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BUSINESSVANCOUVER
Energy outlook: oil price pressure on B.C. natural gas sales April 13–19, 2020
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Long-term pricing helping insulate natural gas producers, but low oil prices are raising immediate concerns in the global marketplace for propane and other natural gas liquids | Page 7
Team tech tackles virus challenge Digital Technology Supercluster CEO Sue Paish spearheading local innovation drive to fight the COVID-19 pandemic | Page 5
Daily business news K biv.com
April 13 - 19, 2020 | Issue 1589 | $4.00
Robson retail wasteland worries retail | The stalled economy that has radically reduced pedestrian traffic along major
city thoroughfares could redraw local shopping landscapes permanently | PAGE 3
Robson Street merchants have boarded up display windows to prevent looting while shoppers remain at home during the COVID-19 pandemic |
Rob Kruyt
How secure is B.C.’s food supply chain? agriculture | Access to temporary foreign workers for farms in B.C. and the reliability of supply chain distribution are among the top concerns for the province’s agricultural sector | Page 4
Entertainment
education
B.C. companies specializing in audio and video content are in high demand as more people stay at home | Page 4
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accommodation COVID-19 could inflict long-term damage to B.C.’s lucrative international education sector, academics warn | Page 6
Push for emergency accommodation finds Vancouver lagging behind Victoria in housing the homeless in hotels | Page 7
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BUSINESSVANCOUVER April 13–19, 2020
BIV | Beyond the print
inside COVER STORY
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Top stories at BIV.com
Business in Vancouver’s most-seen online stories for the week ended April 9
Digital reinvention
•Walmart Canada provides $100-million bonus program for employees biv.com/article/2020/04/walmartcanada-provides-100-million-bonusprogram-employees
B.C. fitness company retools online in bid to weather the pandemic
Finance 10 Data Points
Bryan Yu on a rise in Lower Mainland home sales before the arrival of COVID-19
list 12
Business in Vancouver online: BIV’s Hayley Woodin on polls highlighting what Canadians think about the COVID-19 crisis
Biggest B.C. construction starts
•B.C. landlords seeing up to 50% of tenants not paying rent biv.com/article/2020/04/bclandlords-seeing-50-tenants-notpaying-rent •B.C. reveals all 21 seniors’ care homes that have had cases of
Business in Vancouver’s exclusive list of 2019 projects, ranked by estimated cost
Low-calibre 45
Poll 15 Crisis response
•Interactive map: Today’s COVID-19 cases in Canada biv.com/article/2020/04/interactivemap-todays-covid-19-cases-canada •COVID-19 infects Metro Vancouver real estate market biv.com/article/2020/04/covid19-infects-metro-vancouver-realestate-market
Correction
insights 14 Kirk LaPointe on Donald Trump’s deft destruction of American prestige
COVID-19 biv.com/article/2020/04/bc-revealsall-21-seniors-care-homes-have-hadcases-covid-19
Stream, download or subscribe to the BIV Podcast at biv.com for in-depth analysis of this week’s biggest business stories
In BIV’s Biggest Non-mining Deals of 2019 list, three acquisitions were handled by Blake, Cassels & Graydon LLP: of FHF Holdings Ltd. by Tilray Inc.; of Natura Naturals Holdings Inc. by Tilray Inc.; and of Integrity Gaming Corp. by PlayAGS Inc. They are ranked No.6, No.19 and No.20 in the updated list. Also, the original No.5 deal, the acquisition of Atlantic Gold Corp. and Beedie Investments Ltd. by St Barbara Ltd., was incorrectly included. In the Biggest Stock and Debt Deals of 2019 list, the law firm was counsel to CIBC Capital Markets in the No. 26-ranked deal and to Pure Gold Mining Inc. in the No. 55-ranked deal. Incorrect information appeared in the lists in issue 1588 (April 6–10).
Find it News 3-8
real Estate
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finance 10
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BUSINESSVANCOUVER
April 13–19, 2020
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COVID-19 could permanently redraw Robson retail landscape retail | It
remains to be seen whether empty stores now behind boarded-up windows will reopen
By Glen Korstrom gkorstrom@biv.com
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t is hard to recognize Vancouver’s longtime high street for fashion. The heart of the Robson Street district, between Hornby and Bute streets, is lined with streetfront retailers that have boarded up windows to prevent looting while Robson is nearly void of foot traffic. People are staying home to try to limit the spread of the COVID-19 virus, but at some point the pandemic will be under control, and governments will allow stores to reopen. The question is how Robson Street will bounce back – and what the extent of the damage will be for its retailers’ bottom lines. After all, a Mustel Group survey earlier this month found that more than 50% of B.C. business representatives surveyed were concerned that their enterprises would be insolvent or would lack the fiscal capacity to restart.
Most of the street’s retailers closed around March 18, and street traffic nosedived. In 2014, the Robson Street Business Improvement Association (RSBIA) installed pedestriantraffic counting devices outside the Sephora store at 1045 Robson Street and another near the corner of Bute and Robson streets. According to data from those counters for the week of March 22–29, 13,332 pedestrians were on the street, or about 1,667 per day. That is down 89.6% from the same week a year ago, when the devices counted 126,371 pedestrians, for a daily average of 15,796. RSBIA executive director Teri Smith told Business in Vancouver that pedestrian traffic on the street had been lagging behind slightly in the months prior to the pandemic because access to the street was hindered when the City of Vancouver fenced off the
800 block to build a $5.4 million permanent plaza. Anyone on Robson Street outside Nordstrom consequently had to walk either to West Georgia or Smithe streets, then up a block and back to Robson Street to get to the street’s big-brand retailers. “I wou ld n’t say t h at we were 100% in support [of the 800-block closure] when it was originally proposed by city council, but there was a point where we knew it was going to be going ahead and so we didn’t oppose it,” she said of the project originally expected to be completed this spring but now likely to be done later this year at the earliest. When that plaza opens, Robson Street’s main strip could see a resurgence in traffic although it is unclear how many stores will reopen. Retail Insider Media owner and retail consultant Craig Patterson said that while the pandemic has likely thrown many small businesses into insolvency, many large stores had racked up debt before the crisis and may face their own retail reckonings. “Victoria’s Secret may not make it,” he said, noting that the U.S. lingerie giant’s 30,000-squarefoot flagship store on the northe a s t cor ner of B u r ra rd a nd Robson streets could close. He had been speculating about the company’s demise, and exit from Canada, in February, before the pandemic took hold in North America – when Sycamore Partners committed to buy a 55% stake in Victoria’s Secret from L Brands for about US$525 million. Aurora Realty Consultants president Jeffrey Berkowitz, who represents Victoria’s Secret in real estate transactions, told BIV soon after Sycamore Partners’ investment that he did not expect the retailer to vacate its prime Robson Street space. Berkowitz also represents companies such as Uniqlo, which has been seeking a large downtown Vancouver location, but he would
COVID-19 STAY HOME AS MUCH AS POSSIBLE.
Robson Street Business Improvement Association executive director Teri Smith has watched her street’s retailers board up windows to prevent looting while customers cocoon at home | rob kruyt
not speculate on which tenants might want the Victoria’s Secret space were the location to close. Retailers and analysts tend to agree that the effect of the pandemic will stretch beyond the months-long closure of stores, prompting a longer-term psychological shift among consumers. “Consumers are developing habits and mentalities, and this can happen quite quickly,” Patterson said. He pointed to a study by Montreal-based e-commerce research agency Absolunet that found online sales doubled in the last two weeks of March. “Consu mers may a lso be a little bit hesitant to go out into physical spaces in the months to come, when stores do open at some point, because there will still be a concern of a second wave of the pandemic, or a mutation
I believe that the face of not just fashion retail, but commerce, is possibly changed in some permanent ways
[] David Goldman Owner, Boys’ Co.
or something along the lines of some perceived lack of safety – even if that isn’t something that is reality.” The flip side, Patterson said, is that some people, particularly the younger generation, may feel angry at having been cooped up for months and go on a spree of what he called “revenge spending,” by opening their wallets in
celebration once they can return to stores. Boys’ Co. owner David Goldman chuckled when BIV asked him if he thought a revenge-spending stimulus could be on the way. He closed his 31-year-old store on Robson Street in 2018 because sales were lagging, rent was high and he had doubts about the street’s future, he said. Goldman’s three stores are at Coquitlam Centre, Metropolis at Metrotown and Guildford Town Centre. “I think a lot of people, including young people, are going to change their habits – shopping habits, congregating habits, what they do when they go out. “I believe that the face of not just fashion retail, but commerce, is possibly changed in some permanent ways. We just don’t know yet.” •
HOW TO PRACTICE PHYSICAL DISTANCING
KEEP TWO ARMS’ LENGTHS AWAY FROM OTHERS
LIMIT CONTACT WITH OTHERS WHEN OUTSIDE YOUR HOME.
Learn more about COVID-19 at fraserhealth.ca/COVID19
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BUSINESSVANCOUVER April 13–19, 2020
B.C.’s food supply chain remains strong, experts say agriculture | Sector BY TYLER ORTON TORTON@BIV.COM
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ill Zylmans is used to growing potatoes. The coronavirus crisis, however, has resulted in growing headaches for the owner of W&A Farms in Richmond. “We had a two-week window there that ended about a week ago where we couldn’t find a truck if our life depended on it,” the lifelong farmer told Business in Vancouver April 7. Zylmans said his go-to trucking companies had been enlisted by big grocers to make long hauls south of the border to restock depleted store shelves. But as hoarding has eased off over the past few weeks, a sense of stability has returned to food transportation, he said. “The public has settled down, and this impulse-buying and stockpiling has slowed down phenomenally.” Zylmans added that his farm’s own on-site retail outlet selling meat and potatoes saw a significant spike in business. “Supplies have increased, and we’ve settled down and we’re OK. But there’s still glitches along the way, and it’s not going to be a cakewalk.” Labour is one issue facing B.C. farmers as they seek to meet demand for the upcoming planting and harvest seasons. Te mp ora r y fore i g n workers (TFWs) will be allowed into Canada to help farmers amid unprecedented travel restrictions on non-citizens and non-residents
is adjusting to COVID-19 disruption, but labour, distribution remain concerns
brought on by the COVID-19 pandemic. But employers will be required to isolate workers for 14 days after entry into the country or risk being prohibited from hiring TFWs. Canada’s food security depends on assistance from 60,000 workers, who begin arriving in B.C. this week on flights chartered by industry and paid for by employers.
The restrictions put considerably more pressure on industry to adapt, according to BC Agricultural Council executive director Reg Ens. In addition to bearing the expense of chartered flights, which Ens said cost as much as double commercial flights, farmers are required to upgrade the housing for migrant workers who will be in quarantines for two weeks before they can begin working. Farmers will also be paying the workers who will be unable to work until their quarantine period passes. But for now, Ens said, the province’s food supply is not in jeopardy. “There’s been some disruptions, we’ve seen some shortages here and there, but overall we have lots of food in B.C. It might take some tweaking of the supply chain to get it into the right distribution channels, but there’s no shortage of food.” Problems may emerge in the long term due to uncertainty over market conditions brought on by the pandemic. “Do I invest more money in this crop or do I wait this cycle out?” Ens said.
Bill Zylmans, owner of W&A farms in Richmond: “supplies have increased, and we’ve settled down and we’re OK. But there’s still glitches along the way, and it’s not going to be a cakewalk” | chung chow
Farmers are now being encouraged to reach out to potential workers on local job boards as Canadians that otherwise would not have considered agricultural jobs suddenly find themselves out of work. Meanwhile, trade across the two borders is continuing mostly unimpeded, according to Joy Nott, a partner at KPMG Canada’s trade and customs practice, and the former president of the Canadian Association of Importers and Exporters Inc. “Nobody wants to stop the economy from ticking,” she said. “We might have hiccups here or there, but I don’t think Canadians should be worried about food on the store shelves.” She said a false sense of scarcity in the North American food supply chain has emerged as shoppers
see barren shelves in many stores. But manufacturers base their production on how much product is typically sold during any given week. “They don’t want to manufacture too much and have inventory sitting in warehouses because that’s dead money. So they manufacture in this just-in-time environment,” Nott said. “When you have … consumers [rushing] in to buy six months’ worth of toilet paper on one grocery-store shopping trip, they’ve disrupted the cycle. And now that that cycle has been disrupted, everyone is scrambling to refill the shelves.” And availability of some products can get tricky if some businesses within a supply chain are forced to lock down or slow down due to labour constraints caused
by the pandemic. “The minute that you have some players in the supply chain who are either shut down or working at less than full capacity it starts to have a ripple effect all the way down the supply chain.” Nott added that most Canadians don’t think about the fact that a calf can be born in Canada, shipped to the U.S. to be raised and shipped back to Canada to be slaughtered before being processed in the U.S. for meat in a frozen lasagne that eventually lands back in Canadian stores. “As Canadians we shouldn’t be too worried, because our food supplies are more integrated with the U.S. than anybody else,” Nott said, noting that if Canadians were facing supply-chain issues then Americans would be as well. •
Pandemic whets appetite for B.C. firms’ content, tech TECHNOLOGY | Companies BY TYLER ORTON TORTON@BIV.COM
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rom concept to execution, a podcast produced by Pacific Content usually takes four months to launch. T he pandemic has changed that. “If we’re making pivots in our business right now, it’s around ‘how do we rethink all of our production and strategy initiatives to be able to get somebody in market in four or five weeks instead of four or five months?” said Pacific Content co-founder Steve Pratt. The Vancouver-based company, which was acquired by Rogers Media Inc. in May 2019, specializes in developing podcasts for other firms. The business model means it’s not dependent on dollars from advertisers, but on marketing
specializing in audio and video productions are in high demand
We have just had the world’s fastest cultural shift in history where half the planet has just learned how to work from home in a week
[] Steve Pratt Co-founder, Pacific Content
budgets from companies that commission Pacific Content for podcasts.
And companies that spent the last half of March in paralysis are now looking for new marketing opportunities, shifting their budgets from live events or video productions to audio content that Pratt’s company can produce remotely.
“ E v e r y b o d y w a n t s to ge t to market as fast as humanly
possible,” he said, adding demand for audio content is seeing spikes in certain categories as the public abides by health officials’ calls for people to stay at home. Meanwhile, views for video content offered by Victoria’s SendtoNews Video Inc. are up 50% during the last two weeks of March compared with a month earlier, according to CEO Matthew Watson. The company is best known for its video distribution platform for sports highlights that are showcased within online stories for publications such as the Los Angeles Times or The Chicago Tribune. Last August SendtoNews expanded beyond sports and into finance, health, news, lifestyle and weather videos. It also launched a video player for 200 publishers in early March for dedicated COVID-19
coverage, which Watson said garnered 15 million views per day in the first week. With live sports now on hiatus, SendtoNews is now featuring sports highlights from past glories such as the SendtoNews Video Inc.’s National Basketball Association championship run or the top moments from the New York Yankees’ 2019 season. Watson said the changes have helped the company weather the storm during this uncertain period. “The challenge we face isn’t video inventory. The challenge we face is just the pullback from advertisers. While we see some aspects of the economy are thriving … we also see that there are huge sectors that advertise with us, such as travel and some other ones, that have pulled back.” As a result, the rate SendtoNews charges advertisers per
impression has dropped since the pandemic. Pratt, meanwhile, believes the pandemic will change the way content is consumed. “This is a massive disruption of people’s habits and routines and in some ways there’s an opportunity to build new routines while people are working from home,” he sa id, add i ng that everything from the use of smart speakers to listening to podcasts directly off desktop computers rather than mobile devices could shift. Furthermore, many of those habits will likely stick around after the pandemic subsides. “We have just had the world’s fastest cultural shift in history where half the planet has just learned how to work from home in a week,” he said. “A lot of people are not want to go back to the office.” •
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BUSINESSVANCOUVER
April 13–19, 2020
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Pandemic problems put B.C. tech sector to the test TECHNOLOGY | Agile BY TYLER ORTON TORTON@BIV.COM
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“
e drove hard,” said Sue Pa ish t he d ay after a team of software developers unveiled an online platform allowing suppliers to better manage and source medical supplies and personal protective equipment (PPE) for front-line health-care workers.
T h e d r ive t h e C E O o f t h e Vancouver-based Digital Technology Supercluster speaks of helped deliver the $100,000 COVID-19 Supply Hub to provincial health officials in the span of just seven days, from concept to actualization.
Burnaby-based Traction on Demand Inc. built the platform and contributed $50,000 to the project, while San Francisco’s Salesforce.com Inc. (N YSE: CR M) covered $10,000 a nd the supercluster covered the remainder. “We have been overwhelmed in the most positive way with respon ses f rom i ndu st r y to solve the problems created by the COVID-19 environment,” Paish told Business in Vancouver. And outside the infrastructure of the Digital Technology Supercluster – a program aimed at stoking partnerships between private enterprises, researchers and post-secondary institutions – independent projects throughout the B.C. innovation community have been springing forth and operating at timelines similar to Paish’s. A team of engineers, suppliers and manufacturers at Vancouver startup Ocalink spent eight
innovators deploying projects aimed at fighting COVID-19 in as little as a week We have been overwhelmed in the most positive way with responses from industry to solve the problems created by the COVID-19 environment
[] Sue Paish CEO, Digital Technology Supercluster
days designing a ventilator made from only 41 components. “From the very beginning we said we need a design that’s ultimately scalable to a million units in 90 days and anything less just isn’t very useful,” CEO Corbin Lowe said, adding he hoped the units would cost a few thousand dollars each once in production. “It does only exactly what the respiratory department needs for this specific virus and it doesn’t do anything extra.” L owe l i kened the idea to a microwave that has only an onand-off switch – with no special settings for popcorn. His team built the device with input from Vancouver Coastal Health to ensure it meets all the needs of health-care professionals dealing with the pandemic. The next step is awaiting regulatory approval from authorities such as Health Canada.
A front-line health-care worker at Vancouver General Hospital dons a 3D-printed face shield produced by LNG Studios, a real estate services company | submitted
If approved, the goal is to produce nearly 10,000 per day by April 15. Meanwhile, LNG Productions Inc. (LNG Studios) has been running five 3D printers at maximum capacity to produce about 35 face shields a day for healthcare workers. “They’re in dire and critical need for this protective gear,” said CEO Leon Ng. After submitting prototype face shields to hospitals for approval in later March, the LNG Studios team has since delivered units to Vancouver General, St. Paul’s and Richmond hospitals. Lions Gate, Surrey Memorial and Burnaby hospitals have contacted LNG Studios about tapping into the next available supply. LNG Studios launched a
campaign for the next round of production, which needs $2,000 to cover the cost of printing 60 additional face shields. After finding an open-source 3D model for the face shields, the company’s 3D-printing assets have been redeployed to print the visor portion of the face shields. The company is working with local plastic suppliers to supply and laser-cut transparent acrylic sheets for the face shields. In a follow-up email to BIV, Ng said reusable PPE is vital for front-line workers. “The burn rate of traditional PPE is too high and supply is critically low,” he said. The campaign is also asking for suppliers who can help source and cut additional acrylic sheets. Many initiatives kicked into
high gear after Ottawa mandated on March 20 that the country’s network of superclusters tap its 1,800 members to come up with ways to address the pandemic. Canada’s five superclusters have access to $950 million in funding, with $153 million of that going to the Digital Technology Supercluster. T he West Coast supercluster already had 30 projects in the works prior to the call from government. “We were, I will say, ahead of the ask,” Paish said. “We were developing a pipeline of potential projects that could address specific issues relevant to COVID.” The Digital Technology Supercluster is now fielding 130 proposals aimed at tackling the effects of the pandemic, with projects ranging from the development of platforms to help deal with mental health issues and rebuild community engagement, to data sharing related to the genes of the virus Pa ish sa id even before the pandemic her organization was tailored to identify key players that could tackle jobs such as this. “Once we identified the problem [managing supplies] along with the health system and the government of B.C., it was not hard to identify some potential solution providers and bring them around the table,” she said. “I am both impressed but not surprised that the Canadian business community and industry writ large has come forward to identify ways we can help Canada get through this.” •
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BUSINESSVANCOUVER April 13–19, 2020
B.C. schools brace for foreign-student drought education | COVID-19 could inflict long-term damage on international education sector: academics By Chuck Chiang cchiang@biv.com
A
lthough B.C. schools have limited statistics available, the international education sector could suffer longterm, if not irreversible, damage from the COVID-19 pandemic. That’s because even if the ongoing entry ban for foreign nationals into Canada is lifted, it will take years for international students, many of whom apply to study in Canada for lifestyle as much as educational benefits, to feel comfortable with the level of global mobility that helped drive the sector prior to the outbreak. Business in Vancouver contacted six post-secondary institutions – the University of British Columbia (UBC), Simon Fraser University (SFU), Kwantlen Polytechnic University (KPU), Capilano University, the British Columbia Institute of Technology (BCIT) and Trinity Western University – about international student enrolment numbers this year and projections for the upcoming school year. Only UBC, SFU and KPU responded to the request, w ith K PU show i ng 5,024 international students for the 2018-19 school year (2019-20 final numbers are not available until August). UBC declined to issue enrolment counts and projections of COVID-19’s impact next year, noting in its statement that “the situation is evolving so it is difficult at this time to estimate how enrolment at UBC will be impacted.” But the university said that application volume is comparable to last year’s, although UBC’s
$21.6b 170,000
International students’ estimated contribution to Canada’s GDP Estimated number of jobs generated by the foreign student education sector in Canada
March 15 international application deadline means that most students would have submitted their packages prior to the outbreak-induced lockdown that began in mid-March. SFU was the most thorough with its figures. It charted a steady increase of international undergraduate students from 2010 (3,578) to 2019 (5,325). Decreases last year in the number of students from China compared with 2018 (from 2,729 to 2,645) were offset by gains in markets like India (377 to 467), Vietnam (208 to 258) and Bangladesh (63 to 92). SFU confirmed that fall 2020 international student enrolments are on par with 2019, but cautioned that it is too early to predict the final numbers. (SFU’s international application deadline is March 31). But sector insiders say schools should expect a big drop in international enrolment in the fall, if only because the Canadian entry ban for foreign citizens may still be active by September. Such a ban would prevent any students from outside Canada to enter the country and attend classes. According to federal statistics, i nternationa l students
contributed an estimated $21.6 billion to Canada’s GDP, supporting close to 170,000 jobs through education and other knock-on sectors such as housing, retail and services. The sector was viewed as a key economic driver for Canada and B.C. as Ottawa in 2019 allocated $147.9 million over five years to expand the industry. Even if the travel ban is lifted by September, it wouldn’t come close to solving all the challenges the industry now faces. “The travel ban is the worstcase scenario, but even assuming things go back to normal eventually, things won’t be back to normal by this fall,” said Hugh Stephens, principal of consultant group Trans-Pacific Connections and an associate faculty member at Royal Roads University’s MBA program. “First of all, I think a lot of students will say to themselves to just wait a year. There will be a chilling effect on applications for the year.” Stephens added that international education is built around the in-person experience of going abroad to study, to interact with different cultures and to experience an adventure. B.C. schools’ efforts to recruit international students beyond the school year that starts this fall will be even more challenging because of the uncertainty about international mobility in a post-COVID world.
The departure of international students isn’t as big a concern for UBC history professor Henry Yu, who is also principal at the school’s St. John’s College, which has an international focus. Yu said that since the lockdown began in mid-March, only about
A sign on the door of the British Columbia Institute of Technology’s downtown campus announces class cancellations due to the COVID-19 pandemic | chung chow
10% of his students have decided to return to their home countries (or, in some cases, went home for spring break and were unable to return to Canada due to the border entry ban), while most have decided to stay put. “We have a community that has tried as hard as possible to maintain a sense of community,” Yu said. “Is there some other better place to be? Some people rather go through this with family, but for many others, this is the best place in the world to weather this crisis. Vancouver’s better off than Quebec and Ontario, and the sense that this is a great place to be hasn’t changed.” However, Yu was more pessimistic about enrolment trends for international students in the fall. “My assumption as a historian is that I would find it very, very unlikely that we are back to
normal in September, we meaning the world. If you are going to reopen a campus like this in September, you are bringing people from 150 countries, mixing them with another 40,000 people coming in and out of campus everyday. If you are a virus, there’s no better place to spread. So even if the outbreak is calm around the world by that point, it’s still a terrible idea…. So if you open up a campus in September, one of the conditions should be a guarantee that not a single person coming in is a carrier; and that’s a lot of people in a lot of places you have to track.” Yu added that, even when global mobility returns in some form, it won’t look like what it did prior to COVID-19. What form will the industry look like post-pandemic? No one knows for sure, he said.•
Self-isolation boosts interest in online education technology | COVID-19 By Chuck Chiang cchiang@biv.com
I
solation measures instituted to prevent the spread of COVID-19 are boosting the use of online education tools for more than just B.C. school students. However, whether this spike in use will translate to a continued wave of demand for online learning after the pandemic wanes is unclear. School and business leaders say that how much headway cyber-education makes may depend on how positive an experience students have during their forays online during COVID-19. Local schools like the University of British Columbia, Simon Fraser University, Langara College and Kwantlen Polytechnic University (KPU) almost all shifted to online classes in March. Meanwhile,
driving use of remote platforms, but can the trend outlast the pandemic?
online language education programs such as Duolingo Inc. and Lesson Nine GmbH’s Babbel have reported spikes in North American users and sales since March 13 – a day after the National Basketball Association suspended its current season. Leeann Waddington, K PU’s manager of learning technology, has followed the online learning trend in Canada closely. She referred to the 2019 Canadian Digital Learning Research Association annual survey, which showed enrolment in online courses jumped 14% from 2016 to 2018 in Ontario; the increase in Western Canada was a more modest 8%. Given t h at K PU a nd ot her schools have also shifted courses online to keep students and faculty at home, she said that number will likely jump for 2020.
Aside from college students having to go online to complete their schooling, the increase could be attributed to the sense of control online education programs give to a wide demographic of students who are facing unprecedented uncertainty as COVID-19 paralyzes travel, trade and business and interrupts basic daily life.
“Really well-designed online learning programs help students learn autonomously and offer the flexibility of time, space and pace, which hopefully provides them a little more control over what element of development they need in order to go in a new direction,” Waddington said. Monica Molag, chairwoman of Langara College’s nutrition and food service management department, also noted that the social
aspect of learning may be driving people online as isolation efforts persist. “At this point, with the COVID situation, everybody’s isolated,” Molag said. “So if we can reach out and engage our minds and get some sort of benefits out of the fact we are isolated, I can totally understand. It’s the desire to get more information and to learn.… And who knows? This may be the opportunity to investigate where else your career could go, because there are so many platforms available.” Molag’s program has been available online since 2002, and its status as the only one to provide the certification required to work in the field in B.C. means that the Langara has seen many years of students grappling with online learning as a platform.
She warned that while many people are now jumping into online learning, results will depend heavily on the learner’s level of dedication. Molag said many students in her program had so much trouble staying focused in online courses that the school suggested, prior to the outbreak shuttering classrooms, they take at least one physical class on campus, and take the online class from campus, as well. Waddington said that is why she is unsure if the popularity of online courses will last beyond the pandemic-induced isolation period – but she is urging schools and platform designers to think beyond the current pandemic about the resources and investments necessary to keep the online education momentum going after COVID-19 fades. •
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BUSINESSVANCOUVER
April 13–19, 2020
7
B.C. natural gas producers insulated for now energy | But
company concerns rising over rapidly falling demand for propane and condensate
By Nelson Bennett nbennett@biv.com
T
he last time oil prices collapsed, major liquefied natural gas (LNG) projects in B.C. and elsewhere were shelved. Long-term LNG contracts are indexed somewhat to the price of oil, and without guarantees of sufficient long-term pricing, no one pulls the trigger on a multibillion-dollar LNG project.
But for natural gas producers in B.C., the biggest concern now isn’t necessarily the impact of the COVID-19 and low oil prices on natural gas. A bigger concern is the effect on natural gas liquids, like propane and condensate – otherwise known as “wet” gas.
“The consensus seems to be that, so far, we haven’t seen an impact on demand for natural gas,” Tracy Robinson, president of Canadian natural gas pipelines for TC Energy Corp. (TSX:TRP), said April 7 at a two-day virtual energy conference hosted by Scotiabank (TSX:BNS) and the Canadian Association of Petroleum Producers (CAPP). “I would say that any impact that we do see in the future related to this COVID-19 situation, there’s a short-term response,” Robinson said. “It is not a structural change to demand. So the fundamentals stay strong, and we’re quite optimistic.” Natural gas liquids are a different story – one that is particularly important for B.C. T he Montney formation i n
The new AltaGas propane terminal in Prince Rupert provides new market access, but the pandemic has taken a bite out of propane demand in Asia | submitted
northeastern B.C. and western Alberta is liquids rich. Many of the operators there focus mainly on the liquids, with natural gas being something of a by-product. Operators in B.C. appear to be holding their own right now, according to companies participating in in last week’s conference. Tourmaline Oil Corp. (TSX:TOU), for example, still has drill rigs operating in B.C. and plans to add more this year. Drilling would normally slow down this time of year for spring breakup, and the demand for natural gas begins to decline with the approach of summer. The biggest concern for those companies focused on natural gas liquids is the falling demand for propane in Asia, and the impact of low oil prices on condensate. A new propane export terminal
that AltaGas Ltd. (TSX:ALA) built in Prince Rupert has given producers in B.C. and Alberta access to the Asian market. But demand in Asia has fallen, due to the general contraction of economic activity in response to the CODID-19 pandemic. “We had hoped that actually we had diversified the whole propane market from Western Canada,” said Darren Gee, president of Peyto Exploration & Development Corp. (TSX:PEY) which is focused on the Deep Basin of Alberta. “But unfortunately the Far East prices have collapsed so badly, that new export market doesn’t look very attractive, and Edmonton now looks like the most attractive place for propane,” Gee said. “Propane, as a product, doesn’t look great this year.”
As for condensate, prices are directly affected by oil prices. It is used to dilute bitumen. One of the problems with condensate is a lack of storage, which means that there is little capacity for producers to simply store it until prices come back up. Right now, there is a price differential between oil and condensate of about US$15 per barrel, and oil prices have been down 50% to 60% in recent weeks. “Right now condensate is the big concern, I think for a lot of natural gas liquids producers,” Gee said. “With pricing way off, the differentials and the demands for condensate have dropped off. And unfortunately we don’t have any storage in Western Canada really for condensate. “It’s the one product that we
produce a lot of, because of the demand on the heavy oil side, but we really have no storage capability, so any interruptions to demand put us in a real pickle as an industry. “In the very short-term, it looks like there could be some potential interruptions in demand for condensate, as the heavy oil guys shut in as the result of the pricing.” Jihad Traya, a natural gas consultant for Solomon Associates, said the longer-term impact on the demand and price for natural gas and natural gas liquids is hard to estimate, because no one knows how long or deep a selfinduced global recession will last. “In the short term right now, you’re kind of insulated,” Traya said. “In the medium to long term, assuming this continues, it’s just as dire, if not more dire, for gas producers. “They’ve got a place to take their natural gas,” he said. “Once they don’t have a place to take their liquids, their natural gas can’t flow. “If that natural gas can’t flow, you’ve got to pull it out of storage, which could result in higher prices, and then you’ve got to go start drilling for drier natural gas, which generally has a higher cost. “There are so many moving parts right now, producers are trying to figure it out. In a lot of ways we are in uncharted territory, as everybody says. I’ve never experienced a situation where global economies contract by up to 30% a quarter – never.” •
Vancouver lags behind Victoria in housing homeless accommodation | No evidence of homeless being relocated to hotels as COVID-19 hits: DTES advocate By Frank O’Brien fobrien@biv.com
T
he City of Victoria has moved at least 27 homeless people from city parks to hotel rooms since March 23, according to Victoria Mayor Lisa Helps, as part of the city’s response to COVID-19. T he city secu red 35 rooms through Emergency Management BC, Helps told a March 30 press conference, and expects to have 75 rooms secured shortly. She added that B.C. health authorities have told the city that COVID-19 will hit the unsheltered population hard at some point. “We’re buying some time right now,” Helps said. In Vancouver, time is running out, according to advocates for the homeless on the city’s Downtown Eastside (DTES), despite assurances from city hall.
“We are securing hotel rooms, so if there is someone that’s homeless, or living in a shelter, that’s needing to be in isolation, they are being placed in hotel rooms,” Sadhu Johnston, City of Vancouver manager, said on March 24. The city’s task force is collaborating with Vancouver Coastal Health and BC Housing to support those experiencing homelessness during the outbreak, according to Johnston.
In an April 3 televised address, Vancouver Mayor Kennedy Stewart said BC Housing had secured hundreds of hotel rooms. But there is no indication the local homeless are being escorted to hotels, said Constance Barnes, executive director of the Four Directions Trading Post, a DTES street-vendor market that the city recently shut down.
“T here is no plan. T here is nothing. No hotels are OK’d at
Crowded homeless camp in Vancouver’s Oppenheimer Park |
this point,” Barnes said. “There are still a lot of people sleeping on the street and in Oppenheimer [Park].” Va ncouver city Cou n. Jean Swanson, a long-time advocate for the city’s poor, agreed. “T here may be a pla n, but it’s not evident if you’re on the
rob kruyt
ground. My fear is that it’s based on letting people get sick first. We need hotel rooms ASAP,” Swanson said. The DTES and its Oppenheimer Park has the highest number of Vancouver’s estimated 2,200 homeless people, i nclud i ng approx i mately 640 who a re
sleeping on the street, based on a 2019 survey. (The 2020 homeless count, which was conducted March 3 and 4, is scheduled to be released in June.) Barnes said many DTES residents have little information about social distancing or the spread of the coronavirus. If anything, she said, they have even less contact with authority since the COVID-19 crisis began. “City garbage collectors will not work in the 100-block of East Hastings,” Barnes said, “and police are too afraid to get out of the cars; they just yell out the window.” B.C. firefighters have also been ordered to stop responding to all drug overdose calls, except those that are code purple, which indicates an immediate threat to life. Most overdose calls are code red, which are less urgent. continued on page 11
8
news
BUSINESSVANCOUVER April 13–19, 2020
Fitness company pivots with online platform resilience | B.C.’s
Innovative Fitness reinvents itself to weather the COVID-19 storm
By Hayley Woodin hwoodin@biv.com
J
ust over four weeks ago, Innovative Fitness decided to close its 12 locations – 11 of which are in British Columbia. “Literally we stand on the cliff the m inute that we shut the door,” said company president and CEO Curtis Christopherson. “The minute we shut the door is the minute we stop producing revenue.” The company, which employs 250 personal trainers who offer services at those dozen bricksand-mortar locations, committed to pay its staff for the week after it shut down its operations. Next, as Christopherson explained, Innovative Fitness had two choices. “It was, are we going to be resilient and push through this … or lay off all of our staff and hunker down, close the doors and just wait until this blows over, in the hopes that it blows over in a timely fashion?” he said. “We literally hunkered down, like war-room style.” Christopherson spent four days
working from 5 a.m. to 1 a.m. on a game plan with his team. The result: a digital platform, built by Coquitlam-based SaaSberry Innovation Laboratories Ltd., that offers home-to-home personal training services. “We were able to essentially reinvent our business in five days,” Christopherson said. “We f lipped our training services that were brick-and-mortar, inperson, to online.”
As of March 30, Innovative Fitness was offering a 30-day fitness plan complete with an at-home workout program, fitness tips and community support. When Business in Vancouver spoke with Christopherson, between 40% and 50% of the company’s 5,000 to 6,000 clients had asked about or signed up to the program. Half of the plan fee – $99 of the $199 cost – will go to a COVID-19 relief fund Innovative Fitness has set up with the Peninsula Community Foundation. The proceeds will support local businesses that have been hit hard financially by the spread of COVID-19. Around 70% to 75% of the company’s personal trainers have
Innovative Fitness president and CEO Curtis Christopherson adapted to the social and economic realities of COVID-19 by reinventing the company’s business model | Chung chow
decided to stay with the company through its reinvention. They will all receive training at the new Innovative Fitness Virtual Academy. “All we said was, ‘What does this look like if this lasts six months?’”
said Christopherson, who added that Innovative Fitness plans to keep the platform post-coronavirus outbreak. It has also started a Facebook (Nasdaq:FB) group to build a community around athome health and fitness, which
attracted 1,500 members in 48 hours. “We feel that the pressu re and the shift and the force that was created to make us make this decision will turn into an opportunity.” •
Vancouver game creator builds virtual company culture resilience | Phoenix Labs uses games, exercise to maintain creativity, collaboration during pandemic By Albert Van Santvoort avansantvoort@biv.com
M
a ny busi nesses have a d o p t e d o p e n-c o nc e p t of f i c e s to c u ltivate a sense of culture and co-operation. This is especially the case in the video game industry, where studios often come complete with motorized scooters, foosball tables, gaming rooms, bars and retro arcades. But how do you maintain that sense of camaraderie and community when staff are isolated from their peers and colleagues?
At a glance, Vancouver-based video game studio Phoenix Labs appears to have mastered the transition of its open-concept env i ron ment to a n at-home workforce. Behind the scenes there’s a lot of work that goes into making it a success. “Healthy cultures aren’t something that just happen,” said Jeanne-Marie Owens, vice-president of operations and “nerdherder” at Phoenix Labs. “If you want your culture to be healthy you have to pay attention to it, you have to care for it, you have to guide good behaviours and curb out bad behaviours. “I think of it all like a bonsai tree. Sometimes one branch needs to be trimmed back a bit
Healthy cultures aren’t something that just happen, if you want your culture to be healthy you have to pay attention to it, you have to care for it
[] Jeanne-Marie Owens Vice-president of operations and nerdherder, Phoenix Labs
and another branch needs to be guided in another direction.” Owens said the company has created a virtual open-concept environment across its entire operation of 115 employees. To help ma ke th is happen, Phoenix Labs has created several online communities within its organization, ensuring numerous contact points throughout the day. These aren’t just group chats about daily tasks; they are whole online threads dedicated to conversations that could include tips on handling parenthood during isolation to sharing pictures of food or family pets. Colleagues are even managing to exercise together, said the company’s director of marketing, Nick Clifford. When everyone was working at the Vancouver office, the staff had a 3 p.m. exercise period when
Phoenix Labs’ publishing team takes part in a group call complete with video | submitted
they would get away from their desks to stay active. Rather than lose that part of its daily ritual and company culture, Phoenix Labs brought it to the employees’ home offices. The company’s community extends outside of work hours to include online gaming nights. At 5:30 p.m., a group of Phoenix Labs’ team members would typically play games like Mortal Kombat; now that employee team plays it online. They also use games as a virtual watering hole where they can gather and chat. They also use Nintendo’s (TYO:7974) newly released Animal Crossing to gather and virtually hang out. But it’s not all about having fun.
As Owens explained, the nutsand-bolts details of day-to-day business need to be maintained. Employees therefore collaborated on a how-to guide for working from home: a list of best practices, including simple things like making sure to take a lunch break and end the workday. The guidelines say meetings should be conducted as online video chats with no deactivated microphones or cameras. Phoenix Labs went so far as to ensure that everyone had a working webcam. Owens said video conferences not only help maintain the company’s culture but also foster communication and collaboration. More importantly, Owens said, video calls prevent people
from becoming faceless names hidden behind walls of texts. However, despite all the work the company has invested in facilitating work from home, it is unclear whether Phoenix Labs will maintain a large at-home workforce once it is through the COVID-19 woods. “In my experience working in games, I’ve seen really great power in teams physically being together and in the energy they produce, in the way they bounce ideas off each other and the creativity that comes out of that,” Owens said. Phoenix Labs’ Clifford is also unsure about having a significant number of his colleagues follow in his footsteps. He said that once he decided to make the switch, it took roughly eight months to finalize the details of his new role and to get settled and comfortable with working from home. “As much as we’re doing a really good job of feedback, documentation and communication right now, there’s still no substitute for spinning your chair around and immediately talking to someone and being like, ‘Am I crazy or should we do this,’” he said. “You just miss out on a lot of that synergy and conversation, and to be candid that’s something I miss being a remote person regularly.”•
news
BUSINESSVANCOUVER
April 13–19, 2020
9
briefs economy
Ottawa adjusts wage subsidy program, offers help to job-seeking students The federal government is again retooling economic relief efforts to address the COVID-19 crisis in a bid to help students and businesses. Prime Minister Justin Trudeau announced April 8 that organizations participating in the Canada Summer Jobs Program will get a subsidy of up to 100% from government to cover the cost of hiring students. Many young people find themselves in a precarious position as studies wrap up at the same time the pandemic is grinding the economy to a halt. The federal government will extend
the time for job placement to the winter to acknowledge that many jobs won’t be able to begin until later in the year. Trudeau said more measures to help young people, gig workers and vulnerable seniors will soon be announced. He also revealed businesses seeking assistance from the government’s wage subsidy program will now have to show a 15% revenue decline in March compared with a year earlier. The federal government originally required businesses to demonstrate a 30% revenue decline to qualify for the Canada Emergency Wage Subsidy program.
T hose eligibility requirements d rew criticisms from i ndustry g roups, wh ich ra ised concerns that many small businesses or high-growth companies would not qualify. Trudeau said “there are going to be gaps” when developing such economic measures so quickly. He also acknowledged his government now rea l izes much of the econom ic
impact of the pandemic did hit companies until midway through March, making that month a more problematic reference point. The prime minister clarified that businesses can now choose to use January or February as a reference period rather than March. Cha ritable orga n izations ca n a lso choose to exclude government subsidies when making their calculations. The $71 billion wage-subsidy program was originally introduced at 10% with only small businesses eligible.It was boosted to 75% in late March.
ECONOMY
Travel
B.C. loses 132,000 jobs in March as pandemic takes toll
Returning B.C. residents must submit self-isolation plans
The first punch of the pandemic left B.C. with 132,000 fewer jobs in March. But data released April 9 reveals the worst is yet to come. Statistics Canada emphasized in its monthly release that its Labour Force Survey was conducted March 15–21 — before much of the pandemic’s impact on the job market had been realized. The official data shows B.C.’s unemployment rate climbed 2.2 percentage points to reach 7.2% in March. Meanwhile, Canada as a whole lost
British Columbians returning home from outside of Canada, including the U.S., are no longer on their honour to self-isolate – they will now be met at borders and airports and must prove they have self-isolation plans or they will be quarantined at government facilities. As of April 10, new rules were slated to go into effect under the Quarantine Act that require British Columbians returning from outside the country to submit a self-isolation plan, either
1,011,000 jobs, driving the unemployment rate up 2.2 percentage points to reach 7.8%. The federal government revealed that 4.26 million Canadians have applied for various forms of emergency of unemployment assistance, through Employment Insurance or the Canada Emergency Response Benefit. The actual numbers for March, which won’t become clear until next month, are grimmer than what federal data can reflect based on the period its survey was conducted.
online or at the border. The measures are intended to address concerns that British Columbians who have returned home from abroad may not be abiding by mandates to self-isolate for 14 days, as part of the COVID-19 pandemic containment measures. Returning travellers must have selfisolation plan confirmations, which can be submitted online. When they are confirmed, travellers can show their confirmations at the border or airport upon their arrival.
K biv.com Go online to read these stories in full, along with much more business news updated daily at biv.com.
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BUSINESSVANCOUVER April 13–19, 2020
finance Home sales gain on eve of COVID-19 arrival
March home sales modest, but down sharply in month’s second half Daily sales fell as much as 30% in month’s second half 9,000
Company: Westshore Terminals Investment Corp. (TSX:WTE) Shares owned: 24,090 Trade date: April 7 Trade total: $28,994 Trade: Acquisition of 2,200 shares at prices from $13.16 to $13.18 per share
7,000 MLS Sales
Trade total: $114,764 Trade: Acquisition of 50,000 shares at prices from $2.27 to $2.33 per share
Bryan Yu is deputy chief economist at Central 1 Credit Union.
8,000 6,000 5,000 4,000 3,000 2,000 1,000 2005
2007
2009
2011
2013
Actual
2015
2017
2019
Seasonally adjusted
Sources: REBGV, FVREB, Central 1 Credit Union. Latest: March 2020
Falling Chinese demand pummels B.C. exports in February COVID-19 hit global market demand hard 40
$4,500 4,000
30
3,500
20
3,000 2,500
10
2,000 1,500
0
1,000
-10 -20 2010
Millions
M
odest Lower Mainland home sales in March will likely give way to a sales plunge extending into the third quarter due to the societal and economic disruption of COVID-19. Multiple Listing Service (MLS) sales in Metro Vancouver and Abbotsford-Mission metropolitan areas reached 3,927 units. A 35% year-over-year gain was primarily due to low samemonth sales in 2019, with seasonally adjusted sales down 10% by our calculation from February. The trend had already eased in early 2020. March sales provided only an early signal of the COVID-19 economy. While monthly sales
and the benchmark price up 1.4%. We anticipate a recovery in 2020’s second half, although the duration of current measures are unknown and household and business finances will be eroded in the interim. Nevertheless, low interest rates, an expected return to a tighter labour market and pent-up demand will support the market. Heading into the COVID-19 deep freeze on western economies, B.C. export sales tumbled in February to contrast with growth in Canadian sales. Yearover-year merchandise exports declined nearly 17% to $2.77 billion, following a 14% decline in January. While the headline figure was dire, the contraction was dominated by a severe year-overyear drop in energy sales (down 40%), a 10% pullback in metal ores and non-metallic minerals and decline in farm, fish and intermediate food products. •
Per cent
Data Points Bryan Yu
were modest, daily sales fell sharply in March’s second half by 30% as COVID-19 fears intensified, government measures ramped up and job losses mounted. Given the time lag involved in purchase decisions and firm sales in MLS, demand likely fell more than what was reflected in sales. With prospective buyers hunkered down at home and an economic downturn in play, home sales are expected to fall sharply in coming months. A 40% decline in trend would not surprise. Sharply lower sales will lead to price declines, but their magnitude is uncertain. Both buyers and sellers will step away from the market during the pandemic and distancing period, limiting inventory levels. Price discovery in this market will be difficult and will not provide much indication of post-epidemic conditions. Demand was moderate and market conditions were firm heading into the current downturn, with the average price up 6% from February to $975,600,
500 2012
2014
2016
Year-over-year percent change (L)
2018
2020
0
International exports (R)
SourceS: Statistics Canada, Central 1 Credit Union. Latest: February 2020
INSIDERTRADING The following is a list of stock trades made by corporate executives, directors and other company insiders of B.C.’s public companies filed in the week ended April 8, 2020. The information comes from a compilation of required reports filed with the BC Securities Commission obtained from DisclosureNet.com.
Insider Surinder Ghai Kumar, 10% owner, director Company: Vecima Networks Inc. (TSX:VCM) Shares owned: 13,559,813 Trade date: April 8 Trade total: $1,600,000 Trade: Acquisition of 200,000 shares at a price of $8.00 per share Insider Robert Martin Friedland, 10% owner; director, officer Company: Ivanhoe Mines Ltd. (TSX:IVN) Shares owned: 24,639,632 Trade date: April 3
Insider Eric S Sprott, 10% owner Company: Novo Resources Corp. (TSX:NVO) Shares owned: 5,384,976 Trade date: April 3 Trade total: $70,800 Trade: Sale of 40,000 shares at a price of $1.77 per share Insider Joseph Perino, director Company: Champignon Brands Inc. (TSX:SHRM) Shares owned: 0 Trade date: April 3, 6 Trade total: $42,700 Trade: Sale of 50,000 shares at prices from $0.75 to $0.88 per share Insider Glenn Dalziel Dudar, officer
Insider John Lee; director, officer Company: Silver Elephant Mining Corp. (TSX:ELEF) Shares owned: 8,448,901 Trade date: April 3 Trade total: $28,000 Trade: Sale of 200,000 shares at a price of $0.14 per share Insider Ali Tehrani, officer Company: Zymeworks Inc. (TSX:ZYME) Shares owned: 59,861 Trade date: April 3 Trade total: $19,199 Trade: Acquisition of 575 shares at a
price of $33.39 per share Insider Daniel Oliver, Director Company: Vangold Mining Corp. (TSX:VGLD) Shares owned: 4,715,000 Trade date: April 6, 8 Trade total: $17,400 Trade: Acquisition of 348,000 shares at a price of $0.05 per share Insider Gerald Panneton, officer Company: Gold Terra Resource Corp. (TSX:YGT) Shares owned: 1,550,000 Trade date: April 3, 6 Trade total: $14,000 Trade: Acquisition of 70,000 shares at a price of $0.20 per share Insider Gary Robert Thompson, officer Company: Brixton Metals Corp. (TSX:BBB) Shares owned: 2,473,584
Insider Michelle Marrandino; 10% owner, director, officer Company: Marble Financial Inc. (TSX:MRBL) Shares owned: 2,098,486 Trade date: March 2, 3, 6 Trade total: $8,200 Trade: Acquisition of 62,500 shares at prices from $0.12 to $0.14 per share Insider Alan Douglas Brimacombe, 10% owner Company: Playfair Mining Ltd. (TSX:PLY) Shares owned: 14,950,000 Trade date: April 8 Trade total: $7,500 Trade: Acquisition of 250,000 shares at a price of $0.03 per share •
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Trade date: April 6, 7 Trade total: $12,000 Trade: Acquisition of 100,000 shares at a price of $0.12 per share
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BUSINESSVANCOUVER
April 13–19, 2020
11
realestate Lease obligations are crushing small businesses REAL ESTATE | Commercial By Hayley Woodin hwoodin@biv.com
A
s a non-essential business, Ontario-founded Bad Axe Throwing has had to close its more than 40 locations to keep the public and its employees safe during the COVID-19 pandemic. “We’re probably – I would say – worse-hit than movie theatres,” said Mario Zelaya, founder and CEO of the world’s biggest urban axe throwing club. “The problem with our business model is people book months in advance, and so not only is our revenue zero, it’s negative because we have to issue refunds for cancelled bookings.” Z el aya re a che d out to t he roughly 35 landlords his company works with to negotiate rent deferral deals. Many, he said, told him not to worry and that they would work out an arrangement. But he sa id one la nd lord – Surrey-based Redstone Group – wanted to renegotiate the terms of his lease in exchange for up to six months of basic rent deferral at 6% interest, amortized over a nearly four-year period. A copy of the lease extension obtained by BIV shows that the offer from Richwood Enterprises Ltd. – a Redstone Group subsidiary – includes an additional twoand-a-half year lease extension with annual rent increases. By January 2027, Zelaya would be paying a basic monthly rent rate 29% higher than what he paid in March 2020. Redstone Group also asked for Zelaya to personally guarantee the lease and included non-disclosure clauses in the contract. “It’s price gouging from a landlord perspective where they’re effectively grinding you for your own personal assets, taking advantage of the situation and renegotiating whole new lease terms, which is just absolutely ludicrous,” he said. BIV made repeated attempts to contact Redstone Group. The company did not return any
vancouver lags Continued from page 7
From March 23 to 29, there were eight overdose deaths in Vancouver, according to the Vancouver Police Department, the highest number in a single week since August 2019. BC Housing and the city have opened 143 beds at the Coa l Harbour and Roundhouse community centre. Each centre has separate rooms with private
tenants have received little to no government support in Canada
“A tenant is still bound by the terms of the lease,” explained Jonathan Vroom, a lawyer with North Shore Law LLP who practises in the area of commercial and residential real estate. In B.C., some residential tenants are eligible for up to $500 in monthly rental assistance from the provincial government. The province has also banned residential evictions during B.C.’s state of emergency, with some exceptions, and tenant rights under the Residential Tenancy Act still apply. That piece of legislation’s commercial counterpart – the Commercial Tenancy Act – offers little protection for commercial tenants, Vroom said. “It’s some archaic piece of legislation that really doesn’t do much. So when it comes to the relationship between a tenant and the landlord, it’s really all more or less decided based off of the lease agreement that they have in place.”
Vroom said most landlords are working w ith tenants to find “very short-term” solutions, such as free rent, reduced rent or rent deferrals in April or May. The B.C. government has also said it hopes savings from its school property tax cut will be passed on from landlords to tenants. But some commercial landlords, with tax and mortgage obligations of their own, say it is not their responsibility to offer a break. Given the situation, Vroom said it would not be surprising to see landlords ask for personal guarantees or include non-disclosure clauses in any lease changes. “It sucks. It’s sad. I have all these clients that have been super successful restaurant owners, business owners, and suddenly out of nowhere they can’t pay rent. It’s been a difficult time for everybody.” According to the Canadian Federation of Independent Business, a quarter of Canadian small businesses were not able to pay their commercial lease or meet their mortgage payments for the month of April. Shahad Rajwani, president of CH Pro Chemical Inc. in Surrey, said he had to scrounge together $6,000 to meet his April lease obligations on two properties managed by Redstone Group. His company supplies chemicals to the restaurant and hospitality industries, both of which have been particularly hard-hit by government measures to slow the spread of COVID-19. “We really don’t have the funds to pay,” Rajwani said, explaining that he was disappointed with what Redstone Group offered his company: a three-month basic rent deferral and one-year lease extension, or a six-month basic rent deferral and two-year lease extension. An email exchange between Rajwani and a Redstone Group leasing director states that basic rent deferral programs are being extended to some of
Redstone Group’s tenants. Additional rent would still be payable – more than $2,300 per month plus tax in Rajwani’s case. The federal government has committed to providing an additional $40 billion in credit to businesses of all sizes. The support, administered through the Business Development Bank of Canada and Export Development Canada in coordination with private sector lenders, is expected to roll out mid-April. Many businesses and industry organizations are calling on the government to do more. “We saw on April 1 a lot of businesses in Surrey, their landlords not passing on those savings that the provincial government helped them with, saying ‘If you can’t pay your rent, you’re out,’” said Surrey Board of Trade (SBOT) president and CEO Anita Huberman. “Where is the humanity in that during COVID-19?” The SBOT has called for more support for small and large commercial tenants and property tax deferrals and protections for commercial tenants, including a moratorium on commercial lease lockouts. Last month, the U.K. government told commercial tenants
in England, Wales and Northern Ireland that they will be protected from eviction if they cannot pay their rent due to COVID-19. The government has introduced a moratorium on the forfeiture of commercial leases for nonpayment until June 30. “This means that commercial tenants who fail to pay some or all of the rent due in the next three months will not face the risk of immediate termination of their leases,” wrote lawyers at the global law firm Squire Patton Boggs, noting the decision will place pressure on landlords’ cash flows and could potentially impact property portfolio values. Australia has announced that commercial landlords must offer small and medium-sized businesses rent waivers and deferrals of up to 100% during the pandemic period and over a reasonable recovery period. Any rent reduction is based on the reduction in business experienced by a tenant, and rent waivers must make up at least 50% of the total rent reduction offered by the landlord. Prime Minister Scott Morrison said last week that he expects Australia will be dealing with the virus for at least six months. •
bathrooms available for people that need to self-isolate. “These two sites were available immediately and have a size, indoor layout and proximity to St. Paul’s Hospital that make them well-suited as emergency response centres for people experiencing homelessness,” said a BC Housing statement. As for hotels, BC Housing said it is conducting “a provincewide inventory of additional locationsfor accommodating
vulnerable populations and is in the process of finalizing agreements with facility providers. We are working with our partners to ensure these additional spaces are secured at below market rental rates.” “As far as I know, no homeless people have been moved to hotels,” Swanson said. When asked April 4 how many hotels have thus far been secured for Vancouver’s homeless, Matthew Borghese, BC Housing’s
senior communications adviser, said, “We are still finalizing details.” T h e BC Hotel A sso ciat ion (BCHA) estimates that 60% of the province’s hotels have closed since the pandemic began, including more than 20 in Metro Vancouver. The association expects more will close in the coming weeks. “While BC Housing is the lead agency on this file, many hotels across British Columbia are
enthusiastically raising their hands to assist with the everchanging impact of COVID-19, and the most vulnerable are included in that important work,” said BCHA President and CEO Ingrid Jarrett. “Hotels have, for many years, stepped up when needed to assist in times of need, and this crisis is no different.” Neither BC Housing nor BCHA could name any Metro Vancouver hotels preparing to open their doors to the homeless.•
We’re probably – I would say – worse-hit than movie theatres
[] Mario Zelaya Founder and CEO, Bad Axe Throwing
emails, calls or messages. Zelaya said his only option is to pay rent. If he doesn’t, he would find himself in default and faced with paying hundreds of thousands of dollars. T he situation highlights a challenge faced by businesses across the country that have little to no revenue coming in due to COVID-19, and have little to no government support to help them pay their leases.
Bad Axe Throwing has had to shutter all of its more than 40 locations due to government measures to slow the spread of COVID-19 | submitted
12
BIVLIST
BUSINESSVANCOUVER April 13–19, 2020
Biggest B.C. starts in 2019 BiggestEstimated B.C. construction construction starts in 2019 cost of project Ranked BY | RANKED BY | Estimated Rank Project name, municipality '20
cost of project
Project type
Description
Developer/owner Website
Start date
Completion date
Estimated cost
LNG Canada Facility, Kitimat
Oil and gas
LNG Canada1 lngcanada.ca
Early 20192
Late 2024
$36 billion
Coastal GasLink Pipeline Project,
Oil and gas
Annacis Island Wastewater
Utilities infrastructure
Coastal Gaslink Pipeline Ltd coastalgaslink.com Corporation of Delta
Second Narrows Water Supply
Utilities
Summer Late 2023 2019 Spring Early 2020 2019 Early 2019 Spring 2024
Sea and Sky Residential
Residential
Centerm Expansion Project, Vancouver
Port and harbour facilities
LNG terminal facility located on the former Methanex facility site. The project will include a gas liquification plant, storage tanks, a marine terminal and a rail yard. A water treatment facility and flare stacks will be constructed on the site Construction of a 650 km natural gas pipeline from the Dawson Creek area to the proposed Shell LNG facility in Kitimat Upgrades to treatment plant secondary clarifier and associated infrastructure Construction of a drinking water supply tunnel from Vancouver to Burnaby Residential development with over 900 homes on 53 acres. Will include 986 units and a 17,000-square-foot amenity centre Project will include expansion of the container terminal and yard and terminal capacity from 900,000 TEUs to 1.5 million TEUs
Pacific Residence, Vancouver
Educational services
1 2 Dawson Creek
3 Treatment Plant Upgrades, Delta 4 Tunnel, Vancouver
5 Development, Squamish 6 7
Gilmore Place Mixed-Use
8 Development, Burnaby
Grandview Heights Secondary,
9 Surrey 10
11
First Baptist Church Redevelopment, Residential/commercial Vancouver
Capilano Substation Upgrade Project, North Vancouver
Utilities infrastructure
Highway 1 Illecillewaet Four Laning,
Transportation infrastructure
One Water Street Condominium,
Residential
Coquitlam Transfer Station,
Utilities infrastructure
Spectator Arena, Surrey
Recreation
12 Revelstoke 13 Kelowna
14 Coquitlam 15
Construction of 934 new beds on University of British Columbia campus adjacent to the Walter Gage Residence. Project will include food services and 220 below-grade parking stalls Mixed-use residential/commercial Residential and commercial development in a mixed-use highrise complex up to 64 storeys in height Educational services New school accommodating 1,500 secondary students Redevelopment of the First Baptist Church site includes seismic upgrade and partial restoration and designation of the interior, counselling offices and 37-space daycare. Construction of a sevenstorey building with 61 units of social housing, and a 57-storey tower with 331 units of market housing called the Butterfly This project will address the existing asset health, reliability, safety and environmental issues associated with the Capilano Substation, and to ensure that the capacity of the substation meets the longterm area need The project, 40 kilometres east of Revelstoke, will include widening of 2.5 kilometres to four lanes and expanding the Illecillewaet brake check station Two towers of 36 and 29 storeys, 408-unit development with groundlevel retail space Replacement of the transfer station with a 74,000-square-foot facility, recycling station and an underground utility system including a landfill gas collection system Development of recreation centre near the Scott Road SkyTrain station, including three arenas and a fitness centre
Sources: B.C. government's Major Projects Inventory and BIV research. 1 - Joint venture participants: Shell Canada Energy, Petronas, PetroChina, Mitsubishi Corp and Kogas Canada LNG 2 - Site clearance completed by the end of 2018
City of Vancouver metrovancouver.org/secondnarrows BlueSky Properties seaandsky.blueskyproperties.ca Vancouver Port Authority portvancouver.com/development-andpermits/development/centermexpansion-project UBC Properties Trust vancouver.housing.ubc.ca/pacificresidence-construction Onni Group onni.com/gilmoreplace School District No 36 surreyschools.ca Westbank Projects Corp westbankcorp.com
Summer Late 2020 2019 Summer Late 2021 2019
$6.2 billion $550 million $400 million $350 million $250 million
Early 2019 Fall 2021
$165 million
Spring 2019 Spring 2019 Summer 2019
Late 2022
$100 million $93 million $91 million
BC Hydro
Spring 2019
Spring 2024 $87 million
B.C. Ministry of Transportation and Infrastructure
Spring 2019
Spring 2022 $85 million
North American Development Group nadg.com/onewaterstreet.ca Metro Vancouver metrovancouver.org
Early 2019 Fall 2021
City of Surrey
Spring 2019
September 2021 Late 2022
$65 million Early 2019 Spring 2020 $62 million Opened early 2020
$52 million
Business in Vancouver makes every attempt to publish accurate information in the List, but accuracy cannot be guaranteed. Researched by Anna Liczmanska, lists@biv.com.
Next week’s list – Biggest commercial printers in B.C.
briefs Recreation
B.C. government shuts down provincial parks in response to pandemic Pinecone Burke Provincial Park will close to the public after the provincial government moved to shut down all B.C. parks in response to the COVID-19 outbreak. The decision follows federal and provincial directives that people should stay home to minimize the transmission of the
novel coronavirus. The measure is being described by the provincial government as “temporary,” meaning people shouldn’t expect to be allowed back in until further notice. “We tried to provide safe spaces for people to get some exercise and fresh air in
our beautiful parks,” said Minister of Environment and Climate Change Strategy George Heyman in a press release. “But it has proven too challenging to maintain a safe distance between visitors. This action is difficult but necessary. We look forward to the day we can welcome people
Business in Vancouver is currently seeking BC’s outstanding CTO’s in private, public sector and non-profit organizations.
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back to our wonderful parks.” The ministry said the decision to close the park system was made after hearing from the RCMP, local governments, First Nations, local search and rescue outfits and the public. – Tri-City News
bivlist
BUSINESSVANCOUVER
April 13–19, 2020
13
Average value skyrockets for new construction projects ANALYSIS | Costs
for major projects get larger while costs for smaller starts struggle
By Albert Van Santvoort avansantvoort@biv.com
T
he value of British Columbia’s largest construction starts have skyrocketed over the past year, according to data collected for Business in Vancouver’s Biggest B.C. Construction Starts in 2019 list (page 12). The average value of the largest construction starts grew 1,404% to $2.97 billion in 2019, up from
$197 million in 2018. However, that g row th was largely the result of the stratospheric value of the No. 1 new project, LNG Canada’s Kitimat liquefied natural gas export facility. Even though LNG Canada is an outlier, the value of other large construction starts in the province also swelled. The No. 2-ranked Coastal GasLink pipeline project, valued at $6.2 billion, is nearly 10 times the size of the $650 million project
ranked second in 2018. When LNG Canada is excluded, the average construction start value still grew 209.2% to $610 million. While the recent year’s growth is impressive, the average deal value, when excluding the LNG Canada project, did not surpass the 2016 high of $668 million. As top construction starts in the province enjoy significant growth, smaller projects lower on the list have been struggling.
When LNG Canada is excluded, the average construction start value still grew 209.2% to $610 million
The median construction start value on the list was $100 million – the second lowest level in five years. The median construction start value fell 23.1% in 2019 from its five-year peak of $130 million in 2018. The LNG Canada facility is likely the largest project in the list’s history. In the last five years, the only project to come close to its size was the Site C dam in 2016, at a value of $8.3 billion. •
Average estimated costs for B.C. construction starts (2016-20)
Costs for the biggest projects have increased while costs for their smaller counterparts have remained stagnant
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Estimated costruction start cost (billions)
$3 2.5 2 1.5 1 0.5
2016
2017
2018 Average
2019
2020
Median
Source: biv list
Average estimated cost of construction starts skyrocketed in 2019
LNG Canada, Coastal GasLink projects are the main drivers of the huge spike in value for B.C.’s major construction starts
Percentage change in construction start value
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Source: biv list
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14
BUSINESSVANCOUVER April 13–19, 2020
Insights
Publisher; Editor-in-chief; vice-president, editorial, Glacier Media | Kirk LaPointe, 604-608-5183 Managing editor | Timothy Renshaw, 604-608-5131 Deputy Managing editor | Mark Falkenberg, 604-608-5174 online editor | Emma Crawford Hampel, 604-608-5138 Business in Vancouver is owned by Glacier Media Inc., 303 West 5th Avenue, Vancouver, B.C. V5Y 1J6
COVID-19’s deep debt teachings
H
ere’s another economics lesson from COVID-19’s school of hard knocks. File it under dangerous debt accumulation. That danger has been masked for years by relatively buoyant economic times and low-interest-rate regimes, but when a hammer blow out of left field from a devastating force like a global pandemic hits economies, businesses and consumers as hard as COVID-19 has, debt accumulation becomes a life-and-death factor for
Saving for a rainy day is all but a lost art in Canada many businesses. The daily roll call of job losses and business closures and bleak fiscal outlooks provides a disturbing picture of how the pandemic is inflicting financial damage at every level of the economy. The depth of debt accumulation prior to 2020’s detonation of the pandemic business bomb will determine how deep and how long lasting the damage will be for governments, businesses and consumers. Data from consumer credit reporting agency TransUnion for 2019’s
last laugh
fourth quarter already showed the number of Canadian consumers with seriously delinquent credit payments up 37 basis points year-on-year to 5.61%. Insolvency rates were up 11.5%. Since then the coronavirus pandemic has ripped quantitative-easing bubble wrap from around all businesses and consumers gambling on continuing to carry heavy debt loads. For many it will prove fatal to their businesses; for others it will dramatically lengthen post-pandemic recovery time. The federal Liberal government’s actions to provide support to businesses and workers have been swift and decisive. But the long-term costs of those actions have yet to be accurately calculated. Bank on it being far more than originally estimated; bank, too, on it being a heavy long-term albatross around the necks of Canadian taxpayers already being saddled with debt from a federal government that, as the Fraser Institute recently documented, has recorded the highest per-person spending of any Canadian federal government. Saving for a rainy day is all but a lost art in Canada. COVID-19 has underscored why the country desperately needs to rediscover it once the worst of the pandemic is done.
Replacing Trump with Biden might make America great again
Podium Kirk LaPointe
F
or as long as I’ve lived – and these days, it feels like a very long time – America has been an object of our envy and our smugness in Canada. It’s in so many ways the greatest country, if one step short of exceptionalism. My theory as a kid on why its economy was more advanced was that Canadians had to get in and out of winter clothes for months each year, thus curtailing our productivity. There is more to it, I’ve found. It was impressive how America would win the Olympics, make the best movies, create (then) the best cars, perfect fast-food takeout and take us
by the hand and bring us into the G7. When it would speak moistly, as we now call it, we would catch a cold. But when it was on fire, we got red-hot. No one has benefited like us with the world’s pluckiest consumers nearby. We send three-quarters of our exports there, and it sends one-sixth of its our way. We have treated each president that came along the way a middle manager assesses a new CEO: What will it mean for me? Might he (sorry, all are “he”) discomfort my comfort with the last guy? How can I remain a favoured underling? We traditionally set up a visit – made sure it was his first to take – and our guy and their guy stood at the microphone, the only time we would be the elder partner, to welcome him to a job we couldn’t imagine holding. We would then get along. Minor disputes rarely became major. The ledger was more helpful than hurtful. We saw no reason to sweat.
what’s your opinion?
Then came 45. As our neighbour, Donald Trump has been excavating at all hours of the night for threeplus years, deconstructing and reconstructing, sending architects back to the drawing board, changing the plans, reading the instructions upside down, firing the contractors, suing the suppliers, swearing at the work crew, backing the truck into the gas line, confusing the water and sewer pipes, racking up an obscene over-budget, refusing to pay. He surprised us in taking office, stunned us in keeping it, and squandered all the goodwill all presidents in our lifetime had built with deft nuance that rarely lorded over us their obvious advantage of position. Last week saw the annual Anti-Bullying Day. We ought to have been wearing pink shirts with Trump emblazoned, so coarse and crude and corrupt have been his words and deeds, so thankless has he been to have a meek and mild country to the
north that simply craves benign neglect as our relationship’s central feature. We thank his team and ours for keeping us from him and him from us at crucial moments. The best we can say is we could be worse off and can’t trust him. This is likely how people feel in a drug cartel town, on constant tenterhooks, daring not to look askance or say something that could be taken the wrong way. He nearly killed a bunch of us last week in his petulance about N95 face masks from 3M, which had been serving our market for ages (and deriving the mask’s pulp from a Nanaimo plant). Thankfully, somebody pricked his pique once more. But we long ago wish we could have ostracized him. He opened a trade deal with bluster and sealed it with blather at our expense, understanding less than a grade schooler on what trade surpluses mean, much less the fact of our interdependence and value of our alliance. Certainly we have leaned
toward smugness more than the envy in his era. Last week’s concession by Bernie Sanders that his Democratic run was done disappointed the American left, but ought to please what is left of America. Sanders has been right about how America has strayed from its course, but his candidacy would have been incumbent red meat. Joe Biden has lost a step but knows the dance ahead, and if he can steady the ship of state for the next person, we can take his milquetoast vision over the monstrosity. I’ve watched six Trump briefings on COVID-19 and can’t find words for what I feel. Watch one, but have someone between you and the screen for its safety. I was shocked in 2016. I hope not to be smug in 2020. I want to be envious again. • Kirk LaPointe is the publisher and editor-in-chief of Business in Vancouver and the vice-president, editorial, of Glacier Media.
| BIV welcomes readers’ opinions. All letters, including those sent by email, must include the author’s name, address and daytime telephone number. Business in Vancouver, 303 West 5th Avenue, Vancouver, B.C. V5Y 1J6. Email: news@biv.com. We reserve the right to edit for brevity, clarity and legality.
INSIGHTS
BUSINESSVANCOUVER
April 13–19, 2020
15
Politicians score mixed reviews on their pandemic performances
Podium mario canseco
A
s Canadians continue to wonder when social distancing guidelines will be loosened, the level of satisfaction with the way various levels of government have dealt with the COVID-19 outbreak remains high. However, not all provincial leaders are faring equally, and there is little appetite among Canadians to have a different person in charge of the federal response to the crisis. Research Co. and Glacier Media began tracking these views last month. In early April, the positive perception among Canadians of their municipal governments increased by five points to 69%. We have seen some cities tightening existing regulations and making changes to things they can control, such as parking enforcement. The level of support for the actions of the federal government is also high, jumping two points to 68% since March. In two regions – Atlantic Canada and Ontario – more than seven in 10 residents are satisfied with
Ottawa’s handling of COVID-19 (78% and 71%, respectively). Majorities of those living in British Columbia (68%), Quebec (67%), Saskatchewan and Manitoba (also 67%) and Alberta (56%) concur. Back in October, the federal Conservative Party received more votes but won fewer seats than the Liberal Party, leading to a minority government headed by Justin Trudeau. When Canadians are asked if any one of four Conservative politicians would be doing a better job handling this crisis, yearning for change is muted. A third of Canadians (34%) think former prime minister Stephen Harper would be doing a better job than Trudeau in charge of the COVID-19 file, but one half (50%) disagree. Harper’s numbers on this question are high in Alberta (58%) but drop elsewhere. Only 25% of Canadians are convinced that current opposition leader Andrew Scheer would be doing a better job than Trudeau on COVID-19. The numbers are even lower for two candidates seeking to supplant Scheer: Peter MacKay (23%) and Erin O’Toole (17%). MacKay and O’Toole face an added difficulty. While most people who voted for the Conservatives in 2019 believe Harper (68%) and Scheer (51%) are better suited for this crisis than Trudeau, the proportion
A third of Canadians think former prime minister Stephen Harper would be doing a better job than Trudeau in charge of the COVID-19 file, but one half (50%) disagree drops to 42% for MacKay – a man who has held four federal cabinet positions – and to 28% for O’Toole. Compared with March, the level of satisfaction with the actions of provincial governments on COVID-19 improved by seven points to 77%. The way in which Canadians are looking at their premiers, ministers and health authorities is not uniform, especially in the four most populous provinces. In Quebec, the provincial government improved four points to 88%. Ontario is the biggest gainer, adding 12 points and reaching 78%. British Columbia is slightly up to 72%. Alberta is the only major province with a negative drift, falling eight points to 57%, by far the lowest satisfaction in the country. Alberta’s weakness becomes more obvious when Canadians are asked if their previous provincial administration would be doing a better job handling this crisis. We must remember that
in these four provinces, the current heads of government are all first termers, taking office in 2017 (British Columbia), 2018 (Ontario and Quebec) and 2019 (Alberta). Voter’s remorse is not a significant issue in British Columbia and Ontario, where just over a third of residents (35% and 36%, respectively) believe Christy Clark and Kathleen Wynne would be doing a better job than John Horgan and Doug Ford. In Quebec, in spite of the high approval for François Legault and his administration, residents are practically split: 42% stand by the current government while 38% think this crisis would be better handled by former premier Philippe Couillard – a medical doctor. In Alberta, the numbers are bleak for Jason Kenney. A majority of residents (54%) think former premier Rachel Notley would do a better job handling COVID-19, while 29% prefer the current premier – a 25-point difference. Two governments with vastly different ideologies – in British Columbia and Ontario – have managed to keep the public happy. There is little longing for premiers Horgan and Ford to be supplanted. Quebecers give Legault’s team the highest approval in the country, but voters are still uttering a “what if” when thinking about Couillard. Albertans are not particularly
thrilled with Kenney, and not all of it is a side-effect of COVID-19. We found in late December 2019 that 56% Albertans thought things would be better with a different premier. At the time, animosity towards Ford in Ontario was higher (60%). A few months later, one is extending beyond the base while the other one’s imploding. The differences between Ontario and Alberta point to a problem that is not rooted in ideology, but in delivery. At this point, approval of the actions related to COVID-19 taken by Ottawa in Alberta, where the federal Liberals received just 14% of the ballots cast in the last federal election, is practically the same as satisfaction with a provincial government that garnered 55% of the provincial vote in the same calendar year. And while Horgan, Ford and Legault do not need to worry about three retired premiers, Kenney will still face Notley in the legislature. • Mario Canseco is the president of Research Co. Results are based on an online study conducted from April 6 to April 8 among 1,000 adults in Canada. The data has been statistically weighted according to Canadian census figures for age, gender and region. The margin of error – which measures sample variability – is plus or minus 3.1 percentage points, 19 times out of 20.
To help soften COVID recession, cities should build more homes Recent research found that, among other factors, cities that better respond to growing housing demand with commensurate Podium new construction Josef Filipowicz experienced shorter, lessanadians have become damaging recessions
C
accustomed to robust home-price appreciation in recent years, notably in southern regions of Ontario and British Columbia. Things look far less certain these days, thanks largely to the COVID-19 pandemic. Will the current slowdown in economic activity permeate the housing market, leading to stagnant or negative price growth? If yes, what will this mean for the broader economy? What will it mean for housing affordability, which has eroded significantly in many Canadian cities over the last decade? While no one can predict the future, we can glean important insights from past experiences, including the U.S. housing market crash that helped precipitate
the 2008-09 Great Recession. Here’s what happened then. U.S. home prices rose rapidly throughout most of the 2000s, peaking between 2005 and 2008, then sharply fell as increasing numbers of mortgage holders defaulted on their loans. This, in turn, triggered the significant devaluation of mortgage-backed securities, the ripple effects of which are well known. A less well known, but increasingly emphasized nuance to this sequence, is that not all U.S. housing markets (and indeed, not all local economies) were affected in the same way. A glance at the Case-Shiller Index (which tracks housing prices)
for different metropolitan areas shows that, while markets such as Los Angeles, Washington, D.C., Miami and San Diego all lost one-third or more of their average home values between 2007 and 2010, major growing cities including Houston, Dallas, Atlanta and Charlotte saw far more muted housing price depreciation, if any at all. Such vastly different experiences between major, growing U.S. housing markets raise obvious questions. Notably, what made places such as Houston and Dallas more resilient to upward and downward pressure on home prices compared to other cities? In the decade that followed the U.S. housing crash, a growing body of academic literature has highlighted the role of local land-use regulations, which can restrict the supply of new homes, in turn creating upward pressure on the price of the existing housing stock (i.e. raise home prices), notably in desirable metropolitan areas (such as L.A. or New York). Indeed, according to periodic analysis by economists at the University of Pennsylvania’s Wharton School, homebuilders
in “superstar” cities along the northeast and west coasts (San Francisco, Boston, Seattle, L.A., New York, etc.) face stiffer regulatory environments. These cities all experienced significant home-price increases during the 2000s, followed by steep declines during the crash. Meanwhile, local governments in the Houston, Dallas, Atlanta and Charlotte metropolitan areas, tend to erect fewer barriers to homebuilding such as long and expensive approval processes or onerous land-use restrictions. This favourable building environment enabled more construction during the boom, keeping home-price growth in check. During the crash, overvalued metro areas in the United States saw prices plummet while these four cities (and others like them), where housing was already “appropriately” priced, avoided the devastating boom-bust rollercoaster. Moreover, recent research found that, among other factors, cities that better respond to growing housing demand with commensurate new construction experienced shorter,
less-damaging recessions. In other words, cities that build more homes when they’re most needed tend to see less home price volatility and are less susceptible to the worst effects of economic downturns. These cities also tend to be more affordable, and if the past decade of price increases in Canadian cities such as Toronto and Vancouver taught us anything, this is a feature worth emulating. No two economic downturns are identical, including the current one triggered primarily by an unprecedented public health crisis. But we can learn important lessons from the past. Notably, cities that build more housing when demand increases are better equipped to avoid much of the pain accompanying an economic slowdown, and they’re also more affordable places to live. Perhaps now more than ever, Canada’s most expensive metro areas would be wise to heed this lesson.• Josef Filipowicz is a senior policy analyst at the Fraser Institute’s Centre for Municipal Studies.
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VRCA news feature
A P R I L 1 3 – 1 9 , 2 0 2 0 v R ca . ca
giving BACK: industry embraces philanthropy BC Children’s Hospital among the many beneficiaries of industry’s charitable efforts By Brigitte Petersen
F
FINDit
rom volu nteer i ng t i me and skills to raising money for charities, Vancouver’s regional construction industry contributes to local communities in more ways than building bridges, hospitals, schools and homes. The industry is a strong supporter of BC Children’s Hospital Foundation (BCCHF) through a variety of initiatives, according to Allison Hepworth, philanthropy officer at the organization. Hepworth, who manages BCCHF’s relationship with the construction industry, said the foundation is “so appreciative” of the sector’s continuing support, which helps fund advances in medicine for children in B.C. “Cumulatively, since 1992, the real estate and construction industries have raised over $24 million, and of that, about $10 million comes from the construction industry through annual corporate giving,” she said. From supporting the Building for Kids signage program to sitting on two of the foundation’s committees, industry members make significant contributions. Companies like Ledcor Group hold fundraisers and organize annual employee and corporate giving for BCCHF, while the Vancouver Regional Construction Association’s (VRCA) 2019 holiday luncheon raised more than $8,000 for the foundation through 50/50 raffle ticket sales. The annual Building for Kids Charity Golf Classic, which celebrates its 25th anniversary this year, has raised about $3 million to date for the foundation. Real estate, construction and development industries combined raise about $1.6 million annually for BCCHF, celebrated during the foundation’s Miracle Weekend telethon on Global BC every May. About half of the money is raised by Re/Max real estate agents, and a significant
Participating in the Building for Kids signage program is one way the local construction industry raises money for the BC Children’s Hospital Foundation | Etro Construction
Mott Electric vice-president Ellisha Mott says employees donate part of their wages to their charity of choice during an annual Day of Giving | Mott Electric
portion comes from the Building for Kids golf tournament, which raised $300,000 in 2019. The construction and development industries raise the rest, supporting the hospital’s most urgent needs, such as new medical equipment and research. Taking the lead Burnaby-based Etro Construction Ltd. supports BCCHF by participating in fundraisers throughout the year. Through the Building for Kids signage program, Etro teams up with
constructive comment B2 VRCA president Fiona Famulak on how the B.C. construction industry is set to help lead B.C.’s economy after the COVID-19 pandemic retreats
Regional real estate, construction and development industries raised more than $1.6 million for the BC Children’s Hospital Foundation in 2019. Celebrating during the annual Miracle Weekend telethon, left to right, are Mike Maierle, Etro Construction’s principal and chair of the foundation’s real estate, construction and development committee, with his two children; committee member Mark Marshall, Pacific Reach senior vice-president of development and construction, and his daughter; and past committee member Carlee Groves with her son | BC Children’s Hospital Foundation
construction project clients and developers to raise money for the foundation. Signs are posted at construction sites listing the names of participating partners and BCCHF, raising at least $10,000 per project for the foundation and boosting the profile of all involved. Mike Maierle, Etro principal, said he hopes to increase amounts raised by building up more partnerships through the recently revamped program. “We’re in the process of really ramping it up right now,” said
Maierle, chair of the BCCHF’s real estate, construction and development committee. “I think that our industry as a whole can do more. I’m hoping that it’ll become the largest component of our committee’s fundraising campaign.” Etro also provides its employees with two paid volunteer days annually to allow them to help out a charity of their choice. “We just think it’s an important part of creating a good culture of giving,” said Maierle. “It feels good to give back.”
FORECAST: Demand for construction B3 faces a mixed outlook in B.C. LEADERSHIP: Pandemic makes strong leadership in the industry more important than ever B4
T he company also plans to have a team participate in the inaugural Brand Battle for Good to create an idea of how to get Vancouver to zero waste. Organized by the non-profit Brands for Better Foundation, the twopart event aims to bring 25 teams from across the city together in the fall to strategize on waste reduction. “We’re on a mission to disrupt how we build today,” said Maierle. “Our industry contributes about continued on page B2
R&D: Many construction companies leaving money on the table when they could be claiming federal tax credits that offset the cost of innovation B4
APRIL 13–19, 2020
s p e c ial n e w s f e a t u r e | V a n c o u v e r r e g i o n al c o n s t r u c t i o n A s s o c ia t i o n
B2
constructive comment
Construction positioned to lead B.C.’s post-COVID-19 recovery Industry’s role as essential service provider brings great responsibility By Fiona Famulak
I In the construction industry, companies that normally compete are proactively sharing best-practice protocols to ensure the health and safety of all workers on site
n four short weeks, governments around the globe have moved to close borders, restrict travel a nd cu rta i l ou r everyday activities and interactions in order to lim it the spread of the COVID-19 virus. In the same four weeks, phrases such as social and physical distancing, self-isolation and “flattening the curve” have become part of our daily vernacular. The effects of the pandemic have been devastating, affecting industries, businesses of all sizes and Canadians from coast to coast to coast. And the deeper ramifications have yet to be felt. Through it all have emerged inspiring examples of public, private and not-for-profit sectors working collaboratively to help their constituents and peers navigate this new world. We have witnessed all levels of government working closely to co-ordinate distribution of essential supplies to the front lines, and at break-neck speed launch financial aid packages that will help businesses to stay
in business, workers to pay rent and put food on the table, and the most vulnerable to be supported. In the construction industry, companies that normally compete are proactively sharing bestpractice protocols to ensure the health and safety of all workers on site. And the Vancouver Regional Construction Association and its many industry partners connect daily to share industry feedback, tools and resources and to liaise with governments. We really are all in this together. Shortly after B.C.’s provincial health officer prohibited mass gatherings greater than 50 people, many of us fielded increasing questions about why construction sites remained open during a global pandemic. People were concerned. There were calls from some segments to shut down the industry for all but essential projects and maintenance, a move that would result in the potential layoff of a large number of the almost 250,000 men and women who work in B.C.’s construction industry. That concern was eased greatly on March 26 when, in the context
of COVID-19 response and recovery, the provincial government clarified the nature of essential services – those daily services essential to preserving life, health, public safety and basic societal functioning – and defined the construction industry as a non-health essential service provider. T he cla ri fication was ta ntamount to a call to action for construction companies to continue to operate if, and only if, they comply with the provincial health officer’s enhanced site safety protocols, in order to keep workers employed and to position our province for recovery. And the corollary is true. If a company cannot comply with the enhanced site safety protocols, then it must close its site until the health concern is addressed, or public health orders have been lifted. Our industry is privileged to be an essential service provider, a role that comes with enormous responsibility, not only for the health and safety of workers and their loved ones, but for the future success of our province.
The industry owns that responsibility. Many companies have moved quickly to implement the new safety protocols so that they may continue building the schools, hospitals, roads, bridges and other essential infrastructure that B.C. needs now and in future. Dr. Bonnie Henry, our provincial health officer, reminds us daily that the actions we take as individuals to mitigate the transmission of the COVID-19 virus influence our future reality. Similarly, the steps that our industry has already taken, and will continue to take, to build safely during the pandemic not only influence B.C.’s ability to flatten the curve but also will help it rebound when public health orders are no longer needed. • Fiona Famulak is president of the Vancouver Re gional Cons truc tion Association, which represents the general and trade contractors, manufacturers, suppliers and professional ser vice providers that operate as both union and open-shop employers in the industrial, commercial, institutional and high-rise residential construction industry.
Giving BACK Continued from page B1
a third of Vancouver’s waste. We believe that it’s time for a change.” Call to action Mott Electric GP employees have been donating at least an hour of their wages every fall since 1997 through the Burnabybased company’s internal Day of Giving (DOG). Mott Electric matches the total raised, plus the amount of any tax benefits, and its volunteer committee decides where the proceeds will go. By 2019, Mott Electric had raised more than $1.5 million for charities, supporting organizations focused on rehabilitation, child hunger, mental health and youth services. “The Day of Giving is really about a call to action, a platform whereby every single employee can be and feel a part of something greater than themselves,” said Ellisha Mott, Mott Electric vice-president. “The idea was that our colleagues would champion this exercise because the money would go directly back into their respective communities. The causes, charities and individuals whom the DOG supports are brought forth by the employees themselves.” Since its launch in 2017, the Mott Electric GP Women i n Electrical Trades Training Fund has provided more than $25,000 in financial support to women
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pursuing a career in the electrical trades. The fund covers the cost of tuition and books while aiming to reduce barriers for women as they work toward their Red Seal endorsement. Mott said the fund is meant to increase the number of women working in the electrical trades and to help address the current shortage of skilled workers. “We need to recognize that women are an enormous labour pool that has not yet been engaged within our industry to its full potential,” she explained. Supporting youths As members of the VRCA U40 Network, young construction professionals raised $10,500 in 2019 for the KidStart youth mentorship program through a variety of ways, from 50/50 raffles to donating part of event ticket sales. “ L a s t ye a r’s to t a l d ol l a rs raised for KidStart was a proud record for us and continues a streak of growth we’ve had going back many years,” said Brian Trann, U40 network chair and WillScot’s Vancouver region
Vancouver Regional Construction Association U40 Network members build a chicken coop at Zajac Ranch for Children, an outdoors facility in Mission for children and young adults with medical conditions. Members volunteer their time each spring, working on various projects | VRCA
territory sales manager. U40 memb ers a l so volu nteer their time each spring at the Zajac Ranch for Children, an outdoors facility in Mission for children and young adults with medical conditions. U40 members have completed projects such as building a chicken
coop and mending fences using materials they’ve had donated. “We help out with whatever l ig ht con st r uct ion projects are needed at the ranch,” said Trann. When U40 members fundraise and donate their time to help underprivileged youth, everyone
benefits, according to Trann. He said he is grateful to be able to help out wherever he can. “I feel like this city and this industry have given so much to me personally,” he said. “It feels great to give back and try to make it a better place for everyone to live.” •
s p e c i a l n e w s f e a t u r e | V a n c o u v e r r e g i o n a l c o n s t r u c t i o n A s s o c i a t i o n APRIL 1 3 – 1 9 , 2 0 2 0
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news
FORECAST: Demand for construction services faces a mixed outlook Housing will be needed, but completions face delays BY Peter Mitham
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he coronavirus pandemic that has driven the global economy into a brick wall will very likely become the textbook example of a black swan event: one that wasn’t expected and whose effects couldn’t have been predicted. But since the crisis was precipitated by neither a slowdown in business nor a drop in consumer spending, Andrew Ramlo, vicepresident of intelligence for the Vancouver real estate sales and marketing firm Rennie Group, believes the long-term outlook for the construction sector remains strong. Households will still be formed, people will still need places to live, and immigration will resume when border restrictions are loosened. “There are some people that, on an annual basis, just have to move,” he said. “It may be postponed a little bit but it’s probably still something that will be contemplated if it was contemplated previously, just at a later date.” This means that many of the conditions remain that existed
Andrew Ramlo, vicepresident of intelligence, Rennie Group: “everybody’s pushing really hard to try and figure out how we can work in this new environment” | Rennie Group
prior to the government imposing restrictions on social contact meant to curb the pandemic. “We have a growing population, and that’s being fed and fuelled by changes at the federal level,” he explained, noting that the federal government boosted its immigration targets on March 12, the day following the pandemic declaration. The targets, subject to review in WE SHARE OUR EXPERIENCE. WE DELIVER DYNAMIC SOLUTIONS. WE BUILD STRONG RELATIONSHIPS.
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November, called for accepting 341,000 immigrants this year, 351,000 in 2021 and 361,000 in 2022. “That’s to deal with the issue of an aging workforce, which is front and centre in terms of the construction industry here within the province as well as nationally,” Ramlo said, adding: “We still need the immigrants to come in.” B.C. typically receives about 45,000 new immigrants a year, or 14% of the national total. Reduced immigration may ease demand for housing, but it will also limit the workers tackling demand from existing residents. Getting things built was already challenged by lengthy civic approval processes in addition to
the labour shortage. In addition, supply chain disruptions have already had an impact on the ability to access supplies, and will continue to do so as manufacturing output slows down due to infections and restrictions imposed to mitigate infection. China and now Italy have both taken a hit to their manufacturing output; many anticipate U.S. capacity being next in line. While governments have offered a l l sor ts of econom ic stimulus, the deeper economic effects of the pandemic have yet to be felt. People who can’t work won’t have income; this will undoubtedly have ramifications for personal savings and economic
activity. “But the big question, and not one I have an answer to is, ‘How long is that?’” Ramlo said. However, the restrictions on social contact may also breed innovation that results in deep and lasting changes to how contracting and sales are conducted. While the construction sector has been slow to embrace technology, the need for meetings and paperwork to take place with minimal in-person contacts will require companies to understand and embrace digital forms of business. “The brokerage guys are pushing really, really hard trying to figure out how to deal with all the issues in terms of signatures, verification, how can we do stuff digitally,” Ramlo said. With open houses discouraged, listing agents are developing virtual tour options, and the use of technology to help buyers envision new projects offered for sale is also increasing. “There’s a lot of stuff going on and everybody’s pushing really hard to try and figure out how we can work in this new environment,” he said. •
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APRIL 13–19, 2020
s p e c ial n e w s f e a t u r e | V a n c o u v e r r e g i o n al c o n s t r u c t i o n A s s o c ia t i o n
B4 News leadership: COVID-19 pandemic is making strong leadership more important than ever “One more day of the crisis brings us one day closer to the upswing,” CEO says By Peter Caulfield
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ost businesses are reeling from the COVID-19 crisis and it’s important for leaders to show strong leadership now,” said Jeff Tetz, chief executive officer of consulting firm Results Canada Inc. (Results). “We’re all in this together, figuring out solutions as we go along. And remember – one more day of the current crisis brings us one day closer to the upswing.” To deal effectively with the current emergency, leaders need to establish guiding principles for their organizations that are strong enough to provide direction, but also sufficiently flexible that they can adjust quickly to changing circumstances. Examples of effective guiding principles, Tetz said, include: •Let your personal values guide your decision-making. •Look after yourself and connect with other people. •Focuson what you can control today that will add value to your business. •Look for alliances and partnerships in places that you might
Jeff Tetz, CEO of Results Canada Inc.: “we have found that the local construction industry is open to collaboration and our construction partners treat us like another subtrade.” | submitted
not have thought of in the past; think outside the box. •Be open – don’t hide your feelings and opinions. •There’s no such thing as too much communication with your
Marie Pin, British Columbia practice director for Results: “we measure the variables that tell how well they’re doing at execution – vision, strategy, talent, leadership, process – and that enables us to identify gaps and opportunities” | submitted
employees and customers. Treat them as friends first and customers or employees second. Results was founded in 1998. The company’s head office is in Calgary, with branch offices in
Edmonton and Vancouver. “We specialize in working with medium-size companies that have great growth potential, but that aren’t doing as well now as they would like to do,” Tetz said. “We provide the tools to enable them to do better, by focusing on execution.” As a strategic partner of Vancouver Regional Construction Association, (VRCA), Results adds value to members of the association. “We bring discipline to execution,” said Tetz. “We have found that the local construction industry is open to collaboration and our construction partners treat us like another sub-trade.” Marie Pin, British Columbia practice director, said Results performs assessments that measure how well an organization executes its plans. “We measure the variables that tell how well they’re doing at execution – vision, strategy, talent, leadership, process – and that enables us to identify gaps and opportunities.” said Pin. For example, are they hiring for fit, and not just for paper qualifications? A nd do e s ever yone i n t he
organization know what its vision is and where it’s heading? “Effective execution enables an organization to be strong and resilient today with the capacity to recover quickly from the shocks it is currently receiving,” Pin said. “Strong leadership is more important than ever, because it provides organizational backbone.” To help VRCA members survive the storm that is COVID-19, Results has put together a comprehensive and detailed readiness checklist. One of the most important sections of the long list deals with how to handle workplace risks effectively, which is something that every construction leader should have on hand now. In case there’s a second wave of COVID-19 infections after this one passes, the checklist includes a catalogue of planning activities, business issues to address in a continuity plan and measures to underpin continuity that will help construction leaders prepare for what may come next. For the complete list, go to https://unleashresults.com/ covid-19/ •
R&D: Many Lower Mainland construction companies leaving tax money on the table Innovation doesn’t take place only in labs; construction industry can also tap research tax credit By Peter Caulfield
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any Canadian construction businesses don’t know it, but they’re eligible for federal investment tax credits that offset the cost of innovation and problem solving in the construction industry. The Scientific Research and Experimental Development (SR&ED, commonly pronounced “shred”) tax credit program enables businesses to reclaim some of the money they’ve spent on developing new – or improving existing – methods, processes, services and products. SR & E D ta x cred its c a n b e claimed by businesses of any size. A lthough the program was introduced almost 40 years ago, many construction companies don’t know about it, even though most of them can get at least some benefit from it. The Vancouver Regional Construction Association (VRCA) and the Canadian Construction Association (CCA) say an important outcome of the SR&ED program is that it encourages construction
innovation of all kinds. The associations have partnered with Invennt Business Inc. management consultants to offer SR&ED tax credit writing services to the Lower Mainland construction industry. Fiona Famulak, president of VRCA, says the B.C. construction industry needs to build faster, greener and more productively, to satisfy new provincial zeroemission and green building standards. “To meet those requirements, we need to be more innovative than we’ve ever been,” Famulak said. “We are thrilled to launch this partnership with Invennt to help and encourage our members to further their innovation goals,” said John Bockstael, past CCA chairman. “The credits will help the industry to remain competitive, grow and reinvest to promote innovation.” “Our goal is to promote and drive innovation in the industry, and this new service will make it easier for our members to have a better chance at getting a SR&ED
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credit,” said Mary van Buren, CCA president. According to the CCA, some in the construction industry perceive research and development (R&D) as something that’s carried out only in laboratories by people in white coats looking through microscopes. But although some construction companies might not realize it, if they have developed and improved construction methods, materials, plans and designs, then they have been engaged in R&D. Examples of research and development include finding easier, safer or greener ways of working,
tackling obstacles in new ways and developing new materials or components. A SR&ED ta x credit can be claimed for any project aimed at: •e x t e n d i n g k n o w l e d g e o r capability; •making an appreciable improvement to an existing process, material or service; •using science or technology to duplicate the effect of an existing process, material, device or product in a new or improved way; or •creating a process or service that extends knowledge or capability. B e n P r itc h a r d , e x e c u t i v e
vice-president of Invennt, says the tax credits are a way of rewarding innovation on construction sites. “Companies that qualify for the program get some of their taxes paid back, typically between 18% and 40% of qualifying expenditures,” he said. Why do VRCA and CCA support innovation? Innovation is strongly embedded throughout the strategic plans of both VRCA and CCA, along with a commitment to integrate technology into their various initiatives, and to imagine where and how technology can be adopted now and in the future. Innovation allows industry to take a proactive versus reactive approach to boosting productivity, enhancing safety and adopting technology. Finally, with more than one out of five construction workers retiring in the next 10 years, VRCA and CCA are actively promoting innovation in the industry in order to attract and retain a techsavvy and creative workforce that will lead to the industry of the future. •