanted clutter, reorganizing your space, and refining your practices to improve your business.

There are a few simple steps you can take this spring to get your warehouse to the next level.

Clean up

After a messy winter with lots of traffic and frequent deliveries, warehouses are often in need of a deep clean. The dirt, salt, and debris not only create a mess, but it can also get into equipment, causing failure and the need for repairs. As well, this is a great time to take care of messes like oil leaks from the forklift, inventory labels littering the floor, any remaining debris from deliveries, and anything else littering your space.

Clear out

Do you have equipment or items that you no longer need? Now that the weather is nicer, take the time to dispose of anything you are no longer using, making space for any new equipment or creating a more useful floor plan for your equipment and staff. This may also include returning or re-allocating any unused inventory being stored.

Quick fix

You may have racking or equipment that needs repair, and now’s the time to get it checked out and ready for the next season. Things like corrosion or leaks are issues that can be addressed now to lengthen their lifespan and increase safety in your warehouse. As well, check on any equipment to be stored over the spring and summer months to ensure that it will be in good working order when you need it next.

Get organized

Does the layout still work for your business? Over the winter, especially if it’s a slower season, things like pallets can be stored in quick and convenient (temporary) locations. Move things that were put where they don’t belong to maximize your efforts and avoid accidents this spring. Make sure your aisles are clear and wide enough for your needs, look into your inventory system and ensure easy access to often-used equipment.

Take space into account, too. Are you maximizing your square footage? Could you go higher with your racking? Arrange your inventory and space with a FIFO (first in, first out) system to stay organized all year long.

Level up

Making your warehouse “smart” by adding technology is one way to improve the way your warehouse operates. From robotics to inventory management to predictive and data-driven technology, it may be time for an upgrade to your systems as part of your spring cleaning. Consider investing in innovation to get your business management to the next level.

As the weather improves, getting your warehouse in order should be top of mind. These tips will also help you get a better handle on your supply chain, as you improve the processes and save time and money.

B.C. celebrates construction month

April is Construction and Skilled Trades Month in B.C. with the aim to raise awareness about the job opportunities for people in the building trades. Several events will take place this month for the 6th annual celebration.

“There are limitless opportunities in construction for talented British Columbians looking for a rewarding career path,” said Chris Atchison, president, B.C. Construction Association. “There are many trades to choose from, most of them are in demand, you get paid to train and learn, and with dedication and hard work there’s nothing stopping you from going right to the top, even owning your own company one day. It all starts with apprenticeship.”

Proclaiming April as Construction and Skilled Trades Month highlights the importance of people who work in construction and trades and help make, build and maintain local communities and the province. Construction and skilled trades jobs are in demand and government is investing in trades education and support for workers in the skilled trades.

“There’s a world of rewarding career opportunities for people in skilled trades right now,” said Selina Robinson, Minister of Post-Secondary Education and Future Skills. “We’re investing in training programs through SkilledTradesBC to offer people the education and training they need to pursue these jobs, while helping industry and employers to access the skilled workforce they need. This supports our Future Ready plan, which is helping train British Columbians for the jobs of today and tomorrow.”

SkilledTradesBC delivers pre-apprenticeship trades training programs, including for women, Indigenous Peoples and other equity-seeking groups, to reduce barriers and help people secure employment in the trades. The programs provide individualized and group services and supports, hands-on trades exploration training, and industry certification training. These programs help increase opportunities to enter an apprenticeship training program and earn certification to become a journeyperson.

The province continues to work with employers, industry, training providers and communities to design and implement programs and policies that contribute to eliminating racism, sexism, bullying and harassment in the skilled trades.

Drone program graduates first female cohort

The Construction Foundation of BC’s (CFBC) Sky Keepers program celebrated a major milestone in March with the graduation of its first cohort of female drone operators.

A total of nine participants from Blueberry River First Nations completed the women-specific program, with an additional nineteen participants registered for upcoming programming this spring.

The Sky Keepers acquired a drone operating certificate at the end of the program and also received safety certifications, computer training, financial literacy, cultural connection workshops, essential skills workshops and more over a 10-week training period.

“It’s been an amazing group to work with,” said Sky Keepers manager of operations, Keri Taylor. “There was a sense of engagement, a sense of family, a really tight community. We’ve had some of these women using the Zoom application to participate in class despite having prior family and community commitments. They’ve worked extremely hard to stay involved.”

Drone training for Sky Keepers was delivered by Aboriginal Training Services (ATS), a private, Indigenous-owned company developing training programs targeted specifically for the use of remote piloted aerial systems (RPAS, drones) in areas of consultation, surveying and emergency management.

Participants flew the DJI M30T drone, used in search and rescue, that includes features such as ground penetrating radar and 200x zoom capabilities. Despite adverse weather conditions during training sessions, ATS and the Sky Keepers cohort were able to fly four drones outdoors.

“Working with this Sky Keepers cohort was a fantastic experience,” said ATS founder and owner, Darcy Hunt. “We were out for eight days and the attendance of the participants was great to see. The women who completed the program were issued Advanced Drone Certificates. Now, there are industry partners that are interested in taking them on for future employment.”

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