MRCM promotes Craig McMillan to VP operations

Maple Ridge Community Management has named Craig McMillan vice president of operations. McMillan was promoted from his previous position as the company’s general manager of operations. In his new role, McMillan will oversee day-to-day operations of the Mississauga firm.

“Craig is highly engaged and motivated to ensure our team consistently delivers the high levels of customer service MRCM has become renowned for. He mentors team members, teaches RCM courses and invests heavily in his own continuing development,” said Michael Le Page, MRCM president, in a press release. “For more than a decade, Craig has been a strong contributor to our success and we look forward to teaming with him in his new capacity.”

McMillan has been a member of the condominium management industry since 2003 when he joined MRCM. He is a Registered Condominium Manager (RCM) and RCM instructor. McMillan is also a member of the Association of Condominium Managers of Ontario (ACMO) and Canadian Condominium Institute (CCI) Toronto and Golden Horseshoe Chapters. He is a well-known speaker at ACMO and CCI conferences and has written several industry-related articles.

Canada placed high on Century 21 global ranking

Century 21, a global residential real estate organization with offices in 76 countries worldwide, has released its 2016 Global21 rankings of the top 21 company offices around the world. On this list, Canada ranked highly with five companies, 10 offices, seven teams and three individuals listed in the top 21 in the world.

Surrey, B.C.’s Century 21 Coastal Realty was announced as the number two office globally, followed by King’s Quay Real Estate in Markham, Ont. and Percy Fulton of Toronto, Ont. at positions three and four on the list, respectively.

The Goodale Miller team at Century 21’s Miller Real Estate in Oakville, Ont. and the Stephen Tar Team of Leading Edge Realty in Markham both ranked in the top five of the team category, with the Melnuchuk Real Estate Group of Century 21 A.L.L. Stars Realty in Edmonton, Alta. ranked as 11th in the world.

Finally, the number-one ranked agent in the world for units sold was Ken Young of Leading Edge Realty in Toronto.

The annual Global21 rankings highlights Century 21’s top 21 companies, offices, teams and agents by production. The rankings are a key descriptor of the most active real estate markets, as they take into account the production from over 106,000 sales representatives and 6,950 franchised locations in 76 countries and territories globally.

GTA home sales up 11.8 per cent in January

GTA realtors reported 5,188 home sale transactions through the Toronto Real Estate Board (TREB)’s MLS System in January 2017, up 11.8 per cent compared to one year before. Annual rates of sales growth were higher for condominium apartments compared to low-rise homes.

January 2017 saw sales remain up on a year-over-year basis while the number of new listings dropped by double-digit annual rates for most major home types.

“Home ownership continues to be a great investment and remains very important to the majority of GTA households,” said Larry Cerqua, TREB president, in a press release. “As we move through 2017, we expect the demand for ownership housing to remain strong, including demand from first-time buyers who, according to a recent Ipsos survey, could account for more than half of transactions this year. However, many of these would-be buyers will have problems finding a home that meets their needs in a market with very little inventory.”

The MLS Home Price Index (HPI) Composite Benchmark price increased 21.8 per cent year-over-year in January 2017. Over the same period, the average selling price increased 22.3 per cent to $770,745, with double-digit gains in average prices across all major home types.

“The number of active listings on TREB’s MLS System at the end of January was essentially half of what was reported as available at the same time last year,” added Jason Mercer, TREB’s director of market analysis. “That statistic, on its own, tells us that there is a serious supply problem in the GTA – a problem that will continue to play itself out in 2017. The result will be very strong price growth for all home types again this year.”

Apartment fundamentals retain investor favour

Apartment buildings were top performers last year for institutional investors participating in the REALPAC/IPD Canada Property Index. Recently released 2016 results show an 8 per cent total return on 340 residential properties — well above the 5.7 per cent total return across the entire index, which encompasses more than 2,400 directly held standing assets in 43 portfolios.

The results reinforce reports of cap rate compression in many major Canadian markets over the past 12 months. Residential income returns of 4.3 per cent were the lowest of the four major property sectors, but apartments enjoyed the largest surge in value with 3.6 per cent capital growth.

“It’s still a very desirable asset type, but it’s not producing a lot of cash,” observed Michael Brooks, REALPAC‘s chief executive officer, as he facilitated discussion at the results presentation in Toronto earlier this month.

While real estate in general is aligned with institutional investors’ needs for stable, predictable returns over the long term, apartment fundamentals particularly match that criteria. Top strategists for index participants hailed the residential sector’s ballast qualities, especially in a year when office values declined and the Calgary and Edmonton markets suffered a loss on investment.

“Residential is always solid on the occupancy front,” noted Blair McCreadie, senior vice president and fund manager with Fiera Properties. “The multi-res space is not really a market that has had a lot of surprises.”

“You have a clear view on revenue growth,” concurred Vince Brown, president and chief executive officer of Triovest.

In a year-over-year comparison, residential properties were on par with their 2015 performance when the sector achieved a 7.9 per cent total return. Other property types dropped more off the previous year’s pace. Notably, the retail total return topped the chart at 8.8 per cent in 2015 and fell to 6 per cent in 2016; office properties registered a total return of 5.5 per cent in 2015 and dropped to 4.7 per cent in 2016.

The index producer, MSCI, pegs the total value of apartment properties in the index at $12.4 billion, equating to about 9 per cent of its total capital value. In contrast, the seven open-end funds participating in the REALPAC/IPD Canada Property Fund Index, hold a greater weighting of residential properties.

Apartments are pegged at 17.5 per cent of the capital value of the property fund index, which encompasses about 900 individual properties collectively worth about $26 billion. MSCI reports the property fund index delivered a net fund total return of 6.5 per cent last year.

Fire safety steps for high-rise building owners

A recent fire in a Toronto high-rise apartment building has put the spotlight back on fire safety after numerous residents had to be rescued by Toronto Fire Services. Though no injuries were reported, the incident is a reminder that Fire Safety Plans are critical—especially when building fire alarm systems are rendered inoperative due to repair and maintenance projects.

As most building owners are aware, when undergoing a fire panel replacement project or general system repair, a building’s fire alarm equipment must be temporarily disabled for a scheduled period of time. Typically this means the building’s smoke detectors, manual pull stations and the audible sound for the fire alarm is shut done while the maintenance work is completed. But, as the recent incident highlights, these planned fire alarm system outages require extra precautions must be taken to ensure occupant safety.

Emergency procedures: implementing a “Fire Watch” program

Required by law, building owners are responsible to have an approved building Fire Safety Plan. Fire Safety Plans are designed to provide occupant safety in the event of a fire; to provide effective usage of the building’s fire safety features; and to minimize the possibility of fires. It is this plan that provides emergency procedures, preventative maintenance requirements, and instructions on what to do during a system failure or planned system outage.

Whenever a system is disabled, the building owner is required to ensure that a number of safety steps are implemented. One of those measures is a Fire Watch program. A Fire Watch is the term assigned to an individual (or individuals) dedicated to watching for signs of fire and reporting them. In essence, a physical person or persons must take the place of the detection and alarming equipment during a system outage.

Typically a Fire Watch dictates that the building is patrolled hourly on a 24-hour basis until the fire alarm has been restored to normal operating condition. Patrols are required to be documented in detail at intervals depending on the hazard and impairment. This documentation must be provided to the fire department upon their demand, and remain onsite as evidence of the active Fire Watch.

All common areas, public corridors, stairwells, mechanical/machinery rooms, electrical rooms, service rooms, parking garages and offices are to be patrolled during the Fire Watch. As the Fire Watch typically does not have access to residential suites, residents must also be notified in advance. Patrols are required to be documented in detail at intervals depending on the hazard and impairment, or at the minimum, follow the direction in the building’s Fire Safety Plan for frequency of patrols.

Resident notification

During planned, prolonged outages for repairs and replacements, such as a fire panel upgrade, tenant notification must be posted at all entrances and at every pull station in the building. The notice must clearly state the problem, and expected time of repair—including any special procedures to follow in the event of an incident.

Equipment required for a Fire Watch

In order for a physical person (or persons) to take the place of the alarming equipment during planned outages, the Fire Watch patrol must be equipped with equipment, such as a blow horn, a working cell phone to call 911, a flashlight and rapid access to a fire extinguisher. Your Fire Safety Plan, may or may not contain the above detailed information – but it should. A Fire Safety Plan is also designed to provide building owner and residents, guidance in code and best practices in resident safety.

Fire department notification

In order for your Fire Watch to effectively communicate with the fire department in the event that they do find fire, they will need a working cell phone with which to call 911. This cell phone should not be for personal use, but for emergencies only.

It is important to also note that anytime a life safety system is to be shut down for a period over 24 hours, the local fire department must be notified in writing. Fire departments need to know if they are responding to a building with decreased fire protection so that their tactics and level of response may be appropriate. In addition, at time of notification, fire departments may direct special provisions to the building owner, and even request that the fire safety plan be revised to consider the new plan to be approved prior to any work commencing. This is up to the Authority Having Jurisdiction.

Notification of Persons Requiring Assistance (PRAs)

Ontario Fire Code requires building owners to maintain lists of persons who may require assistance during evacuation. This list is provided to arriving fire crews upon their arrival when responding to a fire alarm, and the list of PRAs is required to be included in the building’s Fire Safety Plan.

Persons requiring assistance during a building evacuation may be described as anyone who has reduced mobility, a speech, hearing or visual impairment, or a cognitive limitation—regardless of whether or not these conditions are obvious, temporary or permanent. It is vital, that during a major fire watch, such as a planned fire panel replacement, that ‘Persons Requiring Assistance’ are advised of the impacts of that impairment. Keep your family of resident informed so that they may make clear decisions in the event of fire, or in the event they are manually notified of fire conditions.

Suspension of hazardous processes

There are many other areas addressed in a holistic Fire Watch program, including the restriction of ‘hotwork’ during the system outage. This prevents building staff, contractors and service providers from doing any work or repairs that result in a higher fire risk, such as work involving heat or spark.

Recent media coverage of high-rise fires within the Greater Toronto Area have highlighted the lack of resident awareness of building emergency procedures, including procedures for persons requiring assistance during evacuations. Building resident information remains an ongoing issue. In summary, property managers should ask themselves: Have I communicated my building’s “approved” building emergency procedures to my tenants this year? If the answer is no, then you certainly should.

Jason Reid is Senior Advisor; Building Safety for National Life Safety Group, a Canadian Consultancy firm specializing in residential high-rise buildings. Jason is a firm believer in the sharing of best practices for the betterment of the industry and is available directly at www.nationallifesafetygroup.ca

GTA new condo sales broke records in 2016

There were 27,217 new condominium apartment sales in the Greater Toronto Area in 2016, a record 34 per cent increase compared to the year before, according to Urbanation Inc.’s recent Q4-2016 market results. Sales in 2016 topped the previous record set in 2011, even though there were fewer new pre-construction launches (18,466 in 2016, versus 28,204 in 2011).

In the fourth quarter of 2016, there were 7,422 new condo sales, up 18 per cent over the same period last year. Strong demand combined with a six per cent decline in new launches for the year pushed unsold inventory in development down by 47 per cent from the end of 2015 to 9,932 units, equal to about 4.4 months of supply, a more than 10-year low.

New condo sales increased the most in the 905 region, climbing 82 per cent to a high of 8,703 units in 2016 and representing a record 32 per cent share of GTA activity. Sales also increased by 57 per cent to 7,397 units in the outer-416 regions of Etobicoke, Scarborough and North York due to higher new launch activity last year, while in the former City of Toronto, there was a three per cent gain, representing 11,116 units, as launches dropped by 40 per cent. The demand-supply imbalance was most significant in old Toronto, where unsold inventory dropped 57 per cent to 3,503 units, or 3.8 months of supply.

The overall average index price for sold units in active development across the GTA increased three per cent year-over-year in Q4-2016 to $598 per square foot. This was impacted by the shift in activity to lower-priced suburban markets last year. Within the former City of Toronto, the average selling price for a condominium unit in projects launched in 2016 reached $746 per square foot, up 14 per cent compared to new launch prices in 2015. At the end of 2016, remaining inventory in new projects in the former City of Toronto was priced at $795 per square foot.

The drop in inventory will limit the market’s ability to top the record activity of 2016. Urbanation is forecasting 23,000 new condo apartment sales in 2017, but expecting that developers will respond to present market conditions by launching more projects this year.

“The new condo market is experiencing broad-based demand that will carry forward in 2017,” said Shaun Hildebrand, Urbanation’s senior vice president, in a press release. “Buyers priced out of the low-rise segment, a surge in rental demand and increased attention from investors are placing heavy downward pressure on condo inventories, which will support strong price growth this year.”

A record high 25,187 condominium apartments were resold in the GTA in 2016, up 22 per cent year-over-year and representing a high of 26 per cent of all GTA resales last year. Sales of resale units in the fourth quarter climbed 26 per cent compared to same period one year before, while total listings in Q4 dropped 14 per cent year-over-year. This caused the sales-to-listings ratio to hit a record 80 per cent in the fourth quarter, up from 55 per cent from the year before, which led prices to grow 16 per cent annually. With an average unit size of 861 square feet, the average resale price of a condo unit reached $458,000, or $532 per square foot. For the first time, the majority, or 59 per cent, of condo apartments represented the majority of all resale activity in the GTA below the $500,000 price point.

NS accessibility legislation gets more scrutiny

The Nova Scotia government is seeking more input on its proposed accessibility legislation after negative feedback on the version tabled in the provincial legislature last fall. Committee hearings on Bill 59, an Act Respecting Accessibility in Nova Scotia, will resume next week with the Justice department replacing the Ministry of Community Services as the lead on the file.

The proposed legislation, drawing from recommendations of a Minister’s advisory panel released in 2015, was introduced in November 2016, then pulled off a planned fast track to approval. The bill sets out a guiding framework for how accessibility standards will be developed, applied and enforced — beginning with the appointment of a 12-member accessibility advisory board that will be instrumental to the task — but critics decry its lack of specifics and leeway for exemptions from compliance.

“The Act, as written Nov. 2, 2016, is too vague, has very little in the way of measurable goals, only refers to a long-term timetable but no short-term agenda, the committee (accessibility advisory board) only meets four times a year and the penalties are not high enough. There are many instances that the word ‘may’ is used rather than ‘shall’ in order to weaken the bill,” states a submission to the government committee from the Nova Scotia League for Equal Opportunities.

“It is substantially weaker than Ontario’s Accessibility for Ontarians with Disabilities Act. It is weaker than Manitoba’s Accessibility for Manitobans Act,” observes the Ontario-based advocacy group, AODA Alliance. “If enacted as is, it would be the weakest such law in effect in any province that has enacted a comprehensive disability accessibility law.”

Others noted that the Nova Scotia government had let 17 months elapse from the time of receiving the recommendations from the Minister’s advisory panel, then tabled the bill just a few days before the legislative session was scheduled to adjourn. This created accessibility barriers given the absence of a Braille version of bill and complications for people with mobility issues attempting to secure transportation to committee hearings.

“It’s important to make this part of the process accessible to those it’s intended to benefit,” asserted Wendy Lill, a former member of parliament from Nova Scotia and a long-time advocate for people living with disabilities.

Embracing energy-saving innovation

Vancouver-based Hollyburn Properties is a company on the leading edge of energy-saving innovation. Throughout its forty-year history, the national property manager has been committed to embracing technology and new ideas while also pursuing sustainable, eco-friendly building operations.

From the early adoption of intelligent digital building controls to a continued commitment to using energy-efficient materials and equipment, Hollyburn Properties has one critical eye on the future, and another on delivering a quality tenant experience.

In early November, we spoke to Hollyburn Director, Paul Sander, and Operations Manager, George Warren, about the energy efficiency strategies and long-term solutions their company has embraced. With its first new construction purpose-built rental building recently completed in North Vancouver, the timing for the discussion couldn’t have been better.

“My father started this business over 40 years ago, and I’ve been working alongside him all my life,” said Sander. “Our business model was, and largely still is, to buy older rental buildings in triple A locations and repair and restore them. We just completed our first purpose-built rental apartment, called Bridgewater, so our foray into purpose built rental construction is something new. We put our 40 years of experience into its construction and anticipate doing more of that in the near future.”

Rising 14-storeys and comprised of 130 units, Bridgewater is North Vancouver’s first new rental high-rise in over 35 years. Neighbouring the Civic Plaza on the corner of 14th and Chesterfield, the modern-looking tower includes a fitness facility, a resident lounge and a contemporary rooftop terrace offering spectacular views of the area’s surrounding natural beauty. Rental suites range from one and two bedrooms, to town-homes and penthouses.

“Our vision is to build new, modern, and vibrant purpose-built rental projects that will provide housing options to the local public, alleviate the shortage of rental supply, and revitalize and improve the rental housing stock in Canada,” said Sander.

Finding efficiencies: it all boils down to the DDC system

Throughout its 40 year history, Hollyburn has acquired more than a hundred apartment buildings of all shapes and sizes, and of all levels of disrepair. George Warren has been with the company for 28 years and is intimately familiar with the inherited issues that come with acquiring older stock buildings. To get a handle on those major and minor deficiencies, Warren says the first step his company takes after an acquisition is to install a DDC system.

DDC—which stands for Direct Digital Controls—is a system that monitors, records and controls all the mechanical and electrical components of the building, while also optimizing its performance. It has the potential to be connected to a network and automated, so controls and settings can be adjusted remotely.

“Basically the DDC system controls all the mechanical and electrical, and even the pneumatic systems of each building,” Warren explained. “First we program it, then we monitor the equipment for any inefficiencies. Over time, as the original building systems are altered and/or repaired—for example if a pump was replaced, or piping was altered —problems and inefficiencies can result. Through the DDC system, we are able to identify those problems and use the data to resolve these issues as well as improve overall building efficiencies.”

Warren notes that one of the great benefits of a DDC system, beyond the ability to control and monitor, is that it sends an email alert whenever there is a system fault. “The instant notification comes to us first, meaning we are able to respond to problems faster, which leads to quicker repairs, and minimal disruption to the residents,” he says.

Today, all Hollyburn properties are equipped with DDC systems at the onset of acquisition, a process that began in 1992 and has been the standard ever since. “Typically when a property is acquired, there are several immediate objectives—marketing objectives, internal and external finishes, suite turnovers, mechanical system objectives and energy objectives,” said Sander. “The energy control objectives start with the DDC system because it’s a proven, valuable tool. Before it, there was no way to troubleshoot and monitor systems remotely. If there was a problem with say, the heat or hot water, the reporting always came through the residents or the Resident Manager. With digital control technology, we are always the first to know and can respond accordingly.”

Collecting data, setting thresholds

Once the DDC system is installed, the building’s equipment is monitored and the ensuing data is collected over the course a year. “Often these buildings are old, with systems at the end of their service life,” said Sander. “Sometimes mechanical issues are identified that aren’t easily fixed using the controls. But for problems requiring a major repair, we will use the data to help us plan custom retrofits.”

That said, often the issues are minor enough that they can be corrected using the controls. Efficiencies, for instance, can be identified and corrected through programming changes, ongoing monitoring and alarms. System thresholds can be set with minimum temperatures, accessed and adjusted remotely.

Sander gives the example of the morning rush hour, and hot water deliverance for showers. “The resident base in every building is different. So, imagine a building full of young professionals—there will be a big morning rush hour at 7 a.m. with everyone taking a shower at once. This creates a huge hot water demand, probably the single biggest peak of the day. Meanwhile, in a building full of seniors, everybody gets up at staggered times and uses hot water more sporadically. We learn a lot from the data of each building just as we learn from the demographics, and that information helps us to customize controls and even determine future retrofits.”

For Warren, the advantages of Hollyburn’s DDC systems are numerous, helping to achieve multiple priorities at once. “The systems have enabled us to reduce utility consumption by an average of 20 percent. Also, we minimize outside service staff by resolving problems remotely so that specific repairs can be carried out during regular business hours and outside of resident peak usage times. From a troubleshooting standpoint, we are able to identify the exact component whenever there’s a problem or a malfunction. Often, it’s a simple matter that can be handled by someone at the building. We avoid inconveniencing the residents by not having outside contractors doing an exhaustive search for a solution in the middle of the night impacting their morning hot water. Of course, for the residents, there are considerable benefits too. “We are able provide a constant heat…we are able to adjust the demand based on usage, and more often than not, we’re able to deal with problems before anyone even knows about them,” Warren said. “This ensures increased comfort and uninterrupted service.”

Aside from that sought-after comfort and service, residents today are environmentally conscious and want to live in buildings that address their concerns; that offer the tools to help them minimize their own carbon footprints. In 2016, Hollyburn proudly reported that 48,000,000 pounds of CO2 were deferred from the atmosphere thanks to the efforts taken and supported by owners, employees and residents alike.

Setting the bar high

As an owner and operator of such a large portfolio of multi-residential properties, Hollyburn takes its responsibility toward the environment—and the future—seriously. “We have a unique level of exposure to people, and to mechanical systems,” Sander said. “For every building we buy, there are many others we look at. We have seen lots of boiler rooms and have learned from all of them. This gives us a great perspective. Unfortunately there is rarely a holistic approach taken when it comes to repairs and maintenance. We understand the limitations that are out there and we are aware of the challenges.”

According to Warren, Hollyburn’s success in this area is largely driven by a dedicated, focused staff made up of exceptional people. “When it comes to achieving our high standard, it has become second nature. We just do what works and whatever it takes to get the job done right. Everybody is highly focused. Everybody is looking for opportunities to make improvements.”

Taking advantage of the numerous rebate programs offered by utility companies as well as the federal and provincial governments is something Hollyburn advises. In fact, in 2013 Hollyburn became the first property management company to achieve the CMHC rebates in multifamily apartment buildings.

“For our generation, the environment has always been a big focus. So between my interest in these things, and George’s knowledge of mechanics and technology, finding solutions…finding ways to minimize our footprint while achieving savings is just something we have always been committed to,” said Sander.

Building Intelligence: the way of the future

SMART technology, mobile networks, motion sensors in suites, intelligent systems that can respond, learn and understand the tenant base—these are all things Sander and Warren see as the future of the apartment space.

“With smartphones, we can already set and control things remotely, like our heat and our lights. But soon it may be possible to have your home recognize patterns, to anticipate your arrival and have everything adjusted and ready for you when you get home from work,” said Warren. “When I started in this business, we had no internet and no cell phones. I grew up watching two channels on television. When I think of that, when I recall all the changes, then I realize the potential is endless.”

“In some ways, the apartment industry has been miles ahead of the curve compared to what’s going on in homes,” added Sander. “The fact that we installed our first DDC system in 1992 is telling of that. Only now are people getting apps on their phones that notify them of trouble at home, or to set their thermostats. We’ve been doing that for twenty five years.”

Sander imagines that the big change will come when things are customized by the suite, rather than the building. In other words, when it’s the individual as opposed to the overall resident base that distinguishes controls and settings. “Some of the things we are now seeing in new construction include digital sub-metering—hot water and heat that get invoiced per customer. Things are going to get smarter and be customized to the occupant, which of course, improves efficiency. Because the more you customize, the less you waste.”

Simply put, things have come a long way, and being energy efficient doesn’t have the negative connotations it used to. Hot water and bright lights when you need them and energy savings from turning them off when you don’t” he said.

By the Numbers: Shining a light on Hollyburn’s LED and motion sensor retrofit

In September 2016, Hollyburn Properties conducted a lighting retrofit across the interior common areas of its Vancouver portfolio. As the numbers below reveal, substantial energy savings are being realized.

According to Monroe Dunbar – Assistant Building Systems Manager at Hollyburn – the biggest savings, in fact, is not coming from installation of the LED lights themselves, but from the new motion sensor technology incorporated into the fixture.

“A simple example of controls is the motion sensor,” said Dunbar. “This is when a sensor is used to turn something on when it’s needed and off when it’s not. Previously the lights in our parkades were on 24-7, now they are mostly always dimmed, or completely turned off. It’s amazing the savings you can achieve with the addition of such a simple control. We use motion sensors across the country now in locker rooms, laundry rooms, stairwells and parkades.”

Highlights from the retrofit:

Annual Energy Savings:

$93,997.90

Project Cost:

$255,016.48

Payback:

2.1 years

Energy Reduction:

CaGBC’s Vanc office first LEED v4 Platinum project

The Canada Green Building Council’s (CaGBC) new Vancouver office is the first commercial project to earn LEED v4 Platinum certification in the country. Achieving LEED v4 Platinum for Interior Design + Construction (ID+C), CaGBC’s goal with this new office was to provide leadership to the industry and demonstrate how a state-of-the-art, innovative green office can reduce greenhouse gas emissions and improve employee well-being.

In order to earn LEED v4 Platinum certification, one of the most rigorous green building standards in the world, CaGBC worked with industry leaders Dialog, Ledcor Construction Ltd. and Integral Group. Through this collaboration, the CaGBC Vancouver office was able to earn a final predicted energy cost savings of 25.3 per cent compared to ASHRAE 90.1-2010, with a 39 per cent reduction in indoor water use.

Selecting a location with access to amenities including public transit and bicycle networks was a contributor in earning the LEED Platinum certification. CaGBC is leasing office space in the newly opened MNP Tower at 1021 W. Hastings St., a LEED Gold certified building owned by Oxford Properties Group. CaGBC built on the idea of wellness by also incorporating an open-office design, a variety of workspace options, and sit-stand desks to maximize ergonomics.

“Our goal with this office was to set an example by achieving the most rigorous level of certification under LEED v4, and to do so by highlighting the innovation and capabilities that CaGBC has fostered over the past decade,” says Thomas Mueller, president and CEO of the CaGBC. “As the pressure builds to urgently address climate change and other environmental issues, CaGBC and our thousands of members and stakeholders across the country continue to lead by example. This project is demonstrating how we can reduce carbon impact, improve efficiency and eliminate toxicity while stimulating innovation.”

Building materials included sourcing flooring, shades and fabric that are Cradle2Cradle certified or that have Environmental Product Declarations (EPDs); ensuring 80 per cent of workstation furniture was from reused, refurbished or recycled sources; and using VOC-absorbing gypsum and other low-VOC products to maximize indoor air quality.

The innovative office space not only achieved LEED v4 Platinum, but has served as a learning tool for CaGBC staff, visitors and the project team. A new video detailing the design and construction process of the office is available, along with project highlights at: www.cagbc.org/v4PlatinumOffice.

Wall-Tech Restoration appoints new president

Wall-Tech Restoration, an Ontario-based building envelope restoration services provider, has appointed Edward Welch as president and general manager.

Welch, an engineer by trade, joins the 16-year-old company after 30 years of combined building restoration and project management experience. He recently served as president of Pivotal Projects where he managed a team of 120 project management professionals in eight offices across Canada.

“I’m thrilled to be joining Wall-Tech, said Welch. “The company has a strong reputation of great teamwork and quality craftsmanship that I hope to build on for the future. “I’m excited to be working closely with our project teams to help create successful outcomes for our clients.”

Welch joins the Wall-Tech management team of Operations Manager John Sawicki and Chairman Clem Smid. He will be responsible for overall business direction, client relationship management and the engagement of the company’s approximately 80 skilled employees.

“Ed is a great addition to the Wall-Tech team,” noted Smid. “As a seasoned executive with direct experience in the industry, we’re looking forward to his contributions to the future growth of Wall-Tech.”

“We’re really proud of the company’s success,” added Sawicki. “We’ve grown substantially over time and Ed’s experience will help us evolve our processes and systems to best support our larger team.”

Infrastructure viewed as ascendant asset class

Infrastructure is a winning proposition for economic developers and institutional investors alike, maintains the head of an international association of real estate, construction and urban planning professionals. Amanda Clack, 2016-17 president of the Royal Institution of Chartered Surveyors (RICS) and an infrastructure specialist with EY in the United Kingdom, was in Toronto earlier this week to gather Canadian insight on project development, delivery and risk management.

“I think it’s a really exciting time to be in infrastructure,” Clack says. “It’s a great thing to be focusing on because governments are realizing they need to invest in infrastructure in order to maintain a city’s or country’s edge.”

Her Toronto stopover is part of fact-finding mission in major North American cities leading up to the RICS Summit of the Americas in Chicago later this spring, which will include a workshop on global best practice and future trends in infrastructure. After a site visit to the in-progress Eglinton Crosstown LRT (currently slated for 2021 completion) and a brainstorming session with players who devise policy, facilitate, build and maintain projects, she flew out to investigate the infrastructure scene in New York.

The focus on hard infrastructure — transportation, energy, water/wastewater — aligns with many Canadian concerns, including the municipal infrastructure deficit, climate resilience, the reliability of the electricity grid and traffic congestion that is undermining economic productivity. It’s also in sync with some opportunities, such as promised government funding, intensifying urban populations that can support transit and community energy, steady technological advancement and the maturing of Canada’s public-private partnership (P3) expertise.

“It is not just a Canadian issue; it is an issue all over the world,” Clack says. “Historically, we invested in our infrastructure and then we sort of took our foot off the gas, but for every dollar you invest in this, there is always wider economic development.”

She refers to the public-private “handshake” needed to foster a proficient infrastructure agenda — reasoning that governments must establish the strategic policy, provide the base funding and ensure the consistency that bolsters key business players’ confidence. Just as real estate has emerged from the catch-all alternative asset class to stand alone as an investment category, infrastructure has the fundamentals to draw a growing share of investment allocation.

“Infrastructure is an attractive asset class because it’s long-term, it’s secure and it’s reliable,” Clack affirms. “The biggest thing (to promote investment stature) is to be able to control your pipeline of projects so then people can begin to plan around that. They can see there is a 30-year pipeline of projects coming downstream.”

Along with that, she stresses the importance of RICS’ international leadership in the development of consistent industry-wide standards for property measurement, construction measurement and business ethics. Last year, the Global Real Estate Sustainability Benchmark’s (GRESB) first foray into infrastructure found that it still lacks much of the environmental, social and governance (ESG) evidence that investors can more readily find to inform their real estate decisions. Clack foresees continuing demand for, and adoption of, standards.

“What gets measured, gets value,” she says. “We want to have consistency in measurement so you can actually compare sustainability.”

At home in the U.K, Clack sits on the newly formed RICS Infrastructure Steering Group, a 10-member contingent of professionals who hold senior posts in industry and government. “It will provide leadership for a significant forum of professionals who seek to maintain and enhance value outcomes for lower levels of expenditure,” the group’s mission statement pledges.

Photo: Construction of Toronto’s Eglinton Crosstown LRT in progress.

KPMG looks to clients in locating Vaughan office

When KPMG selected its new location, proximity to clients factored prominently, and the movement of its clients led the growing professional services firm to set up shop in Vaughan.

The office positions KPMG as the only professional services firm among the big four with more than a satellite site in York Region. The move also makes KPMG the first tenant to take up occupancy in Vaughan Metropolitan Centre.

“We knew this was a high-growth area, and we wanted to be here,” said Sebastian Distefano, regional managing partner, GTA, KPMG. “And we took a leading role: We’re the first in this area.”

With Vaughan Metropolitan Centre, the municipality is shedding its bedroom community status in building a new downtown from the ground up. The plan for a complete community provides for more than 1.5 million square feet of office space, 750,000 square feet of retail space and 12,000 residential units. Located at the crossroads of Highway 7 and Jane Street, the transit hub will connect to Toronto with a namesake stop on an extension of the Yonge-University subway line.

The KPMG tower will have access to Vaughan Metropolitan Centre subway station via underground path when it opens later this year. This quick link to its downtown office in the Bay Adelaide Centre, along with proximity to several of the 400-series highways, was a selling point in the site selection process, Distefano acknowledged.

“Two offices allow us the flexibility, so our people can work from both,” he said. “Not every client that we serve out of this office is in this area, some are downtown.”

Nonetheless, KPMG considered where the clients of its practice groups called home in establishing who would be relocating. The people who service banking and insurance clients remained in the core, while the people who service private companies, technology, media and telecommunications and consumer industrial markets moved north last fall.

The roughly 500 employees in the Vaughan office occupy operations floors nine through 13 of the KPMG tower with room to grow. They also have the use of the fourteenth floor, which is dedicated to meeting rooms save for the reception area.

Demand for meeting rooms outstripped supply in other KPMG locations, recalled Distefano. The fourteenth floor delivered a mix of spaces for employees to select from based on data captured by its booking systems elsewhere.

The largest meeting rooms are separated by Skyfold walls, which can be retracted to accommodate up to a couple hundred people. Rather than running along the windows, as is typical, the meeting rooms run in parallel. The result, explained Distefano, is that the glass-walled meeting rooms retain the benefit of natural light but also provide a quiet corridor in which to have a private conversation, as opposed to the more public reception area.

Technology is a staple of the meeting rooms, from Crestron’s Skype for Business solution to plug-in devices that sync laptops to screens. Multiple screens allow for multiple feeds, with some rooms containing grids of up to nine screens, enabling simultaneous streams of people and presentations. This sort of connectivity is expected to contribute to sustainability efforts by allowing colleagues to collaborate virtually, said Distefano.

Less physical travel will mean less environmental impact as well as more time for in-person meetings with clients, he noted. Also eco-friendly is the internal staircase — set against KPMG’s signature blue — that transcends the operations floors, offering an alternative to the elevator. Other sustainability efforts include locating in a LEED Gold-targeted building as well as energy- and paper-saving measures, such as motion-sensor lighting and dual monitor-equipped workstations.

Just off the internal staircase on each operations floor are cafes with restaurant-style booths ideal for collaborating in small groups. Across from the glass-clad side of the internal staircase, each operations floor features wall adornments that nod to the surrounding community, such as the silhouette of rollercoasters, which call to mind the close by amusement park, Canada’s Wonderland. And, in place of what might otherwise have been another elevator bank, each of the operations floors features a nook with an activity such as mini putt or ping pong.

Being brand new puts KPMG’s Vaughan office at the forefront of the professional services firm’s portfolio as it updates its spaces. The downtown location, for example, retains exterior offices and larger, assigned workstations. The Vaughan office, by comparison, reflects current workplace trends of interior offices and meeting rooms and unassigned, or hoteling, workstations.

Most people have moved to hoteling, said Distefano, although partners have assigned offices. The move facilitated a more efficient use of space, he added, aligning the new location with KMPG’s global benchmark for square feet per full-time equivalent employee. In assigned offices and at hoteling workstations, Bluetooth-connected laptops and headsets have largely supplanted phones, and keyboards run on solar power.

A year-and-a-half ahead of the move, a steering committee began the change management process, involving employees in choices of coffee provider and task chairs, among others. Many of the design decisions, such as selecting grey rather than white carpeting, were made with longevity and future agility in mind.

“Designs are changing so quickly,” explained Distefano, “The more flexible you are, I think it just gives you a longer runway in terms of the use of the space.”

On the thirteenth floor, a large café outfitted with high-end appliances gives employees to a place to congregate over coffee or lunch, or, as has already happened, to watch playoff Blue Jays games. Its sweeping views of Vaughan show the progress of development in the new downtown.

And there has been a good deal of progress since KPMG committed to anchoring the tower in which it now resides. Miller Thomson, one of Canada’s largest full-service law firms, will be joining the professional services firm in the KPMG tower, with 30 of its lawyers expected to take up occupancy of a full floor soon, as SmartREIT recently announced.

SmartREIT also expects to launch sales for two 35-storey towers comprising 700 residential units this spring or summer. And The Gupta Group recently unveiled plans for 20,000 square feet of at-grade retail space and 1,140 residential units in 51- and 53-storey towers, the latter of which will become Vaughan’s tallest tower.

“With house prices and where they’re going, this area, with its connectivity to the subway, will be fast-growing,” said Distefano. “We’re really optimistic about being here and what we can do being so close to our clients.”

Michelle Ervin is the editor of Canadian Facility Management & Design.

Shared facilities agreements increasingly complex

As developments become increasingly complicated, so do the relationships between condo corporations and other parties bound by co-ownership of building assets such as parking garages, according to presenters of the seminar Shared Facilities Agreements: The Problems & the Solutions at PM Expo last fall.

“Some of the big complexes, like around the ACC [Air Canada Centre], you’ll see the agreements are getting very, very thick,” said Armand Conant, head of the condo law group at Shibley Righton, “and it’s getting very complex, because you have everything from retail component to commercial, parts that are non-condo, parts that are shared facilities.”

At the same time, recent changes to Ontario’s condo laws are poised to make shared facilities agreements mandatory among parties with common interests. It’s also hoped that spats over shared facilities agreements will be among the types of conflicts eligible to be heard by a new tribunal provided for in Condominium Act reforms, said Conant.

While the industry awaits the roll out of changes to Ontario’s condo laws later this year, there are other ways to overcome these disputes and improve these relationships now.

‘The root of the problem’

Shared facilities agreements essentially establish the terms of relationships between parties with a common interest, setting out how decisions are to be made and who is to pay for what. Common interests can include amenities, equipment and services such as pools, chillers and landscaping.

Also known as mutual use and reciprocal cost-sharing agreements, if they are documented, they are written by the developer.

“They’re not drafted by the parties who are sharing these facilities; that’s the root of the problem,” said Conant. “A, they don’t have to have them, but b, when they are done … you find that often they’re slanted towards whatever the developer is retaining or the commercial component.”

It may not be appropriate to share costs evenly across owners, regardless of use of, say, an amenity, as is done within condo corporations, said Tania Haluk, vice president of operations for Ontario, FirstService Residential. For example, a residential condo corporation may complain that it’s unfairly being forced to subsidize the costs of a commercial condo corporation responsible for an outsized portion of a hydro bill. These rifts only emerge when the parties to the agreements begin to use the shared facilities, she said.

In one dispute, a condo corporation punished its sister condo corporation for a perceived breach of their undocumented terms of agreement by cutting off access to the shared facility, which was on its property. The sister condo corporation responded in kind by refusing to pay its contribution to the facility’s costs.

‘A whole new declaration’

As developments have incorporated a growing number of components, these agreements have bound together a growing number of parties, bringing more people and opinions to the shared facilities committee table. Complicating these agreements further is the move to spell out in greater detail what each party can expect, Haluk illuminated.

“You read these shared facilities agreements that used to be a page or two about right of access,” she said. “Now they’re like a whole new declaration, breaking out every single component, which seems onerous but is actually a good thing.”

The process of hammering out a protocol for when problems arise while everyone is on amicable terms is kind of like signing a prenuptial agreement before getting married, as Haluk put it. She also suggested succession planning for individual condo boards as a way to sustain positive relationships among the parties to the agreement. A consistent understanding of the basis for cost-sharing provisions and decision-making rationales can avoid challenges every time a party to the agreement changes its representative on the shared facilities committee, she explained.

Although not all shared facilities agreements are cause for friction, some can and do get reopened for renegotiation. If that happens, Haluk recommended checking emotions at the door and minding other parties’ perspectives.

“No one wants to gouge anyone,” she said, but added: “Who’s going to put their hand up and say, ‘I’d like to pay more fees for something because we’re unfairly enriched in the cost-sharing agreement,’ so it’s difficult.”

‘A more sustainable resolution’

If detailed shared facilities agreements are similar to prenuptial agreements, then common interests are similar to the kids in a messy divorce, maintaining a link between two parties that might otherwise sever ties with one another. Sister condo corporations that co-own assets can’t just walk away from their neighbour, as Marc Bhalla, mediator, Elia Associates, remarked. When disputes do inevitably arise in this context, it’s possible to resolve differences with a view to long-term peacekeeping.

“When you are able to successfully mediate a conflict in a shared facilities situation, not only do you receive a more sustainable resolution, you’re able to accomplish one that keeps in mind that you have this forced, ongoing relationship,” he said.

It’s important for condo corporations to come to mediation with an accurate picture of what their options are, particularly their best alternative if mediation breaks down, Bhalla advised. He recalled a case where a penny-pinching corporation entered mediation without a lawyer, relying on an outdated legal opinion.

Other mistakes can include overlooking the condo corporation’s end goals in preparing for mediation.

“Say you have a lot of bad blood between two boards of directors who are trying to figure out how to cooperate and get along running the recreation facility, and you have one member of one of those boards who’s been there forever and who is not well-liked,” Bhalla offered by way of example. “Is that the best representative to have in mediation for that board?”

Property managers and lawyers can similarly play supporting roles in helping or hindering prospects for dispute resolution, he cautioned.

Even if mediation fails to settle all of the issues on the table, it’s valuable to cross some of the items off each party’s list before heading to court, Bhalla said, if that’s where a dispute is headed.

Relief from oppressive agreements

A court ruling last year confirmed that condo corporations can get relief when a shared facilities agreement is oppressive, said Conant. A judge found that the agreement for a downtown Toronto complex known as Maple Leaf Square met that test. As a result, the judge amended the agreement, which had originally given complete decision-making authority to the developer-controlled commercial component of the complex.

The basis for the ruling lies in section 113 of the Condominium Act, which Conant noted is the only reference to shared facilities agreements in the current legislation. The clause gives the first owner-elected board of a condo corporation 12 months following turnover to end an agreement if a corporation can show that an agreement was inadequately disclosed by the developer and produced an oppressive result.

There are two options for condo corporations that want to amend their shared facilities agreement but don’t meet these criteria, Conant said. Formal changes have to be embedded in bylaws, which requires a favourable majority vote in each of the condo corporations that are parties to the agreement in order to succeed.

“You’ve reached an agreement, you all sing Kumbaya, but how do you get it passed by your unit owners?” he asked rhetorically, pointing to the challenge of going this route.

Alternatively, it may be possible to alter a shared facilities agreement by adding a clarification clause, which Conant likened to a signed contract between the parties. However, he added that this approach would not hold up to scrutiny as well as passing a bylaw, which is the ‘most conservative’ approach to take.

Michelle Ervin is the editor of CondoBusiness.

Condo Pavilion returns to Montreal HomeExpo

The Condo Pavilion is back for a seventh year during the Montreal HomeExpo, taking place at Olympic Stadium from February 9 to 12. Montreal HomeExpo is presented by an association of condo managers and owners of Quebec, Regroupement des gestionnaires et copropriétaires du Québec (RGCQ) and Garantie de construction résidentielle (GCR).

The Condo Pavilion will feature more than 30 exhibitors that are experts in condominiums. Condo owners, directors or professionals can receive free legal advice from specialized lawyers and notaries, as well as attend over 20 free conferences covering every aspect of life in a condominium.

Notably, this year’s Montreal HomeExpo will be attended by Yves Joli-Coeur, author of the new book, Condo Insurance, Everything You Should Know and Condos, Everything You Should Know. These publications provide crucial information to English-speaking co-owners and condominium directors to help illuminate a complex field lacking resources for them. Joli-Coeur, name partner at De Grandpré Joli-Coeur S.e.n.c.r.l., is a Lawyer Emeritus who specializes in condominium law and is the Secreatary general of the RGCQ.

The RGCQ is Quebec’s largest non-profit organization for condo owners and managers. It aims to improve the management of condominium buildings and the quality of life for co-owners through training courses, publications and the standardization of industry practices.

Former Guelph hotel to become multi-use tech hub

Plans to transform a former 19^th century hotel in downtown Guelph, Ontario, into a multi-use tech hub and innovation centre is expected to drive new talent to one of the province’s fastest growing cities.

Local entrepreneur Geoff Linton, owner and chief executive officer of Inbox Marketing Corporation, a digital marketing services and technology solutions company, purchased the historic building that was once The King Edward Hotel.

He plans to revitalize the 17,000 square feet of office space into his company’s headquarters and also connect medium-size businesses to experienced marketing and tech professionals.

“We are very excited to be located along the Toronto-Waterloo Innovation corridor,” he said. “A tech incubator specializing in digital marketing will attract new talent to the City of Guelph and will be a focal point for innovation, technology and business leadership.”

Built in the late 1800s and located across from the rail station, the building is now situated in a new transportation hub. Inbox Marketing is also located in Toronto and Waterloo, so this Guelph hub is accessible for clients and employees along the Toronto –Waterloo corridor.

“We’re proud to have supported the transformation of this historic site through the permit process,” said the City’s Chief Administrative Officer, Derrick Thomson. “Innovative projects like these build on the vibrancy of our downtown core and help firmly establish Guelph’s position in the Toronto-Waterloo Corridor.”

Ontario green bond to fund sustainable infrastructure

Ontario recently issued its third green bond, raising $800 million that will be used to help build clean transportation and environmentally friendly infrastructure projects in communities across the province.

Green Bonds were pioneered by the World Bank in 2008 to raise funding for projects with specific environmental benefits. In 2014, Ontario became Canada’s first province to develop and sell green bonds to encourage investment in environmentally friendly projects and attract new investors. Ontario is the largest issuer of Canadian dollar green bonds, with three outstanding bond issues totalling $2.05 billion.

“Ontario green bonds are a smart and innovative tool to build a greener, more competitive province,” said Charles Sousa, Minister of Finance, in a press release. “The proceeds help fund environmentally and socially responsible infrastructure projects that reduce our carbon footprint, grow our economy, improve our quality of life and pave the way to a sustainable future for all Ontarians.”

Proceeds from the bond will support 12 projects, including St. Joseph’s Healthcare in Hamilton, targeted to achieve LEED Gold certification; ErinoakKids Centre for Treatment and Development in Brampton, Mississauga and Oakville, which is expected to achieve LEED Silver certification; the York VivaNEXT Bus Rapid Transit Expansion in York Region; and GO Transit Regional Express Rail in the Greater Toronto and Hamilton area.

“Fighting climate change takes innovation and action from all parts of our society. It means investing in public transit and improving energy efficiency to reduce our dependence on fossil fuels that cause greenhouse gas emissions,” added Glen R. Murray, Minister of the Environment and Climate Change. “Green bonds give people the opportunity to directly invest in climate actions that will protect the environment, help us transition to the low-carbon economy and improve everyday life.”

Investors see slip in 2016 real estate returns

Canadian real estate delivered uncharacteristic, although not entirely unexpected, low investment returns in 2016. Annual results of the REALPAC/IPD Canada Quarterly Property Index, released late last week, reveal a year of below-average performance for index participants’ directly held standing assets.

A total return of 5.7 per cent across 43 portfolios, encompassing more than 2,400 individual properties collectively valued at nearly $142 billion, trails the projected global average of 10.7 per cent, and is well below the three-year, five-year and 10-year Canadian return. Modest capital growth of 0.7 per cent cloaks more marked regional disparity, as values declined in six of eight surveyed national markets. An income yield of 4.9 per cent fell below the 2015 level that index producer, MSCI Inc., had deemed “the tightest in 15 years” to achieve new distinction as “the tightest in 30 years”.

“If you exclude the financial crisis, 5.7 per cent is the lowest return we have seen in literally decades,” Simon Fairchild, MSCI’s executive director, told a Toronto gathering. “We are starting to feel significant and meaningful falls in value in Calgary and Edmonton. If you think of the market as a whole, you’d bundle it into the slipping category, but, relative to the rest, Toronto and Vancouver are showing some resilience.”

Industry insiders on hand for Fairchild’s presentation affirmed they had been prepared for a slip in 2016 real estate returns, but not necessarily a pervasive downward trend across all markets and sectors. With prompts from REALPAC chief executive officer Michael Brooks, the on-the-spot panel deciphered the results through the lenses of the Canadian economy and real estate cycle, global market trends and institutional investors’ strategic needs — concluding that one year of weaker results is unlikely to trigger a panicked pullback from new construction and/or planned overhauls of assets, but could raise the profile of other options.

“Institutional capital isn’t really thinking in terms of developing or not developing. They are looking at real estate in relation to other asset classes,” advised Blair McCreadie, senior vice president and fund manager with Fiera Properties. “It’s a question of: how much money are we going to flow into real estate based on what else is out there?”

From the longer term perspective such investors typically favour, index participants have seen better 10-year (9 per cent) and five-year (9.1 per cent) returns on their standing assets than bonds, equities or REITs have garnered. However, REITs have been the top performer, at 8 per cent, over the three-year horizon, while both the broader equities class, and REITs within it, soared past the index last year, with returns of 21.2 per cent and 18.2 per cent respectively.

Low yields are new norm

Steadily increasing values over the past several years also play into this year’s numbers. MSCI’s historical chart plots all property types and markets in the “pricier” range since 2011, while 2005 was the last year that the majority fell in the “cheaper” half of the graph.

“Falling cap rates have been part of our lives in real estate for the last decade,” Fairchild said. “Returns are low because yields are low. In a sense, this is the new norm.”

“One of the big reasons income has been going down is because capital is so high,” McCreadie reiterated.

The Canadian 2016 index results are among the first of 32 national indices that MSCI will release in the coming weeks. Many country-to-country comparisons are still not definitive, but Ireland is placed as the world-beater again this year, with a total return of 12.4 per cent. The United States also outperformed Canada, with a total return of 7.6 per cent. Both countries have fallen off their 2015 pace when Ireland recorded a 25 per cent total return and the U.S. surpassed 10 per cent.

“I think the general trend here, and you’ve got Canada with it, is that returns have slowed,” Fairchild said.

Among property types, only residential showed improved performance with the chart-topping total return of 8 per cent, up marginally from 7.9 per cent in 2015. Office was this year’s laggard, delivering a 4.7 per cent total return in the face of a 0.6 per cent drop in capital value. Retail and industrial were closely bunched in the middle, with returns of 6 per cent and 5.8 per cent.

“In the grand scheme of things, that’s not a very wide spread in sectors. What’s much more noticeable is the spread across the markets,” Fairchild said.

Even so, more than half of the properties in the index are located in Vancouver or Toronto, somewhat cushioning the impact of weaker performance elsewhere. The two metropolises outdistanced the pack, but with results below their 2015 performance. Vancouver recorded total returns of 12 per cent; Toronto followed with total returns of 8.6 per cent. Six other markets slumped below the national average, ranging from Winnipeg’s 5.1 per cent return to Calgary’s 2.8 per cent loss on investment.

Pain and possibilities

Calgary is home to about 13 per cent of the index, and panellists identified slope for its slide to continue. Although discount prices were largely unseen in earlier phases of what has now been a prolonged downturn, there is an expectation that any new round of transactions will reset the bar.

“In a falling market, you always have a lag. I think that’s where we are at,” said Pierre Bergevin, managing partner with Brookfield Financial.

“I think we are testing the bottom on leasing,” observed Vince Brown, president and chief executive officer of Triovest, but he foresees values could dip further.

“The vendors recognize they’ve got to take some pain,” McCreadie concurred. Yet, on the potential upside, he points to the now approved Trans Mountain pipeline and renewed expectations for the Keystone XL pipeline as stimuli for Alberta’s oil and gas sector and Calgary’s office tenancy.

In exploring how 2016 results might apply to 2017 decisions, panellists agreed investors will be looking outside Canada, but may also become more proactive within its borders. For example, Bergevin drew a correlation between the higher performance of super-regional malls — a 7.2 per cent total return in 2016 — and the massive capital investment that owners have poured into refurbishment and expansion projects in recent years.

“You can sit passively and accept these returns or you can do something else,” he said. “The super-regional malls are bucking the trend and doing a tremendous job.”

Brown also pointed to the perennial consideration of diversification and weighting of assets, which keeps investors open to opportunities as they arise in various sectors and markets. “There is activity, but it is careful and thoughtful activity,” he reported. “This sort of market is actually a great market if you’re somebody, as most of us are, who just loves to operate real estate.”

When asked to predict, panellists all pegged the 2017 total return in the range of 6 to 6.5 per cent. Turning to past prognostication, Greg Spafford of LaSalle Investment Management was named the annual contest winner for most closely targeting last year’s total return — a prediction of 5.9 per cent, made in February 2016.

“You had to be on the bearish end of the spectrum to get it right,” Fairchild noted.

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