Page 1

F O R B U I L D I N G O W N E R S , A S S E T A N D P R O P E R T Y M A N AG E R S

VOL. 26 NO. 1 • MARCH/APRIL 2019






BOMA Membership Your best business asset

An influential voice in the Commercial Real Estate Industry, BOMA Toronto is your strategic business partner, offering exceptional education, proactive industry advocacy and the leadership to advance your career.

Membership matters

Join today

Our Business is to Make Yours Shine! Whiterose is an Industry Leader with a long list of condos in the downtown and surrounding areas Whiterose Janitorial Services Ltd. believes in servicing its customers with professionalism, communication and appreciation. The Key to our success is service, quality and value. We clean beyond the surface! Quality management begins behind the scenes prior to commencing a job all employees are evaluated and or training to the whiterose standard given special attention to health and safety policies. Whiterose Janitorial Services is a full service company and a member of ACMO and CCI. Specializing in cleaning and live in & live out Superintendents for the past 30 years. Spectrum of Cleaning Services: • Facility assessment • House keeping and general cleaning services • Customized cleaning service plan • Customized cleaning schedules • Window cleaning (Exterior high rise) • Garage cleaning • Marble restoration & Polishing • Carpet cleaning

Visit our website or call us today for your no-obligation quote! 1-877-253-3648 / 416-850-9676

Spectrum of Superintendent Services: • Building audit • Check Hvac • Perform generator tests • Cooling towers • Chillers • Compressors • Sprinkler system • Fire pump • Hot water tanks • Booster pump • On call 24/7 for emergencies


Experts in vertical tran Experts in vertical transportation Modernization Design

Experts in vertical transportation



Modernization Design Project Management Specifications


Feasibility Studies

Project Management


Maintenance Audits

Feasibility Studies

New Construction Maintenance Audits New Construction 416 777.0660 + elevatorconsultan 416.777.0660 + 4 years

100100 years industry experience industry experience

OUR MISSION With over 100 years of technical knowledge managing the company, National Elevator Consulting is committed to ensuring our customers receive the BEST in vertical transportation service. National Elevator Consulting strives to focus on the client, be completely responsive, and offer sound expert advice in the field of vertical transportation. Our goal is to provide outstanding leadership and to set higher standards for elevator contractors to meet the needs and exceed the expectations of building owners, property managers and development companies. We aim to demonstrate to each and every client that they are the single most important aspect of our business.







ONTARIO REROUTES CDM PROGRAM DELIVERY Proposed legislative amendment begins process of abolishing rate-based funding 416 777.0660


416 777.0660






Steel price increases reverberate in leasing deals

MPAC instructed to ensure property values are based only on permitted land uses





Housing providers and analysts assess challenges and solutions


OFFICE PARKS COULD DIVERSIFY Ontario government proposes revisions to Greater Golden Horseshoe Growth Plan

Not-for-profit bidders lose extended timelines for acquiring surplus provincial sites





PROGRAM DELIVERY Proposed legislative amendment begins process of abolishing rate-based funding BY BARBARA CARSS







Our Services Include

ntario electricity customers with monthly bills in the range of $1.6 million have been promised savings of about $15,000 in a first step toward transferring the funding mechanism for conservation and demand management (CDM) from electricity rates to general provincial revenues. Greg Rickford, Minister of Energy, Northern Development and Mines, introduced legislation yesterday to realign CDM program delivery in a phased process that begins with cancellation of eight - Roof, wall evaluation and distinct incentives and consolidation of all administrative oversight remediation programs under Ontario’s Independent Electricity System Operator (IESO). - Ultrasonic and infrared electrical “I have directed the Independent Electricity System Operator to equipment inspections discontinue the 2015-2020 Conservation First Framework and establish - Ultrasound testing a scaled down Interim Framework for the balance of 2019 and 2020,” - Web-based strategic maintenance planning Rickford wrote in a letter to energy management service providers. “I and tracking programs have also directed the Ontario Energy Board and provided it with the authority to amend or revoke conservation related license conditions for electricity distributors.” No applications will be considered for current programs after April 1, while oversight of approved in-progress contracts will be transferred to the IESO. The IESO will then begin to accept applications — scheduled for Practical engineering is our commitment May 1 — for a new selection of programs under the Interim Framework. “It’s a full program reset,” explains Andrew Pride, an engineer and consultant specializing in energy management and strategic conservation planning. “Everything is shutting down. Some things are going to start back up.” These directives do not require approval of the legislature and are projected to strip as much as $442 million out of electricity costs over a three-year period. The proposed package of hydro-related measures in the associated Bill 87 includes the legislative amendment that would give the government more direct control over CDM budgets. “Amendments are being proposed to the Electricity Act, 1998, that would enable the IESO to accept government revenues to fund conservation Have Questions? Call KingNorth_GTA_November_2015.indd 1 2015-11-02 (MISSISSAUGA) programs and other procurement contracts, should the government (905) 206-0555 decide to do so in the future,” Rickford advised. “The amendments would (TORONTO) (416) 260-0555 provide the flexibility to take further costs out of the rate base.”

Contact us today 905 751 0823

CENTRALIZED OVERSIGHT Local distribution companies (LDCs) have been the prime drivers of the Conservation First Framework, tasked with collectively attaining 7 million megawatt-hours (MWh) of energy savings in the 2015-2020 period. Each of Ontario’s 68 LDCs has an assigned target and a budget for achieving their share of that goal. They serve as the administrators of provincially designed programs and also have the option to offer specially tailored programs of their own. They’ve now been instructed to wind down their efforts. In doing so, they forego previously promised bonuses for hitting or surpassing their targets, which is presented as a potential $150-million chunk of the cost savings. However, Pride, who was an influential contributor to CDM program design in his previous role as vice president, conservation, with the Ontario Power Authority, questions that assumption. “LDCs delivered conservation at under 1.7 cents per kilowatt-hour (kWh) in 2017, an efficiency level that has historically never been seen in Ontario or neighbouring jurisdictions,” he adds. “Typically, central or private sector operated programs operate at 3 to 6 cents per kWh.” The IESO has been instructed to present a plan later this spring for how it will singularly fulfill the CDM program delivery mandate. Communications released from the Ministry of Energy, Northern Development and Mines lists eight programs “expected to be discontinued”: Business Refrigeration Incentive; Audit Funding; High Performance New Construction; Existing

11:31 AM

Providing Elevator & Escalator Consulting, Safety & Peace of Mind. Solucore performs many types of Elevator solutions including: • • • • •

Maintenance inspections Technical audits and reviews Equipment condition surveys Accident investigations Due diligence inspections

• Reserve fund studies • Construction acceptance inspections • Elevator Modernizations • Evolve web based Portfolio Management tool

Head office: Toronto & Mississauga; US Headquarters: New York , NY; Supporting regional offices: Across North America

Follow us: Solucore_GTA_March_2017.indd 1


2017-03-21 3:08 PM

ENERGY MANAGEMENT Building Commissioning; Monitoring and Targeting; Point-of-Purchase Incentives; Heating and Cooling; and Residential New Construction. It also lists eight programs that will be retained in some form, including some of the most popular with commercial customers such as the Retrofit Program, Energy Manager Program and Energy Performance Program. “We are thankful for the government’s decision to continue the high-value Retrofit programs that have proven successful. That was something we suggested on our list of policy recommendations to the Ministry,” says Bala Gnanam, Vice President, Energy, Environment and Strategic Partnerships, with BOMA Toronto. “However, the lack of transparency leading up to the announcement was not desirable. We are all in it together. As an industry association representing commercial real estate, we are committed to work with the government to address our mutual concerns.” CAMPAIGN PLEDGE SPURS ACTION The Ministerial directives and proposed new legislation are tied to the government’s election campaign pledge of a 12% reduction on electricity bills. (Bill 87 also addresses the Regulated Rate Plan for residential and small business customers — introducing a new structure to replace the previous government’s mechanism for curbing the global adjustment — and the mandate of the Ontario Energy Board.) Current levels of CDM investment are deemed unnecessary. “Today’s customers understand the value of conservation and require fewer initiatives to realize reductions on their electricity bills,” the Ministry of Energy, Northern Development and Mines backgrounder states.” The proposed changes will have no effect on the environment,

will lower system costs and will reduce hydro rates for medium and large employers, increasing competitiveness and opportunities for growth.” That argument comes with examples of potential savings. Notably, an auto sector company consuming 15,000 megawatt-hours (MWh) per month will now save $15,000, while a mining operator using 50,000 MWh will save $30,000. Based on the 2018 average price of $111.50 per MWh (11.15 cents/ kilowatt-hour), that discount would come on bills that previously could have been as much as $1.67 million for the automotive sector company and $5.75 million for the mining operator for the commodity cost of electricity alone, before adding regulated charges. Even if their bills were lower due to participation in the Industrial Conservation Initiative (ICI), promised new savings are modest in the context of their total bills. “It has to be expressed in terms of huge, atypical loads to even get a number worthy of a sound bite,” Pride suggests. “The savings will be negligible for almost all commercial buildings.” The Ontario government projects the pullback on CDM spending will save $442 million over three years, while reducing projected electricity savings by 0.82 terawatt-hours (TWh). That’s 820,000 MWh or 820 million kWh, worth approximately $91.4 million at last year’s average price, that will continue to be embedded in annual electricity system costs. “Energy efficiency is the best bang for the buck for the people of Ontario. Saving a kilowatt-hour is cheaper than spending to generate one,” maintains Corey Diamond, Executive Director of Efficiency Canada. “Cuts to energy efficiency means reducing the lowest cost option in our electricity system.” “Sound energy efficiency policies create jobs and they are very important for our efforts toward curbing greenhouse gas emissions,” Gnanam concurs. ■


Industrial Roofing Contractors Since 1966

Family-based roofing contractor serving the GTA for over 50 years. Specializing in re-roofing Apartments, Industrial and Commercial. “ We are a smaller firm, so we value all of our clients by giving better service and better pricing.” | @Roofcantoronto | 905-823-4105 8



588 Edward Avenue, Unit 49, Richmond Hill, ON L4C 9Y6 P 905-737-0111 F 905-737-4046 (Guelph) P 519-827-1757


Reserve Fund Studies

Performance Audits

Condition Assessments

Specifications & Tendering

Forensic Engineering

Roof Consulting

Construction Review

Contract Administration


Dec. 4 - 6, 2019

Metro Toronto Convention Centre North & South Buildings

Your Leading Source for Cost Effective Solutions for Managing & Operating Buildings #thebuildingsshow Follow Us

Sponsored By




fforts to protect Canadian steel producers come with negative fallout for the commercial real estate industry. The Canadian Coalition for Construction Steel (CCCS) reports the price of steel used for construction projects nationwide soared by about 38% over the course of 2018 due to a booming real estate market and supply constraints. Developers relying on foreign imports have been caught in trade war crossfire, beginning when the United States announced it would impose tariffs equivalent to 25% on steel and 10% on aluminum on imports from Canada and the European Union among other nations. Canada responded with tariffs on steel and aluminum imported from the U.S., along with import quotas and an associated 25% tariff on steel imports from China and other countries. This was a defensive action so that Canada would not become a dumping ground for the steel newly subject to U.S. tariffs. Specifically,




the 25% tariffs are levied on foreign steel where the level of imports “exceeds historical norms” thus protecting domestic steel producers from a sudden influx of cheap steel that would have otherwise been destined for consumption in the U.S. Nevertheless, Canadian domestic mills only have the capacity to produce

Canada — 778 thousand metric tonnes or 55% of steel from foreign sources. Anecdotal data suggests structural steel costs have climbed steadily from $4.50 per square foot in 2014 to $9.00/SF in 2018, representing an annual compounded increase of 19% over the four-year period according to a leading steel fabricator located

IF THE PRICE OF STEEL INCREASES AFTER A LEASE IS SIGNED, DEVELOPERS BEAR THE LOSS. about 50% of product needed to meet domestic demand according to the CCCS. Manufacturers in the U.S. produce the largest share of structural steel imports to

in the Greater Toronto Area. The recent yearover-year price increase is more dramatic still, as structural steel prices increased 38% to $9.00/SF in 2018 from $6.50/SF in 2017.


A 25% tariff applied to imports that supply about half the steel used in construction appears to have prompted a price increase of nearly 40% on a per square footage basis. How did this happen? The answer lies partly in the recent growth of steel fabricators' wages. In the GTA, hourly wages, on average, for steel fabricators increased 33% to $20/ hour in 2018 from $15/hour in 2017 according to a leading GTA steel fabricator. For players in the industrial real estate sector, rising steel prices add unpredictability to negotiations since it typically takes nine to 12 months to complete a deal on a new development project, while the price of steel is fixed for only 30 days. If the price of steel increases after a lease is signed, developers bear the loss, which may have a dramatic impact on less well-heeled developers. To offset this risk, larger landlord-developers may increase net rental rates on new developments. Scarcity of industrial land and lengthy site plan approval times have restricted growth opportunities for new development, so increased rental rates on existing properties may be the only option for pureplay landlords to show steadily growing profitability. Tenants have certainly experienced this squeeze recently. Over the past eight years (2010-2018), GTA industrial net rental rates have increased 4.7% on an annually compounded basis. However, when narrowing the timeframe to rental rate performance over the past three years and one year, net rental rates have increased 10.3% (on an annually compounded basis) and 15.5% respectively. Landlords have successfully attained higher rents when supply constraints have pushed the GTA’s industrial availability rate to record lows of 1.4% as of Q4 2018. Tariffs on foreign supply and increases in domestic labour costs make both domestic and foreign steel supply expensive. Asset managers are being forced to model higher asking rents on new development projects to meet the required internal rate of return given the increase in development costs. With Q4 2018 industrial availability rate across the GTA at a record low of 1.4%, ongoing increases in the price of steel are driving net rental rates higher on new developments. Given the strong market fundamentals, building owners with current availabilities can expect further rental increases over the medium term. ■ ____________________________________________________


CONSTRUCTION WORKER SHORTAGE LOOMS New labour projections indicate Canada will need to recruit about 300,200 new workers into the construction industry over the next decade. Many of them will be needed in Ontario and, particularly, the Greater Toronto and Hamilton Area (GTHA). BuildForce Canada’s recently released 2019-2028 Construction and Maintenance Looking Forward report forecasts construction employment in Canada will grow modestly through 2020, as demands driven by major energy, public transportation, and other infrastructure projects rise to a near-term peak, offsetting a continued softening in housing starts. Longer term, approximately 44,100 workers are expected to enter the labour force, while more than 261,000 will likely retire. “British Columbia is projected to lead construction growth in Canada, propelled by the start of a liquefied natural gas terminal, and transportation and infrastructure construction,” says Bill Ferreira, Executive Director of BuildForce Canada. “Ontario also continues to grapple with record levels of construction project activity and recruiting challenges. However, labour demands are projected to plateau or recede in most other provinces.” Labour demands in the non-residential sector will exceed demands in the residential sector over the next 10 years. Non-residential employment is expected to increase by 35,700 jobs – an overall increase of 6%, with gains in maintenance and industrial, commercial, and institutional (ICI) building construction offset by modest declines in engineering construction. The development of skilled tradespersons in the construction industry takes years, and often requires participation in a provincial apprenticeship program. “Maintaining capacity to meet construction labour force needs will require focused efforts on recruiting, training, and retaining young workers, even under a slower-growth scenario,” Ferreira advises. “Even if the full potential of interprovincial mobility is realized, industry will likely still need to expand recruiting efforts for new workers from local sources of labour, from other industries, and from new immigrants to meet the industry’s long-term needs.” – REMI Network




AFFORDABILITY Housing providers and analysts assess the many challenges and offer some solutions



s 2019 unfolds Canadians face a well-chronicled slate of challenges to owning or renting a home. Supply is tight, demand is robust and more stringent controls on obtaining credit have kept many would-be homeowners in rental dwellings. Despite this certain knowledge and some meaningful action steps taken by policy-makers to mitigate hurdles and spur new development, housing experts foresee a persistent lack of affordable housing into the future. A recent report from concludes the ongoing housing shortage will drive monthly rents even higher in 2019. Annual rental rates could increase by as much as 11% in Toronto, 9% in Ottawa and 7% in Vancouver, the report predicts. “Vacancy rates are getting even lower in several major Canadian cities, including Vancouver and Toronto,” observed Ben Myers, President of Bullpen Research &




Consulting Inc. “Immigration is at a record high nationally and expected to increase. The change in the mortgage stress test has reduced credit availability and pushed more people to rent that were looking to buy in 2018. The increase in rental demand has not been offset by new supply.” According to Bullpen’s data, the combined number of new rental housing units built across all of the Census Metropolitan Areas in Canada was just under 32,000 units from January to October 2018. Though this accounts for an increase of nearly 6,000 units over the same period last year, Meyers contends it won’t be enough to satisfy the additional demand. Dr. David Hulchanski, Professor of Housing and Community Development at the University of Toronto’s Factor-Inwentash Faculty of Social Work, concurs.

“Rents will continue to increase especially in Toronto, Vancouver and Ottawa. There’s no reason why they would not,” he said. The city of Toronto defines “affordable housing” as anywhere between 80 to 100% of market value. “Deeply affordable housing” is defined at 40% of the market rate. As Rentals. ca points out, this means that an affordable space in Toronto or Vancouver equates to around $2,000 per month for a one-bedroom apartment. “The big issue to me in the Toronto rental market is not just price or affordability but inventory and supply,” said Dr. Richard Florida, Professor and Director of Cities at the Martin Prosperity Institute at the University of Toronto’s Rotman School of Management. “We need to build a lot more rental housing at each and every price point.” Ted Tsiakopoulos, Regional Economist (Ontario) at CMHC is optimistic that Canada’s



Contact : | 289.251.0998 or 905.377.5040 M E M B E R O F T H E F O L L O W I N G O R G A N I Z AT I O N S :




GROWING STATUS IN INSTITUTIONAL INVESTMENT PORTFOLIOS Multifamily assets performed well for institutional investors again last year. Annual results of the MSCI/REALPAC Canada Property Index peg the 2018 total return at 11.5 per cent across 394 directly held residential properties. That’s both an improvement over the sector’s 10.3 per cent total return in 2017 and well above the 7.4 per cent allproperty total return for 2018. Capital growth drives that number. Residential was the only sector that could boast rising values in every Canadian market where index participants own properties — ranging from a 12.2 per cent jump in Toronto to a 1.4 per cent gain in Edmonton — while an average income return of 3.9 per cent is in line with continuing low cap rates. “Residential yield has nicked down,” observed Simon Fairchild, executive director with the index producer, MSCI, as he unveiled the results in Toronto. However, he also noted that “record low yields and record high prices” currently characterize the Canadian investment property market in general. The 45 portfolios participating in the Canada Property Index collectively hold 2,424 assets, comprising more than 522 million square feet of space and valued at approximately CAD $160.7 billion. Multifamily properties account for a roughly $17.5-billion share or almost 11 per cent of the index’s capital value. Multifamily assets delivered the strongest returns in the best performing markets — capital growth of 8.6 per cent in Vancouver, 5.5 per cent in Ottawa, and 5.3 per cent in Montreal, in addition to Toronto’s double-digit tally — but were also a rarer source of capital growth in the weaker markets of Halifax, Edmonton and Calgary. Participating on a panel of industry insiders tasked with providing on-the-spot feedback on the 2018 investment results, Steven Marino, senior vice president, portfolio management, with GWL Realty Advisors, credited multifamily as a major contributor to Calgary’s climb back to a 1.4 per cent total return after two years in negative territory. “I think office is still very different than multifamily and industrial,” he said. “The residential market has certainly recovered.” Among the four property sectors, industrial posted the strongest Canada-wide total return for 2018, at 13.8 per cent, representing an upward surge from 10.2 per cent in 2017. Office properties modestly surpassed the all-property average, registering a total return of 7.8 per cent, an improvement from 6.2 per cent in 2017. Retail bottomed out the chart with a total return of 4.4 per cent, slipping from 5.3 per cent in 2017. “Industrial and residential tend to be strong wherever you look,” Fairchild said. (Industrial properties in Edmonton and Winnipeg were the exception, as they lost 1.1 per cent and 0.8 per cent in value, respectively.) That’s also reflected in where investors are putting their money. Last year, index participants channelled about $1.3 billion into residential properties, representing nearly 19 per cent of their collective net investment. That’s up from $554 million, or 10 per cent of net investment, just four years earlier. Spending on industrial properties was even more generous, at nearly $1.5 billion, up from about $613 million in 2014. The seven property funds participating in the MSCI/REALPAC Canada Property Fund Index have always offered a more even property mix with less weight given to retail, in particular, than is found in the directly held portfolios represented in the Canada Property Index. Yet, the funds, too, register increasing residential and industrial exposure. As of yearend 2018, residential properties account for 20.3 per cent of the Property Fund Index, up from 16.8 per cent three years earlier. Industrial’s share has gone from 18.4 to 19.7 per cent in the same period. “Certainly, there is an active shift going on with the funds toward these two (residential and industrial) sectors and efforts to balance portfolios,” Fairchild said. On the new construction front, activity has also picked up from earlier in the decade. In 2014, for example, just $47.5 million or 2.4 per cent of index participants’ development expenditures went to residential. “We are seeing a lot more of our peers move into the development space,” Marino reported. – REMI Network

10-year National Housing Strategy, launched by the federal government in April of 2017, will help encourage new development and address the shortage of rental housing. That said, the goal of CMHC is a bold one with an ambitious 2030 deliverable. By that year, “CMHC is aiming to put every Canadian in not only an affordable home, but also one that meets their housing needs,” he said. To make it so, municipalities all across Canada have begun to unveil their latest initiatives aimed at boosting local affordable housing supplies. In Toronto, Mayor John Tory’s “Housing Now” plan is already underway with support from the federal and provincial governments. Eleven surplus city-owned land sites near transit stations are about to be transformed into muchneeded affordable housing developments. The overarching goal, however, is to add 40,000 affordable units in the next 12 years and realize 3,300 or more affordable units per year, beginning in 2020. “I think we could use some more collaboration between the levels of government. Though there are many programs being offered, they need to be more accessible," reflects Jan Robinson, Executive Director of Vancouver-based non-profit Brightside Community Homes Foundation, which is currently developing 181 rental units primarily for seniors and families. "If the city could just step up a bit, cut the red tape and expedite that permitting process, that would be really helpful.” Cary Green, veteran housing developer and chairman of Greenwin Inc. has been promoting a solution he believes could spark widespread housing development: government-funded development bonds. In December, Green spoke with TVO’s Steve Paikin about this approach and why he believes it’s the best possible direction. “With between 3 and 4 million Canadians currently in need of affordable rental housing, the problem is endemic,” he told Paikin. “It cuts across the country and every group, the obvious one being the homeless. You’ve got people living in overcrowded homes and in substandard housing. Students… people in their first jobs…coming out of divorce, returning war veterans and new immigrants.” ■ ___________________________________________






When disaster strikes call

Commercial water losses is our specialty. We dry the structure in place using a combination of assessment of building structures, hazardous material surveys and latest in drying technology.

STEAM OR DRY CLEAN, WHAT’S THE DIFFERENCE? Call us for an assessment from a certified carpet inspector! Fresh and Clean should be Fresh and Green


Carpet, upholstery, tile, and grout cleaning.

FreshClean_DryIt_CFMD_March_2019.indd 1

905-669-0607 has customized software that can offer our clients an emergency response system at no cost and cloud based reporting software so our clients can update themselves on a project’s status anytime 24/7 at their convenience. 24 hours a day 365 days a year. Water • Fire • Trauma • Abatement CALL us and let the pros take care of your disasters.


2019-03-20 10:14 AM 15


Putting the Cart

Befor the H

The need for a solid strategy when undertaking building projects It happens. We’ve all felt the sting. Whether it becomes evident during a property acquisition walk-through or later in response to an unforeseen problem, it’s not uncommon to find that a poorly diagnosed, designed, and/or implemented construction project has resulted in increased capital costs, lost revenue, unhappy building occupants, or health and safety risks.

issue rather than taking the time to assess and address the heart of the problem. A common example would be to paint the exterior of a building in an attempt to correct water penetration issues and to boost its curb appeal, but using inappropriate products that negatively impact the building enclosure and that reduce the service life of the coating and/ or underlying components.

That lack of adequate planning can manifest in any number of ways when it comes to building enclosure projects. Sometimes, it’s a case of property stakeholders implementing low-cost, quick fix repairs to a building enclosure

There can be more costly oversights as well. Overlaying an existing roof with a new assembly, for example, may appear to some as a more cost-friendly option. Without proper foresight, however, there is a risk of overloading the structure,

entrapping moisture, and/or increasing the potential for stone ballast or pea gravel to blow-off the roof due to reduced parapet height, among other issues. Taking the wrong approach to waterproofing system replacements can likewise close the door on more effective, cost-friendly, and sustainable options. “Property owners/managers don’t set out to ‘put the cart before the horse’ with their construction projects, but cost factors and timing can sometimes overshadow the need for proactive planning,” says Dave Moore, Project Principal and Vice President with Pretium Engineering Inc.


re Horse No doubt, adds Moore, a little foresight and research can go a long way. Here are a few considerations to get you started: • Invest in diagnosing the problems correctly from the onset: Spending a few extra dollars up front can result in significant savings overall. Engage a team of knowledgeable professionals that have a true grasp of building science and construction detailing. Where useful, plan for testing and destructive openings to confirm as-built construction and perform trial repairs for cost-saving options to ensure they work and look good. • Crunch the numbers: Complete a net present value analysis of the repair/ renewal options. • Design solutions that enhance the property value: A repair should not detract from the appearance of the building in the short or long term. • Durability and Resiliency: Designing for durability is not a new concept but often not given enough attention. The

National Building Code is considering climate change and how it will change the loads on a building. It will be shifting its rear-view mirror approach to design which uses historical loads to determine requirements for new buildings to a forward-looking approach based on predictive climate data. Also, the Canadian Standards Association is developing building and component standards that address climate change and the maintenance needed to bolster a property’s resilience to deterioration and changing climate loads. You can get ahead of the curve now by considering changing climate change loads and the adaptive capacity or built-in ability of components or assemblies to accommodate those loads.

“It’s important that owners and managers have the information available to make informed decisions that address the problem the first time and that are practical, cost-effective, durable, increase property value, and reduce the impact on occupants,” notes Moore.

Dave Moore is Project Principal, Vice President (Client Service & Development) with Pretium Engineering Inc. [], a specialist building science and structural consulting engineering firm that provides high quality, evidence-driven services. Contact a local office to see how “Working Together, Better” can work for you.



Ontario government proposes revisions to Greater Golden Horseshoe Growth Plan BY BARBARA CARSS


uburban office parks could be opened up for modest amounts of mixed-use development if a proposed new policy is enacted in the Growth Plan for the Greater Golden Horseshoe (GGH). The measure is among the plethora of Growth Plan amendments the Ontario government released for public comment earlier this winter, and would unlock opportunities that many developers now deem to be effectively impenetrable. “Employment lands are protected and preserved so you can’t even propose nonemployment uses no matter how impractical or obsolete those areas might be (for employment) or what the market demand is,” observes Mike Czestochowski, Executive Vice President of CBRE’s Land Services Group. Currently, prospective developers must rely on a single or upper-tier municipality in the GGH — for example, Toronto, Hamilton, Peel or York Region — to undertake a multistep municipal comprehensive review (MCR) process before an employment area can be re-designated to accommodate non-employment land uses. In practice,




that’s most likely to occur as part of the Official Plan review that municipalities conduct at approximately five-year intervals. Regardless, it’s a complex, time-consuming exercise that requires numerous supporting studies, public consultation and Provincial approval. The proposed new policy is expressed in terms that might be read as a restriction, stating: “Existing office parks will be supported by ensuring that the introduction of any non-employment uses, if appropriate, would be limited and would not negatively impact the primary function of the area.” However, it’s actually loosening the rules. “The new amendment is saying you can introduce non-employment uses, to a certain degree, without having to go through the MCR process,” explains Emelie Rowe, a Planner with CBRE’s Land Services Group. BROADENING INTERPRETATIONS This goes beyond the existing allowance for “an appropriate mix of amenities and open space to serve the workforce” to potentially

make way for an expanded range of ventures for a wider customer base. The current Growth Plan gives local municipalities the flexibility to either prohibit big-box retail within employment areas or allow a controlled amount, capped at a maximum threshold, while residential uses are prohibited outright. The new policy would give developers a basis to challenge any local government’s veto of non-employment land uses in suburban office parks. “A lot of this wording might seem like simple semantics, but any review at what was formerly known as the Ontario Municipal Board (now the Local Panning Appeal Tribunal) is, in essence, a legal cross-examination of intent and expectations of policy,” advises Dan Leeming, Senior Advisor with the consulting firm, The Planning Partnership, and an adjunct professor at the University of Guelph’s School of Environmental Design. “Many of the amendments would leave it a little more open to interpretation than it had been.” In any case, supporters of the proposed new policy maintain it’s aligned with the


Growth Plan’s goals for intensification and “complete communities” that provide social and economic opportunities, support healthy lifestyles and use resources efficiently. Toronto’s inner suburban rings seem particularly well placed to deliver that vision. “People like to live close to where they work today. As we add residential, the employment uses get more vibrant, and it would be adding other uses like hotels, restaurants and retail that also provide jobs,” Czestochowski submits. “In mature markets in the 416 or even the 905, the office parks might be getting a little long in the tooth, but a lot of them have good transit connections and are ripe for redevelopment or some strategic infill. I think we’ll have more institutional investors and landlords looking at the possibilities.” “Developers would be interested in any office park where there is good transportation access, and owners would be amenable to anything that could add value to their site, including retail,” concurs Keith Reading, Director of Research with Morguard.

REDEFINING EMPLOYMENT AREAS A relatively innocuous tweak in suburban office parks is just a small piece of the Ontario government’s revised approach to employment lands. That’s defined in the

workforce, other business interests are calling for a more representative share of protected lands. “We’ve talked about expanding the definition of employment areas to include

”I THINK WE’LL HAVE MORE INSTITUTIONAL INVESTORS AND LANDLORDS LOOKING AT THE POSSIBILITIES.” amended Growth Plan’s explanatory notes as: “A modernized employment area designation system that ensures lands used for employment are appropriately protected, while unlocking land for residential development.” Issues related to preserving industrial lands or, more fundamentally, how to define “employment uses” are likely to capture greater attention and/ or spur more debate. As automation steadily shrinks manufacturing’s human

retail, which generally employs more people than industrial, but doesn’t typically qualify,” says Michael Brooks, Chief Executive Officer of REALPAC, representing many of Canada’s largest commercial real estate companies and institutional investors. “Potentially allowing commercial-residential zoning in some of these areas would make a mixed-use complete community possible. It would help the housing crisis the Province says it wants to address, and maybe some workers could avoid having to drive a car.” ■

Test drive a European state of mind. Albion Golf Cars are the exclusive Canadian distributor for Garia Utility electric mini-trucks. Manufactured in Denmark, the Garia combines four-season reliability, ergonomics, and zero emissions – with comfort, functionality and sleek design. Enhance your property with Garia’s 788kg load capacity and up to 75km range on a single charge. Albion is now offering both the Park model and the European street-legal 45kph City model. Skål to that!

Arrange a test drive at: 416.236.1001 For full specifications visit:



INDUSTRIAL STATUS QUO MPAC instructed to ensure property values are based only on permitted land uses



etails of how the Ontario government might fulfill its promise to protect industrial properties from inflated valuations are still scarce, but it wouldn’t necessarily require new legislation. Section 10 of the Municipal Property Assessment Corporation Act allows the Minister of Finance to issue “general or specific” directives related to MPAC’s activities — authority last exercised in 2015 when the then Minister of Finance, Charles Sousa, called for policies, proced-




ures and standards to guide the assessment of seven specific types of manufacturing and mill facilities. Property tax and assessment specialists theorize that’s why the action is included in a list of initiatives associated with Bill 66, the proposed Restoring Ontario’s Competitiveness Act, even though none of the bill’s dozens of legislative amendments pertain to the Assessment Act. The government’s associated Dec. 6

backgrounder makes the promise, under a heading that reads “Protect industrial lands”, and focuses on communications with MPAC. “The government will confirm with the Municipal Property Assessment Corporation (MPAC) that industrial properties will be assessed based on current permitted uses, not speculative uses,” it states. A brief accompanying explanation calls this a “measure under the Assessment Act” and reiterates it “would confirm that the

TAX TRENDS methodology MPAC uses to assess business properties is based on permitted land uses only.” HIGHEST AND BEST USE Instructions to MPAC would presumably address the application of highest-and-bestuse considerations when assessing properties deemed to be in transition. Assessed values of some properties rose sharply during the most recent province-wide reassessment exercise in 2016 because they were pegged to land uses that could theoretically exist on the site. That was most notable in the case of small commercial properties, which were assessed based on the potential for high-rise residential, and industrial properties in areas facing redevelopment pressure. The Ontario government’s Dec. 6 pledge focuses on the latter. “This would protect businesses on employment lands where land values have jumped because of new residential developments nearby from steep property tax increases,” it maintains. “If the government wants to make an impact and do something quickly, a directive can be effective,” advises Jack Walker, a partner with Walker Longo & Associates LLP and co-author of the Ontario Property Tax Assessment Handbook. “The notification [in the Bill 66 backgrounder] got a lot of positive feedback from large industrial property owners.” Otherwise, reaction has been muted. MPAC has not acknowledged the government’s statement on its own website, but AMCTO, an association for municipal managers and administrators, posted this comment on December 17, 2018: “In a C follow-up to AMCTO, MPAC confirms that it will continue to value industrial properties,M including those on employment lands, basedY on permitted uses only, as determined byCM land use policy set by the province and MY municipalities.” Recently released amendments to theCY Greater Golden Horseshoe Growth PlanCMY include a proposed new policy forK employment lands that also hints at the government’s agenda for industrial properties. “The development of sensitive land uses, major retail uses or major office will avoid, or where avoidance is not possible, minimize and mitigate adverse impacts on industrial, manufacturing or other uses that are particularly vulnerable to encroachment,” it states.

“THE BIG INDUSTRIAL MANUFACTURING PROPERTIES ARE ESSENTIALLY THE ANTITHESIS OF THE DOWNTOWN OFFICE PROPERTIES.” CLOSURES UNDERMINE TAX BASE Meanwhile, the closure of industrial enterprises triggers other issues for property owners and host municipalities. Property tax liability could be a factor in an owner’s ability to sell the site to another industrial user or return scaled-down operations to full production, while concerns about the assessment base can sway municipal decisions to either retain or rezone employment lands. “The big industrial manufacturing properties are essentially the antithesis of the downtown office properties,” Walker observes. “With big industry, the sales value [of the land] is low. The value is when

they are operational. When they are not, the diminution in value is huge.” David Gibson, a Director with Yeoman & Company Paralegal and Professional Corporation, cites the example of the closure of a 1.5-million-square-foot auto parts plant. “The value came down from $38 million to $2.8 million,” he reports. The fallout is likely be multiple times greater when the General Motors automotive assembly plant in Oshawa is shuttered. “The facility is about 14 million square feet so the impact is very significant on Oshawa’s tax base,” Gibson affirms. ■




10:16 AM

Expertise. Insight. Trust. Mechanical Electrical Building Automation Em ergenc y G ener ator Sys tems designed for your building

1 Concorde Gate, Suite 808 Toronto, Ontario 416.443.9499




Not-for-profit bidders lose extended timeline for acquiring surplus provincial sites



rospective developers of community hubs will no longer get extra time to negotiate the purchase of surplus properties the Ontario government is selling. A revised policy for the disposition of provincial realty, announced late last year, ends the special consideration given to broader public sector, not-for-profit and Indigenous organizations proposing to use surplus properties for community-based projects that deliver housing, health care, employment and training, education, poverty reduction or other services for children, seniors and Indigenous communities. “Circulation time to external third parties (e.g., other levels of government) will be reduced, consistent with previous practices,” states a backgrounder released to outline a streamlined process for getting idle sites back into productive use. This reverses the previous government’s surplus property transition initiative (SPTI), introduced in 2017, which allowed qualifying groups to place a hold on properties for up to 18 months while they worked through the details of the deal. Instead, the new government pledges to evaluate surplus properties for suitability for affordable housing or long-term care purposes, but stresses the need to reduce red tape and the government’s carrying costs. “Ontario currently has hundreds of vacant surplus properties across the province, costing the government millions of tax dollars a year to maintain,” observes Bill Walker, the Minister of Government and Consumer Services. The government estimates the sale of 243 properties now listed as surplus on the Infrastructure Ontario website could garner $105 to $135 million in net revenue and remove




$9.6 million in annual operating costs from the provincial books. None of the listed properties are school sites — the sale/leasing of which is governed through a regulation under the Education Act — but vacant school properties were the venue for four community hub projects that gained SPTI approval last year. Project proponents in Hamilton, Ottawa, Owen Sound and North Bay received funding, referred to as holding costs, to cover the operation and maintenance of the properties for up to 18 months until they were in a position to assume ownership. “It allowed more time for not-for-profits or other types of organizations participating in a community hub to get their financing and legal and other types of agreements in place,” says Brennan Carroll, a partner practicing commercial real estate law with Borden Ladner Gervais LLP. “Now the Province is indicating it wants a more expeditious process.” As part of its program to foster community hubs, the former provincial government imposed new criteria in 2016 for school boards leasing out or selling vacant school properties. This expanded the list of prospective purchasers to be notified prior to making properties available to the market, and doubled the allowable time period, from 90 to 180 days, for these designated entities to submit expressions of interest and purchase offers. Those parameters still apply. “As per the Education Act, school boards continue to be subject to all the requirements included in Ontario Regulation 444/98 when they adopt a resolution to sell, lease or dispose of surplus property,” affirms Heather Irwin, a senior media relations coordinator for the Ministry of Education.

However, capital funding remains a challenge. With fewer special considerations for bidding on surplus public properties, private sector developers may see burgeoning interest from potential not-for-profit partners. Mixed-use developments, for example, might accommodate community space that could be a benefit and a draw for residents and commercial tenants. “There is certainly no reason why community hubs have to be on public or formerly public land. I’ve been trying to encourage organizations to engage with the private sector and I think the private sector could benefit from these types of developments as well,” Carroll reflects. “In terms of the provincial government being a real catalyst for community hubs, we are probably taking a step back,” he adds. “But, in terms of community hubs being a) a good use of real estate, and b) a good concept for the communities they serve, I think everybody is still very much on board with that.” Meanwhile, the Ontario government promises the new sales process for surplus properties will include zoning reviews to ensure the vendor enjoys the full potential value and measures to protect heritage buildings. “Our government is committed to creating more affordable housing and long-term care spaces and through this new process we will identify suitable properties to help us deliver on this commitment,” maintains Steve Clark, the Minister of Municipal Affairs and Housing. “By putting properties back into productive use, our plan will also help local communities across the province see benefits in economic development and jobs.” ■

you have the power to change Join over 600 buildings and tenants in this unprecedented energy reduction challenge. Earn industry recognition and access free, energy saving resources.

connect with an R2R Ambassador

a race2reduce ambassador is an agent of change that can provide relevant resources and expertise to drive energy savings. Learn more at:


Title sponsor

Title sponsor

A BOMA Toronto Initiative

Media partner

Media partner | #onepersononeplanet


WWW.CHIRCOBROSPAVING.COM INFO@CHIRCOBROSPAVING.COM 905.264.0351 Toronto Construction Association

Profile for MediaEdge

GTA March 2019  

GTA March 2019