A busy summer has come to an end and the commercial real estate industry now sharpens its focus and channels its energy to move markets forward. While there is hard work to be done in the months ahead, there is nothing we cannot achieve or overcome together!
I am so proud of the collaboration and creative ideas I see creating positive real estate outcomes in communities from coast to coast despite rising interest rates and slowing economic growth. It is also inspiring to see the incredible generosity exhibited by our partners in recent months.
While transaction volumes may have slowed, charitable events and giving certainly have not. CBRE held its 30th Annual Charity Golf Classic outside of Toronto in mid-September and raised over $100,000 for the Canadian Mental Health Association. Thank you so much to our sponsors and over 200 attendees for making our 30th outing such a success! More than $1.5m has been raised from this event over the years for charities across Canada, a proud accomplishment for CBRE Canada.
We have just completed a very successful ICSC Canada, which brings retailers and advisors from around the world to Toronto at the beginning of October. The retail sector is the posterchild for resilience. From pandemic doldrums to uncharted dynamism, the retail sector reminds us all that business is cyclical and better times are always around the corner.
That’s why this edition of Advantage Magazine is dedicated to all things retail!
We have features on the resurgence of the retail sector in the prairies as a commodity boom fuels retail sales growth, as well as a deep dive on the much anticipated revitalization of Rue Sainte-Catherine in Montreal, which is bringing new life to this famous high street.
Speaking of boomtimes, the surge of new residents to Atlantic Canada is creating incredible new opportunities for retailers in Halifax and across the region. We also dig into grocery store competition and food pricing from a commercial leasing perspective.
No matter what property type or asset class you are focused on, we hope that you will find this edition of Advantage Magazine useful for your business ventures.
Let’s stay committed to doing all we can to help each other remain positive and lead our industry and communities to their maximum potential!
One unexpected idea floated by the Competition Bureau is to ban clauses in commercial leases that stop landlords from having competing uses or similar tenants at a property or in the surrounding area.
Exclusive use clauses, known as restricted covenants in leases, effectively make it impossible for landlords to allow rival stores to open up near one of Canada’s Big 5 grocery chains (Loblaws, Metro, Sobeys, Walmart, Costco), who control more than two-thirds of domestic grocery sales.
Those lease clauses allow grocery stores, and other retailers, to ensure that their investments are safe from excessive competition.
Could such commercial lease clauses be adding to rising food prices? What would banning exclusive use clauses mean for retailers, location selection and commercial real estate guidance?
We spoke to Matthew Jackson, Vice President with CBRE’s National Retail Group, to find out.
It may not be common knowledge among shoppers, but exclusions are typical across the retail industry.
“Every retailer from grocers to dry cleaners, even your favourite coffee shop, likely has a clause barring a similar use from the property they are in,” says Jackson. “Only car dealerships and furniture stores don’t generally negotiate for exclusions because they do better when there is more traffic around.”
Banning this widely-used lease clause would be no small adjustment, and a retail veteran like Jackson says it would represent a once in a generation shift. “I think a ban would trigger significant changes in how grocers and landlords approach leases.”
When grocers negotiate leases with landlords, they will typically stipulate that they don’t want competition within the same centre (or adjacent centres that the landlord controls), and they pay a premium on the lease rate to secure that control.
A recent report from the Competition Bureau confirmed what most Canadians know to be true: food costs are on the rise and significant changes may be required to bring grocery prices back down to earth.
Landlords are happy to land a grocery store because they bring in shoppers multiple times a week and that traffic helps boost sales and surrounding tenants. If there were no exclusions, grocers would likely pay landlords a lower rent, which could impact the value of that retail property.
“Government tools are rarely subtle and this change could have a domino effect,” says Jackson. “If there aren’t any restrictions, grocers would offset the rent offering for the potential decrease in sales due to competition. And if they pay less rent, that translates into a lower value for the retail centre.
“So does the landlord want to have the highest rents and the highest value for their retail property and give a grocer exclusions, or not have that exclusivity and have a diversity of other grocery options but lose some value?”
“Even if that decision is taken out of the landlords hands,” Jackson adds, “I’m not sure we’ll see the increase in competition the Competition Bureau is looking for due to some other important factors.”
Real estate isn’t necessarily where the solution to lower grocery prices will be found, Jackson says.
Smaller communities are where this change is likely to have the greatest impact. If a town only has one property that can house a grocery store, then exclusive use terms would stop butchers, bakeries and other independent businesses from locating in that centre. This would limit competition in a significant way. But the bigger culprit in most communities would be supplier agreements.
Large chains have agreements with suppliers to put their products on shelves. Independent stores don’t generally get the same deals as the Big 5, and so they are at a significant disadvantage in accessing the product and competitive pricing they would need to compete, even if they could sign a lease wherever they wanted.
And though there is plenty of room in bigger markets for smaller-footprint competitors like Farm Boy or new entrants like Aldi to co-exist nearby to the bigger grocers and potentially draw some business away, those supplier agreements represent the biggest barrier to entry.
“Real estate isn’t prohibiting new entrants to the market,” says Jackson. “It’s more the control that grocers have through supplier agreements.”
“If potential new entrants want to profit off the success of a Big 5 grocer’s presence, they can’t do it because those grocers have a strong hold on suppliers.”
Jackson advises grocers and other retailers on their long-term real estate decisions.
He anticipates there are a number of ways landlords and grocers might respond in the event that government seeks to limit property controls.
Grocery giants might decide to go on acquisition sprees, snatching up all available properties around their locations as a hedge against competition.
“If they own all the desirable land and key retail centres, then they can dictate which stores open and control their own destiny, versus the unknowns with a lease,” says Jackson. “So it could lead to a grocer shopping spree which then limits competition regardless of the suggested change to lease terms.”
While doing away with exclusive use clauses could increase competition between grocers in sought after locations, Jackson says the change could have unintended consequences that actually result in higher prices for shoppers.
Due to the substantial investment required to build out a grocery store, landlords amortize the cost, typically over a 20-year term, knowing that a grocer could be in that location for 50 years or more.
“But if I’m a grocery store looking at signing up for a 20-year term and then I know in year three the landlord will bring in competition,” he says, “I don’t want to be stuck paying a premium for 17 years.”
“So length of term will be affected. And unfortunately if you shorten term, the investment is amortized over a shorter period, and that means higher rents for the grocery stores.”
“Which is the domino effect again. Because higher rents will eventually impact grocery prices.”
A more effective course of action would be to focus on the aforementioned supplier agreements and how they thwart competition by restricting who can sell what on their shelves and/or at what price they can purchase goods.
“You can attempt to solve for food prices through real estate lease clauses and rents and other things,” says Jackson.
“But if you have 20 new competing grocery stores that can’t get the product on the shelves, then you realize that real estate wasn’t really the problem to begin with.”
“Banning exclusive uses would trigger significant changes in how grocers and landlords approach leases.”
MATTHEW JACKSON CBRE TORONTO
Ben Kelley considers Saskatoon to be Calgary’s sister city. Like Calgary, Saskatoon is a town dependent on resources (agriculture, potash, uranium, oil) and prone to economic booms and busts. And right now, things are booming.
Global population growth and the war in Ukraine have created extraordinary demand for Saskatchewan’s key commodities, including wheat, its staple crop, as well as uranium, with Ukraine Energy recently inking a supply contract with Saskatchewan-based Cameco. Demand is also on the rise for potash, a key fertilizer in agriculture, which outside of Canada is primarily produced in Russia and Belarus. All that commodity-driven activity means lots of people in Saskatoon have good-paying jobs and money to spend, and they’re looking for places to do it.
“Unfortunately, world events have been a boon for us here, and our agricultural and mining industries have had to step up the game with additional production,” says Kelley, a broker in CBRE’s Saskatoon office.
“And it’s having a seriously positive trickle-down impact on our retail market.”
Saskatchewan led Canada in real GDP growth last year, up 5.7% over the year before. Bullish companies are greenlighting capital projects across the province, leading to a surge in migration as firms seek workers for those projects.
“Immigration growth is strong, and wage growth is going through the roof, leading to more and more discretionary income for retail spending,” says Kelley. “And when the retail sales pick up, so does the commercial real estate activity as well as the number of retail jobs Saskatoon has to offer.”
Kelley admits the commodities boom and the swelling discretionary incomes that have come with it “caught us a little off guard.”
High street retail isn’t a big thing in Saskatchewan, save for small parts of Saskatoon. (A new arena planned for downtown Saskatoon is expected to spur the creation of an entertainment and shopping district downtown, like in Edmonton.)
But drive-to suburban grocery/pharmacy/liquor-anchored power centres are Saskatchewan’s bread and butter when it comes to retail sales. “We drive everywhere here,” Kelley says.
Problem is, there are just a handful of new power centre retail projects under development to serve what’s proving to be voracious demand for goods and services.
Dream is working on Brighton Marketplace, with 235,000 sq. ft. of retail space in Homewood, which it’s billed as the largest master-planned community in Saskatoon. But the project is nearly fully leased.
In Rosewood in southeast Saskatoon, Arbutus Properties is developing Meadows Market, the commercial anchor to one of the city’s fastest-growing neighbourhoods.
Kelley and his team are currently marketing phase 2 of the project, which has 180,000 sq. ft. of retail and is anchored by Costco (phase1), Marshalls, Pet Smart, Dollar Tree, Co-op Liquor and Visions.
Meadows Market is more than 80% leased, Kelley says. “And once it’s all taken there will be fairly limited options for retailers seeking space in the city.”
“Putting a new project in play takes a long time, four years likely,” he adds, and construction pricing and rising interest rates have only compounded the challenge of getting new developments underway.
“We had a host of options that have been filled and now it’s down to only a couple of projects, and the pipeline after those is pretty much empty.”
For retailers eyeing a long game, however, Saskatoon promises to be in a strong economic position for the foreseeable future, and that means increasingly fatter discretionary incomes for the tapping.
“Developers are gearing up to figure out what comes next,” says Kelley. “They know they need to respond to this unprecedented demand for retail, so the next few years will be critical.”
Like its sister city, Calgary is also experiencing a retail surge thanks to a strengthening economy.
John Moss, CBRE’s point person for Calgary retail, says 2022 was his team’s best leasing year ever.
He credits a diversifying economy, which is gradually shifting from its oil and gas dependence and expanding to include industries
like tech, renewable energy, alternative mining (lithium), cannabis production, and agricultural carbon capture.
Moss also attributes Calgary’s retail momentum to the rapid influx of B.C. and Ontario residents moving there because they’re sick of the exorbitant cost of living in those provinces. “They looked at their lifestyle and said I can move to Alberta and double the amount of house for the same money,” Moss says.
“That significant increase of residential migration to Calgary is now supporting retail. Residential growth leads to retail expansion.”
Like elsewhere, soaring construction costs and interest rates have led to what Moss calls a “substantial reduction in retail construction” in Calgary.
“It has stalled new development and put pressure on retail rental rates and vacancy in existing properties, which has in turn intensified retail transactions.”
New projects are under way in spite of the challenges.
On the west side of Calgary, Moss and his team are set to launch a new retail project at Truman Development’s West District. Dubbed Gateway, the mixed-use development will include a high street with 170,000 sq. ft. of retail, including a 40,000 sq. ft. grocery store.
Gateway is the first stage of a multi-phase 95-acre mixed-use community that will ultimately comprise 3,500 residential units, 500,000 sq. ft. of retail and 1.2 million sq. ft. of office.
Moss’s team has also been hard at work filling the retail space at The District at Beltline, a project by San Francisco-based Spear Street Capital that saw the ground floor spaces of a former IBM campus revamped to create a retail-focused gathering spot.
“We launched an entertainment and food and beverage hub that has just taken off,” says Moss, noting that every deal there got done during COVID.
“It could not have happened without the landlord believing in the vision and the tenants believing in the merchandising.”
“The trend right now is about amenitizing communities, and landlords are embracing this,” Moss adds. “They’re looking to bring urban cool or trendier tenants out to suburban nodes.
“With COVID people started to stay in their own backyards, and they were less likely to drive places. So the demand is more fickle now and they want quality downtown cool tenants to move to the suburbs.”
“World events have been a boon for us here in Saskatchewan, and it’s having a seriously positive trickle-down impact on our retail market.”
BEN KELLEY SASKATOONMeadows Market in Saskatoon
Pack your loafers and your sandals. Attitudes surrounding business travel are changing, and you’ll need more footwear to keep up.
With the pandemic having popularized remote work, employees across all industries have enjoyed the flexibility of working from anywhere. Now that client visits and conferences have returned, many are taking advantage of company-funded transportation to extend their business trips.
Young professionals, especially millennials, are leading this rise in what’s been dubbed bleisure.
Bleisure is the combination of business and leisure travel. By prolonging work trips, either by staying for the weekend or tacking on a few vacation days, travelling employees can enjoy leisure time and explore more of the city they’re in. They save on personal travel costs while reducing transit-related carbon emissions.
“Bleisure has existed for several years, but hybrid work has made it accessible to far more people,” says CBRE Hotels Director Nicole Nguyen, whose hospitality industry clients have witnessed the exponential growth of this trend over the past 18 months.
Employees can stay fully connected to their jobs while working from anywhere. For some, that means balancing office days with
work from home, while for others, it means enjoying a new city and bringing along loves ones.
“The pandemic put things into perspective for a lot of people,” says Nguyen. “Many are prioritizing a healthy work-life balance and family time. Bleisure travel is well-suited for that.”
Combining business travel with leisure wasn’t always as widely accepted as it is now.
“In previous generations work travel was very formal,” Nguyen says. “People flew to out-of-town meetings in business class and came home as soon as the work was over. Extending trips for leisure or bringing along family members was frowned upon.”
Work and family life were to be kept separate, like church and state, and it was often considered inappropriate to bring a significant other on a work trip. Dialing into meetings was mostly used to connect with distant clients.
But approaches to work have evolved in recent years. More employees are flying in economy rather than business class, or even opting for alternative transportation such as trains or buses.
Email and video call technology has blurred the barrier between work and personal life, and therefore the line between corporate travel with family vacation time.
The hospitality sector is ready to accommodate the demand.
“The infrastructure to support bleisure travel already exists in most places,” says Nguyen. Hotels are equipped with workspaces and conference rooms, and many offer onsite leisure amenities such as spas, pools and restaurants.
Hotels can provide restaurant recos for business meetings, partner with coworking groups, and create tourist itineraries for short visits.
“It’s up to employees to go from work to play,” Nguyen says. “Hotels will be there to assist with whatever they choose to do.”
Evolving attitudes concerning corporate travel are translating into new company guidelines, with some firms encouraging employees to extend their trips.
A few years back Scotiabank implemented a policy requiring employees to take at least one week’s worth of consecutive vacation days to ensure they feel refreshed when they come back to work.
Companies could benefit from the introduction of similar programs to encourage workers to extend corporate travel.
“Prolonging work trips encourages high-performing employees to use their vacation days and helps prevent exhaustion at a time when burnout rates are skyrocketing,” says Nguyen.
Several countries have begun offering digital nomad visas for longer stays. The inability to legally work abroad had been a major limiting factor in the past, but many countries are actively courting people who have flexibility at work.
“In other cultures, work is seen as a means to enjoy life,” Nguyen says. “We sometimes forget that in North America, but things are changing.”
The popularization of bleisure is yet another example of how technology and post-pandemic habits are changing our lives…and vacations!
“Bleisure travel is well-suited for a healthy work-life balance and family time.”
NICOLE NGUYEN CBRE HOTELS
In the last year, layoffs, economic gloom and office downsizings have painted a bleak picture of the tech sector.
“After a period of hypergrowth, the global tech sector is facing headwinds,” says CBRE Canada Chairman Paul Morassutti. “Like many other sectors of the economy, tech has had to adjust to changing economic circumstances with office right-sizing and layoffs.”
But there are plenty of reasons for optimism, according to CBRE’s just-released Scoring Tech Talent report.
The report covers 75 North American markets, ranks the top 50 tech markets in the U.S. and Canada, and outlines tech talent labour market trends amid economic shifts, tech layoffs and increased remote hiring.
Eleven Canadian cities were cited in the report, with eight making it onto the list of North America’s Top 50 Tech Talent Markets.
Last year’s top 10 performers maintained their hold on the higher ranks, with Toronto coming in at #5 – down two spots from last year’s ranking – and Vancouver holding steady at #8. Ottawa (#11), Montreal (#12), Waterloo Region (#18), Calgary (#21) and Quebec City (#35) all climbed up in the rankings, with Calgary improving the most of all ranked markets, jumping up seven spots.
“The scorecard shows how competitive and tightly clustered the top tech markets are right now,” says Morassutti. “Regardless of these short-term trends, Canadian cities have a solid tech employment base and job growth in Canadian markets such as Vancouver, Toronto and Montreal are among the highest in North America.”
Canadian cities topped the charts in several categories. Seven of the eight Canadian markets featured in the Top 50 were ranked as top job markets, meaning they created more jobs than degrees. Toronto, Vancouver and Montreal were considered the top three job markets, generating a combined total of 160,500 tech jobs over the last five years.
Vancouver recorded the greatest tech job growth of all 50 ranked markets, with a 69% increase in its tech workforce over five years.
Calgary ranked second with a 61% increase between 2017 and 2022, while Waterloo Region followed in third with a 45% increase.
Ottawa was once again first in North America for tech concentration, which measures the share of tech jobs in a workforce and is an important predictor of a tech market’s growth potential. The San Francisco Bay Area and Waterloo Region trailed Ottawa on this measure.
Canadian cities are witnessing high rates of population growth among young workers.
Of all the small tech markets covered in the Scoring Tech Talent report, Waterloo Region saw the greatest increase in its population of workers in their 20s and 30s. Toronto, Ottawa and Vancouver were the top five fastest-growing large markets in both demographic groups. High population growth in the 20s and 30s age groups indicates future tech market growth and innovation, according to the report.
Source: U.S. Census Bureau, Statistics Canada, Oxford Economics Canada, 2023.
Canadian cities all ranked as more affordable locations for tech companies relative to U.S. destinations, despite increases in operating costs in the last year. Quebec City earned the title of most affordable city of all 50 ranked markets, followed by Montreal and Edmonton. As lower-cost markets, Canadian cities are ideal destinations for startups and companies looking to expand into new markets.
Three Canadian cities made repeat appearances on North America’s Next 25 list, spotlighting emerging tech markets with appealing opportunities for employers seeking untapped talent.
Halifax was #4 in the Next 25 list, five spots higher than last year’s ranking. London, Ontario ranked #8, having nearly doubled its tech talent population over the past five years. Winnipeg was #18 on the list.
These markets are scored based on a more limited set of criteria than the Top 50, including tech talent employment, wages, growth rates and graduates.
“Canadian tech is on a path to a more normalized, sustainable growth trajectory, which will make for a healthier sector in the long run,” says Morassutti. “You could say that Canada’s tech sector has shifted from office-market juggernaut to a sleeping giant in the short-term.”
Chris Rust remembers when he became CBRE’s sole representative in Victoria.
It was 2008, and Rust, fairly new to the commercial real estate business at the time, felt there was a need for another commercial brokerage firm in Victoria, which had been dominated by Colliers, with J.J. Barnicke taking some of the action.
So he approached CBRE’s then Vancouver Managing Director (and future President and CEO) Mark Renzoni with a proposal, and the two decided Rust would launch an outpost on Vancouver Island, working out of a small shared office space at 1026 Fort Street in downtown Victoria.
Meanwhile, Ross Marshall had been keeping a keen eye on his hometown from Vancouver, where he was working as a broker at the time, and he knew the potential Victoria held for commercial real estate investors. “I also saw how under-serviced the market was.”
In 2011 Marshall made the move over to Victoria, landing a job with DTZ Barnicke. “I didn’t want to work with Colliers or Chris,” says Marshall with a grin. “I wanted to compete against them.”
Rust and Marshall quickly realized they were kindred spirits, both working around the clock to get deals done. They agreed to join forces, with Marshall renting space in the same premises as Rust, “along with a bunch of other entrepreneurs, like luxury car brokers and financial advisors,” says Marshall. “We didn’t have our own office.”
Slowly but surely, however, CBRE’s modest Victoria operation began to grow, and soon the founding duo had hired an assistant and added some junior brokers. “And before we knew it we had taken up the whole office space at 1026 Fort Street, and pushed everyone else out,” says Marshall.
Fast forward to today, and with CBRE Victoria having had several of its best years to date, and growing the team to 12 people, “it’s great to be close and collaborative, but we’re now tripping over each other,” says Marshall. “Relocating means a new exciting chapter for CBRE, our employees and our clients.
CBRE Victoria’s new home will be at The Atrium at 800 Yates Street, a seven-storey, LEED Gold building owned by local landlord Jawl Properties. The lease has been signed and the hope is to be in the new space by the end of 2023.
The office will be built-out in true CBRE fashion with an open-plan concept, inspiring collaboration space, the latest technology and finishes that mirror Vancouver Island’s awe-inspiring beauty.
For Jason Kiselbach, SVP & Managing Director for CBRE in British Columbia, the move to The Atrium signals much more than more square footage.
“This new space represents CBRE’s continued belief in Victoria and Vancouver Island,” he says. “It also reflects our intention to offer the next generation of real estate services and support for our clients on Vancouver Island where there is so much opportunity.”
The space will also offer the design and amenities that reflect the values of a modern workforce. This includes the building’s environmental and wellness features and a variety of workspaces to accommodate different needs.
The new office will better support the growing CBRE Victoria team and provide runway for additional expansion in the market, with increased geographic and asset-class coverage.
“We could have grown our team faster or earlier,” says Rust, “but we wanted quality over quantity. We wanted the right people in place and the right opportunity to come along, and that’s what’s happened ahead of our move to The Atrium.
“All the pieces have aligned nicely and we’re building on that momentum.”
When Rust and Marshall were first building the CBRE business on Vancouver Island, they were taking on whatever listings they could in order to get established, from investment sales to leasing transactions.
“It was obvious to our clients and vendors and purchasers that we were willing to outwork everyone else,” says Marshall. “Our lights were on earlier and stayed on later. In the early days Chris and I were in the office by 6:00 am and often didn’t leave till after 6pm. Every day, not just some. We plain outworked our competition.”
“That’s how we became partners,” adds Rust. “That shared mentality produced results and won us the respect of our clients. It’s the backbone of what we continue to build that differentiates us from the competition.”
Rust and Marshall might have been running a small operation, but they had the might of CBRE’s Global platform on their side, giving them an advantage straightaway. “We were a boutique shop with the world’s biggest firm behind us,” Marshall says.
The two travelled a lot early on, heading to Vancouver and Toronto to meet face to face with clients “who weren’t used to seeing people from Victoria,” says Marshall. “Ten years later, Victoria is more on the radar than ever and I hope we’ve played a small part in that.”
Rust and Marshall worked to put Victoria on the map for institutional and private buyers across North America. “I think we’ve played a huge part in drawing attention to this market with some landmark deals,” says Marshall.
In 2015, for example, he and Rust brokered the sale of Mount Washington Alpine Resort near Courtenay, B.C., (pictured below) to U.S.- based Pacific Group Resorts.
In 2018 Marshall assembled several blocks in downtown Victoria’s Harris Green neighbourhood, which Starlight Investments acquired and now plans a threephase development with 100,000 sq. ft. of commercial and retail space and 1,500-plus residential suites.
Then in 2021 Rust and Marshall brokered the sale of an eight-building, 500-unit rental apartment portfolio, also to Starlight Investments, Canada’s largest residential landlord.
“Once you bring a big player like that to the market, the small and mid-sized guys follow,” Marshall says.
“They’re all wondering, ‘What are we missing? The big guys are in, we should follow.’”
“The fundamentals were always strong in Victoria,” Rust says, “but it took a while for the momentum to build and people to realize there’s huge potential here.”
“There’s better yield on investments and less competition than in Vancouver,” he adds. “We don’t see the lows the other markets see – we might not see the booms either, but it continues to perform very well.
“And now there’s an influx of people moving in from out of the province and country. They see that something is happening here.”
With their new headquarters opening this fall – and a north island expansion on the horizon – Marshall, Rust and their deepening bench of talent will be well equipped to help connect all those people with the right real estate opportunities across Vancouver Island.
“I can’t wait to see what we can achieve with our clients over the next decade,” Rust says.
I just completed my first year of university and spent the summer as an intern at CBRE in downtown Toronto. The experience taught me a lot about myself and made me excited about my career prospects.
For people like me looking for some direction when it comes to work and life, here’s what I’ve learned this past summer.
My first day at CBRE, I was incredibly intimidated by the people I was working with. As time went on, I learned more about myself through listening to other people’s stories and advice.
I decided to go on dozens of coffee chats with people who work at CBRE, in the real estate industry and beyond, to learn what I can do to better myself and be successful in a dynamic and competitive industry like commercial real estate.
If you haven’t mastered the coffee circuit just yet, let me share some insights. Three main points stood out to me. I think they are applicable for anyone deciding what they want to do for work and looking to improve themselves.
Your reputation. This has to do with the work you put out and how you interact with everyone you come across. First impressions are always important, but so is everything you do after! Most people I’ve talked to have said that they act like the person they would want to work with. The baseline is to be yourself, nice and trustworthy. On top of this, find something to be known for, such as being creative, a deal-getter, a strong presenter, a great communicator, a leader, etc. There are many others competing for the same job who have similar qualifications, so find what makes you memorable and unique. And that doesn’t mean making it up; just be who you are and own it.
Your needs. Knowing what you want from your career and lifestyle will help you succeed and find the right path. Look back at your experiences with people, school, and other jobs, and consider what you enjoyed and didn’t. That awareness can help guide you toward the right type of industry, role, or company for you. For example, I want to work with people or clients and have access to creativity and movement. With those guidelines in mind, I can search for roles that align with them. Rather than searching for a specific job, this framework simplifies the process of determining my future career. It also makes the path ahead slightly less intimidating, and what young job seeker doesn’t want that?
The company you keep. Working at a company where there is a culture and environment that works for you is key to determining how you’ll perform. That was a big contributor to my enjoyment this summer. There are many different types of people and personalities that thrive in varying ways. Finding a job where you are challenged, and learning from the people surrounding you, can only help you to be better. Always look to align yourself with people who want to see you succeed and in an environment that makes you stronger.
I still have a lot to experience and decisions to make, but my summer at CBRE put me in touch with some enduring principles that will help guide me going forward.
Not only have I learned a lot about commercial real estate, but I’m clearer about who I am, what I value, and what my value is. Suddenly, figuring out what I want to do for a living seems less daunting.
I’m Rachael Friedman and I know firsthand how challenging the world feels for young people right now. But let me offer some hope.Rachael Friedman (third from the left) and the other CBRE interns atop Scotia Plaza in Toronto.
Calgary isn’t the only city making progress converting office space to housing.
Look no further than Waterloo Region, Ontario.
Canada’s national office vacancy rate has hit a 30-year high as the market faces a perfect storm of challenges, as detailed in CBRE’s most recent Figures report.
And the growing divide between outdated Class B properties and high-performing modern buildings is forcing owners to consider repurposing their older office holdings. The ongoing housing crisis makes this a desirable replacement – if it’s feasible.
Forward-thinking building owners are exploring the possibilities of office-to-residential conversion projects, also known as adaptive reuse, as a two birds-one stone solution. Repurposing underperforming buildings can improve the office vacancy situation – as it has done in Calgary over the past year – while creating much-needed housing supply in city centres.
In Kitchener, Ontario, James Craig, a broker on CBRE’s Southern Ontario Investment Team, is assisting Setman Properties in an office-to-residential conversion project at 30 Duke Street West, a set of sister towers in the city’s downtown.
“Residential buildings in transit-oriented, business districts are in high demand,” says Craig. “So office conversions can put life back into an asset that’s not performing well in its current form.”
When Setman Properties converted the first of the two towers in 2017, they were the first commercial property owners in Waterloo Region to undertake such a project.
“I’d heard about the success of mixed-use projects and thought it would be a good fit for our Kitchener property,” says Denny Cybalski, president of Setman Properties. “The floorplate and structure were conducive to a conversion to residential.”
Initially the scope of the project involved only the conversion of four floors in the smaller Ontario Tower, keeping one floor of the building and the other Duke Tower for office use, while retailers occupied the ground floor podium.
Eventually, however, the success of the first converted floors at Ontario Tower convinced Setman to also transform the remaining office section of the building, creating 33 loft-style one-bedroom apartments.
By 2022, it had become clear that the office market recovery would be a slow one. So Cybalski and his team reassessed their plans for the Duke Tower.
“The office tenants weren’t renewing their leases, we weren’t getting new requests for the space, and occupancy rates were lower than they’d been in our over 20 years of ownership,” he says. “We needed to pivot.”
Cybalski is now waiting to receive the final building permits for the conversion of eight floors at Duke Tower into 128 apartments. This will include 16 affordable units and 24 accessible units. The City of Kitchener has not provided any incentives for these conversions, according to Cybalski.
CBRE’s James Craig is optimistic the project will garner a lot of interest once the conversions are complete.
“The building’s access to downtown transit, colleges and amenities is really appealing,” he says. “With so few apartment buildings on the market in that area, it’s an opportunity for investors to take on a property that promises to perform well in the long run.”
Others in Southwestern Ontario and elsewhere in Canada are starting to follow Setman Properties’ lead in looking at converting struggling office buildings into student housing or apartment units. But there’s a lot for investors to consider before diving into a conversion project.
“You have to take into account the cost of the building itself, the cost of converting and the rents you could achieve,” says Craig. “And with any retrofit, you’re bound to find surprises along the way.”
In the case of 30 Duke Street West, the mechanical systems needed to be reworked to comply with residential building requirements, and remaining office tenants had to be moved to accommodate the renovations.
Obtaining the building permits for that project was also a challenge since the project was the first of its kind at the time.
“Conversions are a lot of work,” Craig says, “but they can be a good way to take a well-located property from obsolete to performant.”
Office-to-residential conversions are all the rage a few provinces over in Calgary.
Three years ago the City of Calgary introduced the Downtown Development Incentive Programs to support the conversion of
underused office space and the demolition of end-of-life office buildings. The program came in response to owners and developers asking for funding to provide additional housing.
These city-sponsored financial initiatives were introduced as part of the City of Calgary’s target to replace six million square feet of downtown office space by 2031. So far 13 projects have been approved.
“The current office market’s economic structure is not sustainable,” says Greg Kwong, CBRE’s Alberta Regional Managing Director. “Older office buildings are struggling to generate acceptable returns.”
But Kwong doesn’t see conversions as the only solution to dealing with outdated office buildings.
“Office conversions will help stabilize vacancy, but it’s important to look at all avenues to reduce our vacancy,” he says. “That involves diversification of the tenant base in the core and providing incentives for international companies to move here. Some buildings will need to be demolished while others will be kept as offices as companies solidify their workplace strategies.”
“Whatever course we take in dealing with Calgary’s older office buildings,” Kwong adds, “the next few years will be critical to revitalizing our downtown and creating a city that’s ready to face the future.”
And while many look to the biggest cities for what comes next, smaller urban centres like Kitchener are also able to innovate.
“Don’t underestimate the savvy and skill of private capital in secondary markets. Our owners see opportunities and have the tenacity to achieve them. It’s exciting that Kitchener can be a leader in office conversions when we already do so many other things well,” says Craig.
“Conversions are a lot of work but they can take an office property from obsolete to performant.”
JAMES CRAIG CBRE WATERLOO REGION
New condos are under construction seemingly everywhere you look, as soaring housing costs and limited inventory force people to consider smaller and more affordable housing options. With less space for belongings and growing families, many are having to turn to self storage for relief.
Clive Bradley, leader of CBRE Canada’s Self Storage Practice Group, says the current downsizing movement has generated a lot of business for the self storage industry.
Demand for storage is strongest in Canada’s big cities, and real estate investors are also turning their attention to self storage, seeing it as an attractive alternative to traditional asset classes such as industrial, retail and office.
“People need storage in good and bad times, so conditions are likely to remain positive for self storage for years to come,” says Bradley. “And it’s a very appealing market for investors; investment returns are good, growth opportunities are abundant, and the investments are widely considered to be recession-resistant.”
But generally speaking, the Canadian self storage market is undersupplied.
In the U.S., where the industry is in the mature phase of its business life cycle, it is generally believed that there are on average five to eight square feet of storage space per capita.
The Canadian self storage market, which is still in a growth phase of its business life cycle, is estimated to have an average national supply of two to three square feet per person. In the Greater Toronto Area, demand for self storage is estimated to be at approximately four square feet per capita, according to Bradley.
In the past, storage facilities in Canada were primarily run by mom-and-pop owners. But Bradley says there’s been a growing trend of market consolidation by bigger players.
“Generally, there are three traditional ways for storage companies to grow or enter the market: buy an existing storage facility, build a new facility or convert an existing commercial building to self storage,” Bradley explains. “High real estate prices in the major Canadian cities are driving both new and existing operators into smaller markets, where prices are more reasonable and competition is less.”
Many mid- to large-sized self storage operators are acquiring self storage facilities in small towns as another way to grow and gain market share.
During the pandemic, Canada saw a spike in demand for self storage facilities. But Bradley says restrictive zoning and planning by-laws and regulations are making it more challenging for owners in some communities to obtain permits and approvals to proceed with their development plans. For example, it has been particularly difficult for self storage projects including shipping containers and portables – a low-cost alternative to traditional self storage buildings – to obtain approvals.
Instead, in markets where office and retail vacancy rates are high, entrepreneurial owners are finding new ways to repurpose existing buildings or integrate storage into new projects. In Toronto, one owner converted an obsolete office building into a storage facility.
“We’ll likely see more creative repurposing of vacant commercial buildings, in whole or in part, into storage, where demand permits,” says Bradley. “However, self storage conversion is by no means a guaranteed solution to turning around problem real estate.”
The self storage industry has had to address fire and safety concerns in its facilities, particularly for women, who are one of the largest user groups of storage facilities. Today, common measures
include internal and external security cameras, well-lit hallways, emergency intercom systems and sprinkler systems – making self storage safer and more accessible.
Some companies offer a pickup model for an additional fee, making it easier for disabled, elderly and vehicle-free users to put belongings into storage.
And new tools are facilitating the storage process around the clock. At fully automated storage sites, users can access their units by inputting a code sent to their phone or computer. New technologies are also reducing the need for onsite staff by helping operators run facilities remotely, optimizing unit pricing based on occupancy rates, and thwarting users with overdue rent or those banned from the premises.
Temperature monitoring technology is also becoming more common. And Bradley expects demand for climate-controlled units will grow as temperatures continue to reach new heights.
“It’s an evolving industry,” says Bradley. “There are always new ideas. Some catch, some don’t. It will be interesting to see how the self storage industry adapts to better service Canadians in the future.”
One thing is clear, self storage is going from niche to the norm. For average users or investors, this is a property type to watch as self storage steps out of the closet and into the limelight.
“People need storage in good and bad times.”
CLIVE BRADLEY CBRE LONDON
With more residents comes more demand for shopping and services. And while East Coast retailers are eager to cater to the needs of newcomers, the larger cities are suffering from a significant retail space shortage. It’s stunting retail growth and driving rental rates higher in the remaining spaces.
To make matters worse, record-high construction costs are impeding new development activity and discouraging business owners from undertaking renovations, which is adding pressure on the existing supply of retail space.
“The population is booming, giving the East Coast a new appeal and retailers new opportunities,” says CBRE’s Rebecca Todd, who does retail deals across Atlantic Canada. “But the lack of retail space in cities is a big challenge for entrepreneurs.
“So forward-thinking retailers are expanding their searches beyond the cities and finding profitable opportunities in alternative markets.”
After years of seeing its labour force shrink, the East Coast experienced a new influx of migration during the pandemic. With the ability to live and work from anywhere, and facing steep housing prices in larger cities, many Canadians opted to move eastward.
“Young people want to settle down but can’t afford homes in larger markets like Toronto or Vancouver,” says Todd. “So they come to the East Coast, where housing is more affordable, there are plenty of job opportunities and they can enjoy a higher quality of life.”
The average home price in Atlantic Canada stood at just over $435,000 in July 2023, while Ontario’s average surpassed $856,000 and British Columbia’s neared $968,000.
While Atlantic Canada’s housing price index rose 17% since 2019, prices there remain far below the Canadian sale price average of $669,000 in July 2023.
40% of new residents in Halifax in 2021 were between 20 to 34 years old
The East Coast has seen an influx of interprovincial migration, with the biggest wave coming from Ontario. New Brunswick saw its number of Ontarian migrants increase by over 223% between 2020 and 2022. Halifax’s population grew 9.1% between 2016 and 2021, making it one of the fastest growing cities in the country. Of the 9,200 new residents who moved to Halifax in 2021, 60% had moved from other Canadian provinces, and over 40% were between 20 to 34 years old.
But Canadians aren’t the only ones moving to the East Coast. The Atlantic Immigration Pilot Program has helped attract and retain skilled foreign workers to New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.
Launched in 2017, the pilot program connected East Coast employers hiring for jobs they couldn’t fill locally with international graduates and skilled foreign workers, and then facilitated with the immigration process.
The pilot program was a success and in 2022, the Atlantic Immigration Program was made official.
Source: Statistics Canada. Table 17-10-0022-01 Estimates of interprovincial migrants by province or territory of origin and destination, annual
Increased immigration is driving demand for goods and services across the Atlantic Region. But the supply of retail spaces is limited.
“Most of the retail deals happening in Halifax are on the ground floor of high-rise towers or mixed-use projects,” says Todd. “The majority of the city’s strip plazas and malls are fully leased, which is new for our market.
“Even places like Sydney (on the east coast of Cape Breton Island) have next to no retail vacancy.”
A few major retailers have managed to secure deals in cities, including some new market entrants.
In 2021 U.S.-based outdoor retailer L.L. Bean made its foray into Atlantic Canada with its first location in Dartmouth, N.S., followed by a second store in Moncton, N.B. in 2022. More recently, Quebec-based fashion retailer Simons announced it will be opening its first Atlantic Canada store in 2024, in a former Sears space at the Halifax Shopping Centre.
But deals in primary markets can cost a pretty penny. According to CBRE’s H1 2023 Retail Rent Survey, Halifax witnessed rental rate increases in five of its eight retail formats in the first half of the year.
“Some retailers are putting their leasing plans on hold to see if prices cool down,” says Todd. “But ambitious businesses are exploring new avenues for growth in the suburbs and rural areas, where rents are more affordable and there is more available space.”
“I’ve seen a lot of activity from restaurant franchises led by entrepreneurial immigrants,” adds Todd. “They’re very driven and eager to find new opportunities across the East Coast.”
In the last few months, she’s fielded inquiries from Canadian-based franchises Mary Brown’s, Pür&Simple and Mezza Lebanese Kitchen.
Restauranteurs aren’t the only ones looking at secondary and tertiary markets. Todd says small format grocery and box stores such as Dollarama, TJX Canada, Giant Tiger and Shoppers Drug Mart are also branching out farther afield.
“Smaller markets offer a unique opportunity for retailers to cater to a growing population without having as much competition as they would in larger locations,” says Todd.
“There’s a wealth of untapped potential to discover if you go just a little bit off the beaten path. The path to the East Coast is now well worn, but we’re just beginning to leverage these new opportunities for retails.”
“Smaller markets offer retailers an opportunity to cater to a growing population without having as much competition.”
REBECCA TODD CBRE HALIFAXRebecca Todd of CBRE Halifax
CBRE has been working behind the scenes to bring a range of exciting new retailers to the street.
“There’s been a huge uptick in deals along Sainte-Catherine since the start of the year,” says CBRE Vice President Christopher Rundle.
“Retailers want to be in the heart of the action, and as Montreal’s main commercial artery, Sainte-Catherine is the obvious choice.”
In just the last few months, Rundle and his colleague Amanda Herbu have helped brands such as Rogers, Starbucks and local streetwear brand Centrall relocate to fresh spaces or set up flagship stores on Sainte-Catherine.
They’ve also helped introduce new retailers to the Quebec market, including Jianyang-based hot pot franchise Haidilao.
All this is a welcome change from the ravages the last few years have wrought on downtown Montreal.
Retailers struggled in the early days of the pandemic, as in-store shopping evaporated overnight and headlines were quick to proclaim the impending death of brick-and-mortar retail.
But it has since become clear that online shopping will not replace in-person experiences, rather it will complement them in the postpandemic retail ecosystem.
A CBRE survey released earlier this year indicated that 7 out of 10 shoppers preferred the in-store experience over online, and that Gen Zers were less likely to shop online than Millennials.
“Brick-and-mortar is still important to retailers and to consumers,” says Rundle “People need a place to try things on, feel and touch the products, and experience the brand they’re buying from.”
The recovery of Sainte-Catherine’s retail is a testament to this.
According to CBRE’s H1 2023 Retail Rent Survey, asking rents along the street ranged between $90 to $200 per square foot at the end of last year – some of the highest in the country.
And landlords are enticing new companies by taking creative approaches to dealmaking by negotiating on tenant improvement packages, co-investing in renovations, and offering months of free rent.
Major brands such as Nike and Apple are inaugurating new flagship stores on the street. Even digitally native brands are expanding into
If you’ve strolled along Montreal’s Sainte-Catherine Street West lately, you’ve noticed some major changes: new sidewalks, new faces and lots of new storefronts.
physical locations and demonstrating the valuable role of in-person customer experiences.
“Retailers who grew during the pandemic are rushing to get brickand-mortar locations,” says Rundle. “Alo Yoga is a perfect example of that.”
The Los Angeles-based luxury athletic wear brand entered the Canadian market in 2022 with the opening of a flagship store in Toronto’s Bloor-Yorkville area. Until then, the digital-first company had focused its expansion efforts on the U.S., so Canada represents its first foray into the international market.
Seeing the success of the Toronto stores, Alo will be deciding on which other markets to enter in the coming months and Montreal
is sure to be on the list. Another digital native, Mejuri, recently opened a new store in the area, adjacent to Ste-Catherine Street.
“Downtown Montreal’s appeal, with the help of the Sainte-Catherine revitalization, shows that brick-and-mortar still plays an important role in the retail ecosystem,” says Rundle.
Despite all this activity, Rundle and his team have had to conquer a quintessential Montreal adversary in their quest to entice retailers downtown: the infamous orange construction cones.
In 2019, the City of Montreal launched the first phase of the Sainte-Catherine Ouest Project. Spanning Sainte-Catherine Street West between De Bleury Street and Atwater Avenue, the project entails replacing century-old underground infrastructure and reconfiguring public areas by widening sidewalks, providing additional seating, and planting trees along the freshly laid cobblestone street.
While that may sound lovely, convincing tenants to move into an area undergoing a major overhaul has been a challenge at times.
“At the start, tenants were put off by the construction, the noise and the traffic,” says Rundle. “We’re helping them see the long-term benefits of this disruption to their business.”
To help them to better envision how the revitalization will look when all is said and done, Rundle shows his clients the completed first phase, the eastern segment of the project. This renovated section is nearing zero vacancy and is busier than ever before. And with tourism recovering to pre-pandemic levels, there’s even more optimism – and shopping – on the horizon.
“It really feels like downtown’s coming back to life,” Rundle says. “It goes to show that when you combine quality retailers and a more welcoming environment, people will come back and the core will thrive.”
“When you combine quality retailers and a more welcoming environment, people will come back and the core will thrive.”
CHRISTOPHER RUNDLE CBRE MONTREALChristopher Rundle of CBRE Montreal
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