Building August September 2016

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architecture

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Employment Lands

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LIFE AFTER THE BACK COVER…

what’s on BUILDING.ca

READ > Why Does Public Art Matter?

David Allison explains why art is not only good for our brains, but good for our city.

66 04

CONTENTS

FEATURES

12 > Where we work vs.

Where we live /

18

There is indeed a conflict between the two and, more often than not, the latter wins out. By Paul Barker

18 > The New WCH /

EXPLORE > Ottawa’s Parliamentary Precinct The Parliamentary Precinct is brought to life by an Exterior Lighting Master Plan developed

by Lemay and Lightemotion.

A hospital designed to keep people out of the hospital. By Leslie C. Smith

24 > Curb Appeal /

The Main Street North Development Permit System is a first for the City of Brampton.

27 > The Business of Buying /

EXPLORE > Sechelt Hospital Perkins+Will collaborate on the renovations and additions at Sechelt Hospital’s acute-extended care facility.

The office condo trend is thriving in the City of Toronto and Metro Vancouver; but is buying your office space always better than leasing? By Shannon Moore

IN EVERY ISSUE

4 > Editor’s Notes 6 > Developments 8 > Market Watch 10 > Legal 30 > Viewpoint

ABOVE IMAGE:

Women’s College has completed a new hospital to replace outdated buildings and further their mandate as Ontario’s first and only stand-alone academic ambulatory care hospital with a focus on women’s health.

Image courtesy of WCH

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04

Bears repeating

Volume 66

Our building stock is getting old. Dangerously so, say many experts. The average age of non-residential building in Ontario is now 38.4 years — the oldest in the country, says the Canada Mortgage and Housing Corporation in their Canada Housing Observer from 2006 (already a decade old!). And as we all know, from an infrastructure perspective, things are even worse.

According to the 2016 Canadian Infrastructure Report Card (CIRC), one third of existing municipal infrastructure in Canada is at risk of rapid deterioration, and requires repair and accelerated renewal. Here’s one example: the average age of pipes is 55 years in Toronto, though some have been in place since the turn of the 20th century, according to 2012 statistics from the City of Toronto.

Governments know this, and to one degree or another are attempting to address the problems. Prime Minister Justin Trudeau says he’s putting “infrastructure money to work,” to the tune of $125 billion over 10 years. But the reality is much of what we’ve got will still be around and in use for years to come. 50 per cent of today’s existing building stock will still be in use in 2050, say some estimates, including Bill Worthen, Director of Sustainability for the American Institute of Architects (AIA), who pointed out that “[f]or the next 50 years, the majority of architects’ work will be on projects that are already built.”

This means that the real challenges — and opportunities — lie in working with what we’ve got even more than what may be coming in the future. For example, when people talk about all the energy efficiency measures that can be taken to reduce energy and resource consumption, GHG emissions, and the like, the vast majority of those energy savings potential — estimated at 20 to 40 per cent — comes in retrofitting buildings. “Improving energy efficiency in existing buildings encompasses the most diverse, largest and most cost-effective mitigation opportunities in buildings to combat climate change,” says the Intergovernmental Panel on Climate Change (IPCC).

But this raises an interesting question, and one posed eloquently at the National Trust Conference 2015 by Joe Lobko, partner at Toronto-based DTAH: “Does the presence of heritage on a development site bring an added level of richness and opportunity to a project, or does it lumber the design task with challenging, frustrating, expensive, unrealistic, uncertain, profit reducing, career and form limiting constraints?” Drawing on a rich career combining urban design with adaptive reuse, Lobko naturally leans towards the former, but believes that to achieve that richness and opportunity, builders must bring the right attitude. “Respect the dynamic nature of a great place,” he says. “Respect what has come before and leave room for what is to come.” To do this, he says, requires combining “the skill of an editor with that of a composer.” He reminds designers that the ‘use’ part of adaptive reuse is subject to change, and to “place more emphasis on the management of change than its regulation and restriction.” Ultimately, we must understand that the new can invigorate the old, and vice versa. As the venerable Jane Jacobs once said, “Old ideas can sometimes use new buildings. New ideas must use old buildings.”

04 Number Editor / Peter Sobchak Art Director / Roy Gaiot Assistant Editor / Shannon Moore Legal Editor / Jeffrey W. Lem Contributors /

Paul Barker, Richard Joy, Megan J. Lem, Leslie C. Smith

Customer Service / Production Laura Moffatt 416 510 6898 Circulation Manager circulation@building.ca Sales Manager Faria Ahmed 416 510 6808 fahmed@building.ca Senior Publisher / Tom Arkell President, iQ Business Media Inc. Alex Papanou Building magazine is published by iQ Business Media Inc. 80 Valleybrook Dr. Toronto, ON M3B 2S9 (416) 510-6845 • 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 $20 US overseas.

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Peter Sobchak Editor We welcome your feedback. Send your questions and comments to psobchak@building.ca AUGUST SEPTEMBER 2016

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06

MENTS

DEVELOP-

“Reforming regulations to encourage new building won’t be easy, but city governments have policy levers at their disposal to help alleviate housing affordability problems in Canada’s major cities.”

Municipal land-use regulation negatively impacting housing affordability

CALGARY | Onerous municipal regulations for residential development are reducing the supply of new homes in Canada’s biggest cities and contributing to rising home prices, finds a new study released by the Fraser Institute.

The study, the first of its kind in CanNews ada, covers 68 municipalities (including 18 of Canada’s largest) and anaChanges to national building, lyzes the impact of five measures of fire and plumbing codes land-use regulation — construction approval times; timeline uncertainty; OTTAWA | Canadians are demanding regulatory costs and fees; rezoning safer, healthier and more accessible and the effect council and community construction where they live, work and groups have on development — on the play. To address these demands, some growth of housing supply.

600 changes were introduced in the NaThe core finding is that in more regutional Model Construction Codes, now lated municipalities, housing supply known as Codes Canada, developed by tends to grow less, even after accountthe Canadian Commission on Building for other factors such as geograph— Kenneth Green, Fraser Institute ing and Fire Codes and published every ical constraints and transportation. The senior director. five years by the National Research study finds that long project-approval Council of Canada (NRC). Codes Cantimelines are particularly detrimental. ada includes the National Building Code, For example, increasing the time it takes a builder to obtain a construction perthe National Fire Code, the National mit by six months reduces the growth of new housing by 56 per cent.

Plumbing Code, and the National EnerThe study also uses survey data from developers to gauge the effect of timeline gy Code for Buildings. uncertainty in each municipality, with responses measured on a five-point scale In response to climate change, the Govfrom (1.0) “encourages development” to (5.0) “would not pursue development due ernment of Canada has announced an to uncertain approval timelines.” When the perceptions of developers moved from additional $40 million over five years to the average (2.8 out of 5.0) to a higher level of uncertainty, growth of new housing integrate climate resilience into building dropped by 51 per cent. This finding is critically important in Vancouver, Toronto design guides and codes. Funding will and Calgary, which have considerably more uncertainty than average. support revised national building codes, “Regulatory reform at city hall, especially simplifying the process of obtaining and guides integrating climate resilienbuilding permits where housing demand has grown, could reduce homebuildcy into the design and rehabilitation of ing costs, increase the number of homes on the market and subsequently push public infrastructure will be ready for down prices,” said Pierre Desrochers, adoption in 2020.

Fraser Institute senior fellow and associate professor of geography at the UniAnyone can submit a code change request at any time through NRC’s website. versity of Toronto Mississauga.

These requests are reviewed and, if approved, help improve the Codes.

• All buildings in Canada will now be designed for earthquake forces regardless of the level of hazard; • New design requirements will improve accessibility of stairs and washrooms; • Increased run dimension of steps inside houses from the current minimum of 210mm to a new minimum of 254mm could reduce fall incidences by up to 64 per cent; • New requirements to flow rates in showers will reduce water usage in buildings; • Additional protection measures such as higher standards for automatic sprinkler systems will allow for the construction of six-storey wood buildings.

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Steady growth for Canadian LEED certified projects OTTAWA | The Canada Green Building Council (CaGBC) saw steady growth for both LEED registered and certified projects in the second quarter of 2016, with 81 certifications and 106 registrations

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between April 1 and June 30. The current cumulative total of LEED certified projects across the country now sits at 2,757.

This ongoing growth in LEED certification continues to solidify Canada as an international leader in green building, with building owners and operators of all types embracing sustainability as both an actionable solution to climate change, and a smart investment. CaGBC also saw growth in LEED v4 registrations in Q2, with four new projects registering under the latest version of the rating system, for a total of 25 registrations and one certification in Canada to date.

Year-to-date totals (to June 30, 2016)

25 LEED Certified 59 LEED Silver 73 LEED Gold 16 LEED Platinum

New Projects Senate of Canada

liament Hill’s Centre Block undergoes a decade-long renovation of its own.

The east addition will provide a new public face to the previously unfinished façade following the demolition of the Corry Building decades ago and later, subsequent renovations. It is reimagined as a modern intervention, informed by the geometry, proportions and materiality of the existing façade.

The renewed spaces will house the Senate Chamber, Senate committee rooms and parliamentary offices and restore interior design features of columns, arches, large Diocletian windows and vaulted plaster ceilings.

Other elements of The Senate move, which has an overall project budget of $269 million, will make the building universally accessible and more functional, with new elevator banks and staircases to connect the north and south blocks. Structural, mechanical and electrical systems will be brought up to current codes.

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People in the News Laurentian’s School of Architecture receives major donation

NCC approves design of new Senate of Canada TORONTO | A design by Diamond Schmitt Architects in joint venture with KWC Architects to transform Ottawa’s century-old train station to become an interim home for The Senate of Canada has been approved by the National Capital Commission. The grand Beaux-Arts structure on the Rideau Canal that became the Government Conference Centre in the late 1960s will see its architectural features restored and public access return when it opens in 2018. The building will house The Senate while the permanent Chamber in Par-

SUDBURY, ONT | The Laurentian University School of Architecture will now be known as the McEwen School of Architecture, in recognition of a $10 million gift by Rob and Cheryl McEwen, $4 million of which will be used to complete the School’s $45 million facility. The remaining $6 million will enhance the student experience and maximize their capacity to become agents of change for architecture globally.

“This School’s focus on green and sustainable design, rooted in northern landscapes and community, is creating unique opportunities for the next generation of architects,” said Rob McEwen. “We are already seeing the impact the School has had on northern communities in its first three years, and we look forward to the innovation and excellence in design these young leaders will achieve in years to come.”

The McEwens are passionate about encouraging and promoting excellence and innovation in education and health care.

Their donations to furthering these objectives are in excess of $50 million. The McEwen School of Architecture welcomed its charter class in September 2013, and will launch a Master of Architecture graduate program in 2017. b building.ca

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MARKE T Spotlight: Office Inventory

Active construction cycle in some submarkets versus lack of demand in others is impacting Canadian skylines Despite some challenging market conditions, direct asking rents for the office buildings that make up the skylines of Canadian cities have seen a slight increase in 2016 — an average of $28.13 per square foot for net rental rates, more than 0.7 per cent higher than the first quarter of 2015.

But, JLL’s 2016 Skyline shows that rent growth has been moderating in Canadian markets, especially in markets occupied by a large concentration of energy tenants. Some of the key trends identified in the report include: development cycle peaks in key skyline markets; landlords investing in updates to older skyline inventory; growing competition from foreign capital; a lack of quality product forcing Canadian institutional investors to global markets; and increasing vacancy offers some relief for tenants, but for how long?

“Despite the negative impact we’ve seen in energy dependent markets, there has been strong growth in Toronto, which has maintained the national Canadian rent rates in 2016 since the previous year. Although the overall Calgary market has seen a sharp decline in rental rates, the Calgary skyline market has performed better and only seen a decrease of 8.3 per cent in direct rental rates since 2015,” said Thomas Forr, JLL National Research Manager. “Due to the sharp decline in global oil prices and its effect on Alberta, we do not expect the average national direct rent rate to drastically change in 2017, even with the expected rent rate growth in Vancouver and Toronto.”

when 22 buildings (23.2 per cent of the total skyline inventory) were under construction. Today that number has returned to historical norms, with 13 towers or 12.2 per cent of the total inventory under construction.

These buildings are concentrated in Calgary, Edmonton and Toronto. Although the new inventory has been well received, evidenced by an average pre-leasing rate of over 70 per cent as of Q1 2016, developers are gearing down and the focus has shifted to investing in capital improvements in existing, older stock.

Landlords investing in updating older skyline inventory Older skyline towers are facing fierce competition from new, modern and highly efficient inventory. The influx of new office space has forced many landlords to make substantial capital investments on their aging inventory to attract new tenants and retain older ones, while maintaining high occupancy levels. Older buildings need to be made more energy efficient to reduce additional rent costs, and maintain their competitiveness on a gross rental basis. In addition, landlords must improve mechanical building systems and amenities to make their office space a more desired work environment for employees. For example, Dream Office REIT is investing CAD$42 million to modernize Toronto’s Scotia Plaza, and Polaris Realty has recently renovated elevators and common lobbies on all floors at 999 West Hastings in Vancouver. Lastly, in Edmonton, Morguard has plans to re-glaze Scotia Place, which was built in 1982, to completely update its exterior.

Development cycle peaks in key skyline markets Most major Canadian office markets are in the midst or tail end of strong development cycles. Since 2013, 11 towers have been added to the skyline inventory with the largest being The Bow, a two-million- square-foot tower owned by H&R REIT in Calgary. 2014 marked the peak in the cycle, AUGUST SEPTEMBER 2016

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Growing competition from foreign capital The flow of foreign capital into Canada is growing, and represented 28.5 per cent of overall sales activity in the skyline over the past five quarters. Foreign capital continues to view Canada has a relatively safe haven for investment dollars. In addition, the weak Loonie, which has depreciated nine per cent against the United States dollar in the last 12 months, continues to give foreign buyers a currency advantage. The markets with strong fundamentals (non-energy markets) are seeing the biggest boost in foreign capital inflows. The largest foreign investment this year was made by Klaus-Michael Kuehne from Germany with the purchase of the Royal Centre for CAD$425 million in Vancouver.

“Across Canada, we’ve seen cap rate compression continue for downtown office in Vancouver, Montréal and Toronto, while Calgary and Edmonton remain ‘no fly zones’ for the time being,” said Matt Picken, executive vice president of JLL’s Capital Markets. “The challenge facing investors is how to unlock assets from institutions that are increasingly reluctant to sell. While there is no denying the presence of foreign capital in Canada, particularly from Asia and Germany, many U.S.-based investors remain discouraged by the lack of bargains, notwithstanding the discounted Canadian currency. Over the short term, we expect to see declines in transaction volumes, which when combined with low GoC bond yields and relatively sound leasing fundamentals, will likely push office cap rates even lower. However, macro-economic concerns and the potential of over-building across the Canadian skyline has caused some groups to pause and re-evaluate their underwriting metrics.”

Increasing vacancy offers some relief for tenants, but for how long?

The overall skyline vacancy hit 10.9 per cent which is an increase of 645 basis points from its cyclical trough, marked only three years ago. Two key factors are impacting the Canadian skyline; an active construction cycle in some markets, and severe lack of demand in others. Alberta is suffering from the lack of demand, caused by the pain in the energy

sector. Lower than desired oil prices has weighed on fundamentals in Edmonton and Calgary skylines, where the vacancy rates currently sit at 11.7 per cent and 12.9 per cent, respectively. It’s not all bad news for landlords in Calgary, however, as direct space (leased directly from the landlord) stands at a healthy 2.3 per cent.

Toronto, Montréal and Vancouver record a vacancy rate at or above the 10.0 per cent mark for a different reason – the robust construction cycles in these markets. However, as the construction cycles wrap up and the supply is absorbed in these cities, expect tightening to ensue. “With an increase in vacancy, rental rates have decreased. Tenants with leases rolling over in the next 24 months have an opportunity to capitalize on reduced overall occupancy costs,” said Damien Mills, executive vice president and managing director of Western Canada, JLL. “The reduced occupancy cost burden parallels efforts to reduce G&A, allowing companies to stabilize in the soft commodity market and better position themselves for the future.”

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A lack of quality product forces Canadian institutional investors to global markets Canada’s skyline inventory contains 62 million square feet and represents only one tenth of the U.S. skyline inventory of 607 million square feet. Since the majority of Canadian skyline towers are institutionally owned, long hold terms are typical, resulting in a dearth of office buildings being offered for sale, particularly in core locations as represented by the skyline inventory. As a result, Canadian investors with an appetite for quality office product are turning to other markets, such as the United States. Canadian investment in skyline buildings in the U.S. was significantly greater than that in Canada in 2014 and 2015, with only $1.06 billion invested in domestic skyline towers in 2015, while Canadian investment in skyline office towers in the U.S. represented over $3.4 billion in the same year. b

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LEGAL tion in average prices by anywhere between 15 per cent to 50 per cent within the first year after implementation.

These depreciation estimates seem aggressive, and both Ming Pao and Sing Tao, the two largest and most established Chinese-language newspapers in British Columbia, ran articles suggesting that the Foreign Buyer Tax will Ontario and other Provinces are waiting to see the have little, if any, impact on the demand outcome of British Columbia’s brave new taxation for Vancouver residential real estate by Chinese nationals. The demand is inof foreign buyers in Vancouver elastic and they will still come.

According to an Angus Reid poll conBy Megan J. Lem ducted shortly after the announcement of the Tax, nine out of 10 Vancouverites supported the new tax. This is not surprising, since there is an The rather innocuous sounding Bill 28, Miscellaneous Statentire working class that sees it being unable to afford living utes (Housing Priority Initiatives) Amendment Act, 2016, in Metro Vancouver. Naturally, Vancouver area real estate decame into effect in British Columbia on August 2, ushering velopers, builders, investors and realtors are livid about the in a 15 per cent land transfer tax on foreign nationals purtax. In terms of strange bedfellows, the entire cohort of recent chasing residential real estate in Metropolitan Vancouver purchasers of real estate within Metro Vancouver also op(the “Foreign Buyer Tax”). The Foreign Buyer Tax will cost a posed the tax, since they risk economic ruin if the 15 to 50 per foreign buyer $300,000 on a typical $2 million Vancouver cent depreciation in housing prices actually comes to pass. area home — a significant pill to swallow by any measure!

The affordability concerns of those not yet in the Metro VanAlthough the legislation does not explicitly target buyers couver market might have to be paid for by incumbent homefrom the People’s Republic of China, it is no secret that Chinese owners (the overwhelming majority of whom are not foreign buyers have fueled the Vancouver real estate market to dizzynationals) who have already taken the plunge into the Metro ing heights, and the Foreign Buyer Tax is, for all intents and Vancouver market and who depend on unfettered resale oppurposes, squarely aimed at such Chinese buyers who perportunities to maintain the value of their properties. ceive Canada as a safe haven for escape capital, and who find Of some significant surprise to all British Columbians Vancouver the most logistically convenient Canadian landfall. was the sudden implementation of the tax (with just over a With year-over-year price increases in Vancouver exceedweek’s advance notice) and the lack of any “grandfathering” ing 30 per cent by the spring of 2016, on top of many previous for existing agreements of purchase and sale that had already years of near runaway housing price inflation (putting the been signed but were not yet scheduled to close before price of a typical house on the west side of Vancouver at well A store$3 on West August 2. This resulted in a virtual cavalcade of accelerated over million), there was incredible political pressure on Street in Goderich, closings trying to beat the tax in the week preceding the Premier Christy Clark and her Finance Minister to take Ont.’s historic downtown beforein thean attempt to restore (or at least hasten the long weekend. The temporary burst of closings saw the elecsome action tornado hit (above), tronic closing system maintained by the Land Title and Surdecline of) housing affordability in Greater Vancouver. The the damage (right), vey Authority of B.C., one of the best-run land registration Foreign Buyer and in August 2013 Tax puts Vancouver at the same level, poli(below) afterwith the town’s systems in Canada, overload and crash on the Thursday after cy-wise, New Zealand, Australia, Hong Kong and Sinrebuilding efforts. the tax was first announced. gapore, all of whom also tax, in one form or another, foreign In addition to the almost universal natural political atownership of domestic real estate. tractiveness of taxing foreigners, the Foreign Buyer Tax is In addition to the Foreign Buyer Tax, the B.C. provincial expected to add handsomely to provincial coffers even if government also took steps to authorize the City of Vancou(ironically, especially if) the tax fails to meaningfully address ver to concurrently impose an additional municipal property housing affordability in Metro Vancouver. Preliminary revetax on vacant residential buildings, since many of the homes nue projections based on the estimated current levels of forbought by Chinese nationals are neither immediately occueign investment in Metro Vancouver suggest that B.C. could pied by the buyers nor added to the available rental stock and, reap additional land transfer tax revenues of over a billion instead, sit vacant as dormant investments. dollars per annum.

Estimates vary on the economic effectiveness of the comThis potential revenue bonanza has other provinces keenbined Foreign Buyer Tax and municipal vacancy tax, with ly interested in the ultimate effect, both political and fiscal, of economists speculating that Vancouver might see a reduc-

Welcome to Vancouver.

Now pay up!

AUGUST SEPTEMBER 2016

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B.C.’s new Tax. Ontario, in particular, experiences a similar, but somewhat more modest, foreign buyer induced housing affordability pressure. A Macleans report on the Foreign Buyer Tax estimates that a similar tax in Ontario would net Ontario additional land transfer revenues in the hundreds of millions of dollars — the kind of numbers that always attract political attention, especially for a tax that appears, on its face, to be all about housing affordability.

Ontario Finance Minister Charles Sousa, in a news conference held immediately after the Foreign Buyer Tax was announced, noted that he is examining it “very closely” and concluded by saying that “we’re certainly looking at whatever options can be made available.” These remarkably friendly words in support of the B.C. initiative have fueled speculation that Ontario might follow suit, especially if B.C.’s Foreign Buyer Tax drives significant Chinese real estate investment eastward to Ontario.

Despite Sousa’s preliminary coziness with B.C.’s Tax, the case for a homologous Ontario tax is nowhere near as compelling. Although residential real estate prices in the Greater Toronto Area have been soaring, they have not reached anywhere near the stratospheric heights seen in Vancouver, and other parts of Ontario have not shared in the euphoric demand fueling the Greater Toronto Area. Although Chinese buyers, especially in the Richmond Hill and Markham areas, get most of

the blame for driving up the cost of Greater Toronto Area real estate, the Greater Toronto Area is a much larger and far more diverse market than Metro Vancouver and it is not just foreign buyMegan J. Lem is a ers that are fueling the demand for corporate lawyer in the Greater Toronto Area real estate.

Toronto office of Oslers One article published by the CBC LLP. This article reflects suggests that the housing affordability the personal views problem in Vancouver isn’t actually of the author alone. caused by foreign demand, but rather, by an artificially burdensome development environment, with excessive delays, costs, and hassles for almost any project of any complexity within the Metro Vancouver boundaries. It is quite possible that therein lies the real policy answer to affordable housing — expedited expansion of supply to meet the onslaught in demand rather than forcibly crushing demand from selected sectors. Ontario has and continues to benefit greatly from the influx of foreign capital into its real estate markets and it is likely that, for Ontario (and probably for every other province in Canada other than B.C.), foreign buyers represent a Golden Goose that is betteroff left to continue laying her eggs. b

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WHERE WE W vs

WHERE WE AUGUST SEPTEMBER 2016

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E WORK

By Paul Barker

There is indeed a conflict between the two and, more often than not, the latter wins out.

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here is a district in Chicago called Goose Island which in the late 19th century was nicknamed “Little Hell� because of the smoke produced

by Peoples Gas, Light & Coke Co. It is now a heavy and light industrial mecca that houses everything from a fully functioning brewery to a digital manufacturing facility. Further north in Milwaukee, Wis., Menomonee Valley, first created in the late 1990s as a dedicated industrial land zone, has been so successful that plans are underway for an aggressive expansion of the entire area.

In British Columbia, the District of Squamish now has in place an Employment Lands Strategy, which the municipality says will allow it to meet a range of potential future needs through 2031.

As part of a study conducted in 2014 by Vancouver-based urban planning and design firm EcoPlan International Inc., baseline demand for employment lands was forecast using population and employment projections. All three are part

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of a minority among municipalities, for when it comes to the age-old debate of employment lands versus mixed use-development the latter, more often than not, wins out.

In a recent white paper on the topic, Andrew Spencer, who teaches urban planning and design at the University of Melbourne in Australia, wrote that “contemporary planning approaches — in contrast to the zoning practices of the mid-20th century — encourage the co-location of employment and housing in centres. Whilst these activities are compatible from an operational point of view, from an economic point of view, there are tensions. In the current economic climate where demand for housing is high, residential development will generally outbid commercial development in locations where both land uses are permissible.”

John Ingram, principal and senior planner with EcoPlan, who was involved in the Squamish review process, is more than familiar with the dilemmas that can be created. “I work in the Gastown/Railtown area of Vancouver, which sits right next to the Port of Vancouver and was in both countries, he points out there are distinct differences historically an industry and warehousing area,” he says. between the two nations when it comes to brownfield re“Over the years, those businesses have been replaced in development. U.S. planning, says De Sousa, “has more of an Gastown and are on the verge of disappearing in Railtown, economic development focus, while in Canada the focus is where they have been supplanted by newer retail indusmore on liveability and quality of place. trial operations like microbreweries, urban wineries, “Here we have more of a white collar mentality and we showrooms and offices. are less keen on celebrating the blue collar. Creating a com“Residential buildings have replaced other manufacmunity of blue collar work is not a bad thing. It provides a turing sites along Hastings Street, although in one case, lot of living wage work for people who may not have the inthey are going to carve out some workshop spaces on a clination or educational ability to work in an office all day. below grade alley space, which is great, but doesn’t fully The reality is that a lot of cities in the U.S. have been trying replace the more flexible and likely less expensive spaces to deal with the issue of employment land for a long time. that were lost.”

Chicago has dealt well with the preservation of employment Dr. Christopher De Sousa, professor and director of the lands,” he says. “The planned manufacturing district modSchool of Urban and Regional Planning at Ryerson Univerel really came about because of this incremental death by a sity, focuses on brownfield redevelopthousand cuts pressure on employment lands, where they ment, urban environmental managetake a piece here, take a piece there and convert a warehouse to a loft here. What ment, parks planning and sustainyou had were lofts instead of places to work. ability reporting in Canada and the “There was a study done by a YMCA group that was a tax financial comparison United States. Prior to joining Ryerson that showed from a tax perspective, [employment lands] provide employment, tax five years ago, he was the chair of urban money and require fewer services. Schools, for example, are not necessary.” planning at the University of WisconAs for Menomonee Valley, De Sousa says it works because there are and always sin in Milwaukee, and as such is intimhave been strict employee density requirements: “You couldn’t just go there and ately familiar with both Goose Island have three workers in a big warehouse. They have created a community of work and Menomonee Valley. Having taught in a cleaner, newer and greener industrial campus.” Corey Zetts, executive direcAUGUST SEPTEMBER 2016

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get there and there are trails and a river and people use it for recreation,” says Zetts. “We have children doing outdoor science labs from neighbourhood elementary schools, 100 yards from where they are manufacturing 36-foot diameter metal gears.”

Menomonee Valley aside, Dr. Steven Webber, a land use policy planner and assistant professor at Ryerson University, who is currently researching the impacts of urban intensification on residential and employment land use change, says the situation is that residential has taken precedence over employment lands and there are a number of reasons for that. “There is an underlying assumption that manufacturing industrial uses are becoming increasingly antiquated and are not part of our new economy,” he says. “I have been doing research into how places such as Boston, Chicago and New York are dealing with the preservation of employment lands. They are also facing this dilemma over how best to integrate employment lands into this complete LEFT: The District of community concept.

Squamish developed “It is creating a lot of problems bean Employment Lands Strategy to cause nobody has come up with a strathelp ensure that sufegy that can balance the two. It is just ficient employment very difficult to integrate manufacturlands are available to ing use regardless of how clean it might meet a range of pobe or how unobtrusive it might be into tential future needs through 2031. a residential area. Once politicians and planners start hearing complaints from tor of Menomonee Valley Partners Inc., suggests that when neighbours about noise, it becomes difficult to balance the two. In the old times, residential was located side-by-side it comes down to the preservation of employment lands, manufacturing areas. From my research I am getting a better one of the key components is a strong public-private partsense that back then, the people who lived near the facilities nership: “You have everyone around the table — the public sector, private businesses, non-profit organizations and the worked there [and] had a vested interest. Now, we have people moving into community at large. The communication piece of that cannot be over emphaneighbourhoods who have no connecsized. You have to be transparent about the goals and why those goals are set.” tion with the manufacturing. It is easiPeople, she says, need jobs and people in urban areas need jobs with “easy acer for them to complain.” cess points where you can come in and make a decent wage without having gone Municipalities, he says, are losing to college or having refined skills. People need to be able to support their families a great deal by diverting these lands and manufacturing is one of the strongest ways to do that. You have much betto residential or mixed use: “To me, ter job benefits, salary wise, at a manufacturing company than you would, for exmixed use is just a euphemism for resiample, working at a retail outlet.” dential. The issue becomes, is there a willingness to protect these employment lands?”

De Sousa, who has heard conversaHowever, when discussing the tensions between employment lands and mixed tions of mixing residential and indususe development, often an opposing perspective arises, and asks: is the protectrial together, suggests that the reality tion of employment lands killing “complete communities” that integrate resiis this: “Office mixed with residential dential and commercial uses? “That’s interesting,” says Zetts. “If anything, it is may work, but in warehousing and inthe opposite. We are seeing how successful this is here. For a long time there was dustrial, there is a lot of movement gothis mindset that everything is a dichotomy — either or — you have jobs or liveable ing on. It’s hard to make noise and it’s places and never the two shall meet.” hard to have trucks go in and out when While there is no residential in the Menomonee Valley, “within walking disyou are surrounded by housing. You tance is some of the densest housing stock in the state of Wisconsin. People can

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(In)complete communities?

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Images courtesy of: District of Squamish / PORT Urbanism / Menomonee Valley

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can’t have children riding bikes around. What Chicago has done well is they have the manufacturing area in a core space that is buffered by office and retail uses and then the residential.”

Finding a sweet spot

As for Squamish, B.C., planners and politicians there now have a sound working strategy in place. Sarah McJannet, a planner with the municipality, says that a key focus for employment lands is to make sure its jobs-to-housing-ratio makes sense. “Because we are a smaller community and well connected, there has been an ongoing discussion and dialogue with industry and through our community planning efforts the recognition that employment lands are vital.

“Being close to Vancouver, where they have lost a lot of industrial land through rezoning and the challenge of getting that back, propelled us to be more proactive and take stock of what we have. The other factor for Squamish that is less of an issue in some other communities, but universal in many areas of B.C., is that we have such a conThere was, she adds, a threefold objective from the Employment Lands Stratstrained land base here with hazards egy: maintain and optimize existing employment lands inventory; expand that and sensitive habitat areas. Our inveninventory; and improve land use management. “For Squamish, located between tory of employment lands means that Vancouver and Whistler, there is a trend towards becoming a bedroom comwe do not have the luxury of a lot of munity. In comparison, we have been a more affordable option in terms of new space. The land that we do have we need business creation and housing. Given the market right now, the affordability to be mindful and considerate of how crunch is upon us.” to find that sweet spot.”

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© Photos : Stéphane Groleau

Ingram, meanwhile, was asked what he learned from the Squamish review process. “We learned a couple of things, or rather, had some suspicions confirmed. First, the term ‘industrial’ is a loaded term that requires definition and, for the purpose of zoning and community plans, a little more definition,” he said. “There’s definitely the traditional, largescale industrial uses that do best separated from other uses, but there are lower impact light industrial uses that could occur in or nearby mixed use areas more easily. Industrial uses are also changing with high-tech production processes making some production cleaner, quieter and more discrete.

“We also learned that there often tends to be a bias towards sexier land uses and occupations. While residents might be quick to embrace more ‘innovative and green knowledge economy’ uses, industrial and light manufacturing uses can be tagged as old, noisy and polluting when they often are not. Many communities don’t Milwaukee’s Menounderstand or under appreciate the monee Valley (right) value more industrial sectors play in and Chicago’s terms of employment, property taxes, Goose Island (below) and the like.” share similar emMunicipalities, says Ingram, should ployment land preservation and expandefinitely understand the kind of capsion initiatives. acity they have for different employment types, but it should be combined with, or backed up by, some kind of larger economic development strategy or policies, and an understanding of a community’s existing employment occupations, land uses and trends. “It can be a particularly important pursuit for communities with limited land bases or who are facing residential and commercial pressure to convert and downzone existing industrial and manufacturing areas.”

De Sousa, meanwhile, says employment lands have to be planned properly in order to lure employers. “We do it very well for offices, but not when it comes to manufacturing hubs. It is not a political priority like it is in the U.S. You don’t have the federal government pushing programs to maintain the strength and vibrancy of our manufacturing core.

That is unfortunate because that can help. Only when it gets to a stress level like a Heinz factory closing or losing jobs at the Ford plant, do we seem to get the government’s attention. The reality is that these are jobs.” And sometimes jobs aren’t the only positive: “Mr. Christie’s baking factory not only provided employment in Toronto, but the lovely smell of cookies was killing the stink of the sewage treatment plant right next to it. If that could go away, then no one is safe.” b

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By Leslie C. Smith Photography by Ben Rahn/A-Frame AUGUST SEPTEMBER 2016

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THE NEW

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WCH

A hospital designed to keep people out of the hospital

WCH’s full name is spelled out under its now-iconic pink box, which houses a divisible meeting room and, at street level, acts as a welcoming beacon.

Whether you’re talking building, adding on or revamping, hospitals are big business for everyone concerned, and they certainly represent prestigious projects for the architects involved. They are also extremely complicated projects, dealing as they do with multiple technical needs, complex construction codes and requirements — not to mention a diverse clientele generally besieged by anxiety. Throw in the afterthought of a meaningful branding exercise, and the task starts to take on Gordian knot dimensions.

Our case in point is the redevelopment of Women’s College Hospital (WCH). Founded in 1883 by Dr. Emily Stowe, the first Canadian female licensed to practice medicine in this country, WCH started life in a sprawling Victorian house in downtown Toronto, near its present location just off of University Avenue. Its dual purpose: to give women a place building.ca

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where their health issues mattered; and to give women doctors — patriarchally restricted from regular hospital practice — a place where they could work.

One hundred-and-twenty-odd years later, the ambulatory care centre still maintains its “womandate,” but now leverages this through an affiliation with the University Health Network (UHN), a consortium of hospitals connected with students and researchers at the University of Toronto. Eight years ago, the hospital foundation began planning an expansion of its facilities, to accommodate a host of special female needs identified in a major commissioned study. Placed in charge of the task was architect Susan Black, principal and director of the international planning, design and consulting firm Perkins Eastman Black (in a joint venture with IBI Group). The Toronto native was particularly keen to take on the job. Not only had her two sons been born at WCH but, as a woman, she felt a vested interest in the female-focused hospital.

Gradually the process consumed her, causing Black to cut back on outside projects and volunteer her after-hours time designing furniture and hand-building art installations. Even after the summer 2016 grand opening, she still finds room on her visits to tweak an element here or there, like a painter daubing a few final brushstrokes on a completed canvas.

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Natural elements, such as abundant plants and light, calming colours, and soft, feminine curves dominate the pavilion’s atrium. These features, combined with a variety of fashionable and comfortable seating styles in intimate groupings, make the space appear very hospitable but very unlike a hospital.

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Black’s main priorities for WCH were the construction of a new 10-storey clinical arm (eight storeys of which would be public-access places with the top two floors reserved for surgeries and mechanicals), a pavilion containing a grand atrium and new entryway, plus a conference centre that would form the educational heart of the hospital. Part of the latter’s design includes a meeting-room space that has generated a lot of interest in the architectural community — a cantilevered, hot-pink box that floats over the complex’s southwest corner, the Women’s College Hospital name wrapped in large letters around the glass wall underneath.

“It’s like a gift box, really,” Black says of the fuchsiashaded glass structure. “Day or night, the outward aspect acts like a beacon.” It also has led to a unique branding campaign, whose ads feature women of various ages and backgrounds holding small pink replicas while explaining what WCH means to them.

To one side of this pink cube lies a 160-seat auditorium, its proscenium enlivened by a fluid wall sculpture entitled Chantilly Lace — an artful (and economical) melding of extruded wire, chicken wire and white blind fabric personally crafted by Black, the contractors and a handful of staff volunteers. The sculpture acts as a finial to the curvaceous auditorium enclosure, itself a continuum of the wavy balus-

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Exterior wayfinding should not be a problem for the newly redeveloped Women’s College Hospital. Outside the new entryway, huge polished steel letters signal the hospital and its focus (and are proving popular with stray groups of selfie-taking females).

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A seminar and tour of WCH led by Susan Black and the design team will be held on December 1st at IIDEXCanada 2016. Information can be found at www.iidexcanada.com

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trades and sinuous walls of the atrium, some of which are overlapped with drywall “fabric folds.”

These all-white curves, feminine by their very nature, more than balance out the building’s hard right angles, lending a gracious, brightly welcoming atmosphere to the main foyer reception, meeting lounge and eating area. Sit there and look up, past the vertical rows of glassed-in clinic floors, for a view of the roof’s underside, ribbon-stripped with even more translucent panels. “We built our own ‘glass ceiling,’ ” jokes Black.

Here, as elsewhere throughout the complex, one must continually remind oneself that this is a hospital. The atrium around which the clinical floors revolve acts as a huge way-finding mechanism — one is always oriented with just a glance through the glass walls or peep over a balustrade. The airy serenity of the place (due in part to superb acoustical work) make it appear to be almost anything – a hotel, maybe, or an upscale store. Indeed, the main floor has already become a venue for people to walk in off the street, grab some sushi or a Thai salad, and lunch together in a relaxed atmosphere. Since the majority of the staff dresses in street clothes rather than lab coats, they fit right in.

But the redeveloped WCH does in fact host dozens of medical research and teaching areas, plus day and overnight surgery facilities. Each of its clinics is physically flexible enough to change program set-ups at will — concentrating on collaborative seniors care one day, perhaps addressing mental health issues in the immigrant community on another. And each floor contains its own kid’s “play zone,” for parents who might otherwise miss an appointment for lack of child care.

Throughout the clinical space, female and male doctors, nurses and volunteers deal with every aspect of the health experience, employing patient-centred care that treats clientele as real people and focuses on wellness instead of illness. Although women’s health — every facet from pregnancy to breast cancer; newly emergent issues such as refugee care; transgender females; and outreach to prevent sexual trafficking — predominates, many disciplines traverse the gender divide.

One-third of WCH patients are men.

For various reasons, some people will make their way to the isolated meditation room off the main atrium. A hushed space with soaring ceiling and back-lit wall featuring a photomural of green Virginia creeper, the floor patterned with a labyrinth copied from France’s Chartres Cathedral, it is an ideal place to sit and quietly reflect. The anxiety relief it provides may well be why it’s a favourite spot of Susan Black, juggler extraordinaire of tricky architectural demands. b

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Curb

Appeal

Main Street North Development Permit System a first for the City of Brampton

ABOVE The new DPS both preserves the quality of Main Street North’s lot pattern and presence of older historical dwellings (pg.

26), and improves the landscape of a mature tree canopy and sidewalks.

If preserving the historical character of the area is the top priority, why not just use heritage designation for those sites?

We definitely considered it. However, at the end of the day, many will turn away as soon as they see that a site has heritage designation because there’s a lot of perceived red tape. Something that’s marked as heritage all of a sudden costs twice as much to renovate and has very specific guidelines that limit the overall design and, sometimes, use of the building. Developers can feel like they have their hands tied behind their backs and that they can’t do very much to the site as a result of heritage status. The beauty of a DPS for this district is that we were able to roll our protective policies within it while also creating a smoother approval process with more flexibility.

Why did the City of Brampton create the Main Street North DPS?

We conducted a separate Community Design study prior to developing the DPS to establish the direction for development along Main Street North. It was a priority to retain the area’s heritAUGUST SEPTEMBER 2016

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age character and image while stimulating Brampton’s Central Area through development. We also wanted to green the street and improve the quality of the landscape, adding to the beautiful mature trees that line the sidewalks. This also naturally leads into supporting pedestrian and transit initiatives, to establish the downtown area as a prime destination for shopping, entertainment and dining. To achieve all of these things, we needed to streamline the development process, making it easier and more accessible.

The DPS combines the Development Permit, the Zoning By-law, the Site Plan Approval and Committee of Adjustment under one application. As well, because all of the public consultation was completed prior to DPS approval, applicants through DPS have a degree of certainty. This means that the only person or body that can appeal a DPS application to the Ontario Municipal Board (OMB) is the applicant.

Photos courtesy of City of Brampton

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The City of Brampton is one of the first Ontario municipalities to implement a Development Permit System (DPS) since the province approved its use in 2007. Coming into effect in early 2016, the city council applied a DPS to the historic Main Street North district in downtown Brampton. The City of Brampton formulated the DPS as a land use control mechanism that would stimulate development in the area while retaining its heritage character.

Under the new DPS , Council will stimulate Downtown Brampton’s revitalization efforts, focusing on approximately 80 properties along Main Street North. Paul Aldunate, Central Area Planner with the City of Brampton, answers some questions about how the Main Street North DPS was implemented and its anticipated impact on the city.

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DOWNTOWN BRAMPTON

In this way, a DPS makes these sites more attractive to potential developers and new businesses who want to undertake adaptive reuse of a heritage property. As well, several of our heritage buildings are on large lots, so there is the potential to add more density. Some of the residential proposals that we’ve received include the construction of up to 30 new low-rise units behind a heritage home, which is a wonderful use of the space. Some of these buildings need more maintenance and it’s great to see that developers see the value in restoring them to their former glory while contributing density. Balancing the historical aesthetic and growing density is key to fostering a healthy, thriving downtown community.

How does this DPS work with other city initiatives?

The City of Brampton also has a façade and building improvement program.

This has led to some really dramatic facelifts to these properties thus far, and when combined with the DPS , there are a lot of advantages to developing on Main Street North. Even before DPS came into effect, we’ve had

Main Street North between Church and Vodden Streets:

Main Street North DPS Area Historic residential character subareas Historic mixeduse character sub-areas Medium density transition character subareas Gateway character subareas Designated heritage buildings Listed heritage buildings

four or five properties take advantage of these programs and it is delightful to see those façades changing. As we see more change, the context of the downtown shifts completely.

There was an adult video store right on Main Street North, complete with cheesy signs, which has since renovated its façade and the business moved elsewhere. It shifts the tone of the street in a different direction — it helps make the downtown a destination for people to take their families, to go on dates, to catch a show, to pick up dinner.

The programs work together to improve the pedestrian experience of the area by protecting the beautiful mature trees along the street and include street furniture or lighting. We want to make it a joy for people to walk up and down Main Street North.

What have been the effects of the DPS so far?

Since we just launched the DPS earlier this year, we’re still reviewing applications. A typical approval process can take eight to 14 months on average, but as little as four to six months through DPS. Once approval is attained, it’s typically left up to the developer to start building.

That being said, the DPS has definitely generated more interest in the area. There’s much more clarity around what can be done with those sites, which makes it easier for interested parties to engage with us. The types of applications we’ve received also show that the DPS is effective because we’re seeing more projects that we desire for the area as well.

There are also other municipalities and the development industry in general that have been contacting us to better understand the context in which we have applied the process. building.ca

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TIME TO REINVEST IN AGING MUNICIPAL BUILDINGS

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According to the 2016 Canadian Infrastructure Report Card (CIRC), one third of existing municipal infrastructure in Canada is at risk of rapid deterioration, and requires repair and accelerated renewal. The report found that seven out of eight infrastructure categories were in declining condition based on the reported level of maintenance costs. In the buildings category, 17 per cent (representing $12 billion in replacement value) of municipal buildings were in poor to very poor condition, and another 28 per cent ($20 billion) were in only fair condition.

The CIRC indicates that more than 50 per cent of municipal buildings are more than 31 years old; 23 per cent are more than 50 years old. The average age of municipally owned buildings

We recently spoke to the Peel chapter of BILD to discuss the merits of the DPS and how it could assist them with their interest. Not surprisingly they were intrigued mostly about the streamlined approval process and the certainty that it provides.

What will be the measure of success for this program?

Seeing these properties are developed in a way that’s consistent with good urban design is our key indicator for success. We want to see new development that’s consistent with the area, and we want the aesthetic to flow through and keep. The DPS is designed to set the tone and the example of how development should be carried out in the Main Street North district.

That being said, the DPS has already given us more opportunities to examine other applications for this process.

And given the positive response we’ve had so far with the Main Street North DPS, we’re considering implementing a second DPS for Queen Street West.

The proposed district is also downtown, but may have even more development potential than Main Street North because there are less historical features that require preservation.

It’s a different set of challenges, as Queen Street West consists of many small lots that need to be consolidated for a development of a significant size.

Six-storey wood frame midrise might work well for that area and those projects are very attractive. We want to make it easier for developers to come in and build them. b AUGUST SEPTEMBER 2016

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is 37 years. Paramedic and police stations had the lowest average age, with around 50 per cent built within the last 20 years. Health care facilities and shelters had the highest average age, with almost 50 per cent built more than 50 years ago. The report card also pointed out that only 14 per cent of municipalities used formal policies or documented practices to factor climate change adaptation strategies into decision making.

Reinvestment in municipal infrastructure is advisable not only to ensure a sound return on building investment, but also to prepare for climate change impacts on buildings. A number of municipalities are in the forefront of developing and implementing climate change adaptation strategies that include buildings: • The City of Vancouver has developed a Climate Change Adaptation Strategy, which outlines potential changes in the regional climate, the impacts on infrastructure (including buildings), and possible adaptation actions. The strategy includes recommendations and opportunities, including energy efficiency measures, for the city’s aging building infrastructure that would ready it for current and future climate change.

• The City of Toronto is also moving ahead with municipal (and other) building initiatives that will not only address climate change, but will also help improve buildings’ energy performance. The City is working with the Ontario Ministry of Energy on a proposed Energy and Water Reporting and Benchmarking (EWRB) regulation for large buildings.

If the provincial regulation does not move forward, Toronto intends to pursue its own municipal regulation, a process it started in 2014, but put on hold pending the outcome of the provincial legislation. In this way, the City will maintain its commitment to a reporting requirement for large commercial and multi-residential buildings. This would also help the City meet its energy conservation and GHG emission reduction goals.

• The City of Victoria is using the Climate Action Revenue Incentive Program (CARIP) to upgrade its municipal building portfolio and to mitigate for climate change. CARIP was developed by the Province of British Columbia to help offset the carbon tax paid on municipal purchases of fossil fuels. Victoria has implemented HVAC upgrades, replaced electric heating systems with heat pumps, retrofitted windows and doors with energy-efficient models, and installed destratification fans in a number of buildings.

According to the CIRC, the current municipal building reinvestment level of 1.7 per cent could lead to an even further decline in the condition of municipal buildings. “The bottom line is that the longer we wait to act on these repairs, the more expensive it will get,” says Raymond Louie, president of the Federation of Canadian Municipalities (one of the report card sponsors). “Canada needs to start planning for the future by reinvesting in our existing assets now.”

The preceding was originally published in Heads Up: Building Energy Efficiency - Volume 3, Issue 5 building.ca

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The Business of Buying

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The office condo trend is thriving in the City of Toronto and Metro Vancouver. But is buying your office space always better than leasing?

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By Shannon Moore

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If you’ve ever rented an apartment, house or condo, you’ve likely experienced that dreaded feeling of handing over cash every month knowing that you’ll never see it again. It’s the most inconvenient yet unavoidable downside to renting. Your hardearned money goes straight into your landlord’s pocket and does little for you in the long run, resulting in a financial dead end.

Business owners often experience this same grief. Leasing office space is standard practice, but the disadvantages parallel those of home renters. In addition to the obvious financial pitfalls, companies are at the mercy of a landlord who has the power to call the shots. building.ca

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The Central North Market of the GTA has the most activity, recording 56 per cent of office condo sales in 2015 and offering 43 per cent of availability.

Colliers Key Findings:

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• Office condos used to be located outside the city core. Now, they are emerging in highly desired neighbourhoods.

“If your next door neighbour needs more office space, the landlord will sim- • The typical office condo user is a small to mid-sized business, like a law, accounting, contracting, engineering or consulting firm. ply move you to another floor,” says Steve Gupta, president and CEO of Markham, Ont.-based The Gupta Group. “I have been • In Metro Vancouver, investment in office condos is increasing due to improving prices per square foot. Since 2014, $280 milleasing for 30 years and have been moved lion in office condos were sold to investors and end users. three times. It’s a major disadvantage.”

“The landlord also has the power to extend or terminate your lease. They won’t • Since 2010, the City of Toronto has seen an increase in office condo sales and the development of new condo projects. Sales kick you out for no reason whatsoever, but activity surged in 2015 at $87 million. if they need the office space for something else, there’s nothing you can do,” he says.

Just as home renters aspire to purchase a property, many businesses have made it a mission to own an office space — either for leasing or for using themselves. In the City of Toronto and Metro Vancouver, office condos have become an increasingly popular trend, according to a 2016 Colliers International Research Report. In the last two years, $280 million worth of condos were sold in Vancouver for use as office space, with 83 per cent being owned by investors in 2014 (a 52 per cent growth since 2010). Sales are similarly strong in Toronto, with $87 million recorded in 2015. End-users dominate the market in the city — last year, 74 per cent of Toronto’s office condos were purchased by businesses who intended to use the space themselves, while 26 per cent were sold to investors typically seeking a stable, solid and predictable cash flow.

Strata titled office/warehouse product has long been a common form of development in Vancouver, with units getting bigger, better and more expensive over the last number of years. This form of development has now shifted to the retail and office asset classes in a meaningful way. “From an office perspective, the key drivers are the lack of Scott Chandler, Colliers International’s sites for small owner occupied developments, and developers are now focusing on senior vice-president, Capital Markets. purpose-built strata office product rather than offering residual office product in “Ownership is a long-term commitmixed-use developments and most importantly, the acceptance of the product into ment, but the office condo is a hard a liquid secondary market in the event the owner outgrows the space, or needs to asset that you can finance over time. downsize,” says Kirk Kuester, executive managing director, Colliers Vancouver. “If You’re no longer subject to leasing an owner or investor wishes to sell, there is an active market to now sell into, which market ups and downs.” might not have existed five years ago,” he added.

Office condos used to primarily exist Whether purchasing for personal use or leasing gain, the advantages of office in the suburban market for the profescondos are clear. “When you own your office space, you never have to worry about sional and medical service industries. moving unexpectedly or about rental rates increasing,” says Gupta. “Once you own Today, the typical office condo user is a it, you have it forever. The focus turns to pride of ownership, putting your personal small to mid-sized business, like a law, signature on it and designing the space the way you want to.” accounting, contracting, engineering “You get all of the benefits of ownership while enjoying capital gains,” adds or consulting firm.

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Photos courtesy The Gupta Group

According to the Colliers report, “Office condos opened up an opportunity for an occupier to own their office space with the advantage of having a clear cost, full control over the design within the premises and more significantly, tax benefits not available to occupiers who lease.”

Looking forward, says the report, “strong capital appreciation of commercial real estate coupled with a low Canadian interest rate presents an opportunity for developers to build more office condos and subsequently attract a more diverse set of occupiers and investors.”

The growing demand for office condos in cities like Toronto and Vancouver is due to these increasing lease and low interest rates. The Colliers report uses an example of a market with $35 per square foot lease rates against office condo units selling at $700 per square foot. Assuming a three per cent mortgage with 20 per cent down (amortized over 25 years), the owner’s

“Initially, it may seem like you’re investing a lot of money, but it’s about appreciation, capital improvement and the value of your condo,” adds Gupta.

“It’s a sound investment, and you’ll never have to look back.”

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The Power of Location Gupta is experiencing these benefits first hand as his group develops Yonge Park Plaza, a mixed-use office condo building in Toronto. “Yonge Park Plaza will be on the northwest corner of Yonge and York Mills,” he says. “The subway will be accessible from our lobby, and we will overlook a golf course and river. Our location is only a few minutes from Highway 401, the Don Valley Parkway, three hospitals and shopping centres.”

The Colliers report found that in analyzing and comparing the sales of high quality office condos, a central location close to transit was a common denominator. Other characteristics that high quality spaces had in common were: steel or reinforced concrete frames with reinforced concrete and concrete blocks; glass wall façades; underground parking; two elevators; amenities such as fitness rooms and shared outdoor spaces; and flexibility in condo sizes, with the ability to combine smaller units to create larger spaces.

In addition to 250,000 square feet of office space with customizable units, Yonge Park Plaza will be a LEED Gold building with 20,000 square feet of retail space, a rooftop bar, high and mid-range restaurants and a 250-room Hilton hotel, all accessible to the businesses in the building. The purpose of the hotel is to provide accommodations for guests, and to allow companies access to boardrooms for meetings and a ballroom for events.

“Yonge Park Plaza has a real advantage in terms of its location and amenities,” says Chandler. “There aren’t many strong, on-top-of-the-subway urban locations left, so that will certainly preserve the value of the building over the long term.”

Advantages/Disadvantages of owning an office condo: Of course, there are some disadvantages to owning versus leasing. The cost • For investors, owning an office condo offers consistent cash flow. must be footed up front, unlike leasing at a monthly or annual rent. Like own• For end users, low interest rates make owning more affordable ing a home, capital gain is dependent on than leasing, while capital appreciation can provide solid equity the real estate market, though apprecigrowth. However, capital gain is dependent on the market. ation over a long-term period is almost always guaranteed. According to Gupta, • Owning ensures predictable monthly and yearly costs, but payone of the major disadvantages to ownment is required up front. Leasing allows costs to be spread out ing is the limitations for expansion. over the long-term.

“If you’re a growing company, it can be hard. If your next door neighbour • Owning an office condo allows full control over the design, but doesn’t want to sell his condo, then you there can be limited opportunities for expanding the space. can’t expand your space,” he says. “If you’re leasing and need more space, mortgage costs provides savings of apyou can simply move to a bigger floor in the building.” proximately $3 per square foot. That’s Nonetheless, the positives outweigh the negatives; and though office condos equivalent to an excess of $90,000 in seem to be thriving in the City of Toronto and Metro Vancouver, Chandler and savings over a 10-year period.

Gupta predict success in other cities, too. “People will start realizing the value and “Interest rates are so low right now recognize that they’re better off buying than renting,” says Gupta. that it’s extremely affordable to buy,” “The depth of the market might not be as strong in other cities right now,” adds says Chandler. “Obviously nothing is Chandler, “but the benefits of office condos apply to them, too.” b guaranteed and capital gains can go either way, but the timing is really good right now.” building.ca

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V I E W Walk With Joy ULI Toronto’s Executive Director uses the lens of Brexit and Donald Trump and sees the late Rob Ford as a canary-in-the-coal mine of a global zeitgeist.

By Richard Joy

Recent global context suggests that the rise and enduring strength of Ford Nation (which spills well beyond Toronto’s borders) is representative of broadening unrest within Western democracies where too many feel that they are outside of the institutions that are shaping our future and the opportunities afforded by it.

Irrational or not, these populist expressions speak to a need to improve our public dialog relating to matters affecting the economy, social inclusion, climate and quality of life.

And this is true whether the focus is the European Union, the presidency of the United States or (more locally) the Toronto Region.

In a recent column I wrote of ULI Toronto’s multi-year initiative, Electric Cities, aimed at strengthening the role of communities in city and region building by listening more carefully to them and their role in embracing urban transformation. That our future must involve significant land use and transportation changes in almost every neighbourhood — as we continue our shift from outward to inward growth — is not something we can responsibly avoid. But explaining these changes and ensuring that the benefits of such transformations are understood, shared equitably and more fully embraced is something we can better manage.

This means better getting out in front of change in our communities before change presents itself. The emerging Regional Growth Plan and the updates to our municipal official plans are opportunities to better bring communities into the fold. And these opportunities need to be taken more seriously than ever before. Their successful implementation demands it.

Our local neighbourhoods need to understand their regional context, and that their viability depends on a more mobile and intensified regional land and transportation AUGUST SEPTEMBER 2016

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system — meaning they must embrace the expansion of higher order transit infrastructure and the building of density along such corridors and stations — and understand that shifts in our economy will require that employment and retail often needs to mix with residential, and that housing affordability demands more mixing of incomes.

Conversely, city builders must do better at understanding and being sensitive to local communities. That the strength of our urban region is our strong neighbourhoods is no coincidence. Toronto’s international ranking as one of the most liveable cities in the world is first and foremost a product of the strong identity and leadership of our local communities. We ride roughshod over them, in the name of “progress,” at our peril.

Going forward, communities will be better served if, within the context of the forces of change facing them, they are ready to leverage such opportunities to improve their neighbourhoods. This may mean more libraries, community space, or parkland. It may also mean more choice in housing supply or retail spaces. It may mean more construction jobs or affordable day care. For sure it means demanding the highest caliber of urban design and architecture.

To his detractors, Rob Ford may not Richard Joy is Executive easily be recognized as a leading global Director of ULI Toronto. indicator. But his tenure and ongoing Previously, he served as legacy speaks to how easily a dangerVice-president, Policy and ous disconnect between policy makers, Government Relations at industry leaders and the broader public the Toronto Board of can cast awry best laid plans.

Trade, and was the Communities in our region must Director of Municipal have a more meaningful role in the Affairs and Ontario shaping of our region, of which they (Provincial Affairs) at themselves are the building blocks.

Global Public Affairs.

This is the belief that is the core of ULI Follow him on Twitter Toronto’s Electric Cities initiative, @RichardJoyTO or email which seeks to foster a new level of diat Richard.Joy@uli.org alog between government, industry professionals and local communities across the Greater Golden Horseshoe.

A community that is ready to leverage change is a community more likely to embrace it. b

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