Building April May 2014

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CONTENTS

what’s on BUILDING.ca

FEATURES

20 > Coming to Terms /

Negotiating a First Nations development deal can prove both lucrative and enlightening.

By Leslie C. Smith

24 > The Future of Work /

What Oxford Properties found when they surveyed more than 2,000 office workers to get opinions on their current office environment and perceived future of the workplace.

By Andrew McAllan

READ > The LEED 2013 Inventory Examine the 573 buildings that received LEED certification from the CaGBC in 2013.

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31 > Raising a building’s I.Q. /

Buildings are now expected to support human activity that is Internetdependant as well as sustain a neverending stream of new technologies.

By Tim Wilson

READ > Focus on the Facts John O’Bryan debunks commercial real estate myths at the CBRE Annual Outlook Breakfast.

READ > Buyer Beware Sharon Vogel on recent rulings regarding condo developers’ rights to limit deficiency liabilities.

IN EVERY ISSUE

7 > Editor’s Notes 8 > Developments 14 > Market Watch 16 > Legal 34 > Viewpoint

ABOVE IMAGE:

The 30-storey RBC Waterpark Place III, developed by Oxford Properties, is scheduled to be completed by the fourth quarter of 2014 at a cost of $400 million.

[Image courtesy of Oxford Properties]

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Volume 64

02 Number Editor / Peter Sobchak

“This city always needs fresh ideas” was a comment from Paul Bedford, former Toronto Chief Planner, early at the awards ceremony for Urban Land Institute Toronto’s Urban Ideas Competition, and it was one that seemed to hang in the air both tantalizingly and frustratingly (at least for me).

Bedford was one of four judges (a planner, an architect, and two developers) asked to review submissions that responded to a challenge for design and planning-based ideas that would reconnect Toronto with its waterfront. The breadth of creativity among the 16 submissions was remarkable, but so too (for different reasons) was the rationale behind how the judges picked winners. “The first [criteria] was to see what ideas could provide both simple and inexpensive solutions to complex problems. Creativity and their ability to transform existing spaces and places was also fundamental,” said Bedford in an interview with the Toronto Star. “The second was all about challenging conventional thinking with a bold set of ideas.”

One prize winner certainly met that latter criterion. Inundation, submitted by Dillon Consulting, won the Overall Vision category for being a “big dreamy idea” that the judges said “introduces a heroic solution and shows the potential if bold moves were made.” The other prize winner met the adjectives in the first criteria: the judges agreed almost immediately that RevAMP, the winner of the Site Specific Idea category and submitted by a pair of University of Toronto students, was the best idea presented overall, supposedly due to its simplicity and clarity of presentation. “[It] presents a series of simple ideas that we can do right away,” said one judge.

Yet bold moves are what major problems like waterfront reconnections need, not necessarily simple, since “simple” is really often just code for “fundable.” Ultimately, funding potential was a key factor for project ideas that scored higher in the judges’ view. “Great ideas are only great if you can fund them,” said Meg Davis, VP of Development at Waterfront Toronto and one of the judges. Hearing an oft-cited statement like that was like taking the helium out of a child’s balloon. Simple can ultimately become predictable, which is the death knell to fresh, new and innovative ideas.

I’m not saying a Ferris Wheel is the answer (although one of the submissions thought so), but nor should we dismiss ideas like Shoreline Skyway, which proposed a creative east-west connection via an above ground, gondola transit line, or another that suggested turning the Gardiner Expressway into a wind farm.

I was reminded of a hilarious rant by Patrick McDonnell, a self-professed urban planner who complained about how his profession is filled with “curmudgeons who default to ‘no’ and ‘how much is that going to cost?’ instead of ‘it’s possible’ and ‘let’s see where this can go.’”

Bedford wasn’t wrong when he said Toronto (or any city, for that matter) always needs fresh ideas, but getting those ideas is just the first step. We need fresh ways to implement them, and fresh-minded people willing to do it. “We need to be rocking it out, exploring and enjoying life, yet we walk around in suits and ties, pride ourselves on being technical experts, and fold our arms whenever someone proposes changing a road or building housing,” bewailed McDonnell, and while he was referring to planners, the same is unfortunately true for many of the professions involved in city building. We need more convention challengers and rock n’ rollers.

Art Director / Roy Gaiot Legal Editor / Jeffrey W. Lem Contributors /

Andrea Bogar, Robyn Brown, Andrew McAllan, Odysseas Papadimitriou, Leslie C. Smith, Tim Wilson

Circulation Manager / Beata Olechnowicz beata@building.ca Reader Services / Liz Callaghan Advertising Sales / Faria Ahmed (416) 510-6808 fahmed@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: info@building.ca 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.

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APRIL MAY 2014

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DEVELOP-

Cities need living green infrastructure as well as grey: GIO

TORONTO | While the Federal government has made a strong commitment to funding infrastructure across Canada with its announcement of $14 billion over 10 years from the Building Canada Fund, getting the most from investments in national infrastructure requires support for living green infrastructure News as well as traditional grey infrastructure, says the Green Infrastructure Ontario Coalition (GIO). The GIO believes that Canada sees highest number ever the federal government should acknowledge that natural of LEED certifications in 2013 systems deserve special focus as valuable components of our cities, saying in a press release “Increased investment in grey infrastructure like roads and transit is much needed, OTTAWA | 2013 is going on the record books as the most probut Canada is falling behind countries like the United States lific year for projects achieving LEED certifications in Canada: in funding living green infrastructure. The current focus on a total of 574, more than in any prior year, says the Canada grey infrastructure should not dictate how infrastructure is Green Building Council (CaGBC). This brings the total numconceived for the next 10 years.” ber to 1,484. In addition, 598 projects registered to pursue “Living green infrastructure includes everything from certification, bringing the total registered and certified projnatural vegetative systems such as tree-lined streets or ects to 4,685. A searchable list with further detail on all LEED urban parks, to green technologies such as green roofs and projects can be viewed at building.ca permeable pavement. All of these elements combine to form 2013 saw the highest number of LEED Gold certifications a natural network that helps clean our to date at 173, and it was another strong year for LEED Platiair and water.” num certifications, with a total of 32 projects certified. Proj“Living green infrastructure also ects were certified across the country, with the highest numcomplements traditional grey infrabers taking place in : structure by helping it do its job and in2014 has started Ontario (221), Quebec (121), British Columbia (87), and Alberta (78) off strong for creasing its cost effectiveness. Green Canadian LEED infrastructure keeps stormwater from The current stats on LEED certified space in Canada also projects with overwhelming grey infrastructure and paint a strong picture of the growth that green building in 140 new is one of the best strategies for dealcertifications Canada has had. In 2013, there was a total of 6,094,101-sq.as of March 31. ing with severe weather events. It also m. of space that became LEED certified They include: shades and cools grey infrastructure, which prevents damacross the country, leading to a now

• age and extends its lifespan.” overall total of 23,931,679-sq.-m. This “As all three levels of government look to make muchtranslates into 0.71 square meters (or LEED needed investments in urban infrastructure, living green 7.69 square feet) of LEED certified space Certified infrastructure should be included in funding programs such for each and every Canadian.

• as the Building Canada Fund. Ontario is already reaping the “In 2013 we saw a steady increase in benefits of green infrastructure. With over 200,000 Ontarboth small and large projects certifying, ians working in jobs related to growing, manufacturing, imwhich speaks to the continued value the LEED Silver plementing, and maintaining living green infrastructure, rating system and certification brings

• further investment fits perfectly into the government’s goal to the industry,” says Mark Hutchinson, of investing in projects that contribute to Canada's economic Director of Green Building Programs for growth and prosperity.”

CaGBC. “It is also encouraging to see LEED so many projects attaining the highest Gold

• New Projects levels of LEED certification as it proves that the industry has the skills, knowlMontréal beach to get major makeover edge and technology to produce high LEED performance buildings at a reasonable Platinum MONTRÉAL | A proposal submitted by the firms Ruccolo + cost and effort. LEED Gold and PlatiFaubert Architectes and Ni conception architecture de num certification has become the stanpaysage has won a design competition that aims to repurdard in constructing or renovating large pose a vacant site of Plage de l’Est on the shoreline of the St. commercial office buildings.”

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Mixed-use neighbourhood planned for Toronto’s Downtown West TORONTO | RioCan REIT, Allied Properties REIT and Diamond Corp. togeth— Stephen Diamond, president and CEO, Diamond Corp.

Lawrence River, along 94e Avenue in Pointe-aux-Trembles, Montréal, that “will be a new, shared natural treasure worthy of our status as a UNESCO City of Design,” says Manon Gauthier, Ville de Montréal executive committee member responsible for Culture, Heritage, Design, Space for Life and the Status of Women. “This project is exemplary in that it opens up many more urban planning perspectives and applications for our city, inspired by the recognition and responsibilities that come with that designation.”

“The original idea for this project came about thanks to a grassroots initiative that took shape via the Croissant de l’est’s ‘Quartier 21’ project, which we’ve been advocating for politically since 2010,” said Chantal Rouleau, executive committee member responsible for Water and Water Infrastructure and Mayor of Rivière-des-Prairies–Pointe-aux-Trembles Borough. The key element of the concept is a boardwalk integrated into the landscape that begins at the entrance to the beach site and connects various levels with distinct uses: games, universal traffic, the beach and water-based recreation. The boardwalk, with the roof of a service building integrated into its centre, hugs the contours of the site and culminates in an observation point of the river.

In both summer and winter, the building at the centre of the boardwalk will be a venue for meetings, leisure and services. The concept calls for a water play area adjacent to the building. This sizable surface with an area of more than 200-sq.-m will feature a permanent stream of water flowing onto sculpted stones, and will become a skating rink in winter. Farther back on the site are a pair of courts designed for beach volleyball or badminton, and which will be adaptable to new needs that may emerge in years to come.

The borough will now proceed with the plans for the work, to be conducted in phases. The budget for the project includes $3 million for the work, which will begin in 2014 and completed sometime in 2016. The Plage de l’Est is one of the first actions stemming from the Plan bleu vert adopted by Rivière-des-Prairies–Pointe-aux-Trembles Borough council in May 2013.

“The Well will be a world class mixed development that expands and enhances the experience of downtown living while integrating seamlessly with all of our neighbours, adding to Toronto’s attraction as a great city.”

The jury chose a concept that combines universal accessibility, sustainable development, and wellbeing, all while providing a special connection between visitors and the St. Lawrence River.

To maximize the park’s connection with its natural surroundings, the concept calls for raw, natural and environmentally responsible materials such as wood, stone and concrete.

er will be filing plans with the City of Toronto for a new neighbourhood to be known as The Well. Spread over seven and a half acres, The Well will extend the revitalization of Toronto’s Downtown West, south of King Street and west of Spadina Avenue. “For two and a half decades, Allied has been renovating, developing and managing office space to meet the changing needs of businesses and their employees who want to work in Toronto’s vibrant downtown core,” said Michael Emory, president and CEO of Allied. “Our joint venture with RioCan and Diamond allows us to bring complementary expertise to bear in creating an urban environment where everyone will be connected. Knowledge workers, shoppers,

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MENTS

residents and neighbours will enrich the urban experience for one another on an ongoing basis. The common spaces in The Well will significantly enhance the sense of community that exists in the area.”

To execute the vision and do the master planning for this project, the developers have chosen three architects and urban designers: David Pontarini, founding partner, Hariri Pontarini Architects; Jon Pickard, partner Pickard Chilton; and Claude Cormier, founder Claude Cormier Landscape Architects.

Menkes tops of the GTA high rise list TORONTO | Nearly one out of every 10 new condominium suites sold across the Greater Toronto Area last year was a Menkes condo, according to the 2013 Strategic Review of the GTA’s housing market from RealNet Canada Inc. and BILD. According to the report, Menkes’ Harbour Plaza Residences was the condominium market’s top selling site of 2013, and also had the fourth best-selling condo site, with 311 sales at its 365 Church condominium development. With strong launches for both Harbour Plaza towers, Menkes sold 858 condominium units in 2013 according to RealNet. That single project sales total was the highest total for any new condominium development in the GTA last year. Sales at Harbour Plaza and 365 Church, combined with sales at other Menkes sites across the GTA last year, including 87 Peter, Fabrik, Pears on the Avenue and Gibson Square, resulted in 1,511 sales, and a 9.3 per cent share of the market. “In a year where both launches and sales were down on an industry-wide basis, Menkes found itself with nearly 10 per cent of Caption the condo market,” says Alan Menkes, pointing to the fact that his company’s cumulative sales in 2013, across all its sites, were nearly double the total sales for the year’s next best-selling developer.

On the Move Eric Pelletier Architects joins Lemay QUÉBEC CITY | Eric Pelletier Architects (eparchitects), a firm

that currently works in Quebéc, Toronto, Algeria and Costa Rica, has been acquired by Lemay in a growth strategy aimed

11

Changing of the guard at CBRE — Mark Renzoni, newly appointed president and CEO, CBRE Limited

“This alliance will contribute significantly to reinforcing the creative offering of Lemay in all markets,” said Louis T. Lemay, president of Lemay, about the newly-acquired firm eparchitects which has won, among other prizes, the Governor General’s Medal for Architecture and the Québec Order of Architects.

at expanding international activities. “By joining forces with Lemay and its two decades of experience, eparchitects takes on a new challenge; that of pushing its boundaries even further on all levels of excellence, innovation and research, and most of all in terms of creativity and inspiration in the wonderful world of architecture,” said Pelletier, whose expertise and that of his team will allow Lemay to further strengthen its presence not only on projects with a strong cultural component, especially libraries, but also architectural competitions.

Eric Pelletier will remain as Principal Creative Partner, and will sit alongside the members of Lemay’s management team, composed of Principal Partners Pierre Larouche and André Cardinal, and Principal Creative Partner Michel Lauzon. Along with Lauzon and Lemay, Pelletier will participate in the founding of lemayLAB, a creation and advanced integrated research studio that will be part of the Lemay agency. The Québec City firm has collaborated with Lemay on a number of projects, including the Parliament of Costa Rica design competition in San Jose, Ubisoft’s headquarters renovation in Montréal, and was a finalist in the competition for the new concert hall in Victoriaville.

“CBRE provides great depth in terms of service lines, market intelligence, and corporate culture, which is reflected in the talent of our 2,000 employees in Canada.”

DEVELOP-

TORONTO | CBRE Limited has made Chief Operating Officer Mark Renzoni the new president and CEO, and transitioned Stefan Ciotlos from his role as president “to focus on key strategic projects that are vital to the company’s continued growth.”

Installed as Chief Operating Officer in 2012, Renzoni has helped develop corporate and financial strategies, while coordinating client relationships across Canada. He began his career in CBRE’s Office Leasing division and became Managing Director of the Toronto West office before moving to the Toronto Downtown office in 2000 as Executive Managing Director. In 2008, Renzoni moved to Vancouver to lead all of CBRE’s operations in British Columbia, which he continued to manage while serving as Chief Operating Officer. Ciotlos, who has been with CBRE since 1986, oversaw one of the most successful periods in the organization’s history in Canada. b

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ARCHITECTURE | CULTURE | TECHNOLOGY

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MARKE T Canadian exports is forecast to rise, helping to drive economic output higher by between 2 per cent and 2.5 per cent on an annualized basis. While there is continued concern related to the European economic recovery, trade activity between Canada and its largest trading partners is expected to pick-up. Canadian businesses are expected to pick up the economic baton and invest in their existing operations to meet this demand.

Business cycle dependent sectors, like office and industrial, will experience moderately positive demand due to the increase in trade-related activity. The office sector will see the ongoing delivery of new supply, with the hope that tenant expansion will offset the addition of this new vacant space. The industrial sector is set to capitalize on increased economic activity. The rise in speculative industrial development will be met with equally healthy interest from tenants in the warehouse and distribution sectors. The broadly positive outlook for Canada's commercial property market will drive investment capital to the sector. Yields will therefore remain at levels required to justify the allocation of funds, with income stability and growth adding to the overall rationale.

Holders of Canadian commercial real estate assets will be the beneficiaries of stable market fundamentals in 2014. Core property values, on the rise for much of the past few years, will hold at the peak. Higher up the risk spectrum, property values will stabilize, having slipped slightly in 2013. Demand for investment-grade property will MISSISSAUGA, ON | Based on its recently-released 2014 continue to outpace supply. However, capital flows will reCanadian Economic Outlook and Market Fundamentals main above the long-term average. Returns will continue to Research Report, Morguard Corporation is predicting a attract investment into the property sector, likely finishing third consecutive year of strong performance for the Casomewhat lower than those of the previous year. The private nadian commercial real estate market. The forecast rise in investment market should see the generation of returns beCanadian economic growth for 2014 bodes well for the natween the high single and low double digits. In short, Cantion's rental market performance. As a result, the nation's ada's commercial real estate owners can expect another run commercial property market will continue to provide invesof solid results in 2014, barring an unforeseen shift in martors with stable and positive income and attractive returns in ket fundamentals. helping them meet their investment objectives.

"The Canadian real estate market will remain a stable and Office attractive source for investment yield and cash flow over the The Canadian office sector is poised for continued health near term, while generating above-average activity levels in in 2014, although it will include some challenges. Returns the sector over the next 12 months," said Keith Reading, diare expected to remain positive, though slightly lower than rector of research at Morguard. "Canadian property values the 2013 results. In the leasing sector, occupancy levels will will remain close to the peak, with the relatively low cost of rise, given relatively modest demand both in the public and debt and equity funds supporting this trend." private sectors. The ongoing delivery of new supply in CalA range of investor groups are expected to be active in gary, Toronto, and Vancouver will present a challenge, parCanada's commercial property investment market, including ticularly for the downtown sub-market. The combined effect pension funds, REITs, private capital, and institutions. Thereof increased supply and modest demand will limit rental fore, the combination of the availability of capital and increasgrowth. However, if demand surprises to the positive, then ing allocations to Canada's property market will result in growth may be more buoyant. For the most part, trends in above-average transaction volume. Annual investment capiCanada's office markets will remain relatively healthy, detal flow into the Canadian real estate sector is predicted to spite the onset of headwinds over the next couple of years. fall slightly short of the 2013 level, but still beat the long-term annual average of almost CDN$20 billion.

Industrial Real Estate Investment Overview The industrial sector is expected to build on the healthy momentum of 2013 in the coming months. Export-driven marThe Canadian real estate investment market will see a conkets will lead the charge. Eastern cities will benefit from a tinuation of positive performance in 2014, given a more stronger economic recovery expected south of the border. robust economic forecast. The Canadian economy is exU.S. demand for Canadian products will boost export-drivpected to gain momentum in the coming year, boosted by en companies in the manufacturing dominated markets a strengthening of the U.S. recovery. In 2014, demand for APRIL MAY 2014

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like MontrĂŠal and Toronto. In the west, Alberta and British Columbia will see continued growth in light of improved demand for oil and gas and lumber across the globe. At the same time, a rise in the rate of economic expansion in Canada will boost distribution and warehousing activity, due to increased domestic demand. The recent surge in speculative development in markets like Calgary, Edmonton, and Toronto will be met with solid interest from a variety of tenants. As a result, construction volume will continue to rise, boosted by U.S. retailers who will continue to develop and perfect their distribution networks.

The investment sector will also see continued momentum, resulting in attractive returns, healthy demand, and values that will hover close to the cycle peak. Investors will look to the sector increasingly in the coming year, with the view that the sector still has upside in terms of growth. In summary, Canada's industrial heartlands will see continued health and stability in 2014, adding to what was a solid 2013.

Retail Canada's retail environment will continue to evolve in the coming year, with new ways to shop, new and changing bricks and mortar formats, and an increasingly sophisticated consumer. On balance, the retail property sector will more than likely enjoy another year of prosperity and growth. In 2014, rental market trends are forecast to mirror those that have been in place for much of the current cycle, including healthy occupancy patterns and demand. U.S. groups looking to expand into Canadian cities will continue to support this occupancy and demand-strength. Competition for limited vacancy will ensure rents hold at the peak, with the potential for further increases in prime centres and high streets. An improved job market and economy will provide a foundation for spending activity, which is forecast to

better the modest increase of 2013 in the coming year. The strength of the leasing backdrop will help buoy investment fundamentals over the near term.

Investment fundamentals are expected to continue to unfold over the next year, a period that will be characterized by positive trends. Attractive returns will once again be generated, boosted by healthy income and capital trends. Property values will hold at the peak, although the growth cycle of the past few years appears to have reached a plateau. However, demand for investment-grade retail property will remain strong, indicating there may be some addition inflation achieved. In short, Canada's retail market will generate largely strong leasing and investment fundamentals through 2014, in keeping with the current phase of the cycle.

15

Multi-Family Residential The 2014 multi-family residential property sector performance will be characterized by persistent stability and broad health. Steady growth in property values over the past few years will continue to ease, in keeping with the 2013 trend.

However values will continue to range at the peak for the cycle. The strength of the sector's demand drivers and constrained supply will once again produce rental market health and stability in 2014. Occupancy should rest above the 95 per cent mark in most cities, as vacancy units remain in relatively short supply. Rents will, as a result, continue to rise, with the limitation of rental control legislation in a number of provinces. Competition for tenants from rental condominiums will continue to be a factor, given the slack in the ownership market. As 2014 progresses however, excess capacity will decline, benefitting the purpose-built market.

Investment-grade assets will remain popular and in short supply, thereby supporting values. Indeed, the health of the investment market will mirror that of the rental market in most markets across the country in 2014. b

Commercial Property Investment Retuns

Commercial Property Rental Market Vacancy

(standing investments annual roling (%) as at Sept. 30, 2013)

(% Office, Industrial as at Sept. 30, 2013; Retail as at Jun. 30, 2013; Multi-family as at Oct. 30, 2013)

Industry

Multi-family

Office

Retail

Industry

Multi-family

Office

Retail

Winnipeg

4.0

2.5

11.0

2.4

n/a

n/a

14.6

18.5

Calgary

6.2

1.0

9.4

3.9

11.8

11.4

15.2

17.2

Edmonton

4.7

1.4

10.2

5.0

12.4

13.4

15.3

14.5

Vancouver

7.1

1.7

8.5

2.3

8.6

4.2

11.3

11.4

Halifax

6.4

3.2

9.0

3.9

n/a

4.9

n/a

n/a

Montreal

8.3

2.8

9.8

5.0

6.9

7.3

5.5

18.9

Ottawa

6.3

2.9

7.6

5.5

11.3

n/a

10.7

14.2

Toronto

4.6

1.6

8.7

6.3

10.6

18.8

11.7

13.1

Canada

5.9

2.9

9.1

4.9

10.3

13.9

11.9

14.3

Source: CBRE & CMHC

Source: IPD

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16

LEGAL Luckily, the DTC does not always mean additional layers of bureaucratic complexity. In the Taku River Tlingit First Nations case, which was also decided concurrently with Haida Nation, a local resource company wanted to re-open an abandoned mine but the local Aboriginal nation objected to the lack of any efforts to satisfy the DTC. The Supreme Court of Canada agreed that there was certainly a DTC, but since the mine re-opening had already been subject to a gruelling and lengthy Environmental Assessment Act review process (a process which the Aboriginal claimants had been actively engaged throughout), that was good enough to satisfy the DTC and there was no need for yet another set of processes. Similarly, in Broken Ojibway, a 2009 Federal Court case, the Aboriginal claimants boycotted consultation The Crown's failure to fulfil its Duty to Consult can opportunities then demanded a separesult in significant roadblocks to development. rate protocol to satisfy the DTC. The Federal Court held that the DTC had

By Jeffrey W. Lem and Odysseas Papadimitriou already been met and the Aboriginal claimants chose to squander their own rights by not fully engaging when they had the opportunity.

Likewise, the courts have not just treated the DTC as an automatic veto card handed to the First Nations. In the Mikisew Cree case, a Supreme Court case dealing with road access through Aboriginal lands, the court reminded Urban planners and property developers have a seemingly never-ending list of Aboriginal claimants that the DTC studies, reports, approvals, consents, and other development hurdles to go through before the hundred acre lot of standing canola becomes the next Runalso imposed on them a reciprocal ning Meadows subdivision (or any other intensification of use). Well, the list isn’t duty to act in good faith and reminded getting any shorter. The rights of Canada’s First Nations to be consulted when the applicants that, even as far back as making decisions that may adversely affect lands subject to the claims of AborigiHaida Nation, there was always a duty nal Peoples should be added to the list of development hurdles. on the Aboriginal claimants not to The Duty to Consult (DTC) is a constitutionally enshrined right of all Canadian take unreasonable positions just to try and frustrate the Crown’s decisionAboriginal Peoples to have the Crown consult with them and accommodate their A store on West making powers. legitimate interests whenever the Crown has knowledge (direct or indirect) of the Street in Goderich, potential Aboriginal rights or title claims, and the Crown is contemplating doing DTC also applies directly to real esOnt.’s historic downtown before themight adversely affect those Aboriginal rights or title claims. Typisomething that tate development and Neskonlith Inditornado hit (above), cal examples of such Crown actions include the granting of licenses, permits, apan Band v. Salmon Arm is an example the damage (right), provals, and resource claims. of how DTC might come into play. A local and in August 2013 (below) after the town’s Although the roots of DTC go back to the 1990s, the modern genesis of the developer wanted to construct a shoprebuilding efforts. ping centre near confirmed Aboriginal DTC is much more recent, with most lawyers pegging the Supreme Court of Canlands. The location of the parking posed ada decision in Haida Nation in 2004 as the beginning of the “modern” DTC era. alleged flood risks for the Aboriginal In Haida Nation, the British Columbia government issued tree farming licenses lands. Municipal staff supported the without allegedly adequately consulting and accommodating the Haida First developer’s plan and the municipal Nation. The Supreme Court of Canada concluded that the DTC was not a fixed council went ahead and approved the protocol, but rather a moving matrix that depended on: (i) the strength of the development of a shopping centre. The Aboriginal claims; and (ii) the severity of the action proposed by the Crown. Of British Columbia Court of Appeal concourse, it is almost trite to say that more DTC is required when the Aboriginal firmed that, while the Crown had a claim is rock solid and the proposed government actions potentially catastrophic, but the trick since Haida Nation has been to determine just how strong some DTC, the DTC was limited to the federal Aboriginal claims really are, and just how significant some of these proposed and provincial governments. Municigovernment actions really are. palities were free and clear of the DTC.

Duty to Consult: an Aboriginal veto to modern development?

APRIL MAY 2014

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This is a significant relief for most developers and urban planners since it is at the sub-provincial level (i.e. at the municipal and regional levels) that most infrastructure and servicing planning takes place.

Another concern for readers of Building should be the Crown’s preference for downloading its DTC obligations. In Wahgoshig First Nation re Solid Gold Resources, a 2012 Ontario decision relating to mining claims under the Ontario Mining Act, the issue wasn’t so much whether the Provincial government had a DTC. The Provincial government knew it had a DTC, but insisted that the private resource company do all the consulting and accommodating before staking out its mining claims near Aboriginal lands. The resource company did not do so, and proceeded to stake its claims. The Divisional Court agreed that the resource company, being a private entity, had no DTC. This is an obligation of the Crown (at the provincial and federal levels, but often they cannot agree amongst themselves who has to take the helm). In response, Ontario amended the Ontario Mining Act to force resource companies to consult and accommodate all potential Aboriginal claims before undertaking exploration activities.

There are other examples of the Crown’s attempts to delegate its DTC obligations. In 2013, in the Moulton Contracting case, a local logging operation won almost $2 million from the British Columbia government by suing it for failing to meet its DTC obligations, which in turn led to a First Nations blockade which severely affected logging operations.

Likewise, in the still ongoing litigation involving Northern Superior Resources in Ontario, a resource company has essentially abandoned gold exploration in the Ring of Fire because of chronic disputes with the Sachigo Lake First Nations and is now suing the Ontario government for $110 million in damages arising from the Crown’s alleged failure to fulfil its DTC obligations.

While these cases make it abundantly clear that it is the Crown that has the DTC, not the private businesses, almost

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any developer will tell you that suing provincial and federal governments is not a sustainable business model for modern development and city planning. Furthermore, while it is also clear Jeffrey W. Lem is a that the DTC is not an absolute veto in partner in the Toronto/ the hands of the First Nations, astute Markham offices developers will tell you that, in the of Miller Thomson LLP game of modern development, timeand is Certified by the to-market is one of the principal deterLaw Society of Upper minants of success or failure. In a prodCanada as a Specialist uct development cycle that is already in Real Estate. He can staggeringly long, waiting for the Crown be reached at jlem@ to comply with its DTC obligations can millerthomson.com. result in fatal delays. For all practical intents and purposes, progressive private enterprises are now actively (although perhaps begrudgingly) embracing the opportunity to run with and satisfy the DTC obligations of the Crown, Odysseas Papadimitriou and chalking it all up to the cost of dois an Associate at Miller ing business.

Thomson LLP, specialBuilding readers should not dismiss izing in all aspects the DTC as some curious legal phenomof condominium law. enon happening in a land far, far away (yes, the cases are predominantly coming out of British Columbia and usually arise from the extractive industries). Developers and urban planners should take a moment to consider how suddenly the development process has already changed in their own lifetimes (“What, we need a LEED consultant for this?!”), and how precious developable land is becoming. It may not be very long before what is seen as “prime” developable land runs very close to abutting Aboriginal titles.

Couple this with the growing commercial sophistication of Canada’s First Nations, and, at the very least, the next generation of developers and urban planners are going to have to become very versed with the DTC. b

17

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20

coming u terms t Negotiating a First Nations development deal can prove both lucrative and enlightening

APRIL MAY 2014

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g

ms

T

by Leslie C. Smith

his great, big land of ours offers plenty of opportunities for real estate enterprise. In several instances across the country, however, where title to the land remains in dispute with First Nations groups, that pronoun “ours” can prove a bit tricky.

Take the case of the Algonquins of Ontario (AOO), whose outstanding land claim encompasses nine million acres of Crown and privately owned lands, as well as a handful of provincial parks, a traditional territory that cuts a wide swath through what used to be known as Upper Canada and includes a hefty slice of our nation’s capital city. The Algonquins never signed a treaty with the Crown and never ceded a jot of land to anyone. Stranger still, due perhaps to their siding with the French against the British in the Seven Years’ War (1755-63), they never received a reserve of their own, save for Pikwàkanagàn, a small parcel of land in the Ottawa Valley that they were obliged to purchase for themselves. Despite having repeatedly petitioned for official recognition, starting in 1772, the AOO were ignored for well over 200 years until, in 1991, the government finally decided to do something about formalizing their rights.

At the same time, the Feds were busy decommissioning several armed forces bases, one of which happened to be CFB Rockcliffe, situated on a prime piece of Ottawa realty. Because of the claim conflict with the Algonquins, the Government of Canada had the obligation — formally known as the “duty to consult” — to enquire if the AOO were interested in this land parcel. Not surprisingly, they were. But the details were back-burnered while larger issues got sorted out.

After treaty talks between the government and the First Nation stalled in 2001 and then resumed again in 2003, Robert Potts, partner in Toronto’s Blaney McMurtry LLP, began working as principal negotiator for the AOO. Complicating the issue of assigning land rights across the breadth of the territorial claim, he states, were myriad cottage, home and business owners who, understandably, possessed a deep financial and emotional stake in the matter. To accommodate everybody’s concerns, a time-consuming series of public meetings were held, which provided valuable feedback to all parties.

“Never before,” says Potts, “had such a thing been put out to the public at large.”

The upshot? A potential settlement in the form of a 2012 Preliminary Draft Agreement-in-Principle, wherein the Algonquins of Ontario agree to no expropriation of private property and the government pays them $300 million in capital. Of the nine million acres of land in question, six million acres are already in the hands of private entities and enterprises, and two million acres are in parks, most of it Algonquin Park. One million acres remains as Crown land to which the Algonquins of Ontario would have certain resource and harvesting rights, and some 117,500 acres of that allotment are ceded directly to them.

“A challenging package,” Potts maintains, “to put into a viable land base for generations to come, especially since much

21

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MB >

Ottawa

22

of this land, too, will be retained as parks.” If the settlement is accepted by all parties, it will mark the first modern-day signing of a constitutionally protected treaty in Ontario.

Remaking Rockcliffe

Meanwhile, back at Ottawa’s CFB Rockcliffe, after consultations with Aboriginal Affairs and the Ministry of Defence, the site was transferred in 2009 to the Canada Lands Company Limited (CLC) for commercial and residential reformation. CLC, an arms-length, self-financing Crown corporation, acquires surplus federal lands for development, and currently owns and manages a real estate portfolio of approximately 2,400 acres in municipalities across Canada, including Toronto’s CN Tower. The prospect of negotiating with an additional stakeholder group on this new project apparently didn’t faze them.

Indeed, says Potts, the corporation’s attitude and approach to the AOO represents the ideal in First Nations negotiations: “They demonstrated tremendous sensitivity and a willingness to make this project special and unique, and to enhance [the Algonquins’] presence in the Ottawa Valley. What better place to do that than right in the nation’s capital?”

CLC president Robert Howald recalls his prep work for the negotiations was: “the same as for any other party we do a transaction with. You take the time to understand their background and other experiences they may have had, and work within those parameters.”

This led, through a series of meetings, to a basic settlement agreement involving three main elements, factors that diverge from an ordinary land deal in that they are all predicated on the AOO’s special perspective. One requirement is that aboriginal-owned companies have the opportunity to compete for construction and other service jobs on the project. Another is economic development that goes above and beyond the typical cash-on-closing handshake.

Once services go in ground, the AOO will have first refusal on portions of land to develop for themselves, up to a value of $10 million. Finally, and most important from everyone’s viewpoint, is the chance to commemorate Algonquin culture as well as educate the public about this heritage through the development’s design and concept. Even though these ideas are still in the germination stage, significant commemoration might include everything from naming the site (the development requires new branding, given that “Rockcliffe” is already a well-known Ottawa neighbourhood) and surrounding roadways to setting aside specific areas identified as important Algonquin touchstones.

Pivotal to this last point is what Howald calls “the ability to have a voice in the development going forward.” Regular meetings with elected Algonquin Negotiation Representatives and consultation with AOO elders ensures the First NaAPRIL MAY 2014

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Algonquin land claim area Algonquin Park

tion’s ongoing participation in the project’s planning. Don Schultz, CLC’s director of real estate at Rockcliffe, says these meetings happen “at least quarterly, but there might be more, if required by the process. Everything’s pretty flexible.”

As an aside, Schultz says these are “always positive meetings, so we’re happy to hold them.” Personally, he enjoys learning more about the Algonquin people, from their history and the reality of their mainly assimilated lives in non-native culture – to the point where the majority have lost touch with the language — to their “extraordinary sense of humour.” Most of all, as someone who specializes in building communities, he is impressed by their social cohesion: “Despite what could be seen as an erosion of their culture and community, it’s still there, it’s still strong. The persistence of the community is really quite remarkable.”

Call of Duty

The duty to consult, and the broader duty of all Canadians to form pathways to reconciliation, may strike some developers as a tad onerous. However, as Robert Howald points out, listening, showing respect, and attempting to make sincere accommodation are key to any negotiation. In regards to the Rockcliffe Redevelopment, as well as other dealings his firm has had with First Nations people, he says they’ve experienced no untoward difficulties: “First Nations are just like any other community that we deal with, including city councils and some companies. Each has their own personality, their own requirements. You’ll never be able to absorb or understand all the subtleties … Just keep an ear open for issues and learn from them.”

Shane Freitag, a partner at Borden Ladner Gervais LLP, talks about aboriginal consultations in particular in a recently posted video on building.ca: “The duty-consult require-

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ttawa

ment has been a game-changer in terms of developing projects … Developers often think that if they’ve signed a participation agreement or a benefits agreement with a First Nation that their duty to consult has ceased to exist, when in fact it continues on. It’s important to understand that the complexion of the relationship with First Nations has changed. First Nations are looking for meaningful participation in these projects, not simply employment and jobs. They’re looking more for participation in the project itself. So the duty to consult and the relationship with the First Nations are absolutely critical to the success of any new project.”

Blaney McMurtry LLP partner Robert Those who welcome the prospect of Potts has accumulated decades of partnering with First Nations will find experience representing and counsela lot of potentially lucrative sites availling First Nations groups. Like everyable to them across Canada. In Ontario thing else, however, there was a first alone, says Potts, there are “plenty of time. 35 years ago, Potts travelled from Toronto to Sturgeon Lake, in development opportunities with the northern Alberta, to present in person Algonquins. A number of sites can be advice he had already submitted developed, over 200 land selections, in writing to First Nations groups many of them strategically located, in relation to their treaty entitlements: and not just in Ottawa.”

In the meeting, I laid out the issues One main constraint to Native neand a series of options, and asked gotiations, at least, seems to have disthem to make their choice. I was met appeared. A generation ago, First Naby a minute-and-a-half of silence. tions’ reverence for the earth, which So I did it all over again, after which necessitates a certain delicacy in site there were three minutes of silence.

Whereupon the chief says to me: “Bob, development, would have struck many I think it would be a good idea for you in the business world as ridiculous. to go outside, walk up the hill, and visit Nowadays, though, with the word our ancestors in the graveyard.” I did “green” falling from everyone’s lips and this, thinking I was going to be fired…. developers vying for top LEED accreditAt the graveyard, two eagles soared overhead. I was told later by the elders ation, the idea of being custodians of that I had been visited by a couple the land makes perfect sense. Nonof their ancestors. I came back to the native thought, in other words, has meeting, and all the decisions had finally evolved to become one with abbeen made. Most of them had agreed original concepts. before the meeting on what needed to be done, but one person had a few The Algonquins even have a name difficulties with a couple of points. for it: Ginawaydaganuc. Megan AikSo they waited, in silence, to allow that ens, Strategic Communications Coperson time to come about. They ordinator for the Algonquins of Onwouldn’t force him to make any tario Consultation Office in Pembroke, decision. Only when they were all in agreement did they approve the next interprets this as meaning: “We are all steps to be taken. connected — with the water we drink, I learned that consensus is very the air we breathe, with the food, mediimportant across the board with any cines and gifts the earth provides us, First Nation. The chief explained to me with the animal teachers, with the larthat, in the past, maybe only five or six families would be involved in the ger universe, and with each other.” decision about which area they would Expressing that thought at the all hunt. The chances of their hunt Rockcliffe Redevelopment is a matsucceeding would diminish exponenter best left in the hands of the Altially if one or two families broke off gonquins of Ontario elders, explains on their own, without everyone heading in same direction. Every negotiation CLC’s Don Schultz, who has met with I’ve done since then, in terms them twice in 2013. They, in turn, of aboriginal leadership, has been have identified areas significant to consensus decision-making. the Algonquins, such as the northern

edge of the site’s plateau, overlooking the Ottawa Valley. “What I’ve learn- 23 ed about Algonquin culture is that it’s very inclusive,” Schultz says. “They’re interested in the idea of all nations coming together because other people used to travel through their territory all the time. They used to collect a toll from other First Nations travellers along here.

“It’s very interesting to me, the dovetailing of traditional Algonquin values and modern values,” he continues. “Another part of the commemoration is finding a location for a more contemplative place with spiritual meaning. We think we’ve found a spot in a stand of trees, some very important old-growth forest — centuries-old sugar maples and beeches. This one site has a particular bur oak that’s between 200 and 300 years old. It predates Confederation. It’s a significant tree, and we’re going to celebrate it.

Tree preservation is a key part of our development strategy.”

Also dovetailed for Schultz is the notion of the Algonquins reconnecting with their own people: “The land claim is about reconciliation and moving forward, at the same time as reconnecting with their past. It’s sort of the same thing with Rockcliffe — we’re reconnecting this piece of land to the rest of Ottawa. Quite a few military bases were isolated from their surroundings, and this one’s been closed for 20 years now. There’s an impulse to rebuild, to reconnect this land to the broader Ottawa community that’s in keeping with the Algonquin impulse.”

Like the government’s current treaty process with the Algonquins of Ontario, the Rockcliffe project has passed through its preliminary stages and is on schedule to wrap successfully within a few years’ time. But the partnership hammered out between the First Nation and Canada Lands Company has already set the benchmark for Canadians looking to build something of significantly more importance than just another development. b

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The Future of

24

By Andrew McAllan

APRIL MAY 2014

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ork

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The Value of Time Statistics Canada reports that 15.4 million Canadians commute to work.

Whether by car, public transit, walking or biking, the commute is putting added

ork

33 per cent of workers admit they’d work an extra three hours per week for a reasonable commute.

perating in a highly competitive global economy, today’s businesses know that attracting talented employees, and keeping them engaged and productive by offering a healthy work environment is no longer an option, it is a business imperative. So how does the physical workspace fit into the mix?

Workspaces have evolved throughout the last century – from corner offices and lunch rooms to multi-concept layouts and green terraces. The design and sustainability of an office space can have an impact on productivity, culture, talent attraction and retention and even the bottom line, which is why smart organizations are factoring workspace design into overall business and talent recruitment strategies.

The Destination Collaboration: The Future of Work study by Oxford Properties and Environics Research Group demonstrates that the majority of Canadians who work in office buildings prefer a smart mix of office design solutions and accommodations, and findings indicate that the future workplace will be shaped by four main trends: the rise of the collaborative worker; a greater focus on work-life integration; the emergence of the multi-generational workforce; and a growing employee emphasis on environmental stewardship within the workplace. While not exactly a surprise, these trends should still not be taken lightly.

What Oxford Properties found when they surveyed more than 2,000 office workers to get opinions on their current office environment and perceived future of the workplace.

pressure on employees’ time to squeeze both work and personal priorities into their days. As a result, more and more office workers are identifying future employment options with companies that are within a reasonable commute from home and located near convenient amenities. In short, today’s workers no longer want to compromise quality of life to commute to the perfect job.

Many companies are also relocating to the core of Canada’s largest cities to be closer to current and prospective talent. Young, high-potential professionals, in particular, are drawn to the larger city cores to get all-in-one access to work, culture and nightlife.

Call it the 30-minute ‘sweet spot,’ because according to the survey, Canadians believe that an average acceptable commute time is approximately 30 minutes, one way. The good news is that expectation and reality are almost aligned, with the average one-way commute time registering at 29 minutes for respondents nationally. But there are large regional differences. Nine in 10 workers in Atlantic Canada commute 30 minutes or less compared to only six in 10 Ontario workers who commute within this time frame.

25

The Swing Factor: Location, location, location When it comes to the ideal workplace, geographic location and commute time are highly important considerations for workers when all other factors are held constant. Three-quarters of Canadians identify a reasonable commute to the office as their most valued attribute, followed by access to public transportation (44 per cent), as well being within walking/biking distance to home (35 per cent). However only half (52 per cent) of workers believe that their workplace is situated within a reasonable commute, which could be a rising cause of concern for organizations. Why? According to the survey, commute time has a significant influence on the employment opportunities Canadians

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choose to pursue, and has an impact on how workers view their workplace, job satisfaction and overall happiness.

All else held constant, commute time (50 per cent) would be the main deciding factor of choosing one job over another. This trumps access to a private office (42 per cent), which has been identified as the ideal workspace configuration for many workers. A quarter of respondents also consider walking and biking to work as a priority, and want their offices to be equipped with the proper amenities to support this.

Not surprisingly, workers in regions with the longest commute rank travel time as the most important workplace consideration when choosing to work for one company over another (54 per cent of Ontarians compared to 44 per cent in Atlantic Canada).

While some Canadians may change jobs for a shorter distance to work, one-third (33 per cent) of workers also admit they’d be willing to work an extra three hours per week for a reasonable commute. 28 per cent would also work longer to be within walking or biking distance to home.

Of all the generations, younger workers in the downtown city core place the greatest emphasis on being able to walk or bike to work, likely since a growing

26

CASE STUDY AVIVA CANADA’S NEW HEAD OFFICE SITE CHOSEN FOR AMENITIES AND TRANSIT

A

mix of amenities and benefits provided by a mixed-use development in a downtown area are why Aviva Canada chose to relocate their head office to The Remington Group’s Downtown Markham development. Occupying the majority of a new 350,000-sq.-ft. building standing 12 storeys and housing more than 1,500 people, Aviva’s new offices are scheduled to open in 2017. “The incredible amenities offered by this new urban centre provide our employees a place to work that is conveniently located to major highways and excellent transit,” said Greg Somerville, president and CEO of Aviva Canada, the second largest general insurer in the country. “Additionally, the retail offerings, restaurants, art installations and green spaces will all contribute to a terrific environment and an engaged work force.”

PERSONAL WORKSPACES

PRIVATE OFFICE

OPEN CONCEPT

BY REGION > Albertans are more likely to work in a private office compared to Ontarians who work in open concept spaces

25%

53%

BRITISH COLUMBIA

41%

44%

ALBERTA

37%

51%

MANITOBA SASKACHEWAN

27%

60%

31%

ONTARIO

55%

QUEBEC

30%

50%

ATLANTIC PROVINCES

BY INDUSTRY > Private offices rank highest in Educational Services,

while Professional Services tend to choose open concept

63%

GOV'T CROWN CORP.

APRIL MAY 2014

BLD Apr May 2014.indd 26

27%

64%

FINANCE & INSURANCE

23%

66%

PROFESSIONAL SERVICES

42%

29%

EDUCATIOAL SERVICES

38%

32%

HEALTHCARE & SOCIAL ASSISTANCE

36%

53%

MANUFACTURING

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Source:

29%

proportion of the younger generation are leaning toward living and working in urban centres, and have grown up in the eco-conscious era. On a scale of one to 10, workers under 35 years of age ranked “being within walking or biking distance” an average score of 6.9 in importance, which was significantly higher than all other age groups in working in downtown or suburban offices. As an increasing number of younger workers flock to large city centres, they will likely choose strategically and conveniently situated employers that complement their work-life priorities and preferences. Organizations that recognize the value employees place on their time will have a greater chance of attracting and retaining the brightest, most engaged employees.

Source:

Work from home – myth or reality?

Advancements in technology have made the workplace more flexible by making it easier for people to conduct business virtually. Yet, despite the rise in communication technology, such as email and video conferencing, only nine per cent of respondents envision the future workplace as a mobile office.

In fact, working from home or from another off-site location is an anomaly, even in today’s technologically advanced workplace. The majority of respondents (51 per cent) work solely in the office reporting that they never work off-site.

Working in the office is more prevalent among women than men (58 per cent versus 43 per cent, respectively), workers aged 50-64 years old (57 per cent) and Atlantic Canadians (66 per cent).

For 49 per cent of respondents who do sometimes work virtually, the average time spent working from home is only 1.8 days a month. Owners and senior managers are the most likely to work off-site, averaging 3.4 days. Regionally, Calgarians rank highest, working 2.5 days a month outside of the office (not including business travel days).

Fewer distractions are also a key benefit for close to half of workers (43

2013 City rank

Street

City

Avg. St. rent p.s.f.

Top St. rent p.s.f.

Avg. Market rent

Difference between Market & St. Avgs.

1

Bay St.

Toronto

$68.87

$73.54

$29.48

133.6%

2

Burrard St.

Vancouver

58.47

65.91

32.39

80.5%

3

2nd St. SW

Calgary

55.29

59.72

45.21

22.3%

4

Albert St.

Ottawa

53.40

53.40

31.10

71.7%

5

101st St. NW

Edmonton

48.19

57.25

31.29

54.0%

6

René-Lévesque W. Montreal

44.62

57.04

29.00

53.9%

7

Upper Water St.

Halifax

35.65

35.83

27.15

31.3.%

8

Portage Ave.

Winnipeg

35.17

36.36

23.82

47.7%

9

Laurier Blvd.

Québec City

28.14

31.00

21.59

30.3%

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Bay Street still tops Canada’s most expensive office addresses Jones Lang LaSalle released its third annual Most Expensive Streets for Office Space in Canada report, ranking the streets with the highest office rents in 2013. Topping the list are: Bay Street, Toronto at $73.54 per square foot; Burrard Street, Vancouver at $65.91 per square foot; and, 2nd Street SW, Calgary at $59.72 per square foot. “Location is everything,” said Brett Miller, president of Jones Lang LaSalle Canada, “As the Canadian market continues to strengthen, we are seeing that companies are increasingly willing to pay higher rental rates in order to be in prestigious locations.” The most expensive streets fall into financial, retail, or government hubs that are highly prominent and competition to get space is growing.

The Top Most Expensive Streets for Office Space in Canada (asking rents):

$73.54 P.S.F.

$65.91 P.S.F.

$59.72 P.S.F.

$53.40 P.S.F.

$57.25 P.S.F.

$57.04 P.S.F.

$35.83 P.S.F.

$36.36 P.S.F.

$ 31.00 P.S.F.

1. BAY STREET, TORONTO, ON | Bay Street topped the list for the third year running. The street spans through both the heart of Toronto’s financial district and Yorkville, a high-end shopping district.

2. BURRARD STREET, VANCOUVER, BC | Burrard Street has moved up since 2012, when it took third place. With increased office asking prices of nearly four dollars per square foot, the street is a centre point of downtown Vancouver.

3. 2ND STREET SW, CALGARY, AB | 2nd Street SW made the list for the first time this year, succeeding last year’s 8th Avenue SW. Located in Calgary’s financial district; it is home to some of Calgary’s tallest buildings.

4. ALBERT STREET, OTTAWA, ON | Albert Street held its fourth place position from 2012, after having dropped from second in 2011. The street is central to many government towers and facilities.

5. 101ST STREET NW, EDMONTON, AB | 101st Street NW kept its position of fifth place. With retail and office space available, the area is appealing to a variety of tenants.

6. RENÉ-LÉVESQUE W, MONTREAL, QC | René-Lévesque W has maintained its position from 2012. Acting as a thoroughfare, the street is lined with numerous high-rise office towers.

7. UPPER WATER STREET, HALIFAX, NS | Upper Water Street has maintained seventh place from 2012, after moving up from 9th place in 2011.

Located on Halifax’s waterfront, it is home to large office complexes.

8. PORTAGE AVENUE, WINNIPEG, MB | Portage Avenue has kept its position in eighth place since 2012. It acts as a thoroughfare, connecting east and west ends of Winnipeg.

9. LAURIER BOULEVARD, QUÉBEC CITY, QC | Laurier Boulevard took the ninth place position. Known for its retail, the street also acts as a main artery in the city. building.ca

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Higher office vacancy is likely the new normal in Canada In late March 2014, the Bank of Canada stated what commercial real estate statistics have suggested for some time — a slower economic growth trajectory has taken hold and expectations need to be adjusted accordingly. CBRE Limited's National Office and Industrial First Quarter 2014 Statistical Summary indicates that office leasing continues at a modest pace and is likely the new norm.

“With solid GDP numbers, an uptick in the RealPAC sentiment index and improving hiring intentions, one might have expected more office leasing this quarter,” said John O'Bryan, Chairman of CBRE Limited. “It’s normal for there to be a lag between good news and business investment, but job growth is the basis for real estate demand and until the economy is creating more jobs on a consistent basis, the current pace of office leasing is unlikely to change.”

On average, 5,000 jobs have been created per month since mid2013, compared to 15,000 jobs per month normally. This partially explains why more office space — 1.5 million square feet of it — was returned to the market than was leased across the country in the first quarter of 2014. This is the fifth consecutive quarter of tepid demand for office space in existing buildings. The national overall office vacancy rate rose 60 basis points (bps) this quarter to 10.3 per cent, which is above 10.0 per cent for the first time since the second quarter of 2010 and is the highest national vacancy rate since the third quarter of 2005. Six Canadian cities – Calgary, Edmonton, Winnipeg, London, Montreal and Halifax – now have overall office vacancy rates above 10.0 per cent. The remaining major cities are close behind and are poised to cross that threshold.

In 2013, suburban office markets had experienced more robust demand; however, more than one million square feet of office space was returned to the market in the suburbs this quarter. The national suburban vacancy rate rose 90 bps this quarter to 13.0 per cent.

Even the downtown Class A market, which has been the beneficiary of a recent flight-to-quality, is experiencing soft demand. As new office towers get closer to completion and hive off leasing activity from existing buildings, the overall Class A vacancy has risen from a low of 4.7 per cent in the third quarter of 2012 to 7.0 per cent this quarter.

“It’s important to remember that Canada has had very low office vacancy rates compared to almost any other country. Even at current levels, the Canadian office market is only now coming into balance.

This is good news for tenants who will have more leverage in lease negotiations. In most markets, landlords will continue to have the upper hand when it comes to quality office space,” said Ross Moore, Director of Research for CBRE Limited. “The trends are now well-established and it appears that the rebound in economic growth and leasing activity that followed the recession were outliers. The current pace is likely much closer to the new norm. ”

APRIL MAY 2014

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per cent) who claim that they can more effectively and efficiently complete independent work outside of the office. As a result, organizations that have flexible office layouts with private workstations may be able to provide better options for their employees looking to fulfill this need, instead of or in addition to, allowing more flexibility to work offsite when preferred.

Creating a Space for All Getting to work is one part of the equation. Another is what that space is like once you get there. Advancements in technology may afford today’s workers the flexibility to work wherever, whenever, but the physical ‘office’ is here to stay. And today’s office is more than just a place to get work done – it is a collaborative environment that brings together technology, people and culture to deliver optimal business results. It is a space that unites, for the first time, four distinct generations under one roof: Veterans, Baby Boomers, Generation X and Generation Y, who each bring their own career motivations, generational perspectives and preferred working styles to the office. Tomorrow’s workplace will be a multi-functional space that incorporates the right design layout to accommodate different types of tasks, worker preferences and the nature of the business.

The Rise of The Collaborative Worker In many organizations, leasing accounts for the largest expense after salaries. As a result, companies are looking to design efficient office environments that make the most of the available footprint. A smaller floor area per worker means lower real estate costs and lower operational and environmental footprint. This trend is not just about saving space, it is about creating the most productive space.

At the same time, as the workforce evolves with an increasing number of Boomers retiring and a younger gener-

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AVERAGE COMMUTE FOR EACH GENERATION GROUP

GEN Y 28 min

GEN X 30 min

Boomers 28 min

29

65+ 30 min

AVERAGE COMMUTE IN MINUTES FOR CITIES ACROSS CANADA 33 min Vancouver

27 min Edmonton

27 min Calgary

42 min Toronto

29 min Ottawa

57 per cent of respondents say they collaborate more than they did five years ago

ation entering the workforce, a more prevalent style of working collaboratively is rising. In fact, over half (57 per cent) of respondents say they collaborate more than they did five years ago, whether face-to-face or through communication technology like email or conference call. The younger generation, in particular, is more inclined to see collaboration as working together in person compared to their older counterparts (79 per cent for those under 35 compared to 59 per cent for those aged 50-64), ultimately placing a greater emphasis on physically being in the office.

Beyond the obvious economic and environmental benefits, many organizations are embracing open concept layouts to increase communication and collaboration amongst team members. Over half (55 per cent) of respondents cite that they work in an open concept setting compared to only 30 per cent of respondents who work in closed, private offices. A further 14 per cent share an office space (e.g. two or more workers in a closed door office).

With collaboration in mind, workspaces are also becoming more flexible by incorporating a variety of spaces to facilitate different types of work. Many organizations are complementing their current office design with collaboration hubs for employees to step away from their personal work space into a place where they can be inspired and exchange ideas with colleagues. These alternative spaces are different from traditional boardrooms; they’re more informal, ranging from alcoves, to kitchens, to lounges to outdoor terraces. These areas might contain activities or game stations like ping pong and music rooms to encourage interaction and stimulate creativity. At the same time, the new office environment also incorporates virtual technology to collaborate with workers who are telecommuting, or partners and suppliers who vary in geographic locations.

When asked “where do you currently conduct collaborative work?” only a quarter of respondents (24 per cent) cited traditional boardrooms. When asked what they prefer, 51 per cent of workers said they’d like to meet in collaboration hubs, although fewer than four in 10 respondents are currently satisfied with the availability of collaborative spaces in their office. In fact, close to half of respondents (46 per cent) cited a lack of meeting rooms/collaboration hubs as the main barrier to getting collaborative work done.

Across all generations, workers see the value of coming into the office, and that will likely not change. The top two benefits of the office are being able to get things

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36 min Montréal

29 min

NATIONAL

done more efficiently face-to-face (53 per cent) and feeling a greater sense of team cohesion (48 per cent). However, Generation Y is most in favour of spaces that promote engagement between all workers, likely based on their definition of collaboration, which leans toward working in person and the desire to learn from their colleagues. Almost a quarter (22 per cent) of those under 35 prefer to work in a flexible work destination with collaborative areas, compared to only 12 per cent of workers aged 50 to 64 years old and 9 per cent of those aged 65 and over.

The allure of the private office While collaboration is on the rise for most office workers and organizations, there continues to be a strong demand for the traditional office structure across all industries. Almost two-thirds (63 per cent) of workers would choose to have a private office if they had the choice, but only 30 per cent actually have one.

So, what is the attraction? The office provides privacy and control, a space that you can personalize and close the door to get work done away from the hustle and bustle of workplace activity.

In fact, for 67 per cent of respondents,

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CASE STUDY distraction and noise are the greatest barriers to getting focused work done, followed by a lack of private, enclosed spaces (42 per cent) and inflexible workspaces (23 per cent).

A mix of open workstations, private offices, collaboration hubs and unassigned areas can help to alleviate the stress that can be associated with open spaces, while providing options for those seeking a quiet area to work.

When asked about hoteling — a system of unassigned seating used on an as-needed basis — a majority of respondents (89 per cent) prefer having their own designated space, compared to only 11 per cent who support hoteling.

The results indicate that while there is a growing preference toward designated open environments that stimulate creativity, networking and collaboration, employees still value the option of having personal spaces to concentrate and action their creativity into meaningful results. Thus, the best, most effective workspaces of the future will be those that provide a variety of solutions to meet the needs and working preferences of multi-generational employees, rather than adopting a one-size-fits-all approach to create a uniform office environment.

RBC AIMS FOR FLEXIBLE AND

26 30

COLLABORATIVE WORKSPACES

RBC

Corporate Real Estate (CRE) has done research to evaluate how their employees were using their workspaces and found that, at any given time, more than half of the desks and offices were vacant. To address this and other findings, RBC has developed a workplace concept that allows employees to better collaborate and leverage mobility. Flexible workspaces at various RBC office locations now give employees the ability to work and sit with different colleagues. They are also outfitted with eco-friendly furniture and materials, and technology that allow employees to take their work with them, reducing paper waste. RBC is also trying to locate offices nearer to public transit nodes.

RBC’s workplace program isn’t just about the location, the office space or the technology. Managing the transition to this new way of working is crucial. For many – even the most enthusiastic adopters – change can be a major challenge and there is always a transition period to adjust to new environments.

When employees are moving into a new workspace, RBC CRE partners with the business units of those employees to communicate and support the philosophy throughout the transition. Approximately 2,500 employees are now participating and RBC has achieved some rental cost savings through reduction of the office footprint. Employees have responded positively to the change with 89 per cent stating that overall, they endorse the new workplace concept.

One of RBC’s latest projects was the renovation of 180 Wellington Street West in downtown Toronto, where the latest workplace concept was rolled out to operations and human resources teams. “Our HR recruiting team is now interviewing prospective employees in the type of workplace that we are building for our future workforce,” said Nadeem Shabbar, Vice President, Corporate Real Estate, RBC. “In addition, we are looking forward to moving 4,000 people into our newest workplace at RBC Waterpark Place in 2014.”

AUGUST APRIL MAY SEPTEMBER 2014 2013

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Work to Do The survey revealed that while technology has allowed the possibility of working virtually, physical office spaces remain an important destination for many Canadians seeking collaborative, face-to-face interactions with colleagues.

There will also be a growing demand from employees to cut down on commute time to satisfy their career and lifestyle needs and preferences without compromising on quality of life. Employees ideally want to travel within a 30-minute radius from home to work and will strategically choose employers based within this proximity. In fact, this “sweet spot radius” is so important to employees that many would be willing to work longer for a shorter commute time.

To improve workplace satisfaction and attraction and retention of top talent, forward-looking Canadian businesses should factor in the accessibility of their offices and the geographical spread of their most talented employees or target prospects to ensure businesses situated within prime travel distance. Organizations will also benefit from accommodating employees with various travel preferences or lifestyle needs. For example, while strategic selection of office location will be important to minimize commute time, employers can also offer secure bike racks for those — particularly the younger generation — preferring to bike to work. Employers can also make proximity to convenient lifestyle amenities a key consideration in the strategic selection of Andrew McAllan is the their future office space to accommoSenior Vice President and date employees and support a better Managing Director of Real work-life balance. b Estate at Oxford Properties. building.ca

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Buildings are now expected to support human activity that is Internet-dependant as well as sustain a never-ending stream of new technologies.

By Tim Wilson

T

he promise of the Internet has hit a wall – not a figurative wall, but the real brick and mortar kind. Whereas greenfield design in state-of-theart data centres and brand new hospitals and commercial high-rises are showing us that buildings can be very smart indeed, the truth is that the vast majority of structures in Canada were not built with Big Data in mind. The result is that although there is a lot of buzz around the standards that are being set with new builds, retrofits also represent huge long-term opportunities — and challenges.

“We are breaking new ground on greenfield sites like the Oakville Hospital we are building for Halton Healthcare Services, and with RBC Waterpark Place Phase III in Toronto,” says Stephen Foster, Director of ICT at EllisDon. “That massive demand is now in new builds, but over time there will be a backlog for retrofits to meet the needs and demands of clients and tenants.”

Greenfield sites like RBC Waterpark Place Phase III are setting a new standard, exemplifying how an integrated approach can deliver results to a mixed residential-commercial environment. The centrepiece of RBC Waterpark Place Phase III is a 30-storey office tower that can handle over 10,000 occupants, with retail space below. At 930,000 square feet, RBC Waterpark Place Phase III is being built with a LEED Platin-

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32

To address these issues, Distech, which develops building um certification in mind, including the possibility of lake automation and energy management systems, promotes a water cooling and steam heating systems. “This is a $247-milmulti-protocol, multi-system management system that can lion project designed with a solid technological backbone, deliver offerings with wireless capabilities on numerous decrucial to ensure the building can deliver the most to its vices, including battery-less sensors and switches. owners and tenants for years to come,” says Foster.

“We only have to develop one control sequence to show a poProjects like RBC Waterpark Place Phase III are being tential customer how they can be helped,” says Cadieux. “For built to take advantage of what is being called the Internet example, in a commercial building or an office tower we can of Things, wherein all devices will have IP-based connectivdemonstrate how a badged employee can enter a building, and ity, with many being wirelessly-enabled. Power over Ethera signal is sent to his office to start heating it and to turn the net (PoE) can provide basic power to those devices with a lights on. From there, our integrated room control solution physical connection, allowing for integrated designs that join can use a wireless sensor to monitor light levels in a room.”

HVAC, security, entertainment — anything that draws power The Distech system will continually adjust shades, dim or interacts with humans. This is not just a technological lights, and control for temperature. This approach delivtrend; it is a societal one, too. The problem is that though ers as much natural light as possible, while also redefinwe have the technology, most buildings are a long way from ing the relationship between energy efficiency and comrealizing the benefits of having a robust, well-integrated IPfort. And it does so with wireless as a central component to based network. the strategy. Wireless makes sense when retrofitting older “The problem with retrofits is they [tend to be] approached buildings made out of marble, granite, and stone, and is in incremental stages, without an eye to the overall design,” also relevant for new builds given that newer construcsays Piyush Bhatnagar, managing director at Accenture Cantion practices use a lot of glass. Aesthetics are a concern as ada. “The big retrofit opportunity is still a few years out, but well: newer builds want a clean look, while many retrofits we need to approach this with caution. leverage the historical beauty of brick and beam lofts.

You want to have the entire architec“You don’t want to dig through those materials,” says Cadieux. “Wireless altural diagram in hand before you start lows us to put our sensors in the wall, or in another location – a nice option given on the heating system, the foundation, that they are not that visually pleasing. We then have a web interface so that they or the roof.” can be controlled with mobile applications.”

Bhatnagar is warning of the dreaded ‘silos’ that have been the bane of systems integrators for years. In retrofits, this is complicated by limited capital Wirelessly enabled devices, combined with a web-based management system, budgets that, in effect, mandate a stepcan propel buildings into the 21st century and beyond. But each edge device is by-step approach. However, that can also a potential security threat. This is a new concern for experts in HVAC and work out fine, as long as there is an eye building maintenance who are used to having their systems operate in silos. to overall design integration so that at Now, in a networked world, the risk is real and ongoing. “Security is a key concern the end of the day HVAC, security, and for our customers,” says Greg Turner, vice president of Honeywell Building Solutions. “Building systems have been future add-ons can be monitored and hacked; this is essentially an offshoot managed as one system. “Point solutions are the problem right now with retrofits,” of hacking industrial control systems. he says. “The market needs people who can take a holistic view, including the busiWe have been addressing these system ness arguments, and integrate these into one implantation strategy.” design requirements for years, and now have a software update service that will push a solution automatically to our Devices in buildings that connect to IP-based and even cellular networks are, in customers, if they desire, or that can essence, simple things: refrigerators, lights, security cameras. Most people have be downloaded and installed when apan ‘on-off’ relationship to such technology, but the role of these technologies in propriate for them.” our built environment is becoming more complex. The smallest appliance is able Turner says that Honeywell takes to communicate not only singularly, but as part of a larger view of how people bea three-pronged approach to the probhave within built environments. And these unassuming gadgets are doing this lem. Crucially, this includes education within highly sophisticated, automated systems, not only in new structures, but to reduce human error, and also adin retrofits as well. dresses the need for security to be a “As it stands, in most buildings the various systems are living on their own,” consideration from the earliest stages. says Caroline Cadieux, director of marketing for Distech Controls in Montréal.

“First you have to start with train“There are a lot of missed opportunities for control strategies that can increase efing your people with an eye to a secure ficiency and comfort, and this can actually become a main rationale for retrofits.”

Living on the edge

When devices outsmart buildings

APRIL MAY 2014

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RBC Waterpark Place III, designed by WZMH Architects, will serve as RBC's new national headquarters for its Canadian banking business.

design that includes virtual private networks [VPNs] and firewalls,” he says.

“Second, you make sure that even during the construction phase all flash and dump drives are scanned and cleaned, because at this stage a lot of IT monitoring is not yet in place, and you don’t want to hand over a contaminated site to the customer. And third, you need to be on top of how the building is accessed and serviced, especially if there is remote access.”

Covering off these main areas is a big undertaking. Honeywell has a guide that runs over 400 pages to help clients with issues around security planning and access; it covers everything from the design stage, to installation, to the care and feeding of an integrated building. Such a thorough approach is a necessity because the proliferation of end-points (many of which — like flat screen monitors in hospital rooms — were initially designed as consumer grade) can be a headache when trying to of short-term users. “We are seeing that some verticals such as airports, hospitals, put in place a fully-secure system. and data centres are ahead of the pack,” says Bhatnagar. “In these examples, inte“The number of endpoints we are gration can build significant value. But to get the job done we must partner with facing is truly staggering, and that inconstruction companies and others to see what they are trying to achieve.” cludes BYOD (bring your own device),” says Turner. “You have to start thinkNot surprisingly, in order to succeed in these environments, standards can be crucial. Increasingly, vendors and ing of how to tier the infrastructure, and how to isolate some customers are embracing industry protocols such as BACnet, of the devices.” Like Foster, Turner says that it is crucial to get the ICT infrastructure people involved in a project as early as which allows a range of building system control devices to interoperate as one, including lighting, HVAC, security, and possible. Getting security right – or wrong – has huge cost implications for a project, particularly for the first five years afaccess. The real value then comes in being able to manage a ter a build or retrofit. diverse and growing ecosystem of devices.

“Now, with edge devices being everything from lights to blinds to door hardware, with all of them residing on the IP network, and all of that data flowing upstream, the real The societal trends driving the move toward building invalue comes when managing the data,” says Foster. “All that tegration are much bigger than the oft-quoted “low hangdata has to serve a useful purpose to anyone who needs to ing fruit” that come from having green building practices use and enjoy a space.” and energy savings. Buildings are now expected to supThat means having diverse product sets that can roll into port human activity that is Internet-dependant and that can one digital interface, which can then be of use to facilities securely support a never-ending stream of new technolomanagers and tenants, and also available as a web interface gies. There is simply no way to succeed in this market withthat can be accessed on mobile applications. This is an alout involving a range of stakeholders and vendors. most utopian vision of what our built environment will look Knowing how to approach the problem requires having like in the years to come, reminiscent designers, architects, engineers, ICT, HVAC and security of the catch phrase from the late-1970s people on the same page. It also means listening to users, This article originally particularly if they have job-related or industry-specific reappeared in the March/ TV show The Six Million Dollar Man: quirements, such as doctors or floor managers. Each build“We can rebuild him. We have the techApril 2014 issue of ing location will have a unique profile. An airport, for exnology.” And yet it is a near-certainty Connections+. ample, will have high volume wireless traffic from thousands that it will come to pass. b www.connectionsplus.ca

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A world of partners

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Bleed Trim

V I E W -

Live

Anne Morash Leadership involves finding balance and cultivating the next generation.

By Andrea Bogar and Robyn Brown

Anne Morash’s passion for real estate is apparent. “I simply love real estate!” says the senior vice president of the Multi-Residential division at Toronto-based GWL Realty Advisors. She is also happy to talk about the role of women in the real estate industry (she sits on the Women’s Leadership Initiative at ULI Toronto and was a founding member of TCREW), but is quick to mention that people get to where they get to because of merit alone. As a woman who has been in the industry for years, Morash is very familiar with questions like “How did you get to where you are?” but wonders aloud “Do people ask Blake Hutcheson at Oxford Properties or Paul Finkbeiner at GWL this type of question?”

She recalls one interview early in her career (for a fairly senior job) where the recruiter’s first questions was “Who looks after your children?” Morash was flabbergasted, but found herself explaining anyway. She does understand why people want to know about her live-work balance, but believes this isn’t just something that women care about. “My husband and I have a unique ability to balance demanding careers with lots of family time,” she says. “Even with three kids I have not missed an important family or work event during my career.”

Morash began her real estate career at Ivanhoe Cambridge in development and leasing capacities; then became Vice President of Development at Cadillac Fairview for over 15 years. Prior to joining GWL, she was part of the executive management committee with Primaris REIT, where she created the development team from the ground up.

Because of a greater level of institutional investment over the last couple of decades, “the industry has become much more sophisticated, across many asset classes,” which supports a long-term view, she says. “This financial shift has enabled the industry to become more sophisticated. The focus in real estate has evolved from chasing money to investment, and using the existing funds to create the highest level of value.”

In turn, this sophistication has attracted higher level talent. All the asset managers in GWL have an MBA, and many are CAs and CFAs. The industry is buoyant, she notes, with most firms able to pick the cream of the crop, and thereby impacting the next generation. “Competition is brisk, and the industry attracts a pool of very educated people, however this is also a reflection of the overall job market and reflective of what people have chosen to do for their own professional growth,” says Morash.

Looking at the future of real estate, Morash sees a role for more creativity, such as improving buildings and urban design. “Clients are driving the demand for imaginative urban design and a high level of customer service. For GWL, who has made large investments in Calgary, it is important that these buildings are ‘future proofed’ and that they will be adaptable and offer leading edge amenities.”

She credits much of her success to fantastic bosses, and the opportunity to learn at every stage of her career. She was lucky to have senior staff – admittedly, mostly men – that recognized her potential and enthusiasm and helped open doors. Nowadays, Morash sees a lack of sponsorship as an industry problem. “We need to focus on finding and devoting the appropriate amount of time to properly ‘groom’ the next genAndrea Bogar is Regional eration,” she says. “The challenge lies Director at Blueprint in running a business while ensuring Effects, and Robyn Brown young professionals have the opporis a Land Use Planner/ tunity to grow by providing them with Land Economist at IBI the experience they need to do so. I Group. Both are strongly believe we have the responsiToronto-based and bility to nurture those who follow.” b members of ULI Toronto.

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With saveONenergy incentives, we installed energy-efficient equipment in the building to save energy and money for our tenants Vladimir Niderman Property Manager, 212 King West Holdings Inc.

Saving energy makes sense – business sense.

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Subject to additional terms and conditions found at saveonenergy.ca. Subject to change without notice.

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“With these tax incentives, it’s like we already filled 10 units.”

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Seiter&Miller 001224 Pub. Building Size. 8 x 10.75 Issue April 2014

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