IFMA updates sustainability guide on green cleaning

The International Facility Management Association (IFMA) Environmental Stewardship, Utilities and Stewardship (ESUS) Strategic Advisory Group has released the latest update in the Sustainability How-to Guide: Global Green Cleaning.

The updated sustainability guide examines green cleaning from a facility management (FM) perspective, providing the tools needed for FM professionals to understand the benefits and make the business case for a green cleaning program.

Originally published in 2009 and updated in 2011, the guide’s recent updates reflect changes and industry trends, and is available for free download from IFMA’s Knowledge Library.

The guide covers the topics of greenwashing, green cleaning equipment, product and service providers, and the effects on indoor air quality and occupant health. With a detailed overview of the implementation process and real-world examples, the 74-page guide offers instrumental advice for FMs to develop and implement a comprehensive green cleaning program.

Authors of the guide including, Jennifer Corbett-Shramo, IFMA Fellow, Bill Conley, CFM, SFP, FMP, LEED AP, IFMA Fellow, Dan Wagner, Palle Esbensen and Dorothy Scholnick, FMP, address the need for more widespread use of green cleaning practices as well as the steps involved in implementing a supporting green cleaning program for many different organization types.

The guide is one of 17 in the Sustainability How-to Guide Series, and is available for download here.

Federal commitment to infrastructure renewal

The Canadian Construction Association (CCA) sees the federal government’s Budget 2017 announcement as a reiteration of previous commitments made to the renewal of Canada infrastructure.

“While we expected to see greater detail regarding the Canada Infrastructure Bank and Phase II of the Federal program, CCA is pleased with the high priority it continues to attach to the renewal of Canada’s critical infrastructure,” said Michael Atkinson, president of the Canadian Construction Association. “We look forward to receiving additional details in the coming months and working with the government on a seamless transition from Phase I to the next phase of the federal infrastructure plan.”

Also included in this year’s budget were some positive proposed changes to enhance the Federal Temporary Foreign Worker Program, as well as changes to Canada’s building codes to improve energy efficiency and reduce building emissions by promoting retrofits and net-zero construction.

“As the national association representing the Canadian construction industry, we will continue to support all efforts to see investment in infrastructure rolled out in a timely and efficient manner,” added Atkinson.

“While short on details, this budget represents another positive step forward in the national effort to improve our competitiveness through the modernization of our nation’s infrastructure. The priority attached to trade infrastructure through the creation of the National Trade Corridor Fund was welcomed and we see it as another positive step forward in the modernization of our trade infrastructure, which are critical to enhancing the ability of Canadian businesses to compete internationally.”

Saskatchewan landlords lose key PST exemptions

Saskatchewan landlords experienced a budget double whammy March 22 — receiving the more forceful cost hit from their provincial finance minister. His budget, released almost in sync with his federal counterpart’s announcements, delivered a surprise reinstatement of provincial sales tax (PST) on labour costs associated with renovation, retrofit and maintenance projects and a province-wide increase in education property taxes.

The measures are part of a package of spending restraints and tax realignment as Saskatchewan grapples with a dramatic slump in resource prices that has seen the government’s share of revenue drop from $2.6 billion in 2014-15 to $1.3 billion last year.

“This budget meets the challenge by taking a number of significant measures — including some difficult but necessary measures — on both the revenue and the spending side,” Finance Minister Kevin Doherty told the provincial legislature as he outlined plans to boost the PST to 6 per cent, remove some previous PST exemptions, reduce or eliminate some tax credits and cut funding for a range of programs and services.

Property owners will now pay a higher PST rate, up from 5 per cent prior to budget day, on the items they’ve traditionally been taxed on, while the elimination of other PST exemptions effectively adds a new 6 per cent surcharge to some key operations and labour costs. These include insurance premiums and contracts for “repair, renovation or improvement of real property”, which will apply on many of the skilled trades, such as plumbers, electricians, HVAC and elevator maintenance technicians, that commercial and residential owners/managers typically employ.

“There is standard maintenance that’s scheduled quarterly, seasonally or annually to maintain the integrity of the facility that, as landlords, we still have to execute,” says Jamie McDougald, president of the Saskatchewan Landlord Association and chief operating officer of Regina-based Deveraux Developments. “For other capital projects that are more optional, this tax may be a deterrent.”

Critics suggest it could also undermine professional service providers and public safety.

“Saskatchewan already has a massive underground cash economy in the renovation market, a cash economy that undercuts renovators who have elected to hold themselves to high professional (and legal) standards that ultimately protect consumers. With the cost of hiring a professional being raised as a result of the new budget, it has now become even more appealing to consumers to go for a cheaper, illegal cash deal,” a statement from the Saskatoon & Region Home Builders’ Association asserts.

Contractors and property owners alike are now trying to ascertain the status of contracts signed prior to the April 1 start-date for the new rules. In future, the 6 per cent tax may help some larger property owners/managers make the business case for in-house maintenance staff over outsourcing.

While new homebuyers will ultimately absorb added construction costs, the rental housing market currently affords little leeway to pass costs through to tenants. “In the multifamily sector, there hasn’t been any significant increase in rental rates in the last 18 to 24 months,” McDougald observes.

The budget also announces the provincial government’s intention to fund a larger share of education costs through property tax, necessitating a nearly 10 per cent bump-up, province-wide, from what was collected last year. An accompanying backgrounder states that ratepayers have been contributing just 35 per cent of education funding, even though their share is meant to be 40 per cent.

“In recent years, education property tax remained unchanged while education costs have continued to rise,” Doherty noted in his budget speech. “The budget restores the 60/40 balance.”

That will equate to a $35 million increase across the residential tax base and an extra $24 million in taxes for the commercial/industrial class. The actual breakdown for each taxpayer will depend on the assessed value of the property.

CREA housing market forecast predicts falling sales

The updated housing market forecast for 2017 and 2018 from the Canadian Real Estate Association (CREA) finds that national housing market trends continue to diverge significantly across regions.

The CREA forecast says that as activity in British Columbia’s Lower Mainland cools from the all-time highs recorded early last year, sales and price pressures in other regions of the province remain strong.

In Alberta, Saskatchewan, and Newfoundland and Labrador, sales activity is still low while supply remains elevated, resulting in weakened price trends for these provinces. Meanwhile, housing markets in Manitoba, Eastern Ontario, Quebec, New Brunswick, Nova Scotia and Prince Edward Island all experienced more activity in 2016 than years prior, resulting in rising sales and declining supply.

In the Greater Toronto Area and the Greater Golden Horseshoe, the balance between supply and demand has tightened. This is expected to lead to continued double-digit price growth, causing further erosion in affordability and sales activity if new supply remains low.

Recently tightened mortgage rules, higher mortgage default insurance premiums and a rise in mortgage interest rates are obstacles to affordability in all Canadian housing markets, but the CREA says it will be some time before their full impact on housing markets is evident.

In certain regions, some first-time buyers may rethink how much they can afford and end up shopping for a lower-priced home, due to the recently tightened “stress test” for mortgage financing qualification. In regions where there is short supply of lower-priced inventory, some sales may be delayed as buyers choose to save longer to put down a larger down payment.

In markets like Vancouver and Toronto, some buyers may find themselves priced out of the market entirely, due to short supply of single family homes and few affordable options. In Toronto, the stress test for mortgage qualification may lead some buyers to select a home further out in the Greater Golden Horseshoe region, where homes are more affordable.

Nationally, sales activity is expected to fall by three per cent to 518,700 units in 2017. As mentioned in CREA’s previous forecast, the climbing sales forecast for Ontario offsets a downward revision to British Columbia’s forecast sales.

British Columbia sales are expected to drop 17.5 per cent in 2017, the largest decline forecast, followed by Prince Edward Island, which is expected to see sales fall 10.8 per cent. Activity in both provinces is receding from the all-time highs reached last year. Newfoundland and Labrador is expected to see a decline of 8.4 per cent in sales this year.

Alberta is forecast to see a sales increase of five per cent in 2017, the largest jump in activity projected for 2017, but this figure still remains nearly 10 per cent below the 10-year average.

In other regions, sales activity may only vary slightly from 2016 to 2017. Ontario sales are expected to climb less than one per cent this year due to strong demand and an increasingly acute supply shortage.

In provinces where the housing market is closely tied to the outlook for oil and other natural resource industries, average prices may stabilize in Alberta while slowing in Saskatchewan and Newfoundland and Labrador.

Although prices are still climbing at a rapid rate in Ontario, British Columbia has seen slowing sales in its Lower Mainland region, which is reflected in a drop in average price. Average prices in other provinces are either climbing slightly or remaining level, reflecting well-balanced supply and demand.

The national average price is expected to rise 4.8 per cent to $513,500 in 2017, with significant regional variations. The average price is forecast to drop by more than five per cent in British Columbia and Newfoundland and Labrador, and by 2.8 per cent in Saskatchewan, yet is expected to climb more than 15 per cent in Ontario.

In other provinces where the average price showed signs of improvement in 2016, average price gains are forecast to remain below the rate of inflation in 2017 as the impact of recent regulatory changes and higher expected mortgage rates support stronger demand and tighter market conditions.

In other provinces where the average price showed tentative signs of improving last year, average price gains are forecast to stay below the rate of inflation in 2017 as the impact of recent regulatory changes and higher expected mortgage rates lean against stronger demand and tighter market conditions.

In 2018, national sales are expected to reach 513,400 units, a decline of one per cent compared to 2017 projections. Most of this decline is expected to be caused by fewer sales in Ontario.

The national average price is forecast to increase by five per cent to $539,400 in 2018, reflecting ongoing market tightness in Ontario and the further normalization of B.C.’s market. Price gains outside of the Greater Golden Horseshoe are not expected to reach the increase in the national average price.

Projections for Saskatchewan and Newfoundland and Labrador say average prices will decline in 2018 by less than one per cent. In other regions of Canada, home price increases are forecast to more or less track overall consumer price inflation in 2018.

Energy efficiency draws fraction of spending

The Canadian government is looking for waste and savings opportunities across its vast and varied portfolio of capital assets. The newly released 2017 budget announces the launch of a three-year comprehensive review as part of ongoing efforts to better manage federal expenditures.

“The Government spends roughly $10 billion annually to purchase, construct, renovate, repair, maintain and operate both owned and leased capital assets,” the budget document reports. “This review will look to identify ways to enhance or generate greater value from government assets.”

Elsewhere, the 2017 budget pledges approximately 0.027 per cent of that annual capital spending toward improving energy efficiency and reducing greenhouse gas emissions. Natural Resources Canada will receive the $13.5 million allocation over five years with a mandate to advise other federal departments on retrofitting buildings and curbing emissions from vehicle fleets.

Unit owners sell boutique buildings to developer

The sale of a property in midtown Toronto that closed in January marks Ontario’s first case of unit owners terminating a condo corporation by vote, confirmed Greg Marley, partner at Deacon, Spears, Fedson and Montizambert, who acted as legal counsel for the corporation and owners.

“Some condos have terminated through a different section of the [Condominium] Act,” said Marley. “Using this section 124, this is the first time it’s happened in Ontario, [and it’s happened] only once before in Canada, as well, through similar provisions, so it’s pretty rare.”

Under section 124 of the Condominium Act, at least 80 per cent of both mortgage holders and unit owners must agree to the sale of a condo property for this type of transaction to proceed. Most of the 27 unit owners at 39 Roehampton Ave. voted in favour of accepting an offer from a group of investors including a developer with plans to intensify the site.

The transaction showed what the process of terminating a condo corporation could look like for others in the select circumstances where it might make sense for unit owners to sell collectively.

Metropia is proposing to erect a 48-storey condo building on properties now occupied by the six- and eight-storey condo buildings at 39 Roehampton Ave., constructed circa 1990, as well as a two-and-a-half-storey house and a parking lot. The site is located immediately northeast of a major redevelopment occurring on the corner of Yonge Street and Eglinton Avenue.

Metropia is also involved in that redevelopment, which is currently under construction. The neighbouring project, known as E condos, consists of a 58-storey condo building on the northeast corner of Yonge Street and Eglinton Avenue and a 36-storey rental building on Roehampton Avenue.

The E condos project paved the way for the developer to connect any new building to a planned underground path to Eglinton subway station, making the opportunity to acquire the property at 39 Roehampton Ave. especially attractive, said David Speigel, president and chief operating officer of Metropia. But he left it up to the condo board to canvass unit owners to see if there was enough interest for the transaction to move forward.

The unit owners of 39 Roehampton Ave. had fielded two offers from different prospective purchasers before receiving the third offer that ultimately succeeded, said Marley. The unit owners dismissed the first offer for being too low, after which the condo board had the property appraised to get a sense of its fair market value. The unit owners considered the second offer, which came through a cold-calling broker, but it failed to clear due diligence.

Condo boards are not obligated to present unit owners with offers to purchase their property, said Marley, but the board believed the third offer represented fair market value. The condo board notified the unit owners and hosted a series of information meetings to discuss how the process and the payout would work if the owners voted to accept the offer.

Unit owners would get a share of the proceeds of the sale based on their proportionate interest in the condo corporation, as outlined in the declaration, after closing costs, legal fees and real estate commissions, he explained. Following the information meetings, the condo board put the proposed deal to a vote of unit owners, enough of whom consented to accepting the offer for the sale to proceed.

In addition to seeing that the condo board had the support of 80 per cent of unit owners, the purchasers required a commitment that the property would be turned over free and clear at close. In other words, Metropia wanted to be certain that it wouldn’t face legal challenges from holdouts.

“Great, you got 80 per cent; as far as we’re concerned, it should be 100 per cent,” explained Speigel, adding as an example: “We don’t want to find out later that we bought the building [and] there are 12 units that won’t move.”

Before the deal closed, the condo corporation struck settlements with two unit owners who had voted against accepting the offer, said Marley. Section 125 of the Condominium Act entitles unit owners who object to selling a condo property to a mediation process to argue that an offer to purchase was below fair market value. If dissenters succeed in their argument, the condo corporation may be ordered to pay those owners their proportionate share, as set out in the declaration, of the difference between the purchase price and what has been determined to be fair market value.

The condo corporation also had to collect written consent to the sale from mortgage holders for units in the building, with a promise that debtors would pay off their balances owing after the deal closed. This was one of the most challenging aspects of the process, said Marley, because section 124 of the Condominium Act neglects to spell out what happens to any outstanding claims against a condo property once the title changes hands.

“The banks had no idea what was going to happen, and frankly we didn’t either,” he said. “It wasn’t until the day of closing when the land registrar said, ‘We’re creating a new pin, so all the mortgages are going to disappear.’”

Metropia also wanted to be certain that it would be able to simultaneously close on all three properties that would be required to get the planning permissions for its proposed redevelopment, said Speigel. In order to achieve the necessary setbacks, or “elbow room,” to intensify the site, the purchasers had to acquire a neighbouring house owned by the Kohai Educational Centre and a portion of a parking lot owned by Bell.

Metropia asked for a few extensions on its deadline for due diligence, as it faced the tricky task of assembling adjacent lands, which is an exercise that would likely be a pre-requisite for the redevelopment of any existing condo building, Speigel said. Another time-consuming aspect of the due diligence process was the fact that the purchasers needed both the condo corporation and individual unit owners to sign off on certain documents, said Adam Lebow, associate at Owens Wright, which represented the purchasers.

Normally, in this type of transaction a purchaser would either buy a whole building from a single owner or buy individual units from multiple owners. In a small condo corporation, with just a handful of units, a purchaser might take the latter approach, said Lebow, because one dissenting unit owner could be enough to scuttle a deal pursued under section 124 of the Condominium Act, which sets the 80-per-cent threshold for support. In the case of 39 Roehampton Ave., which proceeded under that provision, the transaction had to be approached from both angles.

“We had to treat it as individual unit sales, but we also had to treat if as we’re buying the whole building at the same time,” he said.

For example, the purchasers sought declarations that neither the condo corporation nor the unit owners were subject to any litigation, said Lebow. He also conducted searches to verify this fact for the condo corporation as a whole and unit owners as individuals.

During this time, regular communication with the unit owners was critical, said Greg Evans, executive vice president of The Behar Group Realty, who brokered the deal. Unit owners were left in limbo during the due diligence period because the conditional sale recorded on the condo corporation’s declaration essentially prevented them from selling their units individually.

“At the beginning of the process, there was real uncertainty as to why things took so long with the planning process and commercial negotiations,” said Evans. “It’s not the same as buying a house, where the negotiation starts at six o’clock and finishes at 11 o’clock that night.”

Negotiated non-refundable deposits reassured the unit owners that the purchaser had an incentive to close the deal, he said. He also credited the condo board with playing a major role in effectively rallying and representing the unit owners to be able to see the transaction through to completion.

There may be some, albeit limited, opportunities in the Toronto market for other condo corporations with similarly boutique-sized, transit-proximate buildings to sell their properties as a whole, said Evans.

“It fundamentally comes down to the location and the specific property,” he said. “You need to look at whether the highest and best use — the underlying value of the land — is higher than the collective value of the units on the open market.”

Even under those circumstances, it takes patience from the condo corporation and transparency from the purchaser, who must work collaboratively for such a sale to succeed, said Evans. Based on his experience at 39 Roehampton Ave., he recommended that condo corporations considering this path look into what planning challenges a prospective purchaser may face upfront.

The due diligence process in the sale of 39 Roehampton Ave. stretched nine months. The deal was finalized last October, after which there was a 90-day closing period.

The unit owners authorized the members of the condo board to continue acting as their representatives during the closing period, from which point the condo corporation ceased to exist, said Marley. Unit owners continued to pay maintenance fees to cover operating costs and reserve fund contributions for the remaining three months of their tenure in the buildings.

When the sale closed this January, the remaining balances in the operating and reserve funds were transferred to a trust account, said Marley. The trust account will be paid out to the unit owners based on their proportionate interest in the condo corporation, as outlined in the declaration, after the corporation’s last utility and other bills have been settled.

While the process of selling the condo property went relatively smoothly in this case, Marley predicted that the use of section 124 in the Condominium Act will remain rare. A unique set of factors facilitated this particular transaction: The more than 25-year-old buildings at 39 Roehampton Ave. were dated, faced major upcoming expenses and surrounded by sweeping redevelopment.

“You’re going to have to have a relatively small building,” Marley suggested, “because getting over 100 units would be unwieldy to try to get over 80 per cent of owners to vote in favour and all the mortgagees to consent as well.”

Michelle Ervin is the editor of CondoBusiness.

Pictured above: A rendering by TACT Architecture shows the podium level of Metropia’s development proposal for 39 Roehampton Ave.

Canada’s new National Housing Strategy

The Federal Budget 2017, released March 22nd, proposes to invest more than $11.2 billion over 11 years in a variety of initiatives designed to build, renew and repair Canada’s stock of affordable housing. These investments will be made as part of the new National Housing Strategy that was developed following extensive consultation with industry experts, stakeholders, provinces, territories, municipalities and Indigenous Peoples.

Key elements of the new strategy include:

A renewed partnership between the federal government and provinces/territories to support key housing priorities ($3.2 billion)
A new National Housing Fund to address critical housing issues and support vulnerable citizens ($5 billion)
Targeted support for northern housing ($300 million)
Targeted housing support for Indigenous Peoples not living on-reserve ($225 million)
Renewed and expanded federal investments to address homelessness ($2.1 billion)
Making more federal lands available for the development of affordable housing. (202 million)
Expanded funding to strengthen CMHC’s housing research activities ($241 million)

Budget 2017 proposes to provide $3.2 billion over the next 11 years to provinces and territories in support of key priorities, such as the construction of new affordable housing units; the renovation and repair of existing housing; rent subsidies and other measures to make housing more affordable; and other initiatives to support safe, independent living for Canada’s seniors and persons with disabilities.

The National Housing Fund will be administered by the CMHC and will include an expansion of direct lending for new rental housing supply and renewal. This fund is intended to address critical housing issues and prioritize support for vulnerable citizens, including seniors, Indigenous peoples, survivors fleeing situations of domestic violence, persons with disabilities, those dealing with mental health and addiction, and veterans.

Canada’s red hot rental market

2016 was a monstrous year for Canadian real estate, and it’s hard to imagine what the effects of another record-setting year will have on the red hot rental market. To put things in perspective, the CREA Home Price Index jumped from 184 to 208.9 by the end of last year. The total number of home sales increased by 6.3 per cent year-over-year and anyone who tried to buy a home or condo is fully aware of what these figures meant for the price of homes. Not only was 2016 a record-breaking year, but it came on the heels of a record-breaking 2015, further compounding the monstrous increases.

We’ve heard it before, and just like the start of 2015, 2016 and now 2017, experts are calling for anything between a ‘slowing down’ of the trailblazing Canadian real estate market, to a total market crash. A recent article from MoneySense offers a good representation of most predictions, concluding that we’re likely to see a flattening out of property prices.

Naturally, certain areas of the country will be affected by new mortgage rules (Toronto) and government regulations (Vancouver), but overall, we shouldn’t expect to see a complete crash, especially in Toronto. The CREA predicts a 3.3 per cent drop in home sales this year compared to last. However, keep in mind that properties are selling for record-setting prices. The following graph from the CREA summarizes these predictions very clearly.

If sales do flatten out, then it’s safe to say prices will at least remain what they are now, meaning those who are waiting for the bubble to burst shouldn’t expect to see a drop in rental prices just because the red-hot market cools down.

Tightened mortgage regulations

In a recent RentSeeker blog, we discussed some of the new mortgage laws that were introduced in 2016 and the affect they have had on specific markets. Moving forward, it’s important to note that stricter mortgage rules and lending regulations make owning a property more expensive, and in turn, the extra cost is passed along to renters.

The demand to live in Ontario

Despite what Canadians across the country think about Ontario, there is skyrocketing demand for rental units in this province. Strong job growth across the country and the desire to live in the GTA has driven rental prices to new levels. The rent on an average 700 square foot condo broke $2,000 in Toronto for the first time, with renters engaging in bidding wars over in-demand buildings.

Condos are the new houses

Average condo rent rose nearly 12 per cent in the final quarter of 2016 (when compared to final quarter of 2015). In the GTA, 2016 had nearly 30,000 new condos sales, a huge 34 per-cent rise in the total number from 2015. Outside the GTA, some regions saw increases of 57 per cent (Etobicoke, North York) and the 905 district had an unimaginable 82 per cent increase, according to Urbanation. With many unable to afford houses, condos and apartment units are becoming increasingly accepted as viable alternatives—two major factors increasing the demand for condos and rental apartments, and therefore rent.

More buildings are on their way

There are plenty of new construction projects everywhere you look, as buyers are getting forced out of the low-rise market. This, of course, means there is money to be made and demand is high. While it’s logical to think more buildings mean cheaper rates, units in new buildings aren’t on the low end of the affordability scale for renters, and these new builds are being designed to attract renters with money. However, as more new units become available, older units that haven’t been upgraded naturally do have less value in comparison.

The American influence

Our southern neighbour has always had a huge effect on our economy. As the U.S. continues to increase its interest rate, the effect on Canadians will lead to higher expenses for property owners (higher interest and a downswing for the loonie). U.S. immigration policies might also have a large effect on the number of new residents Canada accepts if the States continues to create immigration obstacles, again increasing the demand for rental units. Overall these factors could affect the rental market in a negative direction for renters, especially for those looking for a place to live north for the border for the next four years, or possibly less.

Probability theorem

At the very least, we had to give one logical reason for a slowdown in the rental market for our readers who were hoping, or even cheering, for a bubble burst. One of the most reliable rules of probability is normalization over time. If we apply the Law of Large Numbers to the Canadian real estate market, there’s a good chance things are slowing down, at least to some degree. The chances of three consecutive record-breaking years in unlikely to happen, statistically speaking.

If the Canadian economy continues to remain steady, the increase in demand for rental properties in the big markets isn’t going to slow down. We’re growing as country in GDP, population and in worldly reputation (rated by Lonely Planet as the top country to visit in 2017), all factors contributing to higher demand for rental options. As we approach the 150th birthday of our nation, yes, rent will probably be more expensive, but that’s mostly because we’re succeeding as a country!

Chaim Rivlin is the Founder and CEO of RentSeeker.ca, Canada’s leading real estate search and real estate marketing website. RentSeeker.ca popular reports on Canada’s real estate markets are featured on many of Canada’s largest media outlets.

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Starlight acquires partial interest in Mississauga Executive Centre

Starlight Investments (Starlight) has purchased a 50 per cent interest in the Mississauga Executive Centre (MEC), located at 1-4 Robert Speck Parkway in Mississauga, Ontario.

MEC is a Class A, LEED Gold certified office complex that encompasses 1,150,000 square feet of prime commercial space situated on 26 acres near three major expressways: Highway 401, 403 and 407 and other transportation modes. The site links to walking trails along Cooksville Creek and is adjacent to the Square One Shopping Centre.

“This is a modern and well-maintained property featuring a stable and diverse tenant roster, anchored by long-term leases of credit tenants,” stated Daniel Drimmer, president and chief executive officer of Starlight.

Construction is set to begin in 2018 and be completed in 2022 on the Hurontario-Main Light Rail Transit line (LRT). The LRT’s planned route is along Hurontario-Main Street and running immediately adjacent to MEC.

B.C. updates four-storey sprinkler requirements

An update to the B.C. Building Code will require fire sprinklers to be installed on the balconies of all new four-storey wood-frame residential buildings. The new sprinkler requirements will take effect on July 20, 2017.

Under the current B.C. Building Code, sprinklers generally are not required on balconies or in attics in residential buildings four storeys and under, but are generally required in residential buildings greater than four storeys.

The updated 2015 National Building Code, on which B.C. Building Code updates are based, requires sprinklers on balconies of four-storey residential buildings. Although the next edition of the B.C. Building Code is not scheduled to be adopted until late 2017, the province is taking steps to adopt the new sprinkler standards sooner.

“B.C. is a leader in fire safety requirements, but we continually review those rules and update them. Although the next edition of our building code won’t be adopted until late 2017, we wanted to implement this change as soon as possible, in the interest of safety,” said Rich Coleman, Minister of Natural Gas Development and Minister Responsible for Housing.

The province is providing a transition period to allow time for the industry to adapt to the new requirement. Building codes and fire sprinkler standards apply at the time of construction and do not apply retroactively to require owners to upgrade existing buildings.

3M to acquire Scott Safety from Johnson Controls

3M will acquire Scott Safety from Johnson Controls for $2 billion U.S. in mid-2017.

Scott Safety, which currently employs about 1,500 people worldwide, manufactures innovative products that protect workers from environmental hazards. They include self-contained breathing apparatus (SCBA) systems, gas and flame detection instruments and other safety devices.

“Personal safety is a core growth business within the 3M portfolio,” said Inge G. Thulin, 3M chairman, president and chief executive officer. “This acquisition leverages our fundamental strengths in technology, manufacturing, global capabilities and brand, and builds upon recent portfolio actions within our Safety and Graphics business to position it for long-term success.”

3M’s Personal Safety Division provides respiratory, hearing, and fall protection solutions that help improve the safety and health of workers. The business also supplies products and solutions in other safety categories such as reflective materials for high-visibility apparel, protective clothing and head, eye, and face protection.

“Combining 3M’s products, brands and global capabilities in personal protective equipment with Scott Safety’s well-regarded safety products will provide a broader array of safety products and solutions, enhancing our relevance to customers worldwide,” added Frank Little, executive vice president, 3M Safety and Graphics Business Group.

Mackenzie Health recognized for LED lighting switch

York Region’s Mackenzie Health was recently recognized by Alectra Utilities for converting the facility to 100 per cent LED lighting through the utility’s retrofit program. As part of the presentation, the hospital received a cheque for $127,314 and a Certificate of Achievement from Alectra. Mackenzie Health is the first hospital in the utility’s service territory to make the switch.

By converting the entire hospital to LED lighting, Mackenzie Health will reduce its annual consumption by an estimated 1,536,744 kWh and cut annual energy costs by about $210,000, equivalent to removing 180 homes off the grid.

Lighting can account for nearly 40 per cent of an institutional building’s electricity consumption, so it is seen as a prime target for electricity conservation. Across the province, hospitals, long-term care and other healthcare facilities are cutting costs by using electricity more efficiently. As a controllable operating expense, any reductions in consumption result in almost immediate reductions in operating costs.

“As Canada’s largest municipally-owned electricity distribution company, we recognize the importance of assisting our customers in finding solutions to help them better manage their energy costs,” said Raegan Bond, vice president conservation demand management for Alectra Utilities, in a press release. “Our team of experts can help customers navigate through the retrofit process and realize the incentives available through the Save On Energy retrofit program.”

Photo (L to R): April Currey, Director Customer Insights & Acquisition, Alectra Utilities; Colin Maughan, CDM Account Specialist, Alectra Utilities; Paul Carfagnini, Plant Operations Security & Fire Prevention Officer, Mackenzie Health; Bill Player, Director of Facilities, Mackenzie Health; Richard Tam, Executive Vice President and Chief Administrative Office, Mackenzie Health; Paul Porteous, General Manager Support Services, Mackenzie Health; Raegan Bond, VP, Conservation Demand Management, Alectra Utilities.

Katherine Robinson joins Kasian’s Calgary office

Katherine Robinson, Architect AAA, has joined Kasian as principal in its Calgary office, effective March 13. In this role, Katherine will provide insight and leadership to Kasian’s commercial and hospitality market sectors.

Robinson brings nearly 20 years of experience and a track record of delivering complex buildings while maintaining architectural integrity and design excellence. She specializes in high-rise commercial and multi-family residential projects. Robinson’s project management expertise has enabled the delivery of large-scale and unique projects on time and with a high level of client satisfaction.

“I’m thrilled to be joining the talented and accomplished team at Kasian,” said Robinson, in a press release. “With our shared passion for design excellence, I look forward to the opportunities for collaboration on the creation of meaningful spaces and places.”

Robinson comes to Kasian from a role as studio lead at Calgary’s B+H Architects, where she was responsible for the delivery of commercial projects including the sustainably-designed Eau Claire Tower, secure screening facilities at Calgary International Airport and MEG Energy’s new headquarters.

Prior to that, she was a principal at Zeidler Partnership Architects, where she led the tenant-improvement team for The Bow, a 1.8-million-square-foot office tower featuring state-of-the-art office space, conferencing facilities, employee amenities and function spaces. She has also held a position at CORE Architects in Toronto, where she was project manager for various high-rise residential projects in the GTA. She holds a Bachelor of Architecture from Carleton University.

“Katherine brings a unique and valuable perspective to her new role in Kasian,” said Don Kasian, president and founder of the company. “We are really excited to have her on board.”

How e-commerce is shaping GTA warehouses

Toronto has already outpaced Canada’s growth rate in the last five years. This larger population means a heftier consumption market, which is increasing the size and scale of warehouse and distribution space in order to meet e-commerce demand. And with the Greater Toronto Area (GTA) and Hamilton Area expected to grow by 3.5 million people over the next two decades, some see the potential for more finished goods warehouses that can store products closer to these large consumer communities.

This is an area of commercial real estate that industry should be more aware of because its opening up opportunities. According to Gord Cook, executive vice-president of Colliers International, about one in every 20 buildings is less of a manufacturing environment and more of a finished goods warehouse space undergoing a larger, modern makeover.

“I’ve been in the business for about 30 years, and a large warehouse 30 years ago was probably in the 200,000 square foot range plus or minus; now it’s about 600,000 square feet,” says Cook.

Toronto is now one of North America’s six major distribution markets, with spaces similar in size to New Jersey and Southern California. In its last Big-Box Market Report released in Q2 2016, Colliers had flagged 266 existing big-boxes in Toronto, totaling 145.2 million square feet. Such demand is coming from logistics and e-commerce users looking for modern Class A space near a good number of people.

Where distribution space is growing

Factors shaping where this warehouse space is located include how products arrive to the GTA. Most goods tend to come by truck and intermodal (two or more transportation modes). The GTA has no seaport, so goods normally land in CN’s Brampton Intermodal Terminal or CPR’s Vaughan Intermodal Terminal near Highway 50.

“Those are pretty important hubs because a large percentage of goods are arriving by highway or via an intermodal,” says Cook. “So, there is a concentration of large distribution centres in the areas close to those yards and highways.”

Access to labour is another important factor because warehouses are often seasonal; they have highs and lows because they follow the spending habits of consumers during holidays.

“The labour environment sometimes ebbs and flows as well, so access to labour is critically important,” says Cook, adding that mature markets, which have invested in good housing stock, public transit and amenities, have enabled certain municipalities, Brampton for example, to succeed in supplying necessary labour for employers they attract.

However, in cities like Milton, with less but more expensive housing, the labour market is somewhat constrained, making it more difficult to open up similar facilities.

Fulfillment centres closer to Toronto

Industrial hubs in the Toronto core, like Dupont street, were bustling until the 1970s. While distribution centres aren’t yet materializing in the city like they are in more suburban areas, Cook foresees the potential for more e-commerce specific fulfillment centres popping up in markets like Etobicoke and South Etobicoke, and in North York and Rexdale. There will be a need for products to be sorted into smaller courier-type vehicles that can deliver parcels to core markets in downtown Toronto where there is an “explosive residential base.”

“Learning from markets in New York and other major centres, there is this trend for the fulfillment centre to support more e-commerce and more at-the-door delivery,” Cook notes. “If we look at Amazon Prime and shorter timelines to satisfy customers – that will create smaller fulfillment centres closer to rooftops.”

Rise of modern distribution space

Investors are acquiring older facilities and transforming them into well-located modern distribution centres to attract high-quality tenants. This kind of infill redevelopment has been increasing in the last two years, and it’s something Cook expects to see more of in the future.

In December 2016, a former Zellers warehouse in Brampton circa 1975 became fully leased to occupants like Winners, Mountain Equipment Co-op and Accuristix. The old building had been torn down and turned into a new LEED GOLD-certified 900,000-square-foot warehouse at 8875 Torbram Road in
Bramalea Business Park.

“From a labour strategy, the location was excellent and in close proximity to highways and intermodal sites, but the actual physical building was obsolete from what today’s warehouse required,” says Cooks, thinking back to what the site used to look like.”

Parts of concrete from the original building were recycled into the sub-base to divert waste from landfill and the ceiling height was raised to 38 feet high from 22 feet. The few, beat-up shipping doors were increased in number, so now there are two drive-in doors and 60 at truck level. There are also 144 trailer parking stalls.

Now the site, taller than the former warehouse, reaches 38 feet high and the few beat-up shipping doors from long ago are now in the front and back of the building.

The building boasts other modern features like wide turning spaces for trailers and room for mezzanines, storage and racking. Utilizing technology to run a more automated operation, from lighting and heating to software are all key modern efficiencies for today’s supply chain and logistics operations that are becoming more specific and productive.

Tech hub hopes federal budget will boost smart city innovation

Toronto’s innovation community has high hopes that Wednesday’s federal budget will earmark money for smart city innovation as Ottawa plans to stimulate research and development in the national economy.

Today, the MaRS Discovery District released a white paper that charts how tech companies across the world are moving out of suburban research parks and heading to downtown cores. Rise of the Hub: How Innovation Is Moving Downtown, flags the need to invest in urban hubs to attract talent that wants to collaborate with people from diverse fields.

Canada still lags behind global leaders like New York, Silicon Valley and London. While hubs located in Montreal, Waterloo and Vancouver are putting Canada on the map, Toronto one potential global front-runner because the city already features the Discovery District. Home to one of the highest concentrations of research institutions in the world, the community includes University of Toronto facilities, five research hospitals and the Canadian headquarters of tech giants Facebook and PayPal. Currently, there are 250 tenants in the MaRS complex and close to 6,000 people from various organizations are expected to work there by mid-2017.

MaRS reiterates that Ottawa and the provinces should look to the heart of major cities like Toronto. More pioneers are heading to downtown buildings and their peers are following close behind. According to the report, ‘conducting research on the outskirts worked when innovation was largely confined to information technology.’ Downtown Toronto supports where innovation is heading—towards an intersect of different fields, from digital health and bio-informatics to financial technology (fintech) and the internet of things.

Photo: MaRS Discovery District, Toronto

More purpose-built rental needed in GTA: CIBC

Preventing a full-blown housing-affordability crisis in the Greater Toronto Area will require GTA-specific policies aimed at increasing the supply of purpose-built rental units, finds a new report by CIBC Capital Markets.

“The GTA housing market is fast approaching a full-blown affordability crisis,” says Benjamin Tal, Deputy Chief Economist, CIBC, who authored the report, GTA Housing – Rent Must be Part of the Solution. “But, its trajectory is not written stone. It’s largely a function of policy. Ottawa’s ability to help here is limited since national policies are too blunt to deal effectively with the GTA market. What is needed are GTA-specific policies.”

High demand, low supply and rising land prices continue to fuel the GTA housing market, and 2016 marked a significant year with the average home price rising 17.3 per cent, the strongest annual increase since the 1980s, the report says.

Condo prices jumped 16 per cent year-over-year in the fourth quarter – the largest gain since 2010 and the rapid acceleration in activity in late 2007 ahead of the introduction of Toronto’s land transfer tax. The trigger appears to be the same as the one that led to the rapid rise in the price of low-rise units – land prices, the report says. “Land for high-rise projects in the GTA is getting scarcer and scarcer,” says Mr. Tal.

He points out that specific policies are necessary because the GTA is not a normally-functioning housing market due to legislation-driven land constraints. Imposing a foreign buyer tax will help slow activity at the margin, but should not be seen as the ultimate solution, he adds.

“A much more effective and long-lasting solution would be to dramatically change the role of rental activity in the city’s housing mix,” he says. “Simply put, the propensity to rent in the GTA must rise, and the market should realign to increase the supply of rental units. Crucial here is the role of purpose-built apartment supply. With some incentives from municipalities, purpose-built rentals could be the difference between an affordable and an unaffordable GTA housing market.”

Mr. Tal says that from conversations with developers it’s clear that expediting the approval process for purpose-built projects can make a significant difference in the final decision. Municipalities can demand in return, increased inclusion ratios. Other ways to promote purpose-built activity is to offer higher intensification rates for purpose-built developments, cut the HST charged on the development, as well as eliminate or reduce development charges, as today the same charge is imposed on both condo and purpose-built projects.

The GTA’s rental market has never been hotter, says Mr. Tal, with average rent up 12 per cent in 2016. As well, the number of leases fell 9 per cent in 2016, reflecting lower supply, partially due to a lower turnover rate. “More renters are staying put as the cost of venturing back out into the open market has risen notably,” Mr. Tal says.
Adding to the price pressure is the growing share of leases signed in the more expensive segment of the rental market. In 2016, no less than 52 per cent of all leases were above the $2.75 per square foot average threshold, up from just 25 per cent in 2015.

“That, along with reduced turnover rates can be seen as signs of increased acceptance of the rental option by young families,” Mr. Tal says. “It’s becoming clear that the condo market can no longer be the only option available to renters. The new wave of renters will need the stability of long-term renting and that’s where purpose-built developments enter the picture.

“The low-hanging fruit (mostly parking lots) is no longer available and builders have to be more creative in finding suitable development lots.”

Contrary to popular perception, the condo market is actually undersupplied, the report says. While 2016 was a record year for condo sales with more than 27,000 new units sold, new condo launches fell 6 per cent and unsold inventories fell 50 per cent to a 10-year low, the report says. Not only that, Mr. Tal notes that the lack of supply in the 416 market is leading to more activity in the 905 market, which is likely to overtake the Toronto market in 2017 for condo sales.

“There is some logic to the madness but we still find it hard to fully explain the surge in prices in 2016 just based on those fundamentals,” Mr. Tal says. “There must be a notable increase in speculative flipping activity contributing to the trend. And that makes it even more urgent for policy makers to intervene.

“The market will eventually be tested when interest rates rise and/or the economy faces its next recession,” he says. “What we do between now and then will determine the ability of the region to face that test. Increased rental propensity and supply of purpose-built apartments must be part of the solution.”

Getting cozy with high-density occupancies

Accessibility, ventilation, noise mitigation and privacy have become key design concerns as office floor plans are configured, or reconfigured, to accommodate more people than past workspace norms. Employers’ ultimate objective may be to reduce real estate costs, but they typically want to do it in a style that conveys something positive about their corporate culture. Meanwhile, their landlords can find themselves balancing the need to attract and keep tenants against the operational pressures of high-density occupancies.

“Intensification is not necessarily about cram and jam,” Eric Yorath, a principal with the design firm, Figure 3, told seminar attendees at The Buildings Show last fall — a qualification that nevertheless implies congestion can result.

As moderator of the cheekily titled discussion, Densification on Steroids: Addressing the Challenges of Increased Workplace Density, Yorath polled an experts’ panel on how to achieve a happier outcome. Looking from the perspectives of space design, building systems, tenants’ aspirations and landlords’ constraints, panellists outlined the trends that are shrinking space-per-person ratios, and the structural and social encumbrances that can arise in step with climbing densities.

Although the quest to cut costs is surely a prime motivator for intensification, other evolving business realities help with the practicalities of the case. Offices once housed resources — paper-based documents, computer mainframes, phone and fax lines — that tied staff to a physical location. Today, there is much more technological flexibility to work remotely and formal workplaces are less likely to routinely be at full capacity. With still further space reclaimed from now largely unnecessary storage areas, many corporate strategists are re-evaluating the purpose and the possibilities of their premises.

“Most occupiers today are looking at the real estate as a way to really transform the organization,” submitted Ron Armstrong, managing director, project management, with CBRE.

“People are trying to create an environment for a better product,” concurred Rick Comish, a partner with Ellington Tenant & Facilities Services.

The process for doing that is still far from defined, but concepts such as collaborative environments and employees’ self-identification with the company’s values and image are steadily gaining currency with management gurus. It’s now practically a real estate industry tenet that employers are battling to hire the best available young talent, and that this generation has different, inherently more demanding expectations. Beyond providing tools to carry out assigned tasks, Armstrong posits that companies need to provide choice, nurture social interaction and impress onlookers.

“The employees are really driving the space design,” he said. “For most of our clients, the outside view of their brand has become extremely relevant.”

Office intensification

“Design of the spaces is becoming much more social,” reported Suzanne Bettencourt, a principal with Figure 3. The favoured layout is now most densely peopled at the perimeters to maximize access to outdoor views and natural light, and offers multi-functional space and leisure respite.

Administrative tasks are likewise evolving, with receptionists moving away from the traditional gatekeeper role and more into traffic control. “They really are becoming a facilitator of how you use the rest of the space within the office footprint,” Armstrong maintained.

He’s well positioned to provide professional and personal insight. As a consultant, he has overseen the selection and fit-out of quarters ranging from a few thousand to hundreds of thousands of square feet, while, as an employee, he has experienced his own company’s office consolidation and makeover. CBRE has spearheaded a 25 per cent corporate-wide reduction in the office space it occupies — necessitating an 8 per cent increase in spending on technology and capital upgrades, but resulting in a 20 per cent reduction in leasing overhead.

At Armstrong’s own home base, about 6 per cent of the total office footprint was relinquished, but the square-foot-per-person quotient was cut by a more dramatic 40 per cent. To counter perceptions of crowding, the company added amenity space and committed to the WELL Standard‘s dictates for natural light, air quality and ergonomics.

The new format offers 14 different types of workspaces, none of which are assigned to specific employees. “It’s fluid,” he said.

Furniture design caters to these density trends. Comish noted that workstations are now typically 6′ x 6′, down from the previous 8′ x 8’ standard, while sit-stand desks are becoming more commonplace both for space-saving qualities and to address concerns about the health drawbacks of sitting for prolonged periods. (The latter have proven particularly popular with older workers who no longer have such supple joints, he added.)

Compactness also supports compliance with accessibility standards related to accommodating mobility aids. Bettencourt shared examples of higher-density office layouts that have ample circulation space — stressing that good design begins with inclusiveness.

“Every client comes to us and says: we’re unique; we’re special; we have special needs,” she recounted. “What we try to do is find out not what’s unique about your people, but what are the commonalities of your people?”

Workplace irritants

Yet, common experiences in high-density occupancies can often be negative.

“More people just means more noise,” observed Tony Spina, associate principal with the engineering firm, Smith & Andersen. “If you have more bodies, you’re going to have more carbon dioxide.”

Surface materials within the space can either amplify or muffle the general din so they must be selected with care. Ceiling tiles are a common starting point in efforts to dampen auditory transmission, while engineered acoustics are a next step that many companies are now embracing.

“Certainly, in large open floor plates, you need something to bring the noise down,” Armstrong acknowledged.

There are also concerns about what might be overheard. Secure spaces for confidential conversations are critical, both for due diligence in the handling of sensitive business and for staff morale. Perhaps for this reason, space-per-person ratios continue to be higher among some professional services, such as law firms.

As is often the case, the capacity to provide adequate ventilation and handle greater plug loads is easier to find and/or augment for in newer Class A buildings. Spina advised prospective tenants to assess HVAC adequacy before they make a commitment, while Comish suggested that many owners/managers of Class B buildings may willingly withdraw from contention.

“They are definitely not interested in trying to increase the densification of the floor,” he said.

Especially for buildings that don’t have heat recovery ventilation, extra intake of outdoor air — which has to be warmed up or cooled down during several months of the year — will increase energy loads. On a more positive note, steady advancements in lighting technology have given older buildings some manoeuvring room since they were designed to more generous wattage-per-square-foot criteria.

In newer buildings, Spina warned that multi-functional space can play havoc with air return systems as partitions are opened or closed. “How you start fragmenting space starts to affect HVAC,” he said.

Burgeoning interest in the WELL Standard and other programs to support a better quality of work environment might be seen as reaction to or a trade-off for the negatives of office intensification.

“From an occupant perspective, having worked in it, I would say it’s an absolute positive,” Armstrong said. However, he cautions that it works best as proactive element of a company’s facilities strategy.

“You need to look at it early and you really need a landlord that will participate,” he advised. “All of that happens at the lease phase, as opposed to the design and construction phase.”

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