CAM Jan/Feb 2022

Soaring industrial gains buoy investment returns

Soaring industrial gains were a major contributor to a 12 per cent improvement in investment performance for the Canada Annual Property Index last year. Newly released results from the index producer, MSCI, peg the 2021 total return across 2,367 directly held real estate assets in 46 institutional portfolios at 7.9 per cent, rebounding from negative 4.1 per cent in 2020.

That breaks down to 3.6 per cent capital growth and 4.25 per cent income return, after 2020 saw a 7.8 per cent loss of capital value and a continued downward trajectory that nudged income return to a record low 3.9 per cent. In contrast, 2021 brought the best average total return since 2015.

“I think we can say this was a pretty strong recovery,” Simon Fairchild, executive director with MSCI, observed during the online results presentation earlier today.

Nevertheless, the overarching numbers hide some dramatic divergences among property types. While industrial and multifamily assets continue an established trend as the best performing assets, industrial’s 31.6 per cent total return propelled it far out in front. Multifamily retained a solid grip on second with a 7 per cent total return, as office and retail delivered matching total returns of 2.8 per cent.

Drilling down farther, capital growth is the clear differentiator. Industrial basked in a 24.6 per cent upsurge compared to a 3.8 per cent gain for multifamily. However, income returns were roughly equivalent at 4.3 per cent for industrial and 4.2 per cent for multifamily. Office and retail both sustained losses in capital value — 1.8 per cent and 1.5 per cent respectively — relying on income to pull them into positive return territory.

Toronto and Vancouver are in close step as the leading markets with respective total returns of 10.8 and 10.4 per cent, followed by Montreal at 8.2 per cent. Calgary was alone among the eight analyzed markets to suffer a drop from 2020, registering a total return of negative 1.2 per cent, including negative 6.8 per cent capital growth. In addition, Ottawa, Winnipeg and Edmonton experienced slippage in capital value of 1 to 2.4 per cent.

“Even in Alberta, there is some measure of improvement. So there are some encouraging signs throughout the country, although maybe more encouraging in certain markets and certain sectors,” Fairchild mused. “The 26.4 per cent growth in values for industrial as a whole is obviously just an extraordinary amount of capital appreciation. As you can probably guess from the distribution of the cities, a lot of that was coming through from Toronto.”

Developers plan $1.2-billion seaside community for Royal Beach

Seacliff Properties is pursuing its first joint venture and teaming up with Reliance Properties to develop Royal Beach in Colwood, one of Greater Victoria’s fastest growing cities.

Over the 15-year buildout of the master-planned seaside community, the partners plan to inject $1.2 billion into the development. This will be Reliance Properties’ first project on Vancouver Island that is outside of downtown Victoria.

Royal Beach will be a collection of neighbourhoods totalling 2,850 homes (single-family houses, townhomes, and apartments), plus hundreds of job spaces in commercial buildings and retail spaces. The site is 135 acres of oceanfront land with 1.4 kilometres of shoreline. More than 47 acres of the site will be dedicated to public parks and greenspace.

“Royal Beach presents a unique opportunity to develop the last significant waterfront lands in Colwood, creating a new local, regional, and national destination,” said Georgia Desjardins, director of development of Seacliff Properties.

The Capital Regional District’s Growth Strategy identifies Colwood as a centre for urban growth and densification. Its population is currently projected to increase by about 30 per cent by 2038.

For more than 100 years, the site was a rock and gravel mine, one of the region’s largest employers. It ceased operations in 2008. Seacliff bought the site in 2017, and after years of planning and public consultation, the City of Colwood adopted a new sub-area plan and zoning bylaw for Royal Beach last year.

“Other seaside communities in B.C., like Coal Harbour and Olympic Village, were industrial sites that became coveted, world-class communities in which to live, work, play and visit,” added Desjardins. “Royal Beach will be Vancouver Island’s most distinct waterfront community.”

The first phase of construction will start in the spring with the construction of a new intersection at the site’s entrance at Metchosin and Latoria roads.

8X On The Park rises in downtown Vancouver

GBL Architects and Brenhill Developments recently completed the high-rise development 8X On The Park, located in downtown Vancouver.

The complex, decade-long planning and design process has culminated in a 35-storey mixed-use tower at the corner of Richards and Helmcken Street in the Yaletown neighbourhood, along the northern edge of Emery Barnes Park.

The transformation of the intersection began with GBL and Brenhill’s collaboration on Jubilee House, an affordable housing project built on the northwest corner. 8X is on the southwest corner.

The tower serves a diverse range of uses and user groups across the building. The 365,000-square-foot development accommodates market and rental housing with retail and a ground-level childcare centre. The market housing delivers a family-forward design with over 50 per cent of units having three bedrooms.

The base of the tower, predominantly rental housing, addresses the immediate urban context with a higher degree of solidity and mass. Vertical fins are arrayed across the facade in an irregular rhythm. The composite stone material that clads the walls and fins appears monolithic when viewed obliquely. It offers high performance, durability, and longevity, an asset to the rental program component.

The west half of the bisected tower addresses the park elevation with a horizontal expression of balconies taking advantage of views to offer more expansive outdoor space.

The east half of the tower is clad with curtain wall glazing with inset balconies for minimal vertical interruption. The curtain wall is wrapped with a diagonal lattice of louvers to mitigate solar gains on the southeast-facing exposure. The shading devices thoughtfully balance solar shading with light infiltration and views while creating an engaging visual pattern that distinguishes the tower on the skyline.

The shading pattern is the result of extensive modeling, material studies, and innovative detailing. Each volume required a unique material and detailing approach through the lens of resiliency, durability, and building performance. The varied massing and facade treatments allow for responsive design solutions tailored to specific environmental and climatic conditions. The balconies, as an example, employ integrated thermal breaks to limit heat gain and loss on the north facade. At the same time, the high-performance curtain wall on the east facade facilitates seamless integration of the shading devices.

Flanking the lobbies along the primary street frontages are a pair of retail spaces. The Richards Street frontage features public art commissioned by Brenhill and coordinated within an integrated landscape and architectural approach.

Updated model green lease attuned to the 2020s

REALPAC’s newly updated model green lease for Canadian office buildings introduces measures aligned with the broadening demand for ESG (environmental, social, governance) reporting and performance outcomes in commercial real estate, and also responds to some arising pressures landlords are facing in general lease administration. In this fifth formal revision since the inaugural 2008 effort, the document’s defining centrepiece has been renamed the “sustainability management plan” to reflect some new considerations — such as accessibility and health and well-being — that aren’t expressly tied to the environment.

Even so, some of the most notable changes in version 1.05, which was released in December 2021, relate to reduction of greenhouse gas (GHG) emissions and climate change adaptation. The Canada Green Building Council’s (CaGBC) zero-carbon building standard and certification has been added to the list of referenced initiatives landlords can undertake; a new prerequisite requires tenants to purchase power from onsite renewable generation where it is available; and landlords and tenants will have to work together to implement resilience plans, shaping preparations for and response to climate-related calamities and extreme weather events.

That’s all attuned to signals from REALPAC’s membership — which includes many of Canada’s prominent real estate companies, investment managers and institutional investors — as well as expectations that regulators, lenders, insurers and influential corporate tenants will increasingly be making similar demands. Version 1 offered a pioneering leasing template for the North American market a dozen years ago, and since then has become something of an industry standard in Canada and/or the building block for companies that have developed their own green lease programs. Prior to version 1.05, it was most recently revised in 2017.

“With sustainability and leasing in general, we don’t want to come across, as an industry, like we’re calling on tenants to appease us because we’re the service providers. We want it to be an approach of working together to push sustainability,” says Kris Kolenc, manager of research and sustainability with REALPAC.

As with the predecessor versions, the sustainability management plan (previously known as the environmental management plan) sets out a framework for how the building’s energy and water consumption, solid waste output, indoor environmental quality, and impact on the natural environment and occupants’ health and well-being is to be managed, stating the obligations of each party to the lease. This can then be adopted as a lease covenant or as a commitment to use “commercially reasonable efforts” to comply with the provisions of the plan.

Addressing net-zero targets, climate resilience and health and well-being

The updated model green lease both refines and expands the list of general objectives for landlords. Among the new explicitly stated commitments, landlords will now be asked, within reason, to address: transmission of pathogens; management of asbestos, Legionella and radon and other identified hazardous substances; climate hazard mapping; light pollution and bird collisions; and opportunities and infrastructure to encourage public transportation, cycling and electric vehicles.

The sustainability management plan includes a list of building standards and certification programs to which landlords may either currently subscribe or choose to adopt in the future, with a concomitant understanding that tenants will not undermine efforts to maintain or achieve compliance. Additionally, it stipulates that tenants must provide data related to energy/water use, solid waste output or other operational elements they control within their premises, which landlords may require to comply with those programs or to assess whole-building performance.

In addition to the CaGBC’s zero-carbon standard or a credible equivalent, other standards newly referenced in version 1.05 include Rick Hansen Foundation Accessibility Certification (RHFAC), WELL, Fitwell and Passive House. Kolenc stresses this comes with flexibility to sign on to the programs that are most workable and relevant for a particular building, and with the recognition that guidance and standards are steadily evolving.

“The previous version of the lease was more focused on energy management, which is linked to the associated GHGs, but we wanted to accentuate GHGs in this lease and include some language about net zero,” he says. “We’re really referencing what we think is relevant in Canada currently, but it also states ‘or another equivalent framework’ so users of the green lease can choose what’s best for their circumstance.”

“As further guidance or standards are created for the net-zero pathway, we will address it in more detail,” Kolenc adds. “Similarly, there is no definitive standard in Canada of what is a resilient building, but we do expect further guidelines to be produced and we will reference those standards as they are developed.”

Merging sustainability agendas for landlords and tenants

Version 1.05 now requires that landlords and tenants designate staff representatives to discuss issues related to the sustainability management plan. Tenants will also be expected to attend information or training sessions that landlords may organize, and Kolenc foresees the two parties’ sustainability agendas will continue to merge.

“Tenants are going to be increasingly demanding net-zero space because they have their own corporate targets and corporate commitments,” he observes. “Increasingly, all companies are going to have the same targets. If the real estate footprint is a big part of their carbon footprint, potentially, they’ll want to make sure they’re leasing with a leader who understands this and who reflects this in the lease.”

Those complementary objectives are also reflected in a U.S. based recognition program, Green Lease Leaders, which describes its mission as “creating sustainable landlord-tenant relationships”. Canadian real estate companies have been among winners of the awards, which the non-governmental organization, Institute for Market Transformation, and the U.S. Department of Energy jointly launched in 2014 to showcase collaborative lease agreements that support energy efficiency, cost savings, improved air quality and sustainability. Most recently, in 2021, Dream Office REIT, First Capital REIT and RioCan REIT were landlord honourees, while Ivanhoé Cambridge, Alberta Investment Management Corporation (AIMCo) and their tenant, TD bank, were recognized in the team transaction category.

“To qualify as a Green Lease Leader, there are prerequisites that you have to meet and then there are optional credits. The REALPAC green lease aligns with that,” Kolenc explains.

Outside the sustainability management plan, the model green lease is a template contract for all aspects of lease administration. Here, too, updates have been made, including the introduction of new sections to address health emergencies, amenity facilities and density limits. Aligned with the various updates, the lease also now addresses allocation of operating costs for building resilience, health and wellness attributes, electric vehicle charging stations and health emergency situations.

Melissa McBain, a partner with Daoust Vukovich LLP, led the legal update. The lease is a model for office buildings, but many of the components of the sustainability management plan are viewed as easily transferrable to retail or industrial assets.

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

Early work expedites Surrey SkyTrain project

When full funding was announced last summer for Surrey Langley SkyTrain, the City of Surrey immediately commenced land-use planning and construction to widen sections of Fraser Highway along the new SkyTrain route. This early work was done to expedite the construction of the $4-billion Surrey Langley SkyTrain when work begins on the rapid transit project.

“The Surrey Langley SkyTrain line is already paying off dividends even before a single shovel has been put in the ground for this major rapid transit project,” said Mayor Doug McCallum. “As noted by Transportation Minister Rob Fleming, the completion date for Surrey Langley SkyTrain is now 2028, a full two years earlier than expected. I would like to thank Minister Fleming for the priority he has placed on this long overdue project. I can assure him that the City of Surrey will continue its advanced work to help speed along the construction of Surrey Langley SkyTrain.””

The city added another bonus is the significant cost savings gained by building this project in one phase instead of two. Costs have been reduced by $500-$600 million for the Surrey Langley SkyTrain due to the one phase.

The 16-kilometer route will bring rapid transit to the growing communities of Fleetwood, Clayton and Cloverdale. Having nearby access to rapid transit will also benefit the expanding Campbell Heights Business Park. When completed Surrey Langley SkyTrain will take commuters from King George Station to Langley in 23 minutes.

The SkyTrain will travel on an elevated guideway along Fraser Highway. It will provide a seamless, eastward extension of the existing Expo Line. King George Station will connect to Langley Centre through Fleetwood and Cloverdale/Clayton.

The proposed project includes:

8 stations,
3 bus exchanges,
more park and ride spaces,
55 SkyTrain vehicles, and
an operations and maintenance centre.

Annacis water supply tunnel contract awarded

Traylor-Aecon General Partnership has been awarded a $288 million contract by Metro Vancouver for the Annacis Water Supply Tunnel, Fraser River Crossing project in B.C.

The partnership is a consortium comprised of Aecon (40 per cent) and Traylor Bros Inc. (60 per cent). Aecon Group Inc. announced its share of the contract will be added to its construction segment backlog in the first quarter of 2022.

The scope of work includes the construction of two deep vertical shafts, one on each side of the Fraser River, connected by a 2,350 metre tunnel between New Westminster and Surrey as well as the installation of a watermain, valve chambers and surface piping.

The new water supply tunnel will be excavated deep underground using a tunnel-boring machine (TBM). The TBM will launch from a vertical entry shaft on the Surrey side and progress north under the Fraser River to the vertical exit shaft on the New Westminster side.

Construction is expected to commence in the first quarter of 2022, with anticipated completion in the second quarter of 2027.

“This complex, multi-year project further strengthens our diverse backlog in Western Canada and demonstrates our position as the partner-of-choice in the civil construction market for tunnelling and water infrastructure projects,” said Jean-Louis Servranckx, president and CEO of Aecon, in a statement. “This project will ensure the sustainable, reliable supply of clean drinking water for growing communities. As we continue to execute the Second Narrows Water Supply Tunnel project with Traylor, we are pleased to strengthen our partnership and further our relationship with Metro Vancouver.”

According to Metro Vancouver, the tunnel will be one of five new water supply tunnel crossings in the region built to withstand a major earthquake. Once complete, the new tunnel will be connected to the region’s drinking water system and will help ensure the continued, reliable delivery of clean, safe drinking water in a growing region.

908 St. Clair launches near budding “new Ossington”

At 12 storeys, 908 St. Clair will be the second of two boutique projects that make up Canderel’s St. Clair Village. The condo will rise one block east of the budding Oakwood Avenue main street, an area many are calling the “new Ossington.”

Oakwood has been designated by the City of Toronto as the Oakwood Avenue Arts District with an active community that celebrates and promotes local artists through mural installations in public spaces, art contests and exhibits.

There’s a revitalized food and arts scene there, from unique restaurant concepts to locally-owned shops. “We are excited by all the new activity happening in the St. Clair-Oakwood neighbourhood and to be firmly on the ground in such an authentic and connected part of the city,” says Ben Rogowski, COO of Canderel.

The project is currently under construction, with another project site in the pipeline at Bathurst and St. Clair. TACT Architecture designed the condo, with grey-toned masonry and warm, natural materials, including a wood canopy, that frame the residential and retail entrances.

“Characterized by clean, straight lines and natural materials, the building is not an attention seeker but has a subtle, sophisticated design that respects the masonry character and privacy of surrounding homes,” says Prishram Jain, principal of TACT Architecture. “While it is a new building, it will feel as if it has always been there.”

Residents will have access to hospitality-inspired amenities envisioned by interior design firm DesignGenics. The lobby features 16-foot ceilings and a grand fireplace with stone and gold metal accents.

The lobby at 908 St. Clair.

A co-working space by day, transitions into a modern-styled social mixology lounge by night and offers a hotel-like experience through sophisticated and luxurious textures.

This co-working space transitions into a mixology lounge at night.

There’s also a private dining room and gym with views of the neighbourhood, with a 2,800-square-foot fire pit and barbecue lounge on the fifth floor and a stargazing terrace on the 10th floor.

Residential suites range from studios to three-bedrooms plus den, and four, two-storey townhouse units with direct street access.

The architecture is designed to complement the existing urban fabric of St. Clair West.

Construction begins on Lions Gate Hospital tower

Construction work has begun on the new patient care tower at Lions Gate Hospital, which serves the Sea-to-Sky corridor, Sunshine Coast, Powell River, Bella Bella and Bella Coola on the Central Coast, as well as local Indigenous communities.

The new acute care tower will be built on the current Lions Gate Hospital site where the former North Vancouver General Hospital was located. Also known as the Activation building, it was demolished in spring 2017.

“It’s an exciting day for people in the region as shovels are going in the ground for the new tower,” said Adrian Dix, minister of health. “People will be able to get quality, publicly funded health care in a state-of-the-art facility, which will also help attract and retain health-care workers in the Coastal Community of Care as they prepare for any challenges that may lay ahead.”

The six-storey Paul Myers Tower will have eight operating rooms, a pre-operative and post-operative care area, including anesthesia intervention and isolation rooms. There will be 108 beds in 84 single rooms. All will have ensuite washrooms.

Vancouver Coastal Health is working in collaboration with representatives from Squamish and Tsleil-Waututh Nations to ensure both the design of the new tower and the services provided support the provision of culturally safe care.

The tower is expected to be ready for patients in 2024.

The project cost of approximately $310 million will be shared between the province, Vancouver Coastal Health, and a $100-million fundraising campaign by Lions Gate Hospital Foundation. The new tower is named after North Shore businessperson and philanthropist Paul Myers, who donated $25 million.

“People on the North Shore deserve to know that there’s a modern, high-quality hospital facility available in their community if they or their loved ones ever find themselves in the position to require acute care,” said Bowinn Ma, minister of state for infrastructure and MLA for North Vancouver-Lonsdale. “Our government’s decision to take action on building a new Lions Gate Hospital tower is incredibly important to our community and I’m pleased to see construction underway.”

Lions Gate Hospital currently has 254 beds, eight operating rooms and a variety of diagnostic services and equipment.

What’s your risk management story?

Regardless of portfolio size, owners of multi-residential rental properties will need to demonstrate best-in-class risk management and maintenance to secure even baseline coverage in 2022. Pandemic measures are easing, but the real estate sector has yet to achieve that “return to normal” it’s been striving toward. As such, the year will continue to be about how real estate owners and operators can position themselves to maximize opportunities while still coping with the impacts of COVID-19 — and the most critical piece may be the ability to tell a risk management story that paints a picture of a “good risk” to insurers.

In 2022, the real estate industry can expect to see the following trends and challenges:

Pressure on the multifamily housing market

Multifamily housing coverage (for both high-rise and and low-rise developments) will remain problematic in 2022, although insurance capacity is expected to increase in some sectors. A long-standing rise in the frequency of claims, often due to water damage, will continue to affect multifamily portfolio owners. As a result, many mainstream carriers are only offering coverage with reduced limits, requiring multiple insurers or layering of policies to meet baseline coverage needs.

The pressure continues in 2022, with underwriters scrutinizing every detail — from loss history to electrical and plumbing updates. It is estimated that in the habitational and residential real estate market overall, rates will rise 20 per cent or more. As such, owners and portfolio managers are securing coverage on the spot when they receive an initial quote, without shopping around.

The risk management story has become critical. Real estate owners and operators who take the time to paint an accurate picture of their risk management measures will be more successful at securing appropriate coverage for their properties.

Importance of reassessing valuations

Anyone considering renovations or reconstruction knows that costs are increasing. Statistics Canada recognized a record increase in the spring of 2021, when costs had increased by 7.5 per cent in the second quarter alone.

Exacerbated by shortages of supplies and labour, not to mention the dramatic ups and downs of material prices, the cost of construction has become a major concern over the last several months. The lumber shortage is just one much-talked of example: futures per thousand board feet were US$610 in early November, down from a record US$1,711 in May, but still far up from about US$250 in April 2020.

With prices so volatile, it wouldn’t be surprising if a catastrophic incident led to a need for reconstruction that far exceeded typical policy limits. That’s why it’s critical to determine how much your property is worth now. Obtaining an updated valuation can help to ensure your policy limits are still appropriate so you’re ready to manage your risks and mitigate losses.

Growing reliance on catastrophe modelling

Catastrophe (CAT) modelling is crucial when it comes to helping property owners understand the extent of their risk, estimate policy limits, and secure their coverages accordingly. Underwriters are beginning to require CAT modelling and other predictive tech for large portfolios. And with CAT losses in the first half of 2021 reaching $42 billion— of which $40 billion was related to natural disasters — real estate owners are beginning to rely even more on CAT modelling and other tech tools.

That said, low-tech risk solutions and controls, such as water mitigation and disaster recovery planning, will never go out of style. It’s still a good idea to provide proof that risk mitigation plans are bespoke to the facility, to train staff to engage those plans, and conduct frequent on-site inspections.

Continued repurposing

Most have heard of empty big box stores or anchor mall tenants finding new life as warehouses. But some unusual locations — even empty apartments — have been known to become restaurant spaces, ghost kitchens, or even small entertainment venues. Repurposing will continue to gain popularity in 2022, as interest rates are expected to remain relatively stable.

It’s important to remember, however, that when a building’s purpose changes, so does its assessed risk. Not only does the space need to be designed for the new purpose, but it may take on a whole new set of risks the owner hadn’t considered. It’s critical to discuss these issues with a broker before repurposing.

Looking ahead…

The real estate market won’t be easy to navigate in 2022. Owners and operators looking to reduce their risk will need to rely on both old and new tricks to get the best results. Yet the key to success may be managing your risk story to demonstrate both care and resilience in order to secure sufficient protection.

Sarah Thompson is Associate Vice President, Real Estate Practice for Hub International.

Q4 2021 sees investors broaden search for yields

Low yields on industrial and multifamily properties had more investors turning to office, retail and alternative asset classes in the fourth quarter of 2021. CBRE Canada’s newly released overview of cap rates and investment trends charts the greatest quarter-over-quarter cap rate compression in the industrial sector, although the multifamily average remains the lowest nationally.

That follows another quarter of what Paul Morassutti, vice chair, valuation and advisory services with CBRE, terms “exceptionally robust” investment activity. “National volumes are poised to set a new annual record in 2021, surpassing the $50 billion benchmark by a significant margin,” he reports.

Ten of the 13 markets CBRE surveys posted declining cap rates for Class A or B industrial properties during Q4. Nationally, the Class A rate rests at 4.38 per cent, down 19 basis points (bps) from Q3, while a 38 bps decline in the Class B rate pulls it down to 5.25 per cent.

The national average for Class A multifamily high-rise properties ended the quarter at 3.69 per cent. Vancouver and Toronto — the markets with the lowest caps — saw a further drops of 13 bps and 5 bps, respectively, over the quarter. That drives cap rates in Vancouver down to the 2 to 2.75 per cent range with Toronto’s now hovering in the range of 2.65 to 3.75 per cent.

Retail properties are now offering more enticement, CBRE analysts conclude. “In particular, essential service retail assets and properties with residual development potential continue to garner significant interest,” the report notes. “It’s expected that liquidity for retail assets will remain healthy as this newest wave of COVID cases subsides in coming months.”

Nationally, cap rates compressed for power centres, neighbourhood malls and non-anchored strip plazas, dipping to 6.45 per cent, 6.36 per cent and 6.52 per cent, respectively. Drilling down farther, cap rates decreased in at least one retail category in seven of the 13 markets: Calgary, Saskatoon, Winnipeg, London-Windsor, Toronto, Ottawa and Halifax. However, Saskatoon is alone in experiencing downward movement in every retail category.

Office was the one sector where cap rates remained stable, ending Q4 with national averages of 4.88 per cent for downtown Class AA and 6.41 per cent for suburban Class B. “Given that much of the growing optimism for the office sector had been driven by the perceived nearing of return-to-work plans for many occupiers, it remains to be seen what impacts the emergence of the Omicron variant and further lockdowns will have on the sector,” CBRE analysts observe.

Contractors must choose customers they can depend on

Omicron is wreaking havoc on the reopening of many offices and commercial buildings. In turn, because these are key customers for so many building service contractors, this reopening delay is also playing havoc with the finances of many contractors.

Further, some custodial workers who were called back to work a few months ago now find their hours have been cut or their positions eliminated.

“It cannot be denied that 2022 may be a complicated year,” says Michael Wilson, Vice President of Marketing for AFFLINK, a leading sales and marketing organization for jansan distributors. “What [cleaning] contractors must do is get customers in those industries they can depend on, those least impacted by the pandemic. One that comes to mind is grocery stores.”

The critical cleaning task in most grocery stores is floorcare, and, according to Wilson, while maintaining grocery store floors can prove lucrative, before knocking on any doors, know the following:

The appearance of the floors is crucial. Many grocery store managers believe the appearance of their floor can make or break them when it comes to customer retention.
Get expert help. Work with an astute distributor to select high-quality floor finish that can withstand heavy foot traffic.
Don’t cut corners. Selecting the best equipment to maintain the floors will keep your customer happy and make your job easier.
Refinishing at start of service. Suggest a refinishing of the floor at the start of service. The previous contractor may not have used the best cleaning solutions, finishes, or methods. You want to start fresh and make the floor your own.
Burnishers. If a high-gloss shine is needed, select the highest speed burnisher compatible with the floor finish.
Auto scrubbers. Select a quality machine large enough to clean wide corridors but small enough to tackle tight or narrower aisles.

“And when submitting your [floorcare] proposal, refer to it as your ‘plan,’” adds Wilson. “Managers like to see a plan and a cleaning strategy. It can be more important than price.”

Developers partner on $1.2 billion Royal Beach project

Developers Seacliff Properties and Reliance Properties are partnering to develop Royal Beach in Colwood, one of Greater Victoria’s fastest growing cities. Over the 15-year buildout of the master-planned seaside community, the partners will inject $1.2 billion into the local economy through job creation and spending in the community.

“We are thrilled to partner with Seacliff to develop Royal Beach, which will be our first project on Vancouver Island that is outside of Downtown Victoria,” said Jon Stovell, president and CEO of Reliance Properties.

Royal Beach will be a collection of neighbourhoods totalling 2,850 homes (single-family houses, townhomes, and apartments), plus hundreds of job spaces in commercial buildings and retail spaces. The site is 135 acres of oceanfront land with 1.4 km of shoreline. More than 47 acres of the site will be dedicated to public parks and greenspace.

The site had been a rock and gravel mine for more than a century and ceased operations in 2008. Seacliff bought the site in 2017 and after years of planning and public consultation, the City of Colwood adopted a new sub-area plan and zoning bylaw for Royal Beach last year.

“This is our company’s first joint venture,” said Georgia Desjardins, director of development of Seacliff Properties. “Royal Beach presents a unique opportunity to develop the last significant waterfront lands in Colwood, creating a new local, regional, and national destination. To best realize the potential of Royal Beach, we wanted to work with a strong partner like Reliance Properties, who shares our vision and has a tremendous track record.”

The first phase of construction will start in the spring with the construction of a new intersection at the site’s entrance at Metchosin and Latoria roads.

StorageVault Canada graduates to the TSX

StorageVault Canada has graduated to the TSX. To mark the move, the company’s chief executive officer, Steven Scott, and chief financial officer, Iqbal Khan, were invited to open the market this morning.

Common shares and debentures for the owner and manager of self-storage facilities have now been delisted from the TSX Venture Exchange and will trade on the TSX under the symbols SVI, SVI.DB and SVI.DB.B. The debentures are StorageVault’s $75-million aggregate principal amount of 5.75 per cent senior unsecured hybrid debentures and its $57.5-million aggregate principal amount of 5.50 per cent senior unsecured hybrid debentures.

StorageVault has a portfolio of 230 storage locations across Canada, including 197 owned sites on more than 630 acres of land and a further 4,500 portable storage units. It now boasts more 10.8 million square feet of rentable space. It also provides client services such as last mile storage and logistics and records management, ‎including document and media storage, imaging and shredding services.

York Region piloting Passive House at new facility

A new men’s emergency and transitional housing facility, set to rise in Aurora, Ontario, has opened the door to pilot-testing Passive House “as one of the most efficient uses of public funds for housing,” according to Melissa McEnroe, manager of affordable housing for York Region.

“It has been our aspirational goal for the past five years,” says McEnroe. “But only recently have we had the local capacity to design and build it.”

Passive House is a voluntary standard for achieving extremely energy-efficient buildings. Known as a “factor-10 house,” it uses one-tenth of the energy of an average building; it is so efficient that residents’ bodies and the sun act as heat sources. This is the result of a super-insulated envelope with an R-factor almost 100 per cent greater than a standard build. The entire building is sealed airtight, and the triple-glazed windows are warm to the touch. A Passive House keeps the heat in.

“The space heating demand is equivalent to heating your home with the light of one candle,” says Deborah Byrne, COO and director of Passive House Design at Kearns Mancini Architects (KMAI)—the firm designing the project.

Passive House buildings are also praised for their higher level of comfort.

“This is healthy housing; the building provides constant fresh air,” says Byrne. “It is comfortable housing with wellness built in; there is little or no active heating or cooling. With constant low-flow ventilation and with constant air and surface temperature, there are no drafts or cold spots.”

Ventilation is also the new code word for COVID-19 prevention. Old-style multi-unit buildings are synonymous with stale air—the air return being sucked down the hallway, along with the odours of everyone’s supper. With Passive House, every room has filtered, fresh air, which is offset by efficient stale air extraction, providing an energy balance.

“You feel it immediately when you walk into the Putman Family YWCA,” agrees Medora Uppal, director of operations at the Hamilton YWCA. “The air; it feels clean and refreshing. And it is silent—so quiet, even on busy Ottawa Street.”

Uppal shepherded the development of the new social housing residence, which opened last September as a five-storey Passive House facility, also designed by KMAI. The massiveness of the walls (and no air leakage) attenuates sounds and provides a calm feeling throughout. The facility is an oasis that’s well-suited to help heal those who seek refuge there.

“There’s clearly an environmental benefit,” she adds. “But it also makes good business sense. It is the least expensive sustainable solution. When it comes to green energy solutions, Passive House is the only way to go.”

The Putman Family YWCA in Hamilton, Ontario, opened its doors in September 2021. Photo by Industryous.

Tapping into affordability

York Region is forward-looking in sustainable building practices, but in the end, it still comes down to money. “All utilities are paid by York Region,” says McEnroe. “Passive House is in our best interest for cost recovery.”

In the case of the Putman Family YWCA, the facility cost only two per cent more to build, compared to code construction, and saves up to 90 per cent in ongoing thermal energy costs. With this formula, the slight additional capital costs will be paid back in two years.

McEnroe is keen on pursuing the standard much further. “Passive House is now a reasonable option. Skill levels are starting to catch up. There is a maturity to the sector, which is now available to those who are seeking Passive House,” she says.

“Also, we have local options in modular builds with prefabricated panels. To meet the terms of the rapid-housing initiative and other quick-start funding opportunities, we need not only the money, but the professional skills, materials, and supply solutions at the local level.”

Funding from the Canada Mortgage and Housing Corporation (CMHC) also helps with the extra costs of Passive House. As McEnroe says, “CMHC is definitely increasing their attention to sustainable features.”

The cost effectiveness of modular building makes it easier to pursue Passive House in York Region.

At KMAI, where Passive House design is insourced, the team has developed expertise in modifying existing modular panels to achieve International Passive House Standards. The firm co-developed the prefabricated highly insulated concrete modules for the Putman Family YWCA and worked with a manufacturer to develop a modular steel wall system for an affordable housing project in Windsor, Ont., which is now the first certified Passive House wall component in Canada.

McEnroe believes that the skills set and new materials are a direct result of the market investment. “The desire is here. That’s what is driving the market. The systems being put in place to build long-term, sustainable affordable housing are requiring this,” she says.

“Like any developer, we need to quantify the risk. If the products and materials are made here, and if it’s reliably available for delivery on-site, then it becomes much more developer friendly. Available and sustainable, that’s the key. Knowing the risks in construction allows us to quantify the risks early on and make better decisions for the project’s success.”

Public funds for public good

At the same time, McEnroe does not want to sacrifice liveability for economic sustainability. “Passive House just feels different,” she says. “It feels more still. Institutional settings like long-term care or emergency and transitional housing are a perfect application, where each room is separately ventilated and climate controlled, and utility costs are centralized.”

As infection control figures prominently into the new men’s facility, planned for completion in 2024, Passive House airflow will help make the building as disease resilient as housing can be and, also, maybe pandemic proof.

The airtight envelope controls all the air coming in and out of the building. The ventilation systems are equipped with hospital-grade filters, which remove 99 per cent of known pathogens and toxins. Passive House can optimize the relative humidity in the building as it offers optimal conditions for the human body to fight off any potential airborne disease.

Healing will be an integral concept to this refuge for adult men experiencing or at risk of homelessness.

“York hired a consultant to recommend the location of the building,” says Jonathan Kearns, CEO and principal in charge of KMAI. “They recommended the south side, but our concept was for the north where it connected with a wooded area and had a warm southern exposure. Here, the men could walk out into the trees, find some peace and have a forest bath as it were to help them heal.”

“This project is just good all around,” adds McEnroe. “The social good of 30,000 square feet of homes and services for men at high risk. The environmental good of using public money for a Passive House design – engaging local talent to grow the segment and provide an example of how to move forward. It’s a great example of efficiently using public funds for the most public good.”

She wonders, though, what the market will attract. Passive House is beneficial to people who are in crisis during transition; however, Housing York Inc.’s newest affordable housing communities are typically around 70 per cent subsidized and 30 per cent market apartments, meaning 30 per cent of new residents will be choosing a new building from amongst all the private market rental options available to them. How might Passive House suit those residents?

Through conversations with housing corporations and people who lived and grew up in social housing, KMAI has gathered more understanding of how Passive House responds to the issues inherent in typical affordable housing, such as inadequate funding and poor maintenance.

Residents are often unable to live in the entire space in winter or summer because of mould, dampness and condensation, and the effects of this type of housing on someone’s physical and mental health and on a person’s self-esteem can be dire.

As the industry works to find that happy medium where affordability and livability thrive, where healthy, low-energy buildings help mitigate the social and environmental problems communities are facing, Passive House offers a path forward.

The design concepts for Passive House started in Canada with the Saskatchewan House in 1977, were refined by German physicists over 20 years ago, became recognized by the Intergovernmental Panel on Climate Change as the standard for climate-resilient housing, and have made their way back home, with many projects currently in the pipeline from coast to coast. Now, this new era of construction has finally made its way to York Region.

John Gregory is a Toronto-based freelance writer. He runs an educational communications firm with his partner, Marcia Cunningham (www.cgced.com). They have worked extensively on environmental issues: energy conservation, electric vehicles, renewable energy, climate change and resilient, liveable cities. John and Marcia are also communicating the necessary role of the aggregate industry and are principals in the challenge of youth envisioning their city in 10 years. www.mytoin10.org.

IAQ combos arresting airborne spread of COVID

Commercial building operators could use a combination of air exchange, filtration and purification to comply with the industry-leading guidance for arresting airborne spread of pathogens and contaminants. However, since MERV 13 performance is the baseline requirement — meaning removal of 90 per cent of particles larger than 1 micron and up to 75 per cent of particles that are 0.3 to 1 micron in size — one of the chief drafters of the guidance suggests a MERV 13 filter is the most straightforward and cost-effective measure in many scenarios.

Speaking during a recent webinar sponsored by the Building Owners and Managers Association (BOMA) of Canada, Luke Leung, the team leader for commercial buildings on ASHRAE’s Epidemic Task Force, provided data and modelling to demonstrate the risk of COVID-19 transmission in average office settings and to outline the comparative benefits of various approaches for ameliorating that risk. Thus far in the pandemic, epidemiological studies in both North America and Europe have found lower incidence of infection in offices than in residential dwellings or other types of venues where people can interact, but that hasn’t necessarily translated into office workers’ perceptions.

“A lot of time when we talk about COVID, and especially in the HVAC context, it’s really about the risk level we want to tolerate,” Leung reflected.

“It isn’t just about being safe. It’s also about feeling safe,” concurred his co-presenter, Steve Horwood, vice president, national building development, with the HVAC service provider, GDI Integrated Facility Services/Ainsworth.

Together, the presenters weighed in on four complementary approaches for addressing indoor environmental quality: ventilation; filtration; air cleaning or purification; and occupancy and space configuration considerations. Although data-crunchers are still catching up with the rapid emergence of the omicron variant, the ASHRAE task force is also considering early evidence of a potential fivefold increase in transmissibility.

Pre-omicron research indicated that, on average, there was a 1.4 per cent chance that one infected person could transmit the COVID virus to others within an office space that adhered to ASHRAE’s HVAC guidance if it was fully occupied and no one was wearing a mask. That likelihood fell below1 per cent with a lesser density of occupants wearing masks, but, even prior to the omicron variant, other variables could influence risk.

For example, there is some scientific evidence that a small fraction (approximately 2 per cent) of infected people generate vastly disproportionate quantities of the COVID virus, making them more virulent transmitters. “Your risk level could be significantly higher if you have a super spreader in your office,” Leung acknowledged.

Outdoor air brings energy-use penalties

Beginning with outdoor air intake, ASHRAE’s core recommendations are simply that buildings maintain at least the minimum outdoor airflow rates specified in applicable codes and standards. That’s based on the evidence that 100 per cent outdoor air would deliver a small increment of added risk reduction where MERV 13 performance is in place, but would typically come with a significant impact on energy use.

Even if there is no impact on energy use, Leung cautioned that operators will have to monitor outdoor air quality. As well, he noted that a radiant heating/cooling system, which is coupled with a dedicated outdoor air system (DOAS) for ventilation, brings in far less outdoor air than conventional HVAC systems — an energy-saving design distinction that’s less adept in the context of omicron.

“Your risk level can be higher because there’s just much less air to circulate around,” he explained. “A MERV 13 filter on the fan coil unit will perform better than a dedicated outdoor handling system with a radiant ceiling.”

Filtration and pressure drops

Leung pegged the “first cost” or required capital outlay for MERV 13 filtration at about USD $0.25 per cubic feet per minute (cfm) of air handled compared to about USD $1.3 per cfm for ultraviolet (UV) light technology or up to $5 per cfm for other air cleaning options. Addressing concerns that MERV 13 filters restrain airflow to an extent that can cause a problematic drop in air pressure, Horwood reported he had seen some good results in a series of tests his company conducted to assess air pressure dynamics across the range of filters from MERV 8 to 13, and theorized that other aspects of product quality also come into play.

“Not all filters were made equal. In about half of the situations, we actually had worse performance from MERV 8 filters because of the material that was used,” he recounted. “We did not see the pressure drop in airflow concerns (for MERV 13) that most people anticipated that we would see.”

That said, Leung advised pressure drops and associated operating cost repercussions would be unavoidable with more rigorous filtration in the MERV 14+ range. To achieve performance of that level, building operators could use a MERV 13 filter in combination with air purification technology.

Purification can have maintenance implications

UV light is an established means for destroying pathogens and disinfecting solid surfaces, and Horwood reported it has shown good results as an air cleaner. To get those results, though, he stressed that the application must be suited to the HVAC system’s size and capacity.

“It’s not something that you can just pluck off the shelf. There needs to be a certain level of millijoules per square centimetre through the full surface of the duct and the velocity of the air through the duct,” he explained. “Be cautious, particularly if you’re talking about large volume air and a (UV) system that is multiple smaller lamps. Multiple smaller lamps increase the opportunity for failure and can increase the maintenance.”

Looking at other air-cleaning applications, Leung suggested ionizers could be a largely redundant precaution in elevator cabs. That’s based on the short duration of elevator trips and the assumptions that the elevator has an exhaust fan facilitating up to 70 air exchanges per hour and that passengers will be wearing masks.

Citing a Chicago study that estimated there’s 0.005 per cent chance of becoming infected in those conditions, he expressed his own confidence in vertical travel. “I don’t feel particularly concerned if I get into an elevator and people are wearing masks,” he said.

Resources for building and facilities managers

While mask wearing is contingent on broad cooperation of office occupants, facility managers can play a role in risk reduction through awareness of directional airflow and the impact of office configurations. Leung described localized airflow patterns as a quirk that can’t be foreseen in big-picture recommendations, pointing, for example, to a well publicized case of airborne spread within a restaurant. “Heavy air flowing in one direction with high velocity is part of the reason why the person got infected over 20 feel away from the source,” he noted.

A paper to be presented at ASHRAE’s 2022 winter conference next week examines how office furnishing can affect air circulation and best practices for furniture arrangement. “It can be a value-add for your tenant,” Leung said.

Turning to tools for building managers and operators, Horwood promoted the free online calculator his company has developed to help navigate ASHRAE’s formula for outdoor air equivalency. “You just need nominal knowledge about HVAC systems. You can slot in your square footage, what height, what MERV filter you are using, if you’re using UVC, if you’re using HEPA, and it will demonstrate the benefits of using MERV 13 or using other devices, but with MERV 13 being the easiest,” he said.

“Nice. That’s equivalent outdoor air made easy by Steve’s team,” Leung quipped.

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

Competition Bureau warns of surge in greenwashing

The Competition Bureau of Canada is warning Canadians to remain skeptical of products and services that wrongly claim to be “green.” As more people look to reduce their environmental impact, this demand is leading to more companies making false promises.

“Along with this increase in “green” products, there has been an increase in false, misleading, or unsupported environmental claims, which are illegal in Canada,” the bureau said in a statement released Wednesday.

“This practice is called “greenwashing”. It can take many forms, including claims, adjectives, colours and symbols used to create an impression that a product or service is “greener” than it really is.”

Last year, a global review led by the International Consumer Protection and Enforcement Network found that 40 per cent of green claims made online could be misleading consumers.

The bureau advises that when shopping:

Remember that while some “green” claims are true, others may be false, misleading, or unsupported by adequate evidence;
Be vigilant when you come across a vague or broad statement such as “eco-friendly” and “safe for the environment”. Without any further explanation of the claim, it might lead to misinterpretation and deception;
Don’t be fooled by nature-themed images like water, clouds, plants, animals and earth, or colours used on packaging and in marketing;
When you see eco logos or labels make sure they are trustworthy;
Remember: all consumer goods have an impact on the environment, including those that claim to be “green”;
If you have doubts about an environmental claim, don’t be afraid to reach out to the company and ask them questions. If you believe that a business may have made a false, misleading or unsupported environmental claim, report it to the Competition Bureau.

The Competition Bureau enforces laws that can address environmental claims that are false, misleading or not based on adequate and proper testing.