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Spring 2012


What Will Be Different This Year? MONTREAL: The fundamentals are good for players of all sizes • Mobility, flexibility & environmentally conscious office space • Retail: It’s all about experience & proximity • The business case for greener buildings is growing in Quebec

VANCOUVER: Asia is the game changer • Who’s taking what space in the Vancouver office market • Mentoring the next generation for the C suite • Affordable housing needs high density projects to make sense

EDMONTON: Will the authorities get it together to help developers? • When the Funds & REITs start developing you know you’re in the right market • The Private sector is growing quickly in this Government City • We need more apartment buildings

REAL ESTATE FORUM TEAM Laura Aaron Nataliya Antonenko Roberta Brown Hailey Chan Dennis Chui Maria Encarnacion Lucy Leng Erin Osborne Jessica Petrucci Jean Pickering Katherine Radziszewski Shruti Suppiah Gillian Wright





EDITOR Michel Rémy Michel Rémy is the editor of

18 The Montreal Renaissance 20 Montreal fundamentals are good news for players of all sizes 23 Different strokes for different folks: the condo market in


24 26

It’s all about experience & proximity


The business case for greener buildings is growing in Quebec

MERCHANDISE MART PROPERTIES CANADA, INC. Steven Levy Senior Vice President ABOUT MMPI CANADA MMPI Canada produces and manages over 50 seminars, conferences, trade and consumer shows every year. We have events in Calgary, Edmonton, Halifax, Montreal, Ottawa, Quebec City, Regina, Saskatoon, Seattle, Toronto, Vancouver and Winnipeg. We touch many sectors including construction, design, craft, art, real estate, furniture, furnishings and others. Over the past 10 years, MMPI Canada has grown from 12 to over 50 staff with offices in Toronto and Vancouver. Our overall mission is to produce creative and profitable events.

REAL ESTATE FORUM MAGAZINE The magazine is published three times a year to coincide with the following conferences: SPRING Edmonton/Montreal/Vancouver FALL Calgary/Ottawa WINTER Toronto

Montreal is fragmented Mobility, flexibility & environmentally conscious space that’s what they want


32 These are interesting times for Vancouver 34 Asia is the game changer 38 It’s musical chairs in Vancouver office market 40 There is some positivity amid topsy-turvy market trends 40 High density is key to affordable housing in Vancouver 42 Thinking of retail differently 44 A river runs through it says Bing Thom 45 Which way to the C Suite

DESIGN ©2012 Merchandise Mart Properties Canada Inc. Cover photo credits: © Alexey Krupin |

TO ADVERTISE, CONTACT Frank Scalisi Director of Sponsorship and Advertising Sales Phone: 416-512-3815 Email: See our advertisement on page 56 CONFERENCES For more information on the Conferences, visit our website at




48 Edmonton is bucking the trend 50 When the funds & REITs start developing you know you’re in the right market

51 51 52

Can we have some service please

52 54

Get it while you can


The Altus Report: Risks and opportunities Vancouver, Edmonton and Montreal

10 12 14

Small market – big growth. Quebec City gets attention


Greening from the government down: A robust sustainable development strategy for Canada


Positive trending: driving fair property tax ratios in Canada

It’s time to build apartments Secure the right place, open the store and find staff, that’s the challenge The private sector is leading the demand in Government City

The three markets are looking good but ... Despite crisis, the EuroZone will survive, come back stronger



The Tale of Three Cities What began as a turbulent year in the financial market has seen much stabilization as of late, paving the way for three cities to take flight.


he economic factors in Canada, and to a smaller degree, the United States, all point to continued recovery. Will some resolution of the issues in the EuroZone create a return to more stability in the capital markets? If gasoline prices continue to rise and remain at high levels, will natural gas be seen as an alternative fuel for the cars we drive? And will two controversial pipelines from Canadian oil patches to refineries in the south get approval, and with them, more economic and job growth and a greater market base for the Canadian oil and gas sector? Amid all this uncertainty, three Canadian cities have set out on their own journeys to drive our nation’s economy. Whether it is the natural resources of the land, culture or innovations propelling the Vancouver, Edmonton and Montreal office markets forward or their own unique identities, the proof is in the real estate pudding. They have all seen common successes in tightening office markets, slated construction of new stock and economic drivers that put them in


Canadian Real Estate Forum / SPRING 2012

performance classes of their own. At our three Spring Real Estate Forums, the speakers in each city will offer their advice and insights into these respective markets. But conferences of this magnitude would never be possible without the contribution of experts in the real estate sector; advisory committees, chairs, speakers and consultants who share their unparalleled knowledge and skills set towards the collaborative goal of making the Canadian Forums the successes we’ve all come to expect. Without all the efforts of all these instrumental people, the 2,500 joining us in these cities would not leave each presentation feeling challenged and fulfilled. So, with that in mind, from the West to the East, we welcome you all.

George Przybylowski

Mark Stephenson

Vice President MMPI Canada

Vice President MMPI Canada



Risks and opportunities

Sandy McNair

VANCOUVER , EDMONTON AND MONTREAL Larger or smaller market, the averages are dangerous. The specifics of each office, industrial or retail property matter and vary widely to the properties that many may have thought of as their peers. By Sandy McNair


ntil recently most in the industry would have viewed the Toronto Bank Towers at King and Bay as homogeneous, consistent performers with the lowest vacancy and highest rents in their market, if not the country. For those preparing to market Scotia Plaza, that would be part of the investment premise. However, while Toronto’s Downtown Office Market is performing very well overall, three of these Bank Towers are outliers with a total of 1.1 million sq. ft. of office space currently available. These buildings are pockets of pain. One of them has 426,000 sq. ft. available that has been available for four years and vacant for two years. Yet most all of the neighbours and peers to these three Bank Towers are in very good to excellent shape, in terms of vacancy. The averages are dangerous.

Vancover Downtown Office Market MAJOR TENANTS GET MOVING ■ Direct Space ■ Sublet Space

Existing TELUS Offices 2015

McCarthy Tetrault 2015

TELUS Garden


Canadian Real Estate Forum / SPRING 2012

Pacific Centre Tower IV

SNC Lavalin 2015

745 Thurlow St

1075 West Georgia

Vancouver’s Downtown Office Market has responded to several years of very low vacancy and climbing rents with three, and possibly more, new office towers. Each tower is very different in design and strategy and each has a leasing program off to an excellent start; attracting a total of four large tenants committing to 600,000 sq. ft. of the 1,134,000 sq. ft. in these three towers. TELUS has committed to 350,000 sq. ft., McCarthy Tetrault has committed to 84,000 sq. ft., SNC Lavalin has committed to 100,000 sq. ft. and MNP to 72,000 sq. ft. Filling the second half of these three towers will be the greater challenge in a market that is dominated by small firms. In addition, the backfill, or space left behind by the firms moving into the new towers, will be a significant challenge for those directly and indirectly impacted in 2014. A cycle of trading places and perhaps trading up can begin that impacts many buildings in the market that had nothing to do with the new supply. The impact of multiple large blocks of backfill in a small tenant market MNP with moderate growth 2014 usually involves increased inducements, lower rents and increasing vacancy, but not always immediately. But lease expiry dates and other factors mean the averages are dangerous as there will be both pockets of pain and islands of strength in the downtown Bentall MNP Four Tower Vancouver office market.


60 50



39.0 36.0










0 Vancouver Calgary Toronto Montreal Halifax Edmonton Winnipeg Ottawa Quebec

Relative to its population Edmonton has the smallest office market of the major cities in Canada. The overall inventory is only 22.8 million sq. ft. with 38% of it being Downtown Class A Office space – the addition of a single new tower acts like a big rock in a small pond. The 625,000-squarefoot Epcor Tower at Station Lands opened in 2011 with 70% leased and triggered a series of moves that impacted many office buildings in downtown Edmonton. As the chain of moves continues, the pockets of pain become smaller and more distributed. With 184,000 sq. ft. available at First & Jasper and another 184,000 sq. ft. remaining at Epcor Tower at Station Lands we can expect more pockets of pain and islands of strength from Downtown Edmonton. The office sector indirectly benefits from strength in Edmonton’s industrial, education, healthcare, research and government sectors. The Edmonton industrial market continues to be strong with the Edmonton-specific aspect being staging and fabrication for many of the multi-billion dollar energy and infrastructure projects located in Western Canada. Montreal is unique among Canada’s major cities. Montreal has the most diversified economy without a single focus on any one of key sectors such as Financial Services,

Sandy McNair is President of Altus InSite, Canada’s leading provider of market data and perspective to the commercial real estate industry. Altus InSite is a division of Altus Group.

Calgary Light Industrial

Montreal Light Industrial



Square Footage (000,000s)

Square Footage (000,000s)

■ Completions ■ Under Construction

■ Completions ■ Under Construction












Energy, Technology, Aviation, Resources, or Research. The result has been stability that surprises many. When Bell relocated from Downtown to Nun’s Island, the concern in the market about the painful process of absorbing the resulting backfill was overblown. While no new towers have been added to downtown Montreal in the past decade, supply continues to be added from an unconventional source; the slow and modest conversion of small portions of the 18 million sq. ft. of Midtown Montreal’s loft inventory, a relic of the garment industry of the late 1960s and 1970s. Most of these lofts are strategically located close to subway stations and trendy residential neighbourhoods, making Work-LivePlay developments a real option. Montreal has Canada’s second largest industrial market, with inventory and performance variances which are greater than other industrial markets. See Montreal’s bar-bell as compared to Calgary’s more typical bell-curve in the charts below for part of the reason. A good portion of the Montreal industrial market is obsolete and must be retrofitted – built before 1965, with 18-foot clear heights – but because they are centrally located, these buildings’ best use might not be manufacturing. The best of this class have already been converted to office or residential use. The future of Montreal industrial is along highways, to service the booming transportation industry. Retail is a very dynamic asset class and that is true in Vancouver, Edmonton and Montreal. The life span of retail locations, retail formats, retail concepts and retailers varies widely but is shorter and more dynamic than office or industrial. The result for investors, managers and retailers is both big winners and big losers, making the averages even more dangerous. The current influx of retailers from the USA and elsewhere amplifies the opportunities and risks in the retail sector everywhere in Canada. Rising waters are no longer assured. Canada’s Commercial Real Estate MarketsCalgary and Global Financial Markets and Capital Flows require a careful understanding of the specifics associated with each property and your strategy. Relying on the averages is now even more dangerous than ever. ■


























Canadian Real Estate Forum / SPRING 2012 Montreal






































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A Small market –

n impressive wave of 1.5 million sq. ft. of new office space was delivered to the Quebec City office market during 20092011, which has an existing inventory of 17 million sq. ft. Significant pent-up demand and growth in occupied area has meant that vacancy has climbed only slightly, from 3.2% to 5.2%. The 2009-2011 wave of new office buildings have achieved occupancy rates in excess of 80%, and a second wave of new office buildings, totaling 1.3 million sq. ft., is now underway with completion targeted during 2013. Considering the relatively small size of the Quebec City market, this second wave deserves careful attention and a comparison to other major office markets confirms Quebec City’s unique status. Quebec City’s office inventory grew by 9.5% from 2009 to 2011 and is expected to grow by another 7.5% by the end of 2013. In a market like Montreal, which is five times the size of the provincial capital, this kind of growth would correspond to between 5 and 8 million sq. ft. of new space. The Calgary market experienced a 10% inventory growth between 2009 and 2011, and saw its inventory grow by 6 million sq. ft. Demand drivers for Quebec City are quite different from the Calgary, Toronto or even Montreal markets. Insurance companies are leading several new projects, either as major tenants for their expanding head offices or as developers of new office building to be leased on the open market. While the provincial capital is often perceived as a government

big growth

Quebec City gets attention By Marie-France Benoit Positive service-sector job creation and a booming insurance industry have been fueling demand for new office space in Quebec City.

Canadian Real Estate Forum / SPRING 2012

Photo: © Gilles Dion / istockphoto


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Office Market Growth QUEBEC CITY OFFICE MARKET IS CANADA’S GROWTH LEADER Percentage of Inventory ■ 2009-2011 ■ 2012-2014 town, few people seem to know that the insurance industry, now represent 9% of all jobs in the region, almost as much as the public sector (11%). Many insurance companies have real estate arms that are active owners and developers. La Capitale, SSQ Financial Group and Industrial Alliance own 20% of the office inventory (excluding their own head offices) while REITs own 25% of the office market. Cominar REIT alone owns 15% of the office market. Headquartered in Quebec City, Cominar is also a leading developer with several projects in the pipeline. Other REITs, including Whiterock REIT (Dundee REIT), Allied Properties REIT and BTB REIT also have a significant footprint in the market. Moving away from the office market, REITs also completed major acquisitions in Quebec City. In 2011, RioCan acquired its 4th power centre in the region and the company now owns four of the region’s five power centers. Transglobe REIT completed the $98.6 million acquisition of a large multi-residential complex in Summer 2011, while Cap REIT and Boardwalk REIT had already established a strong presence during the past decade. In spite of increased development and investment activity, Quebec City’s real estate market fundamentals remain sound. With its stable and diversified service-based

20 7.5%


15 13.8%

10 9.5%

5.9% 1.3%







0.6% 1.6%





4.5% 2.4%

Quebec City Toronto Halifax Calgary Vancouver Montreal Ottawa Winnipeg Edmonton

economy, a 5.0% unemployment rate and its pro-business municipal administration, Quebec City’s real estate market is poised for more growth and additional attention. Quebec City’s 2012 Real Estate Forum will be held on May 8th at the Chateau Frontenac. ■ Marie-France Benoit is director of Altus InSite, Canada’s leading provider of market data and perspective to the commercial real estate industry. Altus InSite is a division of Altus Group. Canadian Real Estate Forum / SPRING 2012


The three markets are looking good but ...

Mario Lefebvre

In Montreal, where downtown office development is on the upswing, the commercial real estate sector is expected to help offset the struggles of other industries in 2012. Economic growth will remain at a modest 1.7% this year before accelerating somewhat in 2013, thanks in part to strong non-residential construction activity, says the Conference Board of Canada


ario Lefebvre, director of the board’s Centre for Municipal Studies, believes that after the economy was hit hard by several shocks over the past decade, the unemployment rate of the census metropolitan area (CMA) of Montreal has been relatively high for a while, and grew by a further 200 basis points in 2011 to 8.8%. Another small uptick in unemployment is expected for 2012 before easing commences in 2013. Unsurprisingly, residents have been departing; net interprovincial migration has been negative in each of the last 25 years, and inter-city movement has produced net outflows for a decade. This migration has kept population growth at bay, limiting growth in the CMA’s domestic demand. Looking at the West Coast, local Vancouver businesses are expected to face continuing pressures that started to increase in late-2011. Vancouver’s economy rebounded nicely the past two years, with real gross domestic product rising by 3.5% in 2010 and 3.1% per cent in 2011. However, Vancouver-based businesses (as opposed to national and international firms with operations in the city) lost some steam toward the end of 2011, putting the local economy on a weaker footing going into 2012. As a result, Vancouver’s real GDP growth is expected to slow to 2.5% this year. In particular, manufacturing output growth is projected to decelerate while construction activity is expected to weaken somewhat, slowing gains in the goods sector. At the same time, slightly weaker domestic demand will temper output on the services side. Despite the slower economic growth, Vancouver’s labour market will continue to hum along as 25,000 net new jobs, an increase of 2%, are expected this year. This means that roughly 72,000 new positions will have been created since 2010. Edmonton’s economy will remain steady in 2012, while Vancouver experiences strong job growth and Montreal’s economy makes modest gains, says Lefebvre. Consumers are expected a prominent role in Edmonton, where the retail market is robust and usually outpaces the rest of Canada in spending per capita.


Canadian Real Estate Forum / SPRING 2012

GDP City Ranking Saskatoon Calgary Edmonton Regina Vancouver Winnipeg Toronto Halifax Quebec City Hamilton Montreal Victoria OttawaGatineau 0









Strong consumer spending will keep Edmonton’s real GDP at a steady 3.2%, but economic growth will slow as activity cools in both the goods and services sectors. The Alberta capital will rank third among Canada’s 13 largest urban centres. This forecast reflects a continuation of economic improvement that occurred over the past two years. After experiencing a contraction in 2009, he says, economic activity has rebounded strongly in Edmonton. Following on the heels of a 4% gain in 2010, real gross domestic product increased by another 4.4% in 2011, with the goods sector responsible for most of the strength. The manufacturing, construction, and primary and utilities industries all posted solid rates of growth in 2011. Even though growth was slightly more modest among servicesproducing industries, it still came in at a healthy 3.7%. Sound employment gains led to robust consumer spending, providing a lift to most services industries. ■ Michel Rémy –

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Despite crisis, the EuroZone will survive, come back stronger Don’t write Europe off just yet. That’s the message from Germany’s former Foreign Minister and Vice Chancellor, Joschka Fischer, last week.



Canadian Real Estate Forum / SPRING 2012

Photo: © Yurchyk |

iving up on the EuroZone would be “an unbeliev“We had a decline in wages, we had a decline in able historical disaster,” said Fischer as he discussed pensions, we had to restructure the economy, private and the monetary union’s current challenges and public sector, we had to restructure labour markets,” he shared his insight on the financial crisis. explained. “It needed time, it’s not a quick fix from one year The EuroZone will recover from the financial crisis and to the other, but we made it. Nobody thought that Germany come back stronger, the former foreign minister explained. would make it again, and we re-emerged, and so we will see “The crisis will push us forward into a political union, into a re-emergence of the Mediterranean member states, I am political integration,” he said. definitely sure.” Greater political integration would include elements “I think Europe will make it,” he said. “It won’t be nice, like a central government, parliamenit will be a bumpy road ahead.” tary controls and a centralization of But crisis can also be a driving “I think Europe will make it. It power. The cost of failing to do so, said force for change, Fischer noted. “You Fischer, could be the future of the Euro won’t be nice, it will be a bumpy won’t have serious changes without the itself. challenge of crisis.” road ahead.” According to Fischer, the weakness “This is the moment... when firm Joschka Fischer, Germany’s former of the European situation is that the structures become soft, and you could Foreign Minister and Vice Chancellor. currency union was formed without model them, (and) you would make fiscal policy and without agenda. progress.” He said Europe had passed the point of return and it is Comprised of 17 member states, the EuroZone produces an illusion to think member states could go back to national €12 trillion of the European Union’s €16 trillion annual currencies. If the European Currency Union fails, the GDP. common market won’t survive and the whole of Europe In the future, the business economy will move into would disintegrate, said Fischer. unchartered territory, Fischer said, including investing in “It’s up to us, whether we will play a role in this world renewable energy among other things. For all of its burdens of the 21st century,” he said. “In the end, it depends on of debt and population growth, Fischer said Europe will still whether Europeans understand we have to reorganize be a dynamic continent, and even more so going forward. ourselves.” Europe will still be an extremely good place to invest in, Fischer drew comparisons to Germany’s economic reFischer said. “Real estate investments are long-term investemergence after the Second World War to the EuroZone’s ments and I think Europe has a lot of benefits.” ■ financial crisis. It took time then, and it will take time now. Michel Rémy –

Good property investments are built on solid foundations. That’s why we do our own research – in person and on location.

At Aberdeen, we like to get an accurate view of all potential commercial property investments. And that means getting out on site and researching every opportunity. In fact, our process aims to reduce risk as much as possible to help us deliver enduring performance and consistent returns. In an increasingly synchronised world, we believe that bespoke research and local knowledge gives us an important advantage. Therefore we base our property investment professionals in the regions where they invest so they can examine every opportunity personally, gathering invaluable information and insights first-hand.

We have a varied range of direct and multi-manager investment strategies suitable for Canadian investors looking to gain exposure to global real estate markets. What all our strategies have in common is the first-hand research that allows us to pinpoint genuine opportunities and invest with confidence in markets around the world. And rest assured, if a potential investment doesn’t measure up, we simply won’t invest in it. For more information on Aberdeen property investments – and our investment process – please contact Renee Arnold on 416-777-5570 or email This information is not intended as an offer, recommendation or advice with respect to the purchase or sale of any security, and is for informational purposes only. The views expressed herein are not intended to be relied upon as a forecast or guarantee of future results. Investments in property segregated mandates and property pooled funds may carry additional risk of loss due to the nature and volatility of the underlying investments. Property segregated mandates and property pooled funds may not be available for investment by Canadian investors unless the investor meets certain regulatory requirements. There is no recognized market for property and there can be delays in realising the value of property assets.

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It does not take much to get Montreal Real Estate Forum chairman Bill Tresham to talk about his hometown these days.

By Michel Rémy


hat might not have been the case before he left for 10 years.


Canadian Real Estate Forum / SPRING 2012

Photo: © Sofiene Issaoui |

“I’m a bit fired up,” says Tresham, president of global investments for Ivanhoé Cambridge. “You can only come back once and you sort of see things in a different view. Sometimes you have to give yourself a wake-up call. There have been periods in this town where people have felt not so great. This is a moment when people should feel very excited. And I think maybe by virtue of having been away for so long and having invested in so many different markets through the Americas and overseas, you’re able to put your own town in perspective. For me, it’s high marks here.” Tresham says Montreal has caught up with the rest of the world in housing prices and rejuvenated an office sector that was dormant for two decades. He awards many of his top grades for infrastructure development. “When you drive in today from Montréal-Trudeau

Airport and you stay on the Ville-Marie Expressway to the end, you can’t help but be impressed by the cranes building one hospital on the west side of downtown and then another set of cranes building the other hospital on the east side,” he says. Tresham is also enthusiastic about the rich bicultural experience that Montreal’s Anglophones and Francophones and the increasing involvement of many other ethnic groups who choose to come to the increasingly diverse city. In his view, Canada’s open society and Montreal’s cultural attractions mean the city is attracting the large, educated labour pool necessary to thrive economically. “Most often, people go to the places where they find the resources that they need, and sometimes these economic subsidies help. But if you cut through it at the end of the day, those are really at the margin. It’s about where your labour force is. And so, what’s their education level?” With a sufficient labour pool and education levels in place,

Bill Tresham

Ivanhoé Cambridge will “definitely” be part of the next wave of development in Montreal, especially in the downtown. “If anybody has put their money where their mouth is, it’s us,” he says. “We have an enormous investment in Montreal, from office buildings, a couple of the best ones – several of the best ones downtown – to the largest hotel downtown, to two shopping centres. We really have an important position and we intend to do more. There are other developments in the works downtown that are going to be extremely exciting – mixed-use developments of the stature of other mixed-use developments in other downtowns.” He expects more and more residential and retail development on Sherbrooke Street and De Maissonneuve. “There is a renaissance, an unbelievable renaissance, today in downtown Montreal with the new Residential highrise being built,” he says. Tresham is also impressed that software firms have put their offices in downtown Montreal without funky elements

that usually go along with their campus-style setups. “There are a million decisions that go into where you want your business to be,” he says. “But the success stories here are often the businesses that we’re talking about most on the forefront of the technology end of the world – and a significant amount of it on the creativity part of the world. So when you look at software companies actually putting their offices in downtown Montreal, you go: Now, that’s a little different.” Tresham says Montreal is making a statement to the world about technology and creativity. The city is lucky to have the creative talent that it does. And even more can be done. When you look at what the Cirque du Soleil and the disappointments that they’ve had themselves in trying to make more of this town, these are the kind of people that put us on the map on a global scale. “We’ve done a fantastic job of growing up in the world, and I think our best days are ahead.” ■ Canadian Real Estate Forum / SPRING 2012


Montreal fundamentals are good news for players of all sizes Montreal’s political and cultural differences do not carry over into commercial real estate says Michel Bouchard, co-chief operating officer for the Redbourne Group.

700 de la Gauchetiere , Montreal. Courtesy of RBC Capital Markets Real Estate Group

Michel Bouchard

Armand Des Rosiers

Ron Perlmutter



here could be some little political or language barriers,” says Bouchard. “But they don’t stop the investors at all from coming here. And there’s more and more capital flying to Canada. So in my mind, Montreal is not different.” He views the overall Montreal market as being in a state of equilibrium. Prices for recently sold properties in Montreal compare to those in Toronto or Calgary. As in the other cities, Montreal assets attract a wide variety of investors. But the diverse investment groups in Montreal are dealing with different dynamics. For example, Redbourne, which is targeting office, prefers to leverage debt while others do not. “When you look at these large pension funds that have billions of dollars aside to wait for the proper investment, these guys could be very aggressive. And their expectancy of holding these assets is something like 10, 15, or 20 years, while funds have a strategy of disposal going in. And, REITs have

Canadian Real Estate Forum / SPRING 2012

different dynamics. They will leverage through money that they will raise on the market.” But pension funds make cash purchases while private investors deploy debt in some cases. With interest rates likely to remain low, Bouchard does not expect cap rates to budge. While these conditions might be similar in other parts of Canada, he believes Montreal has different dynamics than the West on the supply side. “We have not seen new (office) supply for the last 15, or almost 20, years. The vacancy rate is reducing. It will exert pressure on rental values. We already feel it. And after that starts, we see more development potential.” He foresees a situation similar to one in Toronto two years ago, when several new downtown office towers came on the market. An expected spike in vacancy did not occur as the financial services and banking sectors made good use of the new and large amounts of older space that was upgraded in order to remain competitive. Armand Des Rosiers, managing director of RBC Capital Markets Real Estate Group, says he has never seen Montreal do as well as it is now since he entered the industry in 1982. The challenge for investors is to find properties. In 2011, supply and demand were unbalanced because there were not enough properties on the

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market to satisfy investor appetite, resulting in multiple bids for properties in all asset classes. “Very often, we would get 5, 10 or even 12 bids for properties that were being marketed. And at the end of the year, investors still had a very strong appetite. And I believe we’re going to see the same this year in 2012. However, I do expect more properties and more real estate to become available on the market.” Pension funds are likely to sell some of their properties as their portfolios evolve. Des Rosiers also expects REITs and private investors to sell some assets. “We’re going to see a good supply of real estate but I can’t – I wouldn’t – tell you that this would satisfy the appetites of all investors,” he says. On the buyer side, foreign players will likely team up with knowledgeable local developers and operators, as has happened in the past. The different types of investors have different goals, with REITs seeking product with good cash flow and pension funds with long-term goals showing more patience. Thanks to low interest rates, all investors are expected to leverage debt to returns. The low interest rates are helping to mitigate the effects of low cap rates. “Last year, we saw several commercial properties trading at around a 6% cap rate,” he says. “We saw multi residential properties trading at a 5% cap rate. So I’d say that in 2011 we saw cap-rate compression. I expect the market to remain very strong.”

He does not expect cap rates to change much in 2012, but investors are hoping cap rates for B class space will exceed A class levels. “Our market certainly compares very well to others across the country in terms of liquidity and in terms of demand,” concludes Des Rosiers. “Therefore, real estate is trading at comparable yields. However, each market presents its own opportunities and there are still very interesting ones for investors whether they are local or from outside of Montreal.” Ron Perlmutter, vice president of investment for Primaris REIT, says the cap-rate compression that picked up speed in late-2011 has continued to accelerate in early 2012, helping to woo more buyers off the sidelines. “As usual, it’s driven by supply and demand for product; but also in this case, it’s clearly a low-interest rate environment that is contributing to the trend,” says Perlmutter, who is participating in the Montreal Real Estate Forum. “None of us know for sure; but certainly from what we hear and read, and following macro-economic situations, we would see interest rates staying low for an extended period of time still. So that’s the key driver. “But it’s interesting. If we look at the spread in cap rates to five-year mortgage yields – and those are some of the statistics that are tracked over decades – it’s important to see that the spreads currently between cap rates and five-year mortgage yields is probably close to 200 basis points, which is considerably more than what it was at the market peak in 2007 where it was probably closer to 50 basis points. So as Canadian Real Estate Forum / SPRING 2012


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much as cap rates have compressed and there certainly is an observation that cap rates are low by historical standards against mortgage yields, they’re still very much in line.” Primaris deals exclusively in retail, primarily fashionoriented enclosed malls. Perlmutter says low supply has led to an increase in competitively-priced bids for investmentgrade assets. “I would say the most notable competition of late has been domestic pension funds that are back looking at domestic assets, whereas two or three years ago they either weren’t ramping up in real estate, generally, or they were spending a lot of their activity outside of Canada,” he notes. “I’m not suggesting they’ve stopped outside of Canada, but they are also coming back domestically now more so.” The lower cap rates have coincided with rising investor confidence in the Montreal marketplace. This situation varies from a few years ago, when uncertainty was prevalent. “Montreal is certainly a large city of a country that doesn’t have many large cities,” he says. “So when we look at Montreal, first off we look at a city with various submarkets. And it’s within those submarkets that we’ll always look for opportunities.” When evaluating a particular property, Primaris pays particular attention to economic and market drivers near the site as well as more external factors. The REIT also examines the site itself and what Perlmutter calls competitive drivers. The metrics include the global economy, local economy in which the property is based, population, employment


Canadian Real Estate Forum / SPRING 2012






numbers, household income and retail sales. Primaris also examines the size of the primary and secondary trade areas around the property. Generally, it looks at a trade area within 10 kilometres of a mid-sized community and much less in a larger city. Market growth, in terms of population and fashion expenditures per house hold, also receive scrutiny. In terms of strategy, Primaris acts as a cold squad of sorts, seeking properties on which competitors have overlooked or given up on. “That’s what we seek when we’re looking for properties to acquire, that’s for sure,” says Perlmutter. “We’re in a marketplace that’s very sophisticated, and there’s a lot of very capable owners and buyers out there. So we’re not kidding ourselves in saying that the whole playing field is ours alone. But having said that, we do look for opportunities.” Primaris also seeks assets with a goal of re-establishing layouts or having a new merchandizing focus. Because of the scale of assets it works with, the REIT can usually gain access to properties that it wants. “Otherwise, with our tenant base that we work with at our other assets, we’ll always look over our shoulders as to tenants that we work with and see how we might apply them to new assets where an existing owner may not have had that leasing clout,” says Perlmutter. “Montreal is certainly a large city in a country that doesn’t have many large cities,” he says. ■ Michel Rémy –

Different strokes for different folks: the condo market in Montreal is fragmented Montreal condominium construction is expected to cool off this year after two years of strong sustained starts, says Canada Mortgage and Housing’s economist for Quebec.

“Y Kevin Hughes

not just first-time buyers. Move-downs by retiring ou have to understand that, in baby boomers and increased densification in cities Quebec, we have a very fragmented across Canada have also contributed to the market for construction,” says Kevin increasing trend of condo living in Montreal. Hughes, who is participating in the Montreal Real “So, obviously that’s going to be to the advantage Estate Forum. “There are many players in the market of apartment buildings,” he says. “And as far as apartthat will produce only one or two projects. So there ment building construction is concerned, there are has been some condominium development. But three big types. One is traditional rental units, the when you look at the aggregate situation, we expect second is condo apartments, and then finally the that that will be lower than it was in 2011.” seniors residence or retirement-home apartments is Inventory is quite high following a surge in new the third. construction over the past two years and the revival So as far as the interest, and as far as the supply side of the resale market, easing demand pressures. But is concerned, well, if you’re a condos remain of strong interest builder of apartment buildings, to prospective buyers in Montreal “There will obviously be there’s more attraction to focus on and elsewhere in Quebec. condo construction. condo or retirement homes than “If we go back to the year 2000 or around that time, there But when you look at the there is traditional rental-apartment buildings. Going forward, these was absolutely no condo construcaggregate situation, we trends should continue to increase. tion outside of Montreal in the This year, CMHC plans to province,” says Hughes. “And expect that that will be study how many owners are then condominium development lower than it was in 2011.” renting out their condominium started to grow. And we see condo units. Their research is also starts, not only in Montreal, but in Kevin Hughes, CMHC noticing a tie-in between condos, many, many other cities in mixed-use projects and public Quebec. We can see this in the amenities in the downtown core of Montreal. statistics, and we can see them as we walk around the On the other hand, condo developments in city that the market has flourished recently.” outlying areas have other characteristics. The increase can be attributed to the afford“I’m not sure that we see one typical formula out ability of condominiums, especially for new home there,” says Hughes. “Because we have a product that buyers, in comparison to other housing options. is attracting different age groups, different socioeco“The product was much more mysterious to nomic realities, you’re not going to see one typical Quebecers than it is now,” says Hughes. “So now it’s type of offering.” ■ much more of an alternative than it was before.” Michel Rémy – The viability applies to different demographics, Canadian Real Estate Forum / SPRING 2012


It’s all about experience & proximity Montreal’s retail real estate market must reinvent itself as an increasing number of large American and European chains enter the local market, says a leading retailer participating in the real estate forum.


Marie-Andrée Boutin

Sal Iacono


arie-Andrée Boutin, vice president of real estate and store planning for the Aldo Group, says the Montreal retail market is healthy, but owners will face several challenges in the years to come, the first being the arrival of more international players. “The world is becoming one big territory as we speak,” says Boutin, whose retail chain operates in 75 countries. “Another challenge that retailers are facing is the incoming experience of the crosschannel. I’m hesitating in calling this e-commerce anymore, because I think the trend now is really cross-channel, which means that whichever channels our customer chooses to shop from, the experience has to be perfect. “It has to make the customer totally satisfied and retailers will be struggling with a bit of a balance between the sales that they can do through the Internet and maintaining their productivity in the mall as well, in addition their productivity per square foot cannot afford to decrease, even if their sales through the cross-channel strategy increase. “So my sense is that the portfolios of retailers, as far as brick and mortars are concerned, may change a little over the course of the next few years.” Large A and B class malls will continue to thrive because they provide an attractive shopping experience. Retailers in C class markets will face more challenges. Despite the changing times and emergence of cross-channel shopping, Aldo does not plan to reduce its real estate footprint. While some retailers are downsizing their store space, most of Aldo’s customers prefer the in-store experience, sometimes after researching products on the internet. The chain’s internet sales now account for 10% of its total sales, but online purchasers are mainly looking for discounts versus shopping experience.

Canadian Real Estate Forum / SPRING 2012

Looking at specific Greater Montreal markets, Boutin says its South Shore operations have benefited from proximity to condo and new-home projects. On the West Island, the future of operations in Fairview Pointe Claire will depend on how well the Harden Group develops its project. Boutin predicts mixed-use development will become a future trend in retail and bring together different sizes and types of retail stores. But first of all, mixed-use projects must be large enough to ensure they succeed over the long term. Sal Iacono, Cadillac Fairview’s vice president of development and Eastern portfolio manager, says international interest is particularly strong in the Laval and South Shore markets and also evident on the West Island. Cadillac Fairview’s properties are experiencing nominal growth and faring well as new lifestyleoriented retail properties enter the market. “We feel very strongly about the strengths of the assets that we have in our possession, because we’re a year-round destination in terms of being a fullyenclosed mall, air-conditioned in the summer and heated in the winter. Whenever there is a lifestyletype competitor, absolutely, there is a demand for that in the market. We don’t look at is as competition per se.” Instead, Cadillac Fairview looks at the new arrivals as an opportunity to learn from it and incorporate new and popular features into its proven and successful format. “This is the kind of thing that we’re looking at for St. Bruno right now,” he says. The institutional investor is constantly looking at ways to reinvent its properties. Accordingly, it has embarked on an expensive renovation and remerchandising effort at its Laval mall. That’s also why Cadillac Fairview has undertaken an $80 million at Galeries d’Anjou and Fairview Pointe Claire.

“Another challenge that retailers are facing is the incoming experience of the cross-channel. I’m hesitating in calling this e-commerce anymore, because the trend now is really cross-channel, which means that whichever channels our customer chooses to shop from, the experience has to be perfect.” Marie-Andrée Boutin, Aldo Group

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BDO. MORE THAN YOU THINK. The re-jigging, re-thinking and reinvestment are part of a constant process to ensure the company is playing its A-game with retail assets. He predicts that mixed-use development will be an important and highly-successful format for retail going forward. But the combination of mixeduse with retail is actually a “new-old” that dates back to the 1950s and 1960s and is coming back into vogue due to difficulties related to transportation, Assurance | Accounting | Tax | Advisory including more traffic. New municipal plans that allow for more mixed-use projects and the economics of land are also forcing everyone in the real estate business to re-think things and recognize that there BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by is now room for multiple uses in a guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO densified area. network and for each of the BDO Member Firms. “There is a market for it,” he says. “People want to live and learn and work and play in a very small vicinity. Developers and property owners will tion up and down St. Catherine Street,” he says. respond to what the market is prepared to pay for, and that’s As with any other property sector, it’s hard for retail what the market is prepared to pay for right now.” landlords to ensure their product is combining the latest Iacono foresees more retail space going vertical in areas technology with the right features and stores. However where land costs are prohibitive, requiring retail and resiCadillac Fairview is confident that, with the tenants it has dential to be combined on a limited footprint. and seeks, it will always be able to offer the right mix of “We forget that that’s been done before – and it will be ingredients. done again,” he says. With Canadian consumer debt at high levels and Cadillac Fairview plans to combine service and neighWestern Canada outperforming the East, he does not expect bourhood retail with a new multi-phase, mixed-use project huge growth in retail in Montreal, but predicts the local in downtown Montreal. The first phase will combine office market will hold its own during these interesting times. “You and residential. The retail component will comprise service just have to think your way through having a proper path, and neighbourhood-type offerings. an even path, for whatever happens,” he concludes. ■ “We do have the room for (a large retail project), but Michel Rémy – we’re also cognizant that there is a large amount of competiCanadian Real Estate Forum / SPRING 2012


Mobility, flexibility & environmentally conscious space that’s what they want

Innovative workforce trends are prompting innovation in the design and delivery of new office product, say commercial real estate industry experts and other business leaders.

“O Avrum Miller

Richard Hylands


Canadian Real Estate Forum / SPRING 2012

Photo: © Ximagination |

Lloyd Cooper

ur environment here largely is better ways to use their staffs. Such operational composed of a very mobile workefforts enable members of the real estate industry to force,” says Avrum Miller, vice identify better design solutions that reduce space, president of corporate real estate for IT firm CGI Inc. increase collaboration and, basically, maximize the “So our people are in and out of the office and what net benefit. we’re looking for is where we put in place new design Miller sees workspace design solutions used in standards which increase the flexibility of our work the tech industry also being deployed in such sectors spaces.” as insurance, banking and engi“Yes, they’re smaller than “Yes, they’re smaller than neering. He is not sure whether they used to be but they reflect, to the tech sector is a trendsetter or they used to be but they follower. a certain extent, the amount of time people are actually physically reflect, to a certain extent, “All I can say is I have noticed in place.” and I talk to people who do the Consequently, CGI has intro- the amount of time people same work I do and they’re grapduced workplace sharing and such pling with similar challenges and are actually physically practices as reservations for office they are applying similar soluin place.” space or work-station usage in tions with varying degrees of certain locations. To a large success.” Avrum Miller, CGI Inc. extent, says Miller, companies But the more things changes, have to re-think their managethe more basic worker needs stay ment approach to find and apply a real estate soluthe same: access to light, good air quality, and a tion. room temperature that is not too cold, hot or humid. It’s not so much a question of developers Quality seating is also important, along with an coming forward with new designs or space solutions ability to collaborate with work-team members. As as it is a matter of operational managers finding far as implementing changes in Montreal, he says

Tinto is also likely to announce a new project. But all of the local landlords are not always able to achieve the same rental projects will have significantly more pre-leasing secured rates and, therefore, the same innovation objectives as than previous buildings did. owners in Toronto and Europe have. Kevric’s mixed-use project includes office, hotel and CGI’s strategic needs are based on its ability to win residential space. “It is a trend that is not just in Montreal, contracts, so the corporate real estate unit plans for a win so it is happening,” says Hylands. and tries to be prepared to deliver space. Lloyd Cooper, senior vice president The firm also signs contingent leases, “I don’t think you could for brokerage firm Cushman & Wakefield, which hinge on contracts being run, so build without being LEED. says that Cadillac Fairview is another that CGI can get up and running quickly company poised to bring a project out of on new projects. “It’s a matter of social the ground soon. “In other words, we’re not always in a “They’re working hard to secure two reactive mode,” said Miller. “We try to get responsibility as a building or three anchor tenants right now, and into a proactive mode.” owner.” they can build around 500,000 sq. ft. very Richard Hylands, president of Kevric Richard Hylands, quickly adjacent to Windsor Station. So, Real Estate Corporation, says space planKevric Real Estate Corporation from a broker’s perspective, that’s a very ning is less about square feet per person and real opportunity. But they haven’t more about utilization than it used to be. announced a lead tenant yet.” “So you design your mechanical systems and your elecDemand has been aided by expanding service compatrical loads in consequence to match the fact that there’s nies, including engineering and law firms, and an influx of more people per square foot,” he says. game-industry tenants such as Warner Brothers and software It doesn’t matter whether the people are support staff or providers. It’s difficult to say whether aeronautics, healthcare lawyers. The amount of space is much less than occupiers and pharmaceutical companies will expand, because there is used to take up. The greening of new space – in other words an abundance of product available for them. LEED certification – is essential. But the LEED level could All of the new buildings will either be LEED Gold or LEED depend on the size of an occupier’s stake in the building – Platinum. In addition to improved environmental features, either ownership-wise or in square footage. tenants are looking for such amenities as bike racks, on-site “I don’t think you could build without it,” he says. “it’s a shower facilities, fitness centres and on-site matter of social responsibility as a building food services. owner. You can go up, practically all the “Cadillac Fairview can But the new office-buildings won’t way up, to LEED Gold without having a large impact on the cost of your project. build around 500,000 sq. ft. just be prevalent downtown. The suburbs have already received delivery on the LEED Gold has a slight cost. LEED very quickly adjacent to fully leased Triad tower. A 60,000 sq. ft., Platinum, to me, is at a different Windsor Station. So, from build-to suit office tower, is also going up extreme.”No private-sector occupier will pay for LEED Platinum unless it can own a broker’s perspective, that’s on the 15. Suburban markets are quicker to react the building or be the only tenant. a very real opportunity.” to potential new and innovative projects Kevric made LEED a priority when it because the buildings are smaller, quicker became the first company to jump into Lloyd Cooper, to build and leasing up rapidly. But there the office development fray after Cushman & Wakefield will not be a flight to quality from downMontreal went for two decades without a town to the suburbs or vice versa. “What new downtown tower. Hylands expects we’re looking for are tenants that are already in the burbs engineering firm SNC-Lavalin will also introduce plenty of wanting to stay in the burbs and expanding there,” says innovation when it builds its own office tower. He also anticCooper. ■ ipates that a new building will go up on behalf of Desjardins in the near future next to the Complexe. Mining firm Rio Michel Rémy –


Canadian Real Estate Forum / SPRING 2012

The business case for greener buildings is growing in Quebec

Michael Stones

Montreal’s office market is going green voluntarily, but change is happening slowly.


he level of new office developments in still reluctant to support energy-reduction programs. Montreal has been at a much slower A few tenants have made it a corporate priority to pace than most other major markets occupy green buildings. But this culture needs to such as Calgary and Toronto, and thus there has become more widespread so that tenants fully underbeen less pressure to compete with LEED-designed stand the benefits of being actively engaged in a buildings,” says Michael Stones, Oxford Properties sustainability program. Group’s Eastern vice president. “Notwithstanding “With lower energy costs than most places in that, most landlords have seen North America, the business case the importance of greening their “With lower energy costs in Quebec has not been as buildings, either through simple compelling, as the payback on than most places in North energy-saving investments is measures such as utilizing environmentally-safe cleaning prod- America, the business case in longer,” says Stones. “Thankfully ucts to the complete replacement Hydro Quebec has implemented Quebec has not been as of their lighting systems to be some interesting subsidy more energy-efficient ones. programs that have incentivized compelling but that is Technological improvements the investment in existing buildstarting to change.” have also allowed landlords to ings. We should not overlook the make life-cycle decisions on fact that the hydroelectric source Michael Stones, expensive equipment such as the of our energy is significantly Oxford Properties Group replacement of chillers while greener than most international lower production costs have cities, and by consequence has a allowed for LED lighting to be more prevalent. lower impact on our carbon footprint and greenThe surge has resulted from pressures companies house gases.” face to display Corporate Social Responsibility, The greening of an existing building is valueincreased societal concern about climate change, and neutral as the annualized energy savings offset the higher consumer awareness of green and organic cost of investment over a five to seven-year period. products. New LEED-certified buildings have lower operating Oxford has set a greenhouse-gas reduction target costs that translate into higher net rents and more of 20% by 2012, which it has surpassed by reducing value for landlords. GHG emissions 21.9% from its 2005 base year. Now, Intuitively, both new developments with the Oxford has established new reduction targets of 10% most modern sustainability features and greened for energy and water consumption by 2014 and older buildings gain from lower vacancy and higher 2015, respectively. It has also targeted a diversion net rents. rate of 60% for its company-wide office portfolio. “Thus, there is a clear value-enhancement While Oxford has seen wider user interest in proposition for a green building,” says Stones. ■ sustainability and green initiatives, most tenants are Michel Rémy – Canadian Real Estate Forum / SPRING 2012


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Canadian Real Estate Forum / SPRING 2012

classes. The city is clearly benefiting from being Canada’s gateway to the Pacific Rim. That role is helping Vancouver gain from strong immigration and strong investment, particularly out of China on the residential side. Heading a panel discussion that will examine the residential, the retail, office and industrial sectors, he hopes to explore sources of demand further. “For instance, there’s a lot of press today about bubbles in the residential sector and whether we’re truly going to see a significant correction,” says McCauley. If the Chinese investor disappears from the market, he wonders, where will the demand come from? Clearly, it will be different if the market is just catering to the end user.

Photo: © Josefhanus |

ith all the upheaval that’s going on around the world and you see what is going on south of the 49th, with the exception of Toronto, Vancouver just seems to be somewhat of an island unto itself,” says McCauley, president and COO for Concert Properties. “There’s just an incredible amount of demand for existing assets and land. “We can talk specifically sector by sector, but there seems to be an insatiable desire or demand on the part of developers and those in the real estate industry for more and more product. It just seems to be counterintuitive to what we read every day in the newspapers. So it’s an interesting time..” Vancouver, he says, is doing very well in many asset

Brian McCauley

Vancouver Real Estate Forum chairman Brian McCauley looks at his city in comparison to the rest of the world and shakes his head.

On the office side, McCauley wants to examine further how the economics of new space work today. There is a pentup demand for new, state-of-the-art office space as so little has been constructed in the last decade which speaks to why there is so much new office space being planned today. But is there enough demand to backfill existing space? Sustainability is also a concern. He wonders how its impact will affect the market as a whole, not just a particular asset class. “No matter what sector we’re involved in – whether it’s residential, or office, or retail or industrial – we’re all striving to create greener buildings,” he says, adding Concert takes a holistic approach to sustainability.

“My concern is some of the things we’re hearing coming out of the U.S. about buildings that have been designed to high levels of sustainability but are not performing at that level. So I’d like to try and find out whether there’s some fear amongst the developers in the industry about continually delivering leading-edge technology on sustainability and how far we should be pushing that.” But, ultimately, McCauley would like to find out why Vancouver is operating so strongly, regardless of sector, when he picks up the newspaper every morning and reads about the demise throughout Europe or slow recovery in the U.S. “How is it that we’re managing to buck the trend on some of that?” he asks. ■ Canadian Real Estate Forum / SPRING 2012


Asia is the game changer Vancouver has long been known for its diversity. Now, it’s attracting a diverse group of investors.

D David Bowden

Andrew Bibby


Canadian Real Estate Forum / SPRING 2012

Photo: © Linqong |

Joe Mazzocco

avid Bowden, CEO of Colliers International, says the investor profile varies according to the asset class in a commercial market in which demand outpaces supply by a wide margin. Drawn by the city’s natural beauty, investors are not shying away from a scarcity of land that results from such geographical constraints as mountains, ocean and the Canada – U.S. border. Foreign investors typically have Asian – not European or American – roots. Asians have more ties to local investors who still control the market, while Europeans and Americans have trouble gaining entry. But Asian interests are changing. Whereas the principal wave of investors sought residential properties, new arrivals are dedicating their dollars to large land plays that were originally speculative investments but are now development-oriented. Local investors also look for land, but prefer multifamily investments that generate reliable income sources. The third group consists of institutional investors, which include pension funds, and publicly-traded REITs, financial institutions and life insurance companies. Institutional investors prefer trophy-class properties with strong cash flow, often in the office sector. In most cases, such existing properties are not on the market, so institutional investors look to develop their own office towers instead.

minium developers, multi-family developers because there’s Although vacancy rates are now at historically-low just the constant desire for people to live in Vancouver and levels, they should not change significantly between now even invest in Vancouver,” he says. and 2017, Bowden says. Grosvenor tapped into Asian buyers in Vancouver Surrey, Richmond and Burnaby, where Metrotown III is through its Asia-Pacific investment platform. The company already underway, will likely be the most active suburban is targeting Asian buyers specifically for its new developoffice markets. Office development in other suburban nodes ments on the West Coast. However, Bibby is wary that the should be modest, but the suburbs will benefit from strong significant offshore demand will raise property values demand for other asset classes. rapidly, putting pressure on a market in which housing Andrew Bibby president and CEO of Grosvenor prices are high relative to income levels. Americas, expects overall development to But he is still willing to proceed with proceed cautiously in Metro Vancouver “But Asian interests are projects here because of the market’s over the next 18 months. changing. Whereas the strength. Bibby, is wary that a potential change Joe Mazzocco, Partner, Investments, in the provincial government could lead principal wave of investors KingSett Capital, says Vancouver appeals to more business taxes. sought residential to his firm because it is counter-cyclical to “It’s just generally a problem of busiToronto and other Eastern Canadian ness confidence,” he says of a potential properties, new arrivals markets. Domestic demand for all asset new regime. “You’ve got a mining industry that’s doing quite well, the real are dedicating their dollars classes from all types of investors has reached its peak he believes. estate industry is doing quite well. If to large land plays” One of the Canada’s largest instituchanges are introduced or adverse changes are introduced, it’s bound to have David Bowden, Colliers International tional investors, KingSett Capital hopes to do more joint ventures with strong local some impact.” partners in the city who require a solid equity partner. The Acknowledging that a change in government is not company is examining opportunities in all of Vancouver’s guaranteed, Bibby still likes what he sees in Vancouver, anticasset classes, but it currently has “a hole” in downtown ipating landlords will continue to benefit from strong real office and also lacks some strong retail. estate fundamentals and low vacancy rates. Tenants should “So those are two asset classes that we would be keen to also fare all right, because there is not a lot of upward pressee if we can look at acquiring,” Mazzocco says. “And, we’d sure on rental rates. love to do multi-family in Vancouver, but the multi-family Since there is not a huge amount of new construction return dynamics in Vancouver are materially different than going on, limited new space will be available, so the market the rest of the market. Investment in Canada is going to be is expected to remain balanced. a struggle for us.” “And then, if you look at not so much the fundamental Vancouver multi-family lacks a big upside because the side, but the capital-market side of it, which is probably as investment metrics are tied to residual land values. As a interesting as any of it, the property in Vancouver is still result, multi-family cap rates hover in the low single-digits – liquid,” he said. “And it has been liquid throughout the and significantly lower than those in other asset classes. aftermath of the financial crisis. It’s in incredibly high Even with low interest rates, there is not a lot of positive demand when, in fact, from our perspective, it’s probably too leverage on debt costs versus yield. expensive” and yields are at historic lows. “So the multi-family investment market in Vancouver is But Grosvenor still plans to grow in Vancouver, mainly such that yield is minimal and you’re really investing in the through development rather than the acquisition of long term,” he says. “In some cases, if you are focused on the “extremely expensive” income-producing assets. The firm is long-term, you can get good lift in your rents. But it takes developing 15 West, an 18-storey condo tower in the years to come, and that’s more of a strategy for the local Lonsdale area of North Vancouver and is pursuing a redevelprivate market to go after.” ■ opment on a full city block in West Vancouver’s Ambleside area. “The most active developers in Vancouver are condoWilliam Ding – The Square Foot


Canadian Real Estate Forum / SPRING 2012

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It’s musical chairs in Vancouver office market Mark Renzoni looks forward to seeing history unfold in the Downtown Vancouver office market within the next 12 to 24 months.


Mark Renzoni

Chuck We

Canadian Real Estate Forum / SPRING 2012

Meanwhile, Manulife Financial and Credit Suisse AG have also emerged in recent months with proposals for additional office tower developments in the downtown core. Slightly east of the central business district, Aquilini Development and Construction is slowly proceeding with its plans to proceed on an office tower adjacent to Rogers Arena. Elsewhere within the city limits, Jim Pattison Developments and Reliance Properties’ are partnering on Burrard Gateway. With the additional supply coming on stream, Renzoni anticipates a short-term vacancy increase and a temporary softening of lease rates within existing buildings. But he expects the downtown market to remain balanced, and rents to stay strong in the long term as tenants opt for new or refurbished space. “These are options that tenants need,” says Renzoni of the pending short-term vacancy increase. “Tenants need flexibility to expand and move around.” Looking at the suburbs, Ivanhoé Cambridge has resumed work on Metrotown III, a LEED Platinum building in Burnaby. But Renzoni does not expect the forthcoming projects and ensuing rental-rate increases to prompt an exodus of tenants from the downtown to outlying submarkets. “We really haven’t seen a significant pull to the suburbs,” he says. HSBC is consolidating some of its administrative and back-office functions in the

Photo: © CamiloTorres | istockphoto


ver much of the past two decades, the downtown has experienced a dearth of development. But Renzoni, executive vice president for CBRE, predicts members of the commercial real estate industry will be “pleasantly surprised” by activity between now and 2014. “Downtown Vancouver will see at least three or four – if not five – cranes in our skyline in early 2013, and that will be an exceptional moment in time for office development in Vancouver,” he says. The most recent new downtown office development was the second phase of Bentall V, completed in late-2007, when floors 23 to 34 were added. No new Downtown Vancouver office tower has been started from scratch since the first 22 floors of Bentall V were completed in 2002. (By the way Bentall V was acquired in 2009 by a German investment bank for $297 million following an unsolicited offer.) The situation has created a strong demand for class A space where vacancy is approximately 3%. “The Vancouver office market is experiencing a very strong development cycle,” says Renzoni. The players involved in the new projects include Bentall Kennedy; Westbank Projects in conjunction with TELUS on the telecommunications firm’s headquarters, which will rejuvenate an entire block, and Oxford Properties. Westbank and Oxford plan to complete their projects by summer or fall 2014, while Bentall Kennedy expects to finish its tower in late-2015.

“SkyTrain is driving the future of the suburbs and future development will be prioritizing SkyTrain station/office and mixed-use development.” Mark Renzoni, CBRE

Photo: © Josefhanus |

Broadway Tech Park, which is located on the outskirts of Vancouver, but still within the city limits, along a SkyTrain line. But that is not quite the same as a shift to the suburbs. “Where the activity in the suburbs is coming from is mainly consolidations or relocation of already-existing suburban office groups,” he says. A flight to quality is also occurring within the suburbs as tenants willing to relocate from older, inefficient space into new, sustainable buildings on SkyTrain lines. “SkyTrain is driving the future of the suburbs and future development will be prioritizing SkyTrain station/office and mixed-use development. Also, if you’re within five minutes walking, obviously that’s better than being completely dedicated to the automobile for moving your staff around. So there’s not a ton of movement downtown to suburbs. It’s really movement within the suburbs that’s creating activity in the new development in the suburbs.” In other words, it’s an exciting time in the history of Vancouver’s overall office market. Even with office developers planning to put shovels in the ground at several downtown Vancouver sites in the near future, Chuck We is not worried about a potential spike in vacancy. “We’re just thrilled that there’s this much activity and focus on Vancouver,” says We, director of leasing for Oxford Properties Group. “Finally, rents are economic enough that people can start making sense of some of these tougher sites.” How confident is Oxford Properties? It launched a 420,000 sq. ft. tower on spec, but 10 floors

are leased, and the program is well ahead of schedule. We points to brokerage houses’ fourth-quarter 2011 statistics. The numbers indicate about half of the downtown absorption occurred in the fourth quarter alone. “So that gives everyone a pretty positive outlook as they roll into 2012,” he says. “The amount of acceleration in the market is pretty clear.” To prove his case, he points to law firm McCarthy Tetrault’s move out of 77,000 sq. ft. at 777 Dunsmuir into Bentall Kennedy’s planned development at 745 Thurlow. KPMG has committed to virtually all of McCarthy’s old space as the accounting firm expands its existing premises. We anticipate a Calgary-like scenario to unfold in Vancouver, albeit on a smaller scale. In Calgary, several new projects created a supply glut, creating concerns about double-digit vacancy for years to come. However, following a massive flight to quality, the over-supply situation has quickly dissipated. Now, there is talk of even more office development in Calgary. We expect several large tenants to snap up available space, even if they don’t occupy it right away, because they know they could “lose it forever.” “A lot of our tenants, especially larger ones, have seen how hard it is to grow when you need to grow,” he says. “A landlord can’t just give you space on six months’ notice. So what we’ll see is tenants forward-commit to space as it comes up to the market.” Call some of the activity musical chairs, if you want. Tenants are making decisions for the next 20 years, and they are willing to pay more for the next wave of sustainability and reliability. Accordingly, We expects the price gap between higher and lower-quality space to widen “quite significantly.” “What we tend to see in up cycles in Vancouver is a widening of the rent,” he says. “So with the amount of availability in C class and the amount of velocity in the market, we’ll see C class hold its rent and we’ll see the new product drive the pro forma rents, and that’s where the gap starts to widen and that’s where you’ll see people start to price themselves in between, depending on who they’re trying to get into their buildings.” Landlords, he says, are driving the shift to new, sustainable product downtown while tenants accept the business case for it. He expects that rental-rate increases will be slower in the suburbs, where demand is different than it is downtown. ‘There’s a lot of gravity in the Metrotown area of Burnaby and with all the business park development,” he says. “So I don’t think we see a lot of tenants trading off downtown for the suburbs.” ■ Michel Rémy – Canadian Real Estate Forum / SPRING 2012


There is some positivity amid topsy-turvy market trends Eric Carlson

Eric Carlson’s outlook for 2012 is positive, despite market trends and critical issues facing his business and the real estate industry in general.


arlson, the president and CEO of Vancouver-based Anthem Properties Ltd., says that one of the major issues he sees is high land costs, “which reduce margins and returns on development projects at any given risk level.” Also, Carlson relates there are lots of developers in the commercial real estate market with more emerging and increasing demand for development sites. He’s cautiously optimistic about the market this year, though he questions whether the buying habits of new immigrants will continue to support Vancouver market and provide the demand that has pushed values to their current levels.

High density is key to affordable housing in Vancouver Gary Pooni

Brian Jackson

Vancouver needs more residential real estate to conquer its housing affordability problem, says leading urban planning and zoning consultant Gary Pooni.


ooni, president of Brook Pooni Inc., says the lack of affordable housing is the number one issue deterring development in Metro Vancouver. Accordingly, the region has to find a way to curb rising land costs that have resulted in rapid development and a reduction of suitably zoned land. “Our industry, particularly in Vancouver, needs to find a way to start creating more homes for more people,” he says. That means developing homes meeting the needs of all ends of the spectrum, ranging from social housing to seniors facilities to standard-market homes.


Canadian Real Estate Forum / SPRING 2012

To achieve the goal, the region must develop more highdensity housing. He cited a proposed 19-storey housing project in Vancouver’s Mount Pleasant neighbourhood, characterized mainly by single-family homes, as an example of the types of solutions necessary. The Mount Pleasant project is being developed Rize Alliance Properties Ltd. Christopher Vollan, vice president of development for Rize, is participating with Pooni in a panel discussion on land use and housing affordability. Pooni hopes the panel will lead to more discussion about high-density housing. While the shortage of affordable

Adding to that, Carlson says “world economic and political turbidity whip saws capital markets and the confidence that people feel in making home purchasing decisions.” Last year, confidence in the housing market in Greater Vancouver was lower than previous years, according to statistics from the Real Estate Board of Greater Vancouver. Another issue that has come to Carlson’s attention is the aggressive buying of revenue properties from institutions and high net-worth individuals, which “continues to erode proper underwriting disciplines, driving effective cap rates even lower than those published,” he says. A critical issue affecting the industry is that HST is still applicable on residential standing inventory until partway through next year. “So, we will have to eat it on new sales until it goes away in March 2013,” Carlson says. “While there is a credit, it only works for smaller, cheaper units, not the more expensive variety.” Carlson notes that the vague policy around community amenity contributions (CAC) in several municipalities in the region is also concerning.

Photo: © Vismax |

housing is the number one problem in Metro Vancouver, the lack of communication on high-density residential development is second most significant issue. Brian Jackson, the City of Richmond’s development director, echoes Pooni’s sentiments on the importance of improving housing affordability. Richmond’s situation can be extrapolated across the region. Developers who bought land early are able to deliver mid-priced product. Developers who are just buying in now or the past two years must factor higher land costs into their pro formas. Richmond has an inclusionary housing policy

“We have to assume the worst when we are underwriting new projects, which reduces pro forma returns, causing us not to pursue projects we would otherwise pursue.” The commercial real estate industry is no different than any other right now, in its continued search for top talent. “There are lots of mediocre people, but not a lot of good ones who have the right balance of technical, leadership, and management ability,” Carlson says. It’s not all bad news for 2012. Carlson predicts the Vancouver real estate market this year will be similar to 2011, which included continued low interest rates, continued immigration and institutional fervor. He suggests values will be staying relatively constant, with modest appreciation, but better absorption and values in urban nodes than outlying suburbs. Carlson says there has been “lots of talk about new condo projects, but only a few breaking ground and of those, most would be from established players.” ■ Michel Rémy –

which requires developers building more than 80 units to include an affordable-housing component. “Now, the developers don’t tend to like that, but at the same time, the provincial government and the federal government have downloaded the responsibility for the provision of affordable housing from themselves. They tried to download it to the groups that typically provide affordable housing (i.e. municipalities) and we, in turn, have tried to get the private sector involved in the delivery of those units.” Richmond has introduced a bonus-density system whereby developers can only achieve maximum densities if they incorporate affordable housing. The city has ample land zoned for high-density housing in the core for high-rise and mid-rise residential development. However, the municipality has run out of large tracts of land zoned for greenfield singlefamily housing development. “That’s not the market for Richmond,” he says. “There is some residual single-family development going on. It’s usually the two-lot splits and small townhouses along major arterials. But the bulk of Richmond’s (residential) growth is happening in the city centre.” High-density housing projects in the city centre comprise more than $4 billion in construction value. Meanwhile, more than 12,000 residential units are or near the rezoning stage. The City of Richmond also encourages mixed-use development, especially in the core, where retail is most prevalent and the city’s long-term plans include above-grade industrial projects. “We’re encouraging mixed-use where it makes economic sense to provide this type of development on the major arterial (No. 3 Road),” says Jackson. “We don’t push mixed-use on sites off of the major arterials, where it really makes more sense to have a pure residential project.” ■ Michel Rémy – Canadian Real Estate Forum / SPRING 2012


Thinking of retail differently In today’s changing times of retail delivery, the mall is not just for shopping anymore, says Michael Penalosa, managing principal with Thomas Consultants Inc.” The new shopping centres of today are no longer going to be single purpose,” he says. “They can’t be …”


Michael Penalosa

Canadian Real Estate Forum / SPRING 2012

discount shopping, buyers like to be around other people. “We’re social creatures,” he says. “People love that stuff.” It’s important to remember that highlyaffluent and discount shoppers also go into midrange stores. But the shopping experience is changing as certain items, like electronics, books and music become the almost-exclusive domain of online retailers. Many shoppers do research products and prices online and then go into a Best Buy or cosmetics store to examine products, but end up buying them via the Internet. The owners of food and drug outlets need not be concerned because consumers will always enter their premises to get items. “What does it all mean? What are the implications to the Best Buys of the world and so forth?” He wonders whether an increase in online retailing, which some predict could account for 15% of total market share in coming years, will hurt shopping centre owners. On the other hand, he sees an opportunity for brick-and-mortar retailers to grow their business by embracing the technology and have a smaller real estate footprint. “What it boils down to is: How does online or e-commerce impact the real estate portion of the business.” ■ Michel Rémy –

Photo: © Nmedia |


f e-commerce takes off, then consumers have an alternative to traditional shopping centres. But if bricks-and-mortar retail owners offer such features as dining, recreation and social gathering, they now have something different than online retailers who have a small market share but are seeing sales increase rapidly each year. “Then it’s no longer just sitting behind your computer on Facebook,” says Penalosa. The new features are all part of the requirement for traditional retail owners to improve their service. Penalosa says high-end retailers are doing extremely well, because wealthy consumers still have the financial ability to purchase high-cost items. Discount retailers are also faring well because of low price points. But retailers that cater to middle-income earners are doing poorly in wake of the recession. High-end and low-end stores offer products that buyers still consider essential, or necessities. However, power or shopping centres with mid-priced retailers like GAP and Banana Republic, are struggling because purchasers consider these items discretionary. The social and experiential aspects of shopping are also contributing to the success of high-end and low-end stores. In the case of the high-end, Women like to be seen with the Louis Vuitton handbag or other luxury items they’ve purchased. In the case of

THE SKY IS BARELY THE LIMIT We’ve had a growth spurt – for the past twenty-two years. As our reach has grown, from BC to Alberta and Ontario, so too has our grasp. As limitless as our growth opportunities may be, we continue to hold true to our corporate vision of excellence.

A river runs through it says Bing Thom In the late 1990s, the City of Surrey commissioned renowned Vancouver architect Bing Thom to design a new performing arts centre.


Bing Thom


t was to be the drawing card for a new town centre the city was in the process of planning. But, realizing that performing arts centres only attract people at night and on weekends, he came up with a bolder idea. To make a long story short, he suggested that a new City Hall or university campus be located in the development area. The city opted for the university campus and gave the province 22 acres of land to facilitate the project. Along the way, ICBC decided to locate its new headquarters in what is now known as the Central City area. Today, Simon Fraser University’s Surrey campus is thriving and many other commercial and residential real estate projects built or planned. “Well, it wasn’t just myself,” says Thom, who heads his own firm. “It was many other people too. What we were trying to do was add value to a piece of real estate. The job of the architect is to try and use the commission that he’s given and add value to what’s there – and not just to give people what they ask for, but give them something more than they asked for. Then it becomes something quite unique.” Now Thom, participating at the Vancouver Real Estate Forum in a panel discussion on Surrey, is helping to make the Fraser Valley city the centrepiece of the Metro Vancouver. With more available land than Vancouver proper and a rapidly growing population, Surrey is expected to become British Columbia’s largest city 10-12 years from now.

Canadian Real Estate Forum / SPRING 2012

But Thom does not want Surrey to stand out from the crowd of twenty-two municipalities that make up Metro Vancouver. He prefers that it achieve its maximum potential by working with, not apart from, the other cities in the region, especially on transportation projects. “Developing a metropolitan mentality is what we need,” he says. “We’re still thinking of ourselves as twenty-two small villages, but we’re really one big metropolitan area squeezed between the mountain and the agricultural land reserves, so it’s kind of a linear city. It stretches all the way to Chilliwack and that’s why transportation becomes very important now.” As with other municipalities, Surrey’s growth is driven by housing, but people underestimate the importance of the port, which is the largest in Canada. Surrey, adjacent to the Fraser River, has a large working population and industrial base that is driven by the port. “(Vancouver) is called a gateway city, but we’re really a city of traders – traders in ideas, traders in goods, traders in information. We’re very similar to Hong Kong and Singapore. We don’t really make anything, but we’re very good information-processors. The only thing we’re lacking is a financial sector, because unfortunately that’s moved away, but we have everything else here.” Rather than “webbing” towards downtown Vancouver, the region’s transportation system must

start looking at “cross-webbing” areas like Coquitlam to Richmond. In other words, the system has to make a 90degree turn and flow up the Fraser Valley. “A lot of investment is required for infrastructure improvements, otherwise we’re going to just choke ourselves to death,” says Thom. “The port’s having a lot of problems moving goods and trucking other things around. I don’t think that’s really understood enough. If you look at the city of Vancouver, some of our best land right now is the port land and Great Northern Way is totally tied up with the rail system. “In the end, Vancouver’s port should be one giant port over in Delta. Then we will free up an enormous amount of land in our older municipality (Vancouver) for higheryielding land uses: offices and residential. Right now so

much of the traffic is all conflicting with each other in the core areas.” To ease the bottlenecks, Thom calls for more light-rail, heavy rail and the development of the Fraser River as a transportation corridor on which ferries are used to connect the municipalities. Which means Surrey will have an active role to play. “There’s a small group of people trying to promote (Fraser River ferries), and that should be examined, because many European cities, or even New York, use their river a lot more than we do for transportation. “But we need to look at it from all angles; there is no single solution. We’ve just been favouring the automobile for too long. And private cars are so inefficient.” ■ Michel Rémy –

Which way to the C Suite Young real estate industry leaders stand to gain from numerous opportunities that will arise as baby boomers retire over the next decade, says a prominent Vancouver developer under the age of 40.

Erin Gibault


“The only thing that is beneficial is that it’s a very open here is a bit a vacuum right now,” says Erin fraternity, especially in the city of Vancouver,” he says. “The Gibault, 39, managing partner of Headwater real estate community is very open, and it’s quite possible to Projects Inc. “It’s going to be interesting to see make friends and acquaintances and who comes forward, because there is a big There are fewer and fewer contacts that you’re invited to bounce ideas bulge in the aging baby boomers which are currently in control of the vast majority of real people in their 40s trying and questions off. So it’s kind of an informal mentorship. estate decisions in companies. Behind that, to fill a lot of spots filled “I was concerned that I didn’t have a there is a drop in the available talent pool to draw from. The reason is because there are by guys currently in their father that had raised me in real estate, and I had only experienced real estate decisionfewer and fewer people in their 40s trying to sixties and seventies. But making through the eyes of my clients as a fill many positions occupied by individuals broker, but I was very comforted by just currently in their sixties and seventies.” as the stories of how welcoming the private community was Gibault is confident that the necessary legendary developers and in terms of seeing the next generation top young talent will emerge to take their place when the time comes. He predicts investors Joseph Segal coming up.” Gibault says realtors in their 30’s all older real estate company leaders will face and Nat Bosa show, you want to know how he managed to get pressure to have suitable succession-planning and training programs in place to can’t replicate personal where he is now. Gibault is concerned that, having grown ensure younger generations are ready to experience. Everybody up and built his career in Vancouver, he has assume the reins. “There is a great opportunity for people takes a different route. yet to experience a major downturn or periods of double-digit interest or vacancy that are in my age group and half a generaErin Gibault, rates. Over the next ten years, his goal is to tion younger, because a lot of senior posiHeadwater Projects Inc. reach out to older generations and see how tions will need to be filled.” they endured through several market cycles. But Gibault, a former broker who Then, maybe, he will have an interesting story of his started his firm four years ago, expresses concern about a own to tell. ■ lack of formal mentorship programs that is exacerbated on Michel Rémy – the ownership side of the industry. Canadian Real Estate Forum / SPRING 2012


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Edmonton Real Estate Forum chairman Phil Milroy has his eye on all commercial real estate sectors these days, but he is more concerned about overall labour supply than a particular asset class.

By William Ding



Canadian Real Estate Forum / SPRING 2012

export [in other words, oil and gas] and what we do here may just exceed our capacity to deliver, which creates its own set of problems. But they’re far better problems to deal with than what the rest of the world has got. So I don’t mean to be negative. Alberta in general – and Edmonton in particular – is in a very enviable position.” Westcorp’s portfolio is weighted toward multi-family and hotel properties, but the firm has “a little bit of everything,” including office and industrial. In Edmonton, it has only one fully-leased office building. The company’s Edmonton multi-family vacancy rate of less than 1% falls below the market’s tight 3% average. “The market has just seen steady improvement over the last 18 to 24 months,” he says. “And that improvement continues to occur, so it’s a pretty good story in the residen-

Photo: ©

e could easily start getting beyond our capacity again and start to see extreme labour shortages and spiking in pricing,” says Milroy, president and CEO of Westcorp Properties Inc. Milroy says labour shortages are slowing development down in many parts of the world, but Edmonton is bucking the trend – so far. In contrast to a number of regions where consumers’ price sensitivity and the high cost of construction are challenging the feasibility of many proposed projects, Edmonton’s commercial real estate development sector is thriving. “Most parts of the developed world are struggling with underperformance and, you know, significant challenges that are really, really slowing their economy,” says Milroy. “And we’ve got the opposite case where the demand for what we

Phil Milroy

tial. Condos are a challenge to sell, mainly based on a sea change in the way the consumer thinks. Edmonton is a Prairie town and, in both Edmonton and Calgary, we’re seeing demand for rental really picking up while demand for condo seems to be lukewarm. You can sell condos, but not easily – and not at prices that would justify further development.” A shortage of rental and single-family residential supply is producing a price rise. Multi-family is an especially strong market, because buyers have “gotten a good dose of sobriety” and become more careful than ever. Meanwhile, lenders have a large surplus of capital, but are also increasingly cautious. Yet, developers have no difficulty whatsoever matching up buyers and lenders for well-priced product. Accordingly, Westcorp is looking at developing more

multi-family properties, first in Calgary and then in Edmonton, where approvals can be extremely slow at times. “Unless you want to develop right on the outskirts of the city on newly developed land, it’s a challenge,” says Milroy. “Doing infill development, which is what our company specializes in, you’re always fighting against communities that think multi-family is a slum and rental is an even bigger slum.” But regulatory roadblocks do not pose the biggest development hurdles. Nor do market trends. Development activity will rise and fall with the availability of affordable labour. “If anybody has any skills and ability in the construction trades, there are jobs waiting for them here,” he says. “Edmonton’s success in going forward is probably going to be limited more to the number of people it can attract than demand for our products.” ■ Canadian Real Estate Forum / SPRING 2012


Dave Young, a senior vice president with CBRE, says strong leasing fundamentals, based on typical Edmonton and Northern Alberta demand drivers, support acquisitions

Dave Young

When the Funds & REITs start developing you know you’re in the right market


or example, low vacancy is spurring development in the industrial market. In the office market, a high absorption rate last year (500,000 sq. ft.) is creating opportunities. Although the suburban office market is slightly soft with vacancy in the low double-digits, it has some velocity because tenants are expanding and buyers are seeking value-add investments. “The Edmonton suburban market is a good place to invest some money,” says Young. Pricing is still below replacement in both the downtown and suburban office markets. In 2011, CBRE sold two existing downtown office buildings for approximately $360 per sq. ft. – well below replacement cost. The suburban office sector does not have many properties on the market, but CBRE has a couple of properties listed at 60% of replacement cost. On the industrial front, the story is the same cost-wise. Retail is a different scenario, because investors are paying a premium for land. In most cases, purchasers are factoring three specific metrics – cap rate, IIR and price per square foot – into the decision on whether to acquire new or existing property. A lack of available trophy-class supply has prompted the pension funds and REITs to move into development. Some large deals are slated to close in early-2012, but Young expects dollar volumes to mirror 2011 levels. “It’s not a demand issue,” he says. “It’s a supply constraint.” Land sales should be very strong, because the industrial market is moving into a development cycle. In all sectors, core assets are most in demand by all investors. Typically, B class is sought by private investors looking for value-add situations. ■ Michel Rémy –


Canadian Real Estate Forum / SPRING 2012

Can we have some service please

Ron Mosher

There is no shortage of opportunities in Fort McMurray these days, but it will still take a while for market conditions to change and regulatory delays to ease, says Ron Mosher, senior vice president for Camgill Enterprises Ltd.


he opportunities in Fort McMurray are in any asset class, because there is a shortage of real estate for all users,” he says. “If you can acquire land and service it, obviously, then that’s where the opportunity is.” Opportunities exist on both sides of the river. However, the market remains overheated and unstable, and that trend will likely continue for two to five years. “The industrial net rental rates in Fort McMurray are the highest in the world,” he says. “So that’s not sustainable.” Industrial lease rates will decrease significantly in five to ten years, after servicing and supply issues get resolved. Investment properties hold considerable potential, because there is significant long-term demand for office, retail If you can acquire and industrial. Retail and office rental land and service it, rates will not decline as significantly. The lack of land supply is the biggest influ- obviously, then ence on industrial lease rates, while that’s where the office and retail rents are more subject opportunity is.” to construction costs. The lack of land supply and related high costs are linked to an absence of servicing. The municipality is trying to improve the situation and has made some headway north of the river, but it is not getting much better, because the municipal and federal governments have many other infrastructure-related issues to deal with. The difference in Fort McMurray is that Ottawa and the provincial government own much of the land. Developers appreciated the province’s release of 1,000 acres, marketed jointly by Avison Young’s Edmonton office and a local Fort McMurray realtor, but more help is needed on the servicing side. “There is no captain in Fort McMurray,” he says. Mosher notes his firm has 40 acres on which it could build a 600,000 sq. ft. office tower and 1,000 residential units. But the project will affect an intersection on a highway. Camgill is willing to pay a levy and hand over a $2 million cheque, but the municipality and province can’t decide who is responsible for the matter. So the company’s zoning application – filed five years ago – remains in limbo. “This is one little issue in a piece of land,” he says. “Forget about servicing it and everything else. Nobody has a clue on how to deal with this issue.” ■

Michel Rémy –

It’s time to build apartments

Derek Lobo

Edmonton is ripe for more multi-family development, says a leading apartment broker.


erek Lobo, president of Rock Advisors, says demand for rental is strong even though the city already has a large supply of multi-family. “It’s more of a renter town than a homeowner town,” says Lobo. Rock is an Ontario-based commercial real estate firm with an exclusive focus on apartment brokerage. The company assists clients with appraisal, consulting, transaction management, development and ownership. Logo says Edmonton’s multi-family inventory is about twice the Calgary total, although the two cities are close to each other in population size, with Calgary having the advantage. Lobo attributes the difference in apartment inventory levels to the fact Edmonton is more of a blue-collar town. Many oilsands workers live in the Alberta capital while commuting to work near Fort McMurray, where rents are the highest in the country at about $1,800 per month on average and supply is extremely tight. Many other Edmonton residents work elsewhere in the oilpatch across Alberta. Calgary is more of a white-collar city, but in both cases oil is a driving force that fuels real estate investment. But with the price of oil showing long-term stability, Edmonton’s multi-family will not coincide with the boombust cycle of the oil and gas industry as it has in the past. “Historically, Alberta has gone sort of up and down with oil, so there has tended to be that boom-bust cycle in Alberta and it flows through to the apartment business,” says Lobo. “But now that oil has become such an expensive commodity, nobody expects to drop out of the bottom of a barrel of oil.” Therefore, he anticipates that more institutional investors, specifically pension funds, will have a higher risk tolerance for trophy-class apartment complexes in Edmonton than they have previously and will attempt to enter the market. According to Lobo, pension funds have not invested yet because they prefer to partner with local developers. Boardwalk REIT is the largest multi-family player by far in Edmonton, while Mainstreet Properties, Midwest Property Management, Westcorp, and U.S.-based Weidner Property Management are also highly active. But Lobo says there is plenty of room for more investors. “The message is: It’s time to build. The population is growing. Demand is there. Money is there. Build apartments” ■ Michel Rémy – Canadian Real Estate Forum / SPRING 2012


Secure the right place, open the store and find staff, that’s the challenge Edmonton has become a market of choice for big-name American retailers. Some have already arrived and others are on the way, says Lance Frazier, a broker with DTZ Barnicke.


Lance Frazier

ecent and upcoming arrivals include Lowes, Target, Marshall, J. Crew, Five Guys Burgers and Cavella’s. Frazier expects more to come between now and the end of this year. While online sales transactions have become increasingly popular with Canadian consumers in recent years, consumers still want bricks-and-mortar retail outlets. In addition to shopping in actual stores, customers have to go to them to pick up online orders. Stores also enable online shoppers to return items, such as clothing does not fit. “So, definitely, those multiple channels are working together,” he says. Retailers must offer a combination of in-store sales, online sales and other purchasing methods to stay current with customers. Multiple purchasing options have had an impact on retail space size – not just because there’s another format of buying available, but because the retail stores grew too big. Now, a number of large-format retailers, such as Rona and Home Depot, are reducing store sizes and closing some locations. “They don’t need to be that big anymore,” he says. “Perhaps they should have been 100,000 sq. ft.

Then they grow to 120,000, and now they realize they can come back down to 80,000. It’s also a cost adjustment that everybody has to make. While we haven’t felt inflation, there are costs that are eating into corporate profits.” Mall owners and other retailers with existing product do not necessarily have to get more creative. They should just get back to basics. Retailers need to tap into mainstream media, social media and other promotional platforms to get their message out and “animate.” But whether the facility is a mall or outdoor lifestyle centre, it must be in a good location that offers strong brands, along with ample parking and other amenities. Land prices are more expensive than they were in 2011. A portion of the increase is tied to the government’s desire to get more revenue from servicing and transportation fees. Construction costs have risen slightly, but not as dramatically as they did in 2004. A looming labour shortage may pose some cost risks, but it does not appear to be a deterrent to the development of new stores. Current rent levels are not hampering new construction, either. ■ Michel Rémy –

Get it while you can After some difficult but not overly trying years, Edmonton’s industrial market is in full recovery, says Andy Horvath, a partner with Cushman & Wakefield. Andy Horvath


he Edmonton market didn’t really drop in comparison to the rest of the markets across Canada,” he says. “We didn’t feel the full effect of the recession. Although, we saw a lot of companies that did. On a real estate front, the market slowed down a little bit but the vacancy rate really didn’t increase all that much.” A considerable amount of new construction is already taking place. A lack of labour supply will be the biggest hurdle going forward, not higher lease rates. Contractors are still able to meet timelines, and the build season should be longer this year because of more favourable weather conditions. Lease rates are climbing slowly and a slight increase in the price of land is evident. In 2011, the average price per acre was $695,000 per acre, but that figure has risen to $731,000 in recent months. “So you’re already starting to see that increased demand,” says Horvath. “The problem is, you just can’t find serviceable land to build on.” Patience on the part of buyers is the key, says Horvath. Some smaller


Canadian Real Estate Forum / SPRING 2012

parcels are selling for $750,000 per acre, but prices should not rise much higher than that figure. As moderator of a panel examining the Edmonton market during the real estate forum, Horvath hopes to discover what will drive the sector in 2012. “We’ve seen actually a significant amount of leasing quite recently in the northwest sector of Edmonton,” he says. “And, we’re seeing more demand on the south side from the service sector – the oil and gas markets.” He expects the trend of increased construction to continue through 2012, with significant amounts of space, especially on the south side, preleased. “There’s more demand on the south side today because of oil and gas, and especially with the increased price of oil,” he notes. “We’ll continue to see Edmonton do well. A lot of space that’s available today, or that is coming onto the market, will be taken off the market.” ■ Michel Rémy –

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The private sector is leading the demand in Government City Change is starting to sweep through the Edmonton office market as 2012 unfolds.

“T Cory Wosnack


consisting of over 40,000 sq. ft. in the city.” he market in Edmonton is going to see In an interesting twist in the government city, a very exciting 2012,” says Cory most of the demand growth is coming from the Wosnack, a principal with brokerage private sector. Any public-sector growth will likely firm Avison Young. “There’s no question that this is start to happen in 2013. going to be the year that will be considered the tran“And, once that happens, this market is poised sition year in the improvement of this marketplace. for a significant increase in momentum,” he says. We are seeing a number of early indicators of positive Landlords will be in a good position to raise momentum being built in the marketplace right rents while tenants will face presacross the board.” Wosnack anticipates that The market in Edmonton sure to become more proactive and plan their expansions earlier office vacancy will decline across is going to see a very than they have in the past. the city and landlords will move He expects the “healthy” rental rates up. The increases exciting 2012. It’s an vacancy rate to fall below 8% began slowly in first quarter, but opportunity for developers across the city by year-end 2012 will accelerate over the next six with 500,000 sq. ft. being months and likely club 20% over to get in the ground and absorbed. The openings of the the course of the year. build new suburban office new Epcor Tower in late 2011, the Meanwhile, developers are first new downtown office preparing to construct new office buildings,” building in 22 years, and a deal buildings on the South Side and in Cory Wosnack, Avison Young on a new 250,000 sq. ft. Alberta the West End. Interest in downTreasury Branches headquarters town development will also pick have had an extremely positive effect, leading to the up. The new development will involve more instituincreased absorption and new development and tional investors than in the past, along with private redevelopment. developers. There won’t be much differentiation between Construction is expected to begin by the end of downtown and suburban areas, where a shortage of 2012, with new inventory being introduced in the large-block space also looms. first quarter of 2013. “It’s an opportunity for developers to get in the “Those that are prepared to start construction ground and build new suburban office buildings,” sooner are going to win some deals because of the says Wosnack. ■ lack of options in the marketplace for large blocks of Michel Rémy – space,” says Wosnack. “There’s very few options

Canadian Real Estate Forum / SPRING 2012

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Greening from the Government down: a robust sustainable development strategy for Canada

Ryan J. Eickmeier

By Ryan J. Eickmeier 2011 marked a year of significant achievements for Canadian real estate in regards to the environment and improvements in energy efficiency. Based on innovative building techniques and financial commitments from developers, the industry is now poised to become a leader in green and energy efficient practices. And whilst advancements are being made in all facets of the industry, it remains abundantly clear that the real property sector is a significant energy and resource consumer and plays a sizable role in the production of greenhouse gases, consumption of water, and the production of solid waste. As the sector continues to evolve, there are opportunities to help reduce the impact of commercial buildings on the environment; opportunities that can be more readily realised with the support of government.






Canadian Real Estate Forum / SPRING 2012


he Canadian real property sector has now prioritized the need to reduce its greenhouse gas emissions and do what it can to shrink its overall environmental footprint. As a nation, Canada has also dedicated itself to improving its social, economic, and governance policies and both industry and government must jointly work towards adapting to the challenges associated with climate change and resource depletion. In order for this to become a reality, concerted efforts must be made to develop a strategy that helps Canada achieve its goals in the short-term, while responsibly adapting to the reality of climate change in the medium-term, and ultimately adding to the earth’s natural regenerative process over the longer-term. REALpac believes that only a cyclical, multi-level governmental/industry approach will yield a high level of success.

Synergizing Efforts: Industry and Government Federal, provincial, and municipal governments across Canada have made considerable progress towards the advancement of green building policies. Whether it be through investments in energy efficiency programs, setting goals to reduce energy consumption, or mandating LEED buildings, policy makers now clearly recognize the need to reduce our environmental impact. In order to create a robust sustainable strategy, REALpac has challenged the industry and lawmakers to further commit time and effort to set a precedent that can be followed the world over; the ability of the government to work alongside industry and their counterparts at other levels will yield the ideal net return. As a result of this approach, REALpac has asked government to play an integral role in at least five general areas: • Funding and financial incentives; • Education programming; • Research and innovation; • Policy development; and, • Standard setting. By supporting the real estate industry in its efforts to design, build, retrofit, maintain, and decommission highly efficient and effective buildings, the government could position Canada as a leader in building sciences. Currently we lag behind Australia, the United Kingdom, and several Nordic European countries in energy and water management, building codes, and environmental policy generally.

Improving the energy and water performance of buildings would help support the government’s economic goals for the country while at the same time substantially reducing the nation’s overall environmental footprint. REALpac believes a strong relationship between the commercial real estate industry and federal, provincial, and municipal governments to be crucial to achieving the desired results. More specifically, REALpac has asked the government as all levels to support and help transform the country’s real estate sector in the following key ways: • Be dedicated to scientific research, innovation, and responsible policy development; • Take a holistic approach toward the legal and regulatory framework affecting the development, management, and operations of real estate; • Ensure all policy (federal, provincial, and municipal) includes active and measurable (sustainable) practices, which reflect appropriate adaptive strategies as well as long-term policies that ensure natural regeneration of ecological systems; • Establish and properly fund respective agencies (or Ministry) dedicated to helping Canada emerge as a world leader in sustainable building sciences; and, • Work closely with associations and organizations dedicated to supporting developers, owners and managers keen to advance sustainable building practices.

The task of creating a sustainable development strategy for Canada that yields favourable economic conditions is certainly expansive. Support of the aforementioned would encourage foreign investment in a highly competitive global sector and continue to position Canada as one of the world’s most desirable markets in which to invest; the “greening” of our market would result in largely positive returns for the Canadian economy. REALpac believes the real property sector can provide insight and guidance as governments at all levels move along in this process. The ideas that have been presented to policymakers are ambitious but attainable under a strong strategy that pools together the full reach and resources of the government and industry. The key economic stimulus that would result from these initiatives include job creation, economy growth, and energy cost reduction, all of which are mutually beneficial externalities. REALpac believes that these resource investments will have positive impacts within the commercial real estate industry and the community as a whole, and can act as a stepping stone towards an evolving strategy moving towards the future. ■ Ryan J. Eickmeier, M.P.P., Manager, Government Relations & Policy Real Property Association of Canada,

Advance Advance your your career career: C Commercial ommercial R Real eal E Estate state T Training raining C Courses ourses /HDGHUVKLS'HYHORSPHQW /HDGHUVKLS'HYHORSPHQW



This unique unique program, program, led led by by a world-class w orld-class This faculty of of seasoned seasoned industry industr y practitioners practitioners and and faculty development professors, offers of fers a professional professional development professors, none in in Canada. Canada. experience second second to to none experience

TThe he new new oone-day ne-day ccourse, ourse, ³³$FFRXQWLQJ $ F F R X Q W L Q J IIRU5HDO(VWDWH(QWLWLHV8QGHU,)56´, RU5HDO(VWDWH(QWLWLHV8QGHU,)56´, rreplaces eplaces and and expands expands upon upon REALpac’s REALpac’s pprevious revious ccourse, ourse, ³³$FFRXQWLQJIRU $ F F R X Q W L Q J  I R U 3 XEOLFO\$FFRXQWDEOH5HDO(VWDWHDQG 3XEOLFO\$FFRXQWDEOH5HDO(VWDWHDQG will ,,QYHVWPHQW(QWLWLHV&RXUVH´. QYHVWPHQW(QWLWLHV&RXUVH´. ItIt will with a full full review revie w provide provide participants par ticipants with recommendations for of of REALpac’s REALpac’s recommendations for the the interpretation interpretation and and application application of of IFRS IFRS ffor or the the publicly-accountable publicly-accountable real real estate estate iinvestment nvestment and and development development industry industr y in Canada, Canada, in in specified specified areas, areas, such such as: as: in cost capitalization, capitalization, leasing, leasing, sales sales of of real real cost eestate, state, and and acquisitions. course will will acquisitions. The The course aalso lso provide provide deeper deeper insight insight into into the the new ne w IIFRS FRS standards standards issued issued in in 2011, 2011, such such as as Consolidated Financial Financial Statements, Statements, Joint Joint Consolidated AArrangements, rrangements, aand nd FFair air Value Value Measurement. Measurement.

This two-day the goals, goals, tw o-day course course will will discuss discuss the This benefits, common common skills skills and and operating operating models models benefits, ooff the the real real estate estate asset asset management management function; function; aand, nd, will of operations operations in in which which will explore explore the the context contexxtt of tthe he asset asset management management function function is is performed. performed.

program has has been been This This 2.5 2.5 day day intensive intensive program developed developed to: to: professional development development • Complement Complement the the professional commercial real real nneeds eeds of of the the Canadian Canadian commercial estate sector, estate sector, Help organizations organizations prepare prepare their their most most • Help talented professionals professionals to to lead lead the the business, business, talented Meet the the needs needs of of professionals professionals looking looking • Meet to develop develop a stronger stronger understanding understanding of of to the key key business business functions functions of of a successful successful the commercial real real estate estate organization. organization. commercial

TThe he skills skills required required of of and and functions functions performed performed Asset Manager Manager depend depend on on several several bbyy an an Asset of a portfolio. por tfolio. In In addition, addition, there there are are variables of variables m any aapproaches, pproaches, ddefinitions efinitions aand nd m odels ooff many models aasset sset management, management, and and itit continues continues to to expand expand iinn order order to help deal deal with with the the numerous numerous and and to help vvaried aried issues issues between betw een owners, owners, consultants, consultants, pproperty roper ty managers, managers, accountants, accountants, tenants, tenants, ccapital apital markets and rregulatory egulator y authorities. authorities. markets and TThis his course course is is an an excellent excellent career career step step toward tow ard bbroadening roadening your your knowledge knowledge and and sharpening sharpening yyour our skills. skills.

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Canadian Real Estate Forum / SPRING 2012



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2011 Tax Ratio COMMERCIAL TO RESIDENTIAL TAX RATES ■ 2009 ■ 2010 ■ 2011 Source: 2011 Property Tax Rate Analysis Figures in this chart are calculated by dividing the commercial tax rate by the residential tax rate to obtain a ratio. Where mill rates are applicable, the mill rate is multiplied by the mill rate factor before calculating the ratio.

1 1HZ HZ 1 1-Day -Day T Training raining Course Cour se

Understanding Perrfformance U nderstanding Performance Measurement M easurement May May 11 11tthh, 2012 2012 Understanding U nderstanding Performance Perfor mance Measurement Measurement iiss a ccomprehensive o m p r e h e n s iv e oone-day ne-da y ccourse ourse that that eexplains xplains aand nd illustrates illustrates the the m easurement measurement ttechniques echniques used used in in IPD’s IPD’s ccomparative omparative analysis analysis of of the the real real estate estate pportfolio. or tfolio. TThe he course course iiss mainly m a i n ly w workshop-based, orkshop-based, giving g iv i n g ex am ples of of aallll pparticipants a r tici pa n ts tthe he chance chanc e to to work w or k through th r ough examples understanding ooff IIPD’s PD’s tthe he calculations calculations aand nd get get a hhands-on ands-on understanding insights into into how how to to get get ooutputs. utputs. The The course course aalso lso pprovides rovides fresh fresh insights analysis rreports, epor ts, bbyy examining examining tthe he best best from from IIPD’s PD’s portfolio por tfolio analysis tthe he data data inputs inputs uused sed aand nd analysis analysis methods methods in in detail. detail. ItIt explains explains hhow ow ddifferent if ferent pperformance erformance m easures rrelate elate ttoo eeach ach other, other, and and w ill measures will PD’s rreports. epor ts. ggive ive yyour our oorganisation rganisation a better better understanding understanding ooff IIPD’s FFor or m ore iinformation nfor mation aabout bout tthis his ccourse ourse aand nd ttoo rregister, e g i s t e r, more pplease lease vvisit isit tthe he REALpac REALpac website w ebsite aatt > PProfessional r o fe s s i o n a l D evelopment > TTraining raining C ourses. Development Courses. + 2 6 7 ( '  % < 




T: 416. 642. 2700

Canadian Real Estate Forum / SPRING 2012




Positive trending: driving fair property tax ratios in Canada By Ryan J. Eickmeier

Property tax fairness is an issue that the Real Property Association of Canada (REALpac) has been consistently focused on since its inception 41 years ago. Our members populate the prime owners of income producing commercial real estate across Canada, and are directly affected by the rates various municipalities levy. In order to track property tax rates in key cities across the country, REALpac utilizes an annual survey to inform our advocacy efforts and present clear data in our communications with municipal government officials.


or the eighth consecutive year, Altus Group has prepared an annual Property Tax Rate Analysis for REALpac, which serves as our prime source of data. The most recent report, released in October 2011, reflects that tax year’s rates in major cities across Canada. From the report we select key findings that we bring to the attention of decision makers in the hopes of increasing property tax fairness; by the same token, we also acknowledge those cities that are getting it right.

Montreal on the rise; Toronto and Vancouver Continue their Descent The 2011 survey yielded both encouraging and alarming results. At the high end of the spectrum, Vancouver, Toronto, and Montreal continue to post the highest commercial to residential tax ratios in Canada, all of which are well in excess of 4:1. While REALpac remains concerned about these unfair ratios, it was pleased to see that for the fourth consecutive year, Vancouver and Toronto continued to trend downwards with significant reductions, and applauds these cities for working towards a more favourable business environment. In contrast, Montreal continues to trend upwards at an

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For details on these conferences and to register online visit

alarming rate that may well put them on par with Toronto and Vancouver as early as 2012, and will surpass them shortly thereafter if the current ratio increases continue. On the opposite end of the spectrum, REALpac commends the cities of Winnipeg and Edmonton which continue to promote favourable business environments with the three lowest commercial to residential tax ratios amongst major Canadian municipalities. On an absolute tax basis, Calgary, Edmonton, and Vancouver populate the low end of the spectrum with the lowest estimated property taxes per $1,000 of commercial assessment while Halifax, Montreal, Toronto, and Ottawa have the highest. From a residential assessment standpoint, Vancouver, Calgary, and Edmonton yield the lowest property taxes per $1,000 of residential assessment while Winnipeg, Halifax, and Ottawa yield the highest.

• Disincent major international tenants from locating in those particular cities. REALpac has recommended that the City of Montreal and Province of Quebec work synergistically towards a reduction in their commercial property tax rate. Provinces and municipalities alike have shared interests in the economic vitality of major urban centres, and it would be prudent to ensure this vitality is achieved. Montreal is quickly becoming an unfavourable place for businesses to locate as commercial rates rise steadily, causing them to look to other cities where the tax environment is more palatable. If Montreal seeks to remain as a top Canadian location for doing business, it is important for the municipal government to do all it can in attracting and keeping these tenants through favourable tax policies.

Remaining on the Political Radar: Advocating for Fair Property Ratios REALpac and its Members believe in tax fairness, are committed to working with municipalities across Canada on achieving tax fairness, and have consistently advocated that continued reduction of the excessive property tax burden on commercial and industrial tenants and landlords will make Canadian cities more competitive and promote jobs and investment. Greater investment in the property assessment base will also generate more stable and sustainable revenue for the cities. Our advocacy philosophy at REALpac on property tax is that the commercial to residential ratio should be no higher than 2:1; we believe this is fair as businesses can deduct property taxes as an expense. However, in some Canadian cities the ratio is closer to 5:1; a level we deem to be unacceptable. REALpac and its member companies believe that high commercial property taxes: • Send jobs and development out of city centres and contributes to urban sprawl; • Work at cross purposes with hub-and-spoke transit, which brings people to and from downtown cores; • Penalize investment in downtown office, hotel, apartment and retail, particularly during periods of high vacancy; • Punish small and medium size businesses who are tenants (usually under “net leases”) of downtown offices, or drive them out to the suburbs; and,

Property taxes are often a difficult issue to achieve results from an advocacy standpoint. With municipalities across Canada facing widening budget deficits, there is resistance amongst officials to reduce that cities revenue through tax reductions. Lowering commercial tax rates also does not necessarily translate into votes for elected officials as residents are more concerned with their own rates. As a result, industry representatives and stakeholders need to continuously work in conjunction with government, as the immovable nature of real estate can leave the sector vulnerable to increases. REALpac and its Members will remain diligent in advocating for lower ratios. While a good advocate can make an argument for anything, the key is to always back positions up with the most up-to-date data available. REALpac is confident in what we are advocating and the approach we take as it builds lasting relationships with government representatives, with them trusting the information we deliver. REALpac produces credible studies, reports, and articles that back up our position and we translate data into effective advocacy campaigns, with the ultimate goal of achieving fair property tax ratios nation-wide. For a copy of the 2011 Property Tax Rate Analysis, go to > Research > Property Tax Reports. ■ Ryan J. Eickmeier, M.P.P., Manager, Government Relations & Policy Real Property Association of Canada,

Thank you to all our Sponsors and Advertisers! Reach a Targeted National Audience! For more information on how you can advertise in Real Estate Forum Magazine, contact: Frank Scalisi at or 416-512-3815 A DV E RT I S E R

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