real estate development
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The not-so-clear impact of aging Baby Boomers on residential real estate
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Hamilton Recast Hotel Investment Trends Canadian vision in Algeria
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what’s on BUILDING.ca
16 > The Coming Grey Wave /
While we can’t seem to agree on what Baby Boomers want as they enter their senior years, we do know they will change the face of residential real estate in this country. To what degree, only time will tell. By Rhys Phillips
21 > Make It Better /
Steel may be dead, but Hamilton is experiencing a phoenix-like rebirth based on bottom-up, organic urban renewal strategies. By Peter Sobchak
READ > From brownfield to Pan Am Village How 2015 Pan Am Games athletes will be housed on a reclaimed industrial wasteland.
24 > Arabic Lines by Canadian Hands /
Two Québec firms are helping Algeria tackle its growing urban population with a new $2.4-billion neighbourhood development project. By Peter Sobchak
HEAR > P3s in Australia The challenges and victories the Australian government experienced in setting up a P3 program.
27 > Welcome to Hotel Canada /
Canada’s hotel market continued its strong and stable trajectory in 2012, and increased optimism in the market will help further fuel transaction activity in 2013. By Russell Beaudry
EXPLORE > Three Harbour Green A new condo by IBI/HB Architects in the Coal Harbour district of Vancouver.
IN EVERY ISSUE
5 > Editor’s Notes 6 > Developments 12 > Market Watch 14 > Legal 30 > Viewpoint
Inspired by the sinuous lines of Arabic calligraphy and arabesques, the El-Menia urban plan proposes a symbolic relationship between residents and the surrounding territory. Image courtesy of Lemay.
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life’s a breeze
Because it expands to fill every gap and crevice, closed-cell spray polyurethane foam keeps the outside out. Before a house can become a home, those inside have to feel comfortable. And nothing brings comfort and energy savings like closed-cell spray polyurethane foam insulation (ccSPF). Not only does ccSPF offer superior R-value, it is a certified* air barrier and a vapor retarder that significantly increases building strength and durability. CcSPF is the preferred all-in-one solution for new construction or retrofits. In short, ccSPF formulated with a Honeywell blowing agent delivers comfort while cutting heating and cooling costs†. Download the insulation comparison chart by scanning the QR code to see why ccSPF is the choice that lets everyone rest easy. Also, ask about Honeywell Solstice™ Liquid Blowing Agent – our latest nonflammable, non-ozone depleting, low global warming potential ccSPF blowing agent. *According to ASTM-2178 testing by the Air Barrier Association of America when a 1” minimum of ccSPF is applied. † Savings vary. Find out why in the seller’s fact sheet on R-values. Higher R-values mean greater insulating power. Scan for the insulation comparison chart
Call 800-631-8138 or visit www.honeywell-blowingagents.com for more information. © 2013 Honeywell International Inc. All rights reserved.
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Editor / Peter Sobchak Art Director / Roy Gaiot Legal Editor / Jeffrey W. Lem Contributors / Russell Beaudry, William J. Ferguson, Megan J. Lem, Rhys Phillips
Circulation Manager / Beata Olechnowicz (416) 442-5600 ext 3543
One of us is gonna die young
How many times do advertising campaigns attempt to pull on our heartstrings by asking “What would you give to spend a few more hours a day with your family?” All the time, right? Yet Metrolinx is trying to give us exactly that — get us home faster! — with their suggestions on how to fund the GTHA public transit build out, and already it looks like the issue will be dead on arrival when it gets to the Provincial Legislature. The expected reason? No one wants to pay more taxes. And a weak minority government won’t risk losing their position by taunting parties that are founded on promises of “no more taxes!” Everyone hates taxes. What else is new? It didn’t take long on May 27 when Metrolinx suggested that funding come from four new taxes for voices to begin raising opposition to one or more of them. For example, the proposed parking tax for offstreet non-residential parking at an average rate of 25 cents per parking spot per day: in response, REALpac chairman Stephen Taylor, speaking on behalf of several real estate industry associations, said, “We support efforts by the government to improve transit. However, when it comes to funding, everyone should be treated equally and fairly. This parking tax unfairly targets only one industry.” Get in line, Stephen: these taxes and levies will be targeting everyone, one way or another. Get over it, and get on with it. After years of tax cuts and lack of investment, Ontario faces a public transit infrastructure deficit that is literally killing us. “Congestion is getting worse every day. It’s having an increasingly negative impact on both our quality of life and our region’s economy,” said Robert Prichard, Metrolinx board chair. Transit task forces have come and gone. Proposals made and dropped. Debates about progressive taxes versus flat taxes or user fees rage on. But Toronto really only has one chance to drag itself out of its persistent provincialism and embrace what we have done and what it will take to move us forward. It’s time to take off the diapers and put the big-boy pants on. We’ve always wanted to be a World Class City, and now we are on the cusp of it, but the lack of a unified and funded transit scheme (like the rest of the major power-player cities in the world have) is holding us back. The development industry has an opportunity to lead with bravery and vision, and the support they profess for transit should not just be lip service. Lead by example, and show the public that the private sector isn’t afraid to make sacrifices. Signs of such thinking are already out there: an informal survey conducted be The Strategy Institute, in anticipation of their upcoming Transportation Infrastructure Funding & Financing conference, asked a range of private and public sector professionals in the building industry what, in their opinion, are suitable methods to support transportation infrastructure funding, and at the top of the list was development levies. But there is no single move that can sustainably fund The Big Move — the pain will have to be spread out. Many people have said that it’s time for an “adult conversation” about taxes. I think it’s time for adults to start ponying up. Paying for transit now will hurt, no question, but the pain of doing nothing will be worse. Let’s put our money where our mouth is and get it done today, or one of us is gonna die young — stymie Big Move funding, and Toronto’s potential will suffer from crib death.
Reader Services / Liz Callaghan Advertising Sales / Greg Paliouras (416) 510-6808 / gpaliouras@Building.ca Senior Publisher / Tom Arkell Vice President, Publishing Business Information Group / Alex Papanou President, Business Information Group / Bruce Creighton Building magazine is published by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. 80 Valleybrook Dr. Toronto, ON M3B 2S9 Tel: (416) 510-6845 / Fax: (416) 510-5140 E-mail: firstname.lastname@example.org Website: www.building.ca SUBSCRIPTION RATE: Canada: 1 year, $30.95; 2 years, $52.95; 3 years, $64.95 (plus H.S.T.) U.S.: 1 year, $38.95 US, Elsewhere: 1 year, $45.95 US. BACK ISSUES: Back copies are available for $8 for delivery in Canada, $10 US for delivery in U.S.A. and $15 US overseas. Please send prepayment to Building, 80 Valleybrook Dr. Toronto, ON M3B 2S9 or order online at www.building.ca Subscription and back issues inquiries please call 416-442-5600, ext. 3543, e-mail: email@example.com or go to www.building.ca Please send changes of address to Circulation Department, Building magazine or e-mail to firstname.lastname@example.org NEWSSTAND: Information on Building on newsstands in Canada, call 905-619-6565 Building is indexed in the Canadian Magazine Index by Micromedia ProQuest Company, Toronto (www.micromedia.com) and National Archive Publishing Company, Ann Arbor, Michigan (www.napubco.com). Member of
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JUNE JULY 2013
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MENTS Canadian Design-Build Institute releases updated guides
News Planning, recruitment, training key to meeting national construction needs OTTAWA | According to Construction Looking Forward, National Summary, 2013-2021, a labour forecast report from the Construction Sector Council (now called BuildForce Canada, after a re-branding and re-organizing effort announced in April), construction will need to recruit more than 250,000 workers, including the traditional number of new entrants to the workforce, to meet building needs from now until 2021. A large portion of this need (about 210,000) is to replace retiring workers. While institutional and commercial building provide steady year-by-year growth in most provinces, big resource projects like electrical generation and transmission, mining, and oil and gas pipelines create more volatility in industrial and utility construction. In terms of regional differences across the scenario period, British Columbia, Alberta, and Ontario are moving into a new expansion that will raise employment by 2021, while Manitoba and Prince Edward Island expand at a slower pace. Key resource projects are ramping up employment in Saskatchewan and Newfoundland and Labrador, which will reach a peak over the next two years, but still settle well above pre2009 industry norms. Though Québec, New Brunswick and Nova Scotia have limited year-to-year changes in total construction employment, they may nonetheless face labour challenges that will require recruitment from outside the industry. In all of these provinces, new jobs are being added on top of all-time record high employment. The forecast says residential construction employment is largely unchanged from 2013 to 2021. Limited population growth from 2013 to 2021 keeps growth in new home building below previous levels. There are important variations across the provinces. Early on, for example, housing in Ontario is expected to decline, while in Manitoba and Saskatchewan this will not be a factor. JUNE JULY 2013
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OTTAWA | The Canadian Design-Build Institute (CDBI) has released revised versions of the CDBI Design-Build Practice Manual Series 100 “Introduction & General” and Series 200 “A Guide to Procurement and Award,” which have been updated to address the current industry operating environment and concerns. Formed in 1998 as a special committee of the Canadian Construction Association, the CDBI represents about 200 firms. Of the updates incorporated into the new documents, Series 200 has been expanded to provide more detail on how to calculate the amount of honouraria owners should be paying, including matrices to help calculate honouraria on low, medium and high complexity projects. As well, the Series 200 guide explains why owners “[T]hese numbers should be prepared to pay reasonable conceal important fees for professional proposals, largely ups and downs due to the fully-developed design soluhappening tions that may come in through mulin different tiple proposals. The added benefit of construction seeing these various solutions should sectors and in ensure some compensation is shared different regions back to those creating the proposals. of the country,” says BuildForce Canada executive director Rosemary Sparks, stressing “the increased importance of labour market planning.”
Project Announcements Half-billion dollar residential project underway in Mirabel MONTRÉAL | Ray Junior Courtemanche, of Investissements Ray Junior Inc. and Daniel Proulx, of Investissements Au Pied Carré Inc., are the two entrepreneurs behind La Cité de Mirabel, the
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— Salvatore Iacono, senior vice president of Development and Portfolio Management, Eastern Canada Portfolio, Cadillac Fairview
Cadillac Fairview proposes $2 billion over the next 15 years to redevelop Montréal core
Montréal’s tallest residential building and an unmistakable visual landmark. To the east will rise the Deloitte Tower, the city’s first, new, privately-owned commercial office tower to be built in more than 20 years. Ultimately, Cadillac Fairview plans on developing the area located just south of Saint-Antoine Street. We envision a mix of uses including office, residential and retail upwards of five million square feet which will contribute to creating a new vibrant, downtown neighbourhood. The basic site plan includes: two towers organized in an urban campus layout, two office towers at the corner of Peel and Sainte-Antoine and one million square feet of new commercial space.”
“Cadillac Fairview believes in Montréal’s enormous potential. We want to be partners in the development of this city. That is why we are launching one of the most significant real estate development plans in Montréal to be carried out over the next 15 years. Cadillac Fairview is aiming for the best because Montréal deserves the best.”
largest residential real estate project west of the Laurentian Autoroute in Mirabel, where a future “Premium Outlet Center” will be located. This 2.2 million-sq.-ft. project includes more than 2,000 residential units such as condos, townhouses and tower houses for retirees. La Cité de Mirabel’s project is the result of lengthy negotiations between the two promoters and MSG Lac Mirabel Quebec SEC (Morgan Stanley Group and Sheldon Gordon Group), owner of the 14 million-sq.-ft. property. “We are very proud that La Cité de Mirabel will represent significant economic benefits for the region,” said Ray Junior Courtemanche, co-developer of the project. “Our perseverance and unique vision of the project allowed us to win the confidence of foreign investors.” The plan includes three 14-storey buildings with rooftop terraces, a residential tower for retirees, an integrated park with water games, and a protected area of more than three million square feet of wetland and protected forests, including a $2.5 million initiative to restore ponds and aquatic vegetation behind the houses.
MONTRÉAL | During a Board of Trade of Metropolitan Montréal Strategic Forum on Greater Montréal and its major projects, Salvatore Iacono, Cadillac Fairview’s senior vice president of Development and Portfolio Management, Eastern Canada Portfolio, shared the company’s vision for the development of Montréal’s downtown core. “More than ever, we are building properties in multi-hub commuter districts; properties that are energy-efficient and provide residents with the opportunity to truly “experience” their cities. Cadillac Fairview wants to offer Montréalers projects that are in line with these trends. In 2009, [we] acquired Windsor Station and adjacent real estate assets. This area can accommodate several million square feet of mixed-use development [and] is at the heart of a rapidly transAppointments forming community that integrates commercial, residential and entertainULI Toronto names Robert Millward ment venues into a vibrant urban landas Executive Director scape. And over the next 15 years, Cadillac Fairview plans on investing up to $2 billion to develop this area. This is TORONTO | ULI Toronto, a local district council of the Washington D.C.-based a comprehensive, multi-phase, multinot-for-profit volunteer organization Urban Land Institute (ULI), has hired Robyear redevelopment of these lands surert (Bob) Millward as Executive Director. “The appointment of Bob is a strarounding the Bell Centre,” said Iacono tegic effort to build on the success of ULI’s multi-sectoral in his keynote address. stakeholder base and to strengthen its already influential “Our development plan will rest on policy voice with one of the industry’s foremost and trusted three pillars: the Tour des Canadiens, thought leaders.” says Mark Noskiewicz, Chair of ULI Toronthe Deloitte Tower and the developto District Council. In addition to advancing ULI Toronto’s ment of the area just south of Saint-Anongoing objectives and its longer-term strategic plan locally toine Street. Straddling the natural ridge throughout the Greater Toronto Area, Millward will reprebetween the mountain and the river, sent ULI Toronto within the larger global ULI organization Bob Milward the Tour des Canadiens will become of over 30,000 members. building.ca
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DEVELOPMillward is also the president of R.E. Millward & Associates Ltd., a consulting firm which he founded in 1997 that offers development, planning and project management services to a variety of clients. Before that, Millward served as the Commissioner of Planning and Development for the (former) City of Toronto from 1987 to 1996 where he was actively involved in all aspects of policy formulation, project management and economic development.
Stephen Price new president and CEO of Graywood Developments TORONTO | Stephen Price has been appointed president and Chief Executive Officer of Graywood Developments Ltd., a Toronto-based real estate investment management company established in 1985. Price joined Graywood in 2007 as Senior Vice President, Corporate Development, and was promoted to Chief Operating Officer in 2008 with responsibility for Graywood’s growth and operating strategies. With offices in Toronto and Dallas, Graywood has in excess of $1.5 billion in residential and commercial properties under development and Stephen Price management.
Acquisitions MCW Group of Companies acquires Perez Engineering Ltd VANCOUVER | Perez Engineering Ltd. of Vancouver has joined MCW Consultants Ltd., part of the MCW Group of Companies. “We have not only added talented employees and desirable customers, but we have expanded our presence in the key markets of British Columbia and Western Canada,” says Greg Lord, managing partner of the MCW Vancouver office. “With this acquisi-
“I have been a member of ULI for 20 years and know the impact ULI can have for cities,” says Bob Millward. “ULI is uniquely positioned to bring about thoughtful, meaningful and responsible solutions to manage growth. We plan on changing the conversation from ‘study’ to practical and actionable ‘practices.’”
tion, MCW grows to over 350 men and women delivering our brand of services right across Canada.” This new addition will become an integral part of MCW’s Vancouver operations, with all Perez staff being immediately consolidated into MCW’s downtown Vancouver offices. Willie Perez, the founder of Perez Engineering Ltd. and former partner at Keen Engineering, has now become a principal of the MCW Group of Companies and will help grow their combined customer base in the institutional, commercial, health care and residential sectors. For his part, Perez, a one-time past employee of MCW, sees this amalgamation as a homecoming for himself and a great opportunity for the employees and clients of Perez Engineering Ltd.
Ivanhoé Cambridge buys 73 office buildings in Silicon Valley
MONTRÉAL | Ivanhoé Cambridge has grown an already-significant U.S. office portfolio through the acquisition of 73 office buildings in California’s Silicon Valley region. This opportunistic investment, achieved in partnership with affiliates of TPG and DivcoWest, provides the partners with access to 6.4 million square feet of leasable space. “This investment of more than US$400 million enables us to acquire a critical mass of assets in a rental market that is seeing one of the best growth rates in the United States,” said Ivanhoé Cambridge’s president of global investments, Bill Tresham. The properties were part of a portfolio sold by Mission West Properties, Inc., a publicly-traded REIT. All the buildings are located in Silicon Valley, California, which boasts a large concentration of high-tech firms and has among the fastest employment growth rates in the United States. b
Re: Mandatory WSIB coverage combats the underground economy There are only two things that fight the cash economy; reducing the difference in cost between a cash contractor and a legit contractor or policing the industry well enough that cash contractors give up and leave. This decision does neither. It actually increases the difference in cost between the good guys and the bad guys, making it that much more tempting for consumers to hire contractors for cash. Rob Koci, | publisher, Canadian Contractor
Congratulations on the new look. It looks great and I always enjoy the articles Fred Serrafero | Vice President Development & Construction, FRAM Building Group
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Ain’t a grand grand?
WATCH “Having seen a variety of energy efficiency and green building programs and ratings come and go, we latched onto LEED right way. It’s now 10 years later, and we still believe as strongly in the LEED rating system.”
JUNE JULY 2013
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— Steve Carpenter, president, Enermodal Engineering
OTTAWA | The Canada Green Building Council (CaGBC) announced in May that 1,000 projects have now been LEED certified in Canada. The certifications total 145 Certified, 316 Silver, 447 Gold and 92 Platinum projects across Canada, in six different ratings systems. The certified buildings range from single family homes to condo and office towers; from schools and arenas to retail outlets and industrial complexes. Since certifying its first project in 2005, the CaGBC has been collecting data to evaluate the impact that LEED Canada has made on Canadian energy and water consumption, greenhouse gas emissions and waste diversion, and the results thus far are impressive: energy savings of 1,600,321 eMWh (which is enough to power 54,307 homes in Canada for a full year); a 312,006 C02e tonne reduction in greenhouse gas emissions (like taking 58,980 cars off the roads for a year); water savings totalling over 3.3 billion litres (equivalent to 1,336 Olympic-sized swimming pools); recycling over two million tonnes of construction/demolition waste (or 639,642 garbage truck loads); and installing 100,239 square metres of green roofs (or 66 NHL hockey rinks). For the private sector, LEED has been a concrete way to demonstrate commitment to sustainability, and no other company in the private sector has embraced LEED more than Enermodal Engineering, which has now acted as LEED Consultant on 200 LEED certified projects. “Having seen a variety of energy efficiency and green building programs and rating come and go, we latched onto LEED right way,” says Steve Carpenter, president of Enermodal Engineering, which began using LEED in 2003. “LEED had a strong technical basis; credibility based on third-party certification; and was not subject to the whims of government funding. It’s now 10 years later, and we still believe as strongly in the LEED rating system.” LEED has changed the landscape of the downtown cores of many Canadian cities. Large commercial real estate land owners such as First Capital Realty have demonstrated leadership and a commitment to sustainability. “Over the past decade, LEED has played a pivotal role incorporating sustainability into business operations. First Capital Realty is proud to have been one of the
early leaders to mandate LEED beginning in May 2006,” says Rosemary Martin, Chief Sustainability Officer, First Capital Realty. “The company currently has 32 projects at 23 properties comprising over 700,000 square feet of gross leasable area certified to LEED standards.” Canadian cities have been some of the most influential drivers of the adaption of LEED Canada as they recognize the need for green building policies and higher sustainability standards. For example, the Cities of Vancouver, Calgary and Montréal have LEED Gold targets for their new building stock. In fact Vancouver, which has a solid Gold policy in place, also now certifies many of its buildings to LEED Platinum. “The City of Vancouver uses LEED not only in our own projects, but also in our public policy and it’s a key part of our effort to become the greenest city in the world by 2020,” says Sadhu Johnston, Deputy City Manager for the City of Vancouver. The City of Calgary has also been a leader in building green since it first adopted LEED Canada as part of its Sustainable Building Policy in 2004, most recently increasing its new building targets to LEED Gold in 2008. The City now has a total of 17 LEED certified buildings either owned or funded. In total there are 29 cities or municipalities that currently have a LEED certification policy, and are seeing the fruits of their labours. For example, a recent six-storey Class A office building at 947 Fort Street in B.C.’s capital has been awarded LEED Gold certification. This 49,700-sq.-ft. collaboration between local firms Tri-Eagle Development Corporation, Trebizond Developments and Homewood Contractors is the first office building in downtown Victoria to achieve this accolade. And on the other side of the country, Nova Scotia Power’s new head office building in Halifax has achieved Platinum certification, the first building in the Maritimes to achieve the highest LEED rating designation.
Financial value of green buildings A reduction in energy and water consumption, greenhouse gas emissions and waste diversion are not the only benefits of building green. A new comprehensive report released by the World Green Building Council (WorldGBC) highlights that there are a large number of compelling benefits from green buildings received by different stakeholders throughout the life cycle of a building. The report, The Business Case for Green Building: A Review of the Costs and Benefits for Developers, Investors and Occupants, examines whether or not it’s possible to attach a financial value to the cost and benefits of green buildings. Today, green buildings can be delivered at a price comparable to conventional buildings and investments can be recouped through operational cost savings and, with the right design features, create a more productive workplace. “This report synthesizes credible evidence from around the world on green buildings into one collective resource,” said Jane Henley, CEO of WorldGBC. “From risk mitigation across a building portfolio and city-wide economic benefits, to the improved health and well-being of individual building occupants, the business case for green building will continue
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1 UNITED STATES
44,270 Projects 595.8 GSM * 2 CANADA
4,212 Projects 62.3 GSM
Top 10 Countries 1,156 66.5
with Registered & Certified Projects
4 UNITED ARAB EMIRATES
808 Projects 46.1 GSM 5 BRAZIL
638 Projects 18.1 GSM 6 INDIA
405 Projects 6.9 GSM 7 MEXICO
322 Projects 7.9 GSM 8 GERMANY
to evolve as markets mature. Indeed we have already seen this momentum grow globally where in more and more places, green is now becoming the status quo.”
Key findings include: ASSET VALUE: As investors and occupiers become more concerned with the environmental and social impacts of the built environment, buildings with better sustainability credentials will have increased marketability. In fact, studies from around the world demonstrate a pattern of greener buildings being able to more easily attract tenants and to command higher rents and sale prices; DESIGN AND CONSTRUCTION COSTS: Research shows that building green does not necessarily need to cost more, particularly when cost strategies, program management and environmental strategies are integrated into the development process from the start; OPERATING COSTS: Green buildings have been shown to save money through reduced energy and water use and lower long-term operations and maintenance
* reported in millions
299 Projects 6.1 GSM
costs. The energy savings alone typically exceed any cost premiums associated with their design and construction within a reasonable payback period; 9 WORKPLACE PRODUCTIVITY AND HEALTH: Research shows that TURKEY the green design attributes of buildings and indoor environ194 Projects ments can improve worker productivity and occupant well-be8.9 GSM ing, resulting in bottom line benefits for businesses; 10 RISK MITIGATION: Sustainability risk factors can significantREPUBLIC OF KOREA ly affect the rental income and the future value of real estate 188 Projects assets, in turn affecting their return on investment. Regula15 GSM tory risks have become increasingly apparent in countries and cities around the world, including mandatory disclosure, building codes and laws banning inefficient buildings. The report concludes that by greening our built environment at the neighbourhood and city scales, the green building industry can deliver on large-scale economic priorities such as climate change mitigation, energy security, resource conservation and job creation, long-term resilience and quality of life. “This report underscores that green buildings play a fundamental and cost-efficient role in tackling some of the immediate challenges of our times,” said Rick Fedrizzi, chair of the WorldGBC and president, CEO and founding chair of the U.S. Green Building Council. “Canada is now considered one of the global leaders in green building with some of the most innovative and advanced buildings in the world,” says Thomas Mueller, president and CEO of the CaGBC. “But we cannot become complacent in the wake of the progress we have made. We need to strive to design buildings that are not only sustainable but regenerative, and make more inroads in the retrofit and operations of existing buildings to counteract the steady decline of ecosystem health worldwide.” b building.ca
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LEGAL A Slap in the Face While venomous protesters may catch a break in Ontario’s new anti-SLAPP legislation, it actually appears unnecessary, premature and ill-conceived. By Megan J. Lem
The recent introduction of Bill 83 is nothing short of an insult to the development and construction industry in Ontario. According to proponents of the bill, Ontario’s development and construction industry regularly uses predatory defamation lawsuits to silence opponents of various development projects, and this tactic has become so pronounced that it now warrants introducing new laws to stop such litigation. Bill 83, otherwise known as Protection of Public Participation Act, 2013, amends the law to limit defamation lawsuits which are initiated by plaintiffs (allegedly, typically, real estate developers) without any merit on their part and despite valid defenses on the part of the defendants (typically, local rate payer groups, environmental groups, wildlife/wilderness groups, historical and architectural preservationists, and so forth), all with the intent of silencing or suppressing public criticism. These defamation actions are frequently referred to as “strategic lawsuits against public participation” (SLAPPs) and Bill 83 is now being touted, accordingly, as “anti-SLAPP legislation.” Québec is the only Canadian province with anti-SLAPP legislation already on its books, although such legislation is more common in the United States. Of course, by labelling SLAPPs as inherently frivolous and without merit, painting all SLAPP plaintiffs as big bad companies seeking to obstruct public input, and putting SLAPP defendants on pedestals as innocent and powerless victims, anti-SLAPP legislation naturally appears like the corporate equivalent of “anti-bullying” legislation. Viewed as such, it is not difficult to see the widespread political popularity of Bill 83. After all, who could object to “anti-bullying” legislation? However, like with most “feel-good” legislation, underneath the surface there are any numbers of reasons why Bill 83 may ultimately be unnecessary, premature and unintentionally (but ironically) destructive to the province. Bill 83 requires an early judicial determination of whether or not a given defamation lawsuit is in fact a SLAPP (which, by definition, would be a frivolous lawsuit). While it is laudable to have such a mechanism in the judicial system, the fact of the matter is that there is already a process available for all litigants to do just that — a motion for summary judgment is a court process designed specifically to dismiss frivolous, non-meritorious actions before proceedings can be dragged-out to trial. As such, is there really a need for special anti-SLAPP legislation?
If in fact all of the legal tools necessary to combat SLAPPs are already available, isn’t the more
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Likewise, Bill 83 awards SLAPP defendants with litigation costs from the developer (so that a developer would have to pay the defendant’s full legal fees and sometimes punitive damages) when the defamation lawsuit is in fact determined to be a SLAPP. Again, while laudable, that is already pretty much the case under the existing law (if a plaintiff loses, and it is shown to have been a frivolous lawsuit to begin with, judges can and often do order that the plaintiff be required to pay all of the defendant’s legal fees). Brendan Crawley, spokesman for the Ministry of the Attorney General, was recently quoted in a legal newspaper agreeing that “...the law provides a number of remedies for questionable claims. There are provisions that allow the courts to dismiss such suits…However, these remedies are rarely exercised in practice...” If in fact all of the legal tools necessary to combat SLAPPs are already available under the current judicial status quo, isn’t the more efficient approach to curbing SLAPPs simply to teach and encourage judges to apply the existing remedies? Furthermore, one has to wonder how frequently defamation lawsuits are in fact being used by real estate developers and others to stymie public criticism of their respective projects. In an article on Bill 83 in the June 3, 2013
efficient approach simply to teach and encourage judges to apply the existing remedies? edition of The Globe & Mail, the developer of a lakefront subdivision on Lake Simcoe in southern Ontario was singled out as a potential SLAPP plaintiff, but, anecdotally at least, SLAPP defamation cases in Ontario seem somewhat rare. While anti-SLAPP legislation may have some role to play in the far more litigious United States, where everybody seems to be suing some-
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body for something, one has to wonder if there are really enough SLAPPs in Ontario’s courts to warrant such legislative attention. A more insidious problem, and one that most advocates of Bill 83 arguably tend to overlook, is the very real risk that some of the so-called “victims” of SLAPP lawsuits are in fact “venomous activists” hell bent on stopping projects with whatever means possible — including libel and slander. By tipping the existing checks and balances in favour of such activists and protestors, will Bill 83 actually impede the orderly development of the province in ways that might not have been considered? So, even if the real estate development industry might be a good political fall guy for anti-SLAPP legislation, Bill 83 is not limited to subdivisions and condominiums. Indeed, any development project in any community may feel the wrath of such so-called “venomous activists” including, for instance, new hospitals that may bring much needed beds and specialized medicine to a region; new schools and daycare facilities in chronically underserviced neighbourhoods; mining and other resource projects that will bring widespread prosperity and increased standards of living to remote and underserviced portions of the province; factories that will help restore the province’s industrial capacity and bring much needed jobs
Megan J. Lem is a student in the Faculty of Law at the University of Western Ontario.
back to that sector; or any of the infrastructure and alternative energy works that may improve living conditions for generations to come. The list goes on, and each of these projects, big and small, will be that much more vulnerable to the local NIMBY lobbies that inevitably oppose all such projects, regardless of the greater overall good that such projects can bring to their communities. At the same time, the real estate community should not be flocking to embrace SLAPPs — frivolous lawsuits are an abuse of process and should never be condoned, whether they are launched by developers with the intent to suppress public participation or not. Instead, the question remains, if existing remedies are sufficient for the task (but are simply underused), and SLAPPs are not in fact that common in Ontario, shouldn’t the government be focussing its attention on more pressing social and economic needs? b
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S By Rhys Phillips
ometime in the 1990s, a young Globe and Mail music critic bemoaned how Baby Boomer musicians, then drifting through middle age, continued to dominate popular music. With the Rolling Stones on yet another tour, KISS and Paul McCartney rambling through Canada and others such as Peter Frampton, Fleetwood Mac and the ageless Leonard Cohen still grabbing headlines, the now not-so-young critic must be downright bitter. Born between 1947 and 1966, Boomers, radicals in the 1960s and 70s but solidly middle class consumerists since the 80s, just won’t seem to go away and stop calling the shots. To make matters worse, no other country in the world has proportionately a larger post-war Baby Boom cohort than Canada. As Emily Badger writes, Baby Boomers are like an “indigestible mammal moving through the python that is America,” and as they enter their retirement years they are now gearing up for one big final twist to the social contract. The early Boomers are now well into their 60s and economists, politicians and a few developers are increasingly awakening to the implications this inevitable aging process will have on the residential housing market. Some recent headlines are even quite alarmist given the significant role both residential construction and personal equity accumulation play in the current economy. Rob Carrick suggests in The Globe and Mail, a bit too gleefully, that smug Baby Boomers may find when they want to downsize their suburban homes that the response of Gen Y will be “Good luck selling your house, old timer.” JUNE JULY 2013
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In contrast, Larry MacDonald in Canadian Business dismissed the “old bugaboo of demographics sinking the housing market.” Perhaps, therefore, the Canadian Home Builders Association’s (CHBA) Task Group on Housing and Older Canadian’s August 2012 call to “crystal ball” what seniors will need in 2020 is an apt if not very scientific turn of phrase.
A Demographic Bomb or Just a Lively Firecracker A seesawing of opinions on the Baby Boomer cohort’s impact on real estate demand and prices has been underway for some time. After referencing the well-known cautionary tale of Mankiw and Weil’s 1989 failed prediction of a decline in U.S. house prices based on an expected decline in consumption as Boomers passed into their 40s, professor Mario Fortin pointed out 20 years later that interest rates and real income play a more important role than demography in determining house prices. He predicted house prices would not decline, at least into the mid-2020s. In fact, he continued, an increase in the number of households up until that time would result in a housing stock gap despite a decline in prime purchasing age cohorts. Other recent predictions, however, have highlighted the negative impact of the aging boomer demographic on residential housing demand. This abnormally large cohort, the argument goes, has been the driving force behind rising
While we can’t seem to agree on what Baby Boomers want as they enter their senior years, we do know they will change the face of residential real estate in this country.
household formation rates — defined as the percentage of people who head up households — over the last four decades. “Boomers started reaching their midtwenties in the early 1970s,” states the Conference Board in its 2011 report, Retirement Homes – The Future of Canada Housing Market?, “creating a wave of demand for new homes” that reached its unrepeated highest level of 274,000 units in 1976. This was followed by a second only-modestly lower peak in 1987 and, after hitting a trough in the 90s, peaked again for a sustained four year period starting in 2004, again only slightly less than the previous high. While the first two booms covered the period in which the Boomers were hitting age 25, the Board attributes the post-millennium peak to a combination of pent-up demand from the slow 90s and, most importantly, to new demand from “echo boomers” (a combination of later Gen Xers and early Gen Yers) entering their household forming years. Carrick’s alarming article, however, relied on a report by Pacifica Partners Capital Management issued in December 2012. The report suggests that rather than a new demand from postBaby Boomers as the driver for the 2004-2008 housing boom, it was demand from Boomers in their most prolific “asset-accumulation-phase.” By 2012, the peak bulge of this now assetrich demographic characterized by a high propensity to save had reached age 51. According the Canadian Mortgage and Housing Corporation’s (CMHC) impressive five-volume Housing for Older Canadians: The Definitive Guide to the Over-55 Market, the 55-65 cohort will grow to five million by 2036. Like the wave of the perfect storm, Boomers will only roll toward age 65 and a period of asset depletion to meet their decreasing revenue generation.
Boom, Bust or Orderly Transition There is little doubt that the large number of Baby Boomers that have just now started to enter what CMHC calls the
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“young senior” cohort, 65-75, and the even larger group to follow will change the residential housing market in Canada. This change, however, is likely to unfold relatively gradually over the next 20 years, only picking up steam in the 2030s as the oldest Boomers reach their 80s. Of course, as more than one observer pointed out, 20-year predictions on demographic impacts when also mediated by significant socio-cultural change becomes highly suspect. Still, there is a reasonable possibility that an orderly transition can be achieved if the industry and governments avoid looking backwards while going forward. In its August 2012 Report, the CHBA’s Task Group recognized that “First and foremost the industry needs information and analysis — and lots of it.” Miriam Lankoan, a major contributor to the CMHC report, echoes this sentiment, saying “There is a need to fill the information gaps, to consult It is reasonable to assume all the stakeholders, including the industry, to find out what information is lacking and where it can be that the extraordinary Baby Boomer cohort will, accessed.” Currently, she adds, there is a lack of data on the uptake of developers of seniors housing. The over time, significantly CHBA is increasingly working with the federal agency impact the residential housing market. But two which has for some years been leading the way with studies on housing and aging. The milestone 2012 caveats are required. Guide not only looks closely at the emerging market A closer look at the full profile of seniors and how to respond to this expanddemographic picture ing market, it provides a step-by-step project developsuggests “the wave,” ment model covering planning and designing to what while significant, is not exactly a tsunami. What are the services and amenities required. While the CHBA currently foresees major shortis often forgotten is that falls in such areas as senior care units, “begging the the Boomer generation question of where are seniors with care needs going at 9.6 million is only to live,” Toronto commercial real estate agent Tarun marginally larger than Gen Y at 9.2 million. At the Gupta reports that many new and expanding compasame time, numbers ignore nies are seeking suitable properties for such housing. 18
very significant attitude changes as well as other variables on the behavior of both Boomers and those The overwhelming majority of Baby Boomers want to age-in-place and this requires age-friendly comfollowing on their heels.
munities including the more rapid adoption of universal design principles. The former is defined by the Public Health Agency of Canada as “a community in which the policies, services and structures related to physical and social environment are designed to help seniors ‘age actively.’” Almost 30 years ago, in 1986, Gloria M. Gutman and Norman K. Blackie edited Aging in Place, Housing and Options for Remaining in the Community that itself referenced research from 1972 that identified the conflict between seniors’ stay put preference and the lack of supportive community structures and services. By 1999, CMHC was exhorting developers to consider the opportunities provided by an aging population through designing all new communities for an aging population, a call that went largely but not completely unheeded. In 2006, the World Health Organization developed the Global Age-Friendly Cities Project that gathered extensive material from 33 cities including Canada’s Saanich B.C., Portage la Prairie, Man., Sherbrooke, Que., and Halifax. This resulted in the identification of eight core areas to be considered: outdoor spaces and buildings; transportation; housing; social participation; respect and social inclusion; civic participation and employment; communication and information; community support and health services.
For more on the “other” demographic and changing attitudes to aging, read the expanded version of this story at building.ca
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Subsequently, the federal Public Health Agency of Canada, in conjunction with the provinces and territories established the Age-Friendly Communities Initiative that included the PanCanadian Age-Friendly Communities Network to facilitate exchanges on best practices. This includes a comprehensive Age-Friendly Communities in Canada: Community Implementation Guide. By 2011 over 560 communities in Canada had formally committed to becoming age-friendly communities. Such noble objectives, however, do not change the fact that the horse has long bolted through the barn door. To be truly age-friendly will require a staggering major refitting of suburbia at a time when, despite the three decade long “New Urbanism” movement, most new developments continue to ignore what is required. As John Mcllwain of the Urban Land Institute wrote less than two years ago, “seniors who remain in suburban homes find themselves in communities designed for families with young kids and cars… their friends, shopping and any needed services all require a car to reach; public transportation is generally scant or nonexistent.” While one may debate his assertion that these neighbourhoods are family friendly, the lack of walkable, mixed-use communities devoid of sidewalks, connectivity, comfortable places to gather or pleasant streetscapes remains the hallmark of most suburban communities. Even the CHBA Urban Council, in its 2011 Key Findings from the Literature on Aging in Place includes the following from a City of Edmonton conference: “Although most builders favour incentives, research out of the U.S. indicates that legislation is often the most effective way to increase the number of new homes that include visitability for accessible housing features.” The same probably holds for obtaining conformity with broader age-friendly community development. Perhaps the best hope for change comes from the pressing and broader need for metropolitan areas to reign in the unsustainable costs of suburban
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Jack Pong is not at all sure we really understand what Boomers want as they enter their senior years. And that includes Boomers themselves. The CEO and president of City Core Development says that many of the surveys that find Boomers committed to aging in “elderburbia” only skim the surface. Working with pollster Angus Reed, City Core is
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sprawl through denser, transit-based, and mixed-use communities that also respond to mounting environmental imperatives. For example, Calgary was for a long time Canada’s king of suburban sprawl. Now it has in place a 30year plan to link all these communities with extensive expansion of its LRT system while simultaneously developing along all these transit lines, mixed-use urban villages that will provide centres to existing suburban areas. Such a major structural shift will facilitate if not guarantee a better aging-in-place option. As this takes place, there will need to be a conscious inclusion of varying care levels of senior housing that will allow people to remain within their communities once home ownership is no longer possible. Retrofitting suburbia for an aging population will be expensive and take time. In the short to medium term, therefore, increasing application of universal design principles to new and existing residential buildings will be increasingly required. Just over a decade ago the American National Association of Home Builders (NAHB) developed its Certified Aging-In-Place Specialist (CAPS) program. If not as well-known as LEED accreditation for architects, CAPS certification is open to both a broad range of professionals as well as building contractors and is now being recognized in Canada. Since 2011, for example, the Nova Scotia Home Builders’ Association has been a licensed provider of CAPS training in the province. Many builders and remodel specialists are increasingly touting certification in their advertising.
Cafe Recreational Centre Retail Residential
Bradford Street Previous spread and above: Harmony Village, in Barrie, Ont., is a Boomertargeted resort community on the shore of Lake Simcoe.
continually doing deep market polling. The problem, he explains, is “if you don’t know or see anything better you don’t see the opportunities that come with change.” So, like the old Crosby, Stills & Nash hit, it’s been a case of “If you can’t be with the one you love, love the one you’re with.” Suburbia may just be a fall back in love and if you give them something different and exciting that love may prove fickle. Their polling has found eight out of 10 want easy and convenient access to a broad range of amenities from stores, restaurants, and libraries to cooking classes and even a community wine cellar, not to mention healthcare and wellness facilities. They want it in a walkable urban village setting with a sense of community supported by animated street level retail. While “the old style retirement homes are the last place seniors want to go,” Pong says, “once they have a richly urbane and adult environment, they want to be able to age-in-place.” This requires homes with universal design features such as lower light switch placement, wider doors and step avoidance to assist residents to age-in-place without major expense or the need to move. “You have to solve future problems by addressing them now.” Residents must also be able to move from independent living (based on standard condo-like ownership rather than the life lease approach of traditional senior developments) to assisted living accommodation complete with emergency response teams in place. Cost also matters, he says. Despite a desire for high-end retirement living, “people tend to have fixed incomes in retirement so cost is a very important factor; but you can deal with it.” Despite this cost awareness, however, his surveys have found that while only about 10 per cent of Gen Y condo buyers are prepared to pay even one to two per cent higher figures for green buildings, 75 per cent of older buyers state they would pay up to a 10 per cent premium for energy saving accommodations. building.ca
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Above: Englewood Courtyard is a master-planned resort community in Chilliwack B.C. built exclusively for retirees.
Whatever demographics may finally signify, Pong is betting on his own research by moving his diverse development company into building one of the country’s most impressive adult-oriented villages. Harmony Village on the shores of Lake Simcoe in Barrie, Ont. is a fully-integrated, mixed-use village for the over 55 market. Built on 8.6 acres of land, the townhouses and five towers for over 1,500 residents will sit on a massive underground garage over which streets of shops, restaurants, spas, gyms, a health centre (with medical, testing and physiotherapy facilities), a community centre and a host of other urban amenities will share surface area with trails, gardens and parks to provide a “holistic” community. LEED Gold will be the target. But City Core Developments has gone a gigantic step beyond what most other Canadian developers are prepared to do. Harmony Village is being built to the winning design from a major invited architecture competition evaluated by a stellar jury. When the jury overwhelmingly selected the up-and-coming Toronto firm RAW Design, but over ten thousand members of the public equally strongly selected Diamond and Schmitt Architects as their choice, Pong worked out a joint venture design arrangement that should make Harmony Village remarkable both as sociological and architectural events.
Englewood Courtyard, located on the edge of Chilliwack, B.C., is an old military town on 19.67 acres approximately 86 kilometres up the Fraser Valley from Vancouver. Like Harmony Village, this plus-45 targeted community is a new focus for realtor Mark Perry who says that based on demographic shifts underway “developers are moving into senior-oriented development in a big way and this will constitute a major grey-wave economy in the future.” If Englewood bears some similarities to “adult communities” that have been around for over two decades, including smaller but spacious single houses on streets that still mysteriously lack sidewalks, there are also differences. In addition to 131 individual one-storey bungalows with “master-on-main” and no basements (1,200 to 2,000 square feet), there are also 150 “resort-style” condo units in the upper valley’s first five-storey wood frame structure that are targeted to retired snowbirds. A 2,500-sq.-ft. clubhouse is now in construction and will provide a communal focus for the community. Given its location, Englewood goes somewhat against the grain of trying to accommodate seniors in familiar neighbourhoods and near families. This is not because Perry does not believe these can be important factors. But like Pong, he sees a new economic reality for many seniors emerging from the stubbornly persistent effects of the 2008 recession, coupled with the cripplingly high accommodation costs in the immediate Vancouver area. Indeed, over the last 25 years, Chilliwack and nearby Agassiz and Harrison Hot Springs have emerged as lower cost alternatives for affordable adult housing, including Hazelwood Grove constructed back in JUNE JULY 2013
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1993. By locating up the eastern valley, comfortable homes and an active “resort” lifestyle are well within the reach of many older clients. Containing costs at Englewood is facilitated by a 99year pre-paid land lease arrangement with the Tzeachten First Nations. The reserve boasts numerous other senior communities such as Promontory Lake Estates, Halcyon Meadows, and Ensley. Unlike Harmony Village, these developments seek to leverage the emerging mixed-use village of Chilliwack and its services. Within walking distance, says Perry, are medical services, restaurants, continuing education facilities, markets and stores as well as easy access to the de rigour golf courses and a host of spectacular natural amenities. Also unlike Harmony, Englewood is for “active living” only and there are no plans for assisted living options on site. Chilliwack may be emerging as what is sometimes called a naturally occurring retirement community or NORC, defined as a community that was not intended necessarily for seniors but increasingly has high or even majority percentage of residents in the older age cohorts. In this case, a large number of seniors have gravitated to Chilliwack, drawn by quality inexpensive housing near accessible services and these in turn have started to drive the shape and form of the town.
The Future The next two to three decades will see significant but probably not catastrophic adjustments to demand in all aspects of the residential market. Developers can respond if, in part, they understand that the emerging market for seniors will be fragmented with several distinct groups with different wants and needs. Very different niches will be there to exploit and these must reflect perceived age, incomes, ethnicity, geographic location, technical innovation and even the still-evolving Baby Boomer culture. The smart entrepreneur would do well to start with a close, careful reading of all five volumes of CMHC’s tome. b
Images courtesy of City Core Development and Englewood Courtyard Management Corp.
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MAKE IT BETTER
Steel may be dead, but Hamilton is experiencing a phoenix-like rebirth based on bottom-up, organic urban renewal strategies.
t speaks volumes that the first thing you see when you step inBy Peter Sobchak side the beautifully-renovated City Hall in Hamilton, Ont. (Building, February-March 2012) — before catching sight of the impressive double height mezzanine floor in which a floating cantilevered staircase with aluminum risers and teak wood details rise in front of a huge mural — are two desks simply labelled Business Licencing and Business Facilitation, and not far is the Small Business Enterprise Centre (SBEC). This simple gesture sends a clear signal: Hamilton is open for business. Placing these services in such a prominent location was by no means an accident. It reflects a “onestop shopping” business model that moved all economic development and planning functions for businesses expanding or relocating into one easy-to-find facility, a manoeuver that to some may seem little more than improved customer service, but to the City represents another tactic in the ongoing campaign to reverse the oft-seen trend of downtown deterioration that Hamilton has been fighting for decades.
Hamilton is a city of 500,000 people 100 kilometres west of Toronto, and possesses an identity that has always been dominated by industry. To most Southern Ontarians, a shared impression of the city is that of driving along the QEW over the bridge that spans the western tip of Lake Ontario and seeing the Stel-
Images courtesy of City Core Development and Englewood Courtyard Management Corp.
Evidence of Hamilton’s rebuilding efforts abound, such as this Homewood Suites by Hilton project being constructed on the old Hamilton Motor Products site.
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co and Dofasco smokestacks that dominate Hamilton’s skyline. And while not ashamed of this identity, Steeltown (as it came to be known), like many industrial cities in the post-industrial age, saw a hemorrhage of jobs, money and people as the strength of its economic backbone withered. The long and slow decline of the city began in the 1980s and well into the 1990s and mirrored that of the steel industry. It was a decline that saw significant ripple effects, including the loss of head offices such as Dominion Glass, Otis Elevator, Canadian Canners, Westinghouse, International Harvester and more; and that led to a disappearance of downtown retailers like Eaton’s, The Bay, Woolworths, and others. Coupled with the inexorable pull of suburbanization, downtown Hamilton decline reached rock bottom when an “anything is better than nothing” syndrome hit, turning the downtown core into little more than parking lots and bingo parlours. While not altogether dead, steel ceased to play its dominant role, and Hamilton began in the late 1990s to look for a new purpose. And in a city whose DNA has always been one of “making things,” a new philosophy made sense: do whatever is necessary to make the city attractive to businesses. But instead of repeating the mindset of the past, Hamilton realized they could not rely on one type of business to save them. They maintained a commitment to industrial park development and site readiness and didn’t shun their strong, good old-fashioned industrial base, while at the same time began to align themselves with the university community, and perhaps most importantly, the arts.
This turnaround in mindset led to a turnaround in planning policy in 2000, when the city established a Downtown and Community Renewal Division and began a series of incentive programs to revitalize downtown investment. For example, the Hamilton Downtown Multi-Residential Property Investment Program (2000) supported conversion of commercial space into residential units; the Commercial Façade Property Improvement Grant Program (2002) to support the physical and aesthetic appearance of façades; the Hamilton Downtown Property Improvement Grant (2002); the Commercial Corridor Housing Loan and Grant Program (2007) to stimulate residential development within downtown; the Office Tenancy Assistance Program (2010), for leasehold improvements to office buildings located downtown; and many more. Hamilton also understood that to attract new businesses they needed to build on their value propositions, and in an age where creative and knowledge-based industries crave buildings with that old industrial patina, Hamilton has a lot of built heritage to offer. Hence the Hamilton Heritage Property Grant Program, which supports structural/stability work required to conserve and restore herit-
age features of properties. Examples of projects that benefitted from the Program are multiple, such as Treble Hall, an important 19th century building located at the crossroads of downtown Hamilton that went through a painstaking restoration, as did the the conversion of an early 20th century public school into a luxury condominium property called Witton Lofts, adjacent to an emerging arts district along James Street North. More heritage preservation is currently underway, including various efforts by Wilson-Blanchard Management to preserve and renew signature buildings along the downtown Gore Block. These incentive programs are already showing their cumulative effect. Hamilton had 20 new or expansion projects with at least $1 million invested, or at least 20,000 new square feet between June 2011 and May 2012. Local projects include Maple Leaf’s investment in a new meat processing plant, the expansion of Activation Labs in the suburb of Ancaster, the construction of a new automotive research centre at McMaster Innovation Park, and Bermingham Foundation Solutions’ expansion in the former Lakeport brewery. McMaster University is investing heavily in a downtown medical campus, and two new hotels are also going in the core. Major waterfront renewal is already underway, led by the efforts of the Molinaro Group and other local developers to create contemporary mixed-use properties along the historic waterfront, as well as a number of projects at Hamilton’s port, including a Biox expansion and new grain handling facilities built by Parrish & Heimbecker and Richardson International. To be fair, much of this positive turnaround is largely due to a well-timed coincidence of effort from the Hamilton Chamber of Commerce, the SBEC and McMaster’s Innovation Park in fostering and attracting the region’s newer generation of entrepreneurs and young professionals. The past couple of years have seen many of them flocking to the city for its cheaper real estate and growing arts community. Much of this reverse migration, as the media loves to point out, comes from those young creative class cohorts being squeezed out of the real estate market in Toronto – a fact Hamilton hasn’t passed up on, as a recent initiative to appeal to urbanites who can’t afford to live in Toronto but still work there demonstrates: GO Transit’s improved rush hour train schedule will get commuters from Hamilton’s forthcoming new station to Toronto’s Union Station in less time than it takes to order a pizza. Heritage buildings are up for rent, and they’re affordable, and the City knows they are powerful attractors to creative
Heritage buildings are up for rent, and they’re affordable, and the City knows they are powerful attractors to creative clusters.
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Photos by Banko Media
To see more of Hamilton’s renaissance, view the slideshow at building.ca
Am Games. This later event is also helping jumpstart activity on an $8.8 million downtown train terminal and the creation of an LRT system (currently before Metrolinx for approval, the plan includes an East-West line for $17.4 million and a North-South line for $12.4 million) to better service the growing downtown population.
Photos by Banko Media
clusters. But the city isn’t just sitting back and hoping these brick-and-beam lures will do all the work. They know cheap rent coupled with events like the art crawl on James Street North help fuel a renewed interest in downtown, but are not enough. This is why the City is investing $10 million in a Farmer’s Market and Central Library, and $54.1 million in a new Ivor Wynn Stadium in anticipation of the 2015 Pan
By all accounts, Hamilton appears to have turned the corner on its downtrodden downtown. On average, 308 people and jobs have been added to the downtown each year since 2001. Over 23,400 people work in the downtown every day — double the residential population — Above: The revamped and over 70 per cent of jobs are in the Hamilton Public Library and Farmers Market private and non-governmental sectors, project includes 6,500 the largest clusters being scientific/prosquare metres of renovation and 1,000 fessional, F.I.R.E (finance, insurance square metres of and real estate), retail, healthcare and additions. Left: This creative industries. The majority of former icon of urban decay, the Lister Block workers (56 per cent) are between the was saved by a ages of 20 and 44, of which 63 per cent $25-million restoration. Below: The Gore are female. For the rest of the city, this Pedestrianization Project same age range accounts for only 28 per is creating a pedestrianfocused space in the cent of the overall population. downtown core. Small business is leading growth and creating a more diversified economy. The health sciences industry now employs more people than the steel industry, and the creative industries cluster employs more people downtown than education and manufacturing combined, and are transforming commercial corridors like James Street North and Ottawa Street. But there’s much more to do. Hamilton still in many respects suffers from an image problem — those massive smokestacks and decaying skeletons of the steel industry are still and probably always will be icons — and good branding is a necessary tool in introducing people to an urban space. However there is an undeniably fresh, positive mood around economic development in Steeltown these days. “Our legendary affordability is rolling together with the growth of our research sector and our creative sector and our healthcare sector,” said Mayor Bob Bratina. “We’re on everyone’s radar now.” Indeed, Hamilton’s resurgence is catching the attention of many mid-sized cities with similar post-industrial legacies to contend with. But ultimately it wasn’t some magic wizardry that made renewal happen. The City will simply tell you to understand the contemporary downtown economy, build strategies and programs around it, and then allow it to happen. Because sometimes, the best strategy is to just get out of the way. b building.ca
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Two Québec firms are helping Algeria tackle its growing urban population with a new $2.4-billion neighbourhood development project.
rban growth is happening in every corner of the world, not just those parts that seem to dominate the headlines. According to the World Bank, the Middle East North Africa Region has one of the world’s most rapidly expanding populations, and urban areas have been the primary locus of this growth, as urban share of total population is expected to exceed 70 per cent by 2015 (against an average of 54 per cent for all developing countries). Growth is happening globally, and responses to it are equally global. For example, a joint venture formed by JUNE JULY 2013
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By Peter Sobchak Québec-based multidisciplinary firms Exp and Lemay recently won an international competition launched by the Agence de gestion et de régulation foncière urbaine de la Wilaya de Constantine in Algeria, aimed at the development of a major new growth hub in the city of Constantine, 431 kilometres east of Algiers. The future area of El-Menia will be a multifunctional and autonomous urban agglomeration on a 47-hectare plateau directly in front of Constantine. With a price tag of approximately $2.4 billion, including $1.57 billion devoted to the residential sector, the mandate involves the planning and development of a new neighbourhood to house more than 20,000 residents in 6,500 to 7,500 housing units. Major infrastructure such as potable water and electricity will be serviced from the main city, and while there will be no major structures like hospitals, local amenities are being designed to all be within a walkable radius. These include schools, daycares, mosques, clinics, a small police station, municipal offices, recreational buildings, and commercial spaces such as a large retail mall and an open-air market along the main thoroughfare. Blank Slate and New Realities Defining growth is a tricky thing, but certain characteristics seem to be consistent around the world, and one of them is the rise of a new middle class. And what this class wants has a profound effect on new urban development. “The recurring desire of the new bourgeoisie in Algeria to own cars and to break away from the traditional way of life [is a] phenomenon that translates into new Algerian towns which tend to adopt Western patterns, such as isolated mansions on manicured lawns, mono-functional suburban neighbourhoods deprived of services or amenities, and a strong dependence on the automobile for movement,” observes Michel Lauzon, partner, chief creative officer and director of urban design at Lemay. “This is a heavy trend in North Africa and in most emerging economies of the Middle East where there is a symbolic need of the middle class to adopt a stereo-
Images courtesy of Lemay
ARABIC LINES BY CANADIAN HANDS
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Images courtesy of Lemay
typed Western lifestyle, even if this lifestyle breaks with their own traditions and is a proven ecological disaster.” The El-Menia proposal addresses the need for cars and modern living through what Lauzon calls a “hybrid solution” that integrates traditional patterns of living with an efficient road system and ample underground parking, “but this network is subdued and is visually treated as secondary to the pedestrian realm and the collective green spaces in our design which are the dominant features of the master plan,” he says. This green mandate has also integrated spaces designed to promote urban agriculture inside the city to reduce the dependence on imported food while supporting a local industry. Also woven into the program is the potential for photovoltaic solar energy, wind turbines and geothermal systems. El-Menia will be serviced by an electric bus line through four residential quadrants and connected along the main thoroughfare to the public transit system of Constantine. And because of impassable chasms that separate certain parts of the city, a gondola system widely used and understood in Constantine will connect the main plaza at the eastern edge with the valley below and the Old City above. Modernity and Heritage Urban growth may be global, but the ways in which people occupy territory is what ultimately makes it unique. “There is a common denominator in all our urban designs in that we try to understand the underlying meaning, to extract the essence of what is important for a specific people in a specific region,” says Lauzon. “We then try to focus on these traits and translate them in new forms and solutions in order to generate new meaning and news ways of answering current needs. We often find that these archetypes are remarkably resilient to new uses, functions and technologies.” In the case of El-Menia, the design team was inspired by the traditional Maghrebian courtyard.
Far left & left: Exp and Lemay designed a cultural destination at the western edge of the site comprised of a national library, an archives complex and a performance hall venue, surrounded by civil servant offices in a half-moon crescent shape. Above: Even though the city was planned to minimize suburban sprawl and car dependency, large green spaces will anchor the quadrants.
At the centre of the medinas and Arab towns of North Africa for many centuries, the concept reflects the cultural characteristics of the landscapes and integrates a clear hierarchy between dualities such as private and public spaces, openness and privacy, family and community, or the hot climate and cool nights. This duality has become the building block of the plan, mediating between past and present and bringing continuity within the cultural framework, “instead of promoting brutal change,” says Lauzon. Building a modern community around the courtyard typology creates a pattern that is familiar to every Algerian. “However, we have enlarged the scale of the traditional courtyard in order to accommodate modern needs such as vehicular access, security and accessibility, the need for collective and recreational space and the required urban density.” Grouping the courtyards into four residential quadrants is what comprises the main body of the neighbourhood. Additionally, by using elevation changes caused by the mountains and dramatic landscape, the design creates zones of variable density. “By applying different mean heights along the site slope we have managed to accommodate increasing density without changing the basic layout of the city,” says Lauzon. Currently the team of Exp and Lemay are in the detailed master planning stage, starting with the public domain, residential lots and zoning, with a goal of going to tender in 2014 for the residential components. Which means in 10 years the suburbs of Constantine will have been touched by the maple leaf. b building.ca
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Caption Ilibus. Cesti in re ditatemqui tempore sed undentia saperum et explicias andus
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Tremco Headquarters, Beachwood, OH
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For more information call 1.800.263.3308, e-mail email@example.com or visit dryvit.ca JUNE JULY 2013
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TO HOTEL CANADA
he hotel transaction market continued its strong momentum in 2012 with $1.2 billion in sales registered for the year. This surpassed 2011’s $1.1 billion in deal volume and replaced 2011 as the fifth strongest year since Colliers began recording transaction data in 1985. Sales of lodging properties across Canada marked its third year of growth, nearly tripling in total dollar terms since the full effects of the last downturn. There were 116 transactions reported for the year, up 17 per cent from the 99 trades in 2011. Total deal volume also increased year-over-year, up 6 per cent from 2011, and 64 per cent from 2010. However, pricing per room for the year averaged $83,600, about 23 per cent below last year’s average. This was weighed down by smaller average deal sizes, which registered at $10.2 million, versus $11.2 million in 2011.
Transaction Activity by Location Hotel trading activity was nearly split evenly between the west (49 per cent) and east (51 per cent) of the country in 2012. The disparity, however, was on the average price per room with the west 28 per cent higher than the national average, bolstered by results in Alberta, reflecting the strength in many of the Province’s oil and gas markets. While Saskatoon ended with the highest price per room metric across the country, trading volume was thin and represented just 3 per cent of the overall results. The east (measured as provinces east of Manitoba) ended some 25 per cent below the national average. On a provincial level, Ontario led the pack in terms of volume and number of trades ($460 million, 50) followed by Alberta ($391 million, 30) and Quebec ($135 million, 13). On a local level, Toronto marked the highest deal volume ($289 million) per city, followed by Edmonton ($121 million), Montréal ($112 million) and
By Russell Beaudry
Canada’s hotel market continued its strong and stable trajectory in 2012, and increased optimism in the market will help further fuel transaction activity in 2013
KEY TRENDS IN 2013 ctivity will remain A strong in 2013 as the lodging sector continues to attract equity, and lodging fundamentals strengthen. Q1 2013 transaction volume has already surpassed 2012’s record first quarter volume, estimated to be over $400 million (versus $384 million last year). u Portfolio acquisitions will increase in 2013 given the pipeline of both focused- and full-service portfolio offerings in the market which are attracting a variety of capital, for the most part from institutional domestic sources. u
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Transaction volume by region
# of Hotels
# of Rooms
Alberta British Columbia Saskatchewan Manitoba
Calgary ($80 million). Other cities that made their mark on the hotel investment map in 2012 included Vancouver ($61 million), Fort McMurray and Grande Prairie ($56 million each), Victoria ($48 million) and Saskatoon ($37 million).
Whoâ€™s Buying, Whoâ€™s Selling? Real Estate Companies (RECs) were the most significant buyer group in 2012 at 43 per cent of total volume, growing from an 8 per cent share in the year prior. However, acquisitions by RECs were largely motivated by conversion opportunities tied to hot residential high-rise markets in major urban markets, particularly Toronto. The bulk of these transactions occurred in the first half of the year and has slowed substantially ever since, as activity in the residential sector has moderated. Hotel Investment Companies (HICs) were net-sellers representing 43 per cent of sell-side activity, reversing course from 2011 when they were the dominant buyer group with 45 per cent of volume. HICs were the second lowest buyer group in
2012, ending with a 10 per cent share. Opportunities that would have otherwise been typically acquired by HICs were purchased by RECs. REITs/C-Corps emerged as an active buyer group at 16 per cent of volume for 2012 (3 per cent in 2011), their busiest year since 2007. This effort was led by Temple Hotels Inc. who purchased seven assets, the single largest purchaser of hotel real estate for the year with $160 million in volume. REITs/C-Corps were active sellers as well, representing 17 per cent of the transactions sold
Traditional Growth Periods by Comparison
traditional hotel transaction volume real GDP growth 5-year GOC bond yields trends
96 1.2% 2.9%
116 0.5% 1.6%
400 91 1.4% 5.6%
131 1.7% 3.5%
100 1.6% 2.3%
# of Hotels Supply Demand
82 1.2% 4.7%
Traditional trading decreased 10% in 2007 as the majority of transactions fell into the strategic category
Investor confidence returned to the market as debt became increasingly available and the economy regained momentum
Larger average deal size helped elevate traditional volume up 6% from the previous high in 2006
Cities with transaction volume greater than $10 million
GRANDE PRAIRIE $56M BANFF $24M
FORT MCMURRAY $56M SLAVE LAKE $18M
EDMONTON $121M SASKATOON $37M
VANCOUVER $61M VICTORIA $48M
CALGARY $80M Source: Colliers International Hotels
FORT ST. JOHN $56M
WINNIPEG $12M TORONTO $289M
MONTREAL $112M OTTAWA $17M KINGSTON $15M
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GUELPH $16M HAMILTON $10M
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Source: Colliers International Hotels
Ontario Québec New Brunswick Nova Scotia EAST
# of Hotels
# of Rooms
(9 per cent in 2011), although these disThe relative strength of the Canadian economy and the positions were from InnVest REIT, Holrenaissance in other commercial real estate sectors such as the office and retail markets have created new dynamics loway Lodging Inc. and Royal Host Inc. among hotel investors. Private investors were the second When focusing on the traditional portion of the market largest buyer group at 29 per cent, the and removing strategic acquisitions, we are able to better same share as the year prior. This group compare the natural market ebbs and flows given the omisrepresented the lowest average price sion of one-time deals that were inked for strategic reasons. per room (at $69,000 per room) of all Taking a look at traditional volume between the two periods, buyer groups, as their average deal size the three years between 2005 and 2007 averaged around was generally low and segmented in $920 million per year, with a peak in 2006 of $1.09 billion in the limited-service category. Still, pri2006. In the recent period, 2012 ended as the new peak year vate investors purchased 71 of 116 on record, up 6 per cent from the previous trades last year, by far the most active 2012 market high. The pace and scale of transgroup by the number of properties sold. buyer action flows in 2012 clearly demonstratSelling by cross border companies groups ed a healthy market, which we believe will represented 24 per cent of volume (40 carry through in 2013 and beyond, supper cent in 2011). These sales were gen- % ported by a plethora of “stars aligned” erally the most significant deals of the 2 Institutional/Other conditions — from rock-bottom borrowing year and averaged $46 million. On the 10 Hotel Investment buy-side the 160-room Banff Interrates, robust employment markets and Company national Hotel was the only sale to a the country’s beneficial exposure to key cross border ownership group, continucommodities that are well demanded worlding the trend from last year when there wide. This presents a great window of opwere only two transactions to non-Canportunity for investors looking to enter and 16 REIT/C-Corp adian groups. exit the market. Lender-driven sales corresponded We based our forecast of sustained to 4 per cent of the overall transaction growth on three fundamental factors curmarket. Distressed hotel property sales rently in play. First, with real estate being peaked in 2010 at 12 per cent of volume a high priority for many investors, we exand have since moderated as lenderpect more non-traditional players to enter driven asset sales have largely worked the hotel investment market over the next their way through to resolution. Sales 29 Private Investor few years given the compression in yields in the focused-service category grew as occurring in other investment spaces. Seckey buyer groups aggressively chased ondly, the significant commercial real esthis asset class in secondary markets. tate transformation seen across Canada Approximately 60 per cent of these sales has changed the overall landscape for the occurred in Western Canada. better — from the massive restructuring in the retail industry to hot office markets outperforming with record low vacancies Window is Now Open for and a good stock of new developments in the Transaction Market the pipeline. And finally, the market of buyLooking at where we are in the cycle to ers and sellers is more rational and balshed some light on the industry’s outanced than the previous peak cycle. Wherelook, we compared the previous growth as the last up-cycle (circa 2006/2007) period to the current cycle, which we Real Estate was more of a “frenzied” approach with too define as 2005–2007 and 2011–2013F. 43 Company much capital aggressively competing for Our analysis reveals that when lookdeals, the current cycle is seeing rational ing at overall real estate metrics and buyers underwriting transactions using the more diverse buyer/seller comsolid investment decision-making tools. b position that has transpired in recent years, we believe we are in a period of sustainable growth that should carry Russell Beaudry is a Senior Hotels Analyst at Colliers the market through the next few years. International Hotels. www.colliershotels.com
ssets purchased A for redevelopment will slow for the year ahead (and has since the first half of 2012), particularly given the moderation already exhibited in many of the major residential markets across the country. u Coming off a very low year for national supply growth, new construction will accelerate this year, although it should be localized to markets that support the demand and generally conservative on a national basis. u Eastern Canada is shaping up to be the busiest year on record for hotel sales, with investors attracted to markets like Halifax and St. John’s where opportunities rarely become available. Victoria, Vancouver, Calgary, Regina, Saskatoon and Winnipeg are also expected to experience more activity versus 2012. u Private investor’s share of transaction activity will likely continue to grow as all indications suggest the limitedservice category is in favour, at least over the short-term. u More liquidity in the debt markets is appearing at a time when the Bank of Canada has signaled overnight lending rates should not increase until at least mid-2014. This will help deal flow. u
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V I E W -
Michael Emory: Excellence results in execution By William J. Ferguson
Real estate execution is not one-size-fits-all. Companies pursue success through various business models and approaches, from privately held enterprises to publicly held REITs. While size and scope may differ, the commonality is the vision of the leadership team, their understanding of their unique approach, and the ability to execute consistently and efficiently against a well-developed and articulated plan. Michael Emory was a relatively young 33 when he started the predecessor to Allied Properties REIT. As a newly-minted attorney, he had a “fools rush in” confidence but no formal training in the real estate industry. For the first 18 months, Emory and his partners were unknowingly riding the tail end of a real estate boom, moving from one modest success to another. Like many young people, they mistakenly assumed their success was due to their business skills and real estate acumen, and not the highly favourable market conditions. They soon discovered how lucky they had been. Emory and his partners had purchased a couple of older buildings that shared similar attributes: close to the core of the city, distinctive architectural features, and lower overall occupancy costs. When the market collapsed in 1990, those two buildings held up: while office towers were running 2528 per cent vacancy and leasing out at below-market rents, Allied was able to keep its two buildings full and generate a respectable net rent. The young entrepreneurs had stumbled upon a business model that they understood and could execute with ease. In the mid-‘90s, Toronto began expanding beyond the downtown area, leaving behind entire blocks of brick and beam buildings that had once been the city’s light industrial base. The former occupants had moved out to industrial parks near the expressways and airport, leaving these classic, older buildings empty and no longer useful for their original purposes. The area quickly became derelict. Emory and his partners saw potential for a niche market that they could enter with relatively low costs. Working with Mayor Barbara Hall’s administration, they were able to have the area rezoned, and transformed their two older buildings into office space above grade with retail at grade. As soon as one building was retrofitted, it was leased out. Based on that success, Emory and his JUNE JULY 2013
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partners rolled out the concept on a progressively larger scale over the second half of the 1990s and finally launched Allied Properties as a public company. The productivity impetus for building such a distinctive and profitable niche in the marketplace boiled down to simple mathematics. The realty tax and operating cost for those buildings amounted to about $8.50/sq.-ft. versus $25/sq.-ft. for an average office tower. When the market was down, Emory could lease his space for $20/sq.-ft. and realize a net profit of $11.50 per, whereas the office tower had to lease at $20 to stay competitive, losing $5/sq.-ft. in the process. It was that occupancy cost advantage, coupled with the fact that there were certain tenants that simply wanted to be in the brickand-beam environment as opposed to the glass and steel towers, that led to Allied’s success. By focusing on this specific niche, Allied was able to differentiate itself from competitors, while also protecting its position in a market that didn’t have a large supply of space with those attributes. Another execution coup for Emory was an understanding of the psyches of William J. Ferguson is the young professional service providchairman and CEO of ers who were interested in their propFerguson Partners Ltd. erties. Their largest competitors at the and co-chairman and time were marketing the properties as co-CEO of FPL Advisory a “downgrade with dignity,” Emory took Group. The preceding was the opposite approach, seeing it as an an excerpt from his new upgrade with attitude. book Market Discipline, Michael Emory takes pride in the The Competitive 30,000 people working in Allied buildAdvantage: Lessons from ings; no small feat for a mid-sized CaCanada's Real Estate nadian REIT. As he surverys Canadian Leaders, published by the REAL Property Association REITs, Emory sees leaders who are very strong and an industry that is well led. of Canada (REALpac), As he examines his own leadership apavailable at realpac.ca proach, he acknowledges the values he gained at an early age from his parents: When you start something, finish it. Give it your best, and if someone else has more on any one day, that’s just life. But don’t give up part of the way through. b
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“With these tax incentives, it’s like we already filled 10 units.” People who know Real Estate, know BDO.
The Real Estate Practice at BDO Real estate markets globally are undergoing a period of virtually unprecedented turmoil. Now more than ever, it is crucial to have proactive financial guidance to help you address these issues. BDO’s Real Estate practice combines in-depth knowledge of the industry with a truly global network of support. All through a single point of contact. Assurance | Accounting | Tax | Advisory www.bdo.ca/real-estate BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.
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Seiter&Miller 001004 Pub. Building Size. 8 x 10.75 Issue April/May 2013
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