CANADA’S NATIONAL PUBLICATION FOR APARTMENT OWNERS AND MANAGERS
VOLUME 10 / NUMBER 4 / august/September 201 3
Four leading industry professionals share the secrets of their success
The Amenities Issue From parking to WiFi, find out which amenities appeal most to today’s renter
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Getting Ahead in Property Management It is with great pleasure I introduce our August issue of Canadian Apartment Magazine, featuring four of the industry’s leading ladies: Bev Greene (Concert), Kris Boyce (Greenwin), Margaret Herd (Park Property) and Trish MacPherson (CapREIT). We are delighted by the buzz we were able to generate for this special edition based solely on their participation. Each fearless female is the personification of hard work and enthusiasm; a testament to the industry and a great example of what can be achieved when the goal is to succeed. Their inspirational stories can be found on page 16. We’d love to hear your feedback—perhaps you or someone you know is a woman of influence and deserving of a future profile? Also in this issue: a focus on all-important building amenities. As Derek Lobo points out in his article on page 30, “Amenities are a vital part of every apartment building, and a key way to stand out in a crowded field.” Find out why, as well as which amenities are becoming critical components of apartment communities, especially for the millennial generation that seems to be taking over downtowns across Canada. And, adept as they are at social media, it’s not just the tech-savvy twenty-somethings who are hooked on it. Canadians of all ages are relying on Facebook, Twitter, LinkedIn and YouTube for all their media and communication needs. Don’t miss out on the chance to connect with your tenants via social media channels. For tips and statistics tune in to our Marketing article on page 38. We hope you enjoy our issue, Sincerely, Erin Ruddy
CANADA’S NATIONAL PUBLICATION FOR APARTMENT OWNERS AND MANAGERS
V OLUME 1 0 / NUMBE R 4 / A UGUS T 2 0 1 3
Publisher Paul Murphy email@example.com (416) 512-8186 ext. 264 Senior Designer
Production Manager Rachel Selbie Contributing Writers P eter Cook, Robert Fleet, Paula Gasparro, Derek Lobo, Chaim Rivlin, Andy Schwartze, and Daniel Viola
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W W W. CANADI ANAPARTM ENTM AGAZI NE. CA
Four leading industry professionals share the secrets of their success
The Amenities Issue From parking to WiFi, find out which amenities appeal most to today’s renter
13-08-28 11:51 AM
On the Cover: Left to right: Margaret Herd, Park Property Management Inc. Bev Greene, Concert Properties Trish MacPherson, CAPREIT Kris Boyce, Greenwin
Circulation ext. 232 Subscription Rates: Canada: 1 year, $50* 2 years, $90* US $75 International $100 Single Copy Sales: Canada: $12* * Plus applicable taxes Reprints: Requests for permission to reprint any portion of this magazine should be sent to Paul Murphy
Quoteworthy “Juggling the demands of family and career has been one of my greatest feats yet. Every day of “doing it all” is just another day in the life of today’s professional woman.” Kris Boyce, Greenwin
Authors: Canadian Apartment Magazine accepts unsolicited query letters and article suggestions. Manufacturers: Those wishing to have their products reviewed should contact the publisher or send information to the attention of the editor. The opinions expressed are those of the authors of articles and do not necessarily reflect the views of Canadian Apartment Magazine. This information is general and is not a substitute for legal advice. Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Apartment Magazine makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused. Printed in Canada
– page 19
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contents Cover Story 16
Women of Influence Some of the industry’s leading professionals share their stories By Erin Ruddy
AMENITIES FEATURE 10 Understanding the Millennial Renter
By Heidi Lamar
38 Property Managers Start Caring About Car Sharing By Daniel Viola
Transactions What’s Trending across Canada
By Richard Vilner
14 CMHC Accessible Housing by Design
By Paula Gasparro
28 Finance Qualifying for Construction
By Peter Cook and Robert Fleet
30 Portfolio Strategy Amenities Count, Now More than Ever
By Derek Lobo
34 Insurance The Good and the Ugly
By Andy Schwartze
44 Amenities Going Coinless
By Susan Reynolds
46 Marketing Connecting with Tenants on Social Media
By Chaim Rivlin
50 Smart Ideas
Columnists Peter Cook, Robert Fleet, Paula Gasparro, Derek Lobo, Andy Schwartze, Richard Vilner
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Second Quarter 2013 Slowdown for Apartment Sector By Richard Vilner
RealNet Canada Inc. announced results for the GTA commercial real estate investment market for the second quarter of 2013. Total commercial real estate investments, which include multiresidential properties, reached a new record high of $4.9 billion, surpassing the previous record of $3.9 billion set in the fourth quarter of 2006. The quarterly results represented an increase of 74% compared to the same period last year and an increase of 75% compared to Q1 2013. Driving the record level of overall investment activity were new record levels of investment in the office and industrial sectors of $1.4 billion and $1 billion respectively, and the second highest level of investment in the retail sector at $1.2 billion. The apartment sector contributed only $336 million to the quarterly total, or 6.8% of the overall market. A total of 39 assets traded that exceeded $1 million in the second quarter, the lowest level since the third quarter in 2011, when 37 total deals transacted. Total dollar volume receded by approximately 48% versus the previous quarter, which reached $650 million. Sector heavyweights Q Residential and CAPREIT contributed $139 million of the $336 million quarterly total through only two transactions. Q Residential picked up 601 units at The Westood Abbey Apartment complex on Darcel Avenue in Mississauga for $82.35 million, while CAPREIT acquired 2521 Lake Shore Boulevard West in Etobicoke for $56.25 million.
Here we see the first quarter apartment transactions greater than $1 million in the GTA region by dollar volume, geographically. (The larger the transaction is in dollar volume, the larger the size of the circumference).
Whatâ€™s trending The slowdown in deal volume also contributed to a slight reversal in yields for the sector reaching a year to date average of 5.53%, or up ten basis points from the 2012 average of 5.47%. The price per unit values remained virtually unchanged from a year earlier, remaining at $164,000 per unit through the first two quarters. This was a record set in 2012.
This chart summarizes, on a quarterly basis, the total dollar volume and the total number of apartment transactions greater than one million in the GTA region. 8 www.canadianapartmentmagazine.ca
This article was written by Richard Vilner, Research Manager at RealNet Canada Inc. Contact Richard at: firstname.lastname@example.org. RealNet Canada Inc. is the leading real estate information services company in Canada, powering the decisions of firms involved in approximately 75% of the market activity. www.realnet.ca
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Understanding the Millennial Renter
By Heidi Lamar
Anyone who has watched a recent episode of First Time Home Buyers or Property Virgins has probably noticed that buyers under the age of 30 are getting pickier. This group, known as â€œmillennials,â€? has lofty expectations and the budget to get what they want. One of the reasons they are so picky about their first home purchase is that they have been living in some pretty amazing apartments. Although millennials can afford to purchase homes, many choose to rent because their jobs require frequent travel and they move often. These renters-by-choice would rather spend their weekends biking with friends than mowing the lawn.
Photos: Chamberlain Architect Services Limited
Here are some more important facts about millennials: Millennials expect luxury. This fortunate group has grown up with granite counters and stainless steel appliances and they believe that hardwood floors are a birthright. The mobile and tech savvy consumers favour urban chic hotels when they travel and they expect their apartments to have similar amenities. Apartment developers who want to appeal to the new breed of renters should consider hiring an architect with hotel experience. Millennials need work space. When they are not travelling, millennials often work from home, so in addition to an office space in their unit, they need a place to meet clients. Apartments with a hotel-style business centre and conference rooms are at the top of the list for these renters who bring their work home but prefer to meet their clients elsewhere.
Millennials need space for guests. Unfortunately, their propensity for working at home often means the millennialsâ€™ second bedroom is an office, leaving them without a guest room. To solve this problem, an increasing number of apartment communities are offering furnished hotel-style guest suites to accommodate overnight guests. These one- and two-bedroom suites are comparably priced to hotel rooms and are more convenient than sending guests to a hotel. Millennials think green. They may eschew politics but they do tend to be green-conscious consumers. These civic minded renters read magazines like Dwell and view their homes as an extension of themselves. Recycling programs and sustainable building features are hot buttons with this socially responsible crowd. August/September 2013 11
Millennials like to entertain. Many are foodies that enjoy cooking for their friends, so a well-equipped open kitchen, large outdoor patio and grilling areas are at the top of their wish list. A community social room that can be reserved for larger parties and corporate events is also in high demand. Millennials are not looking for grand foyers. They want well designed, multifunctional spaces, which are a better value. Millennials are active. A state of the art fitness facility with a sauna is a minimum and a resort-style pool is a definite plus. Millennials like to bike and they need space to store their gear, preferably in their own unit. One new community, hoping to appeal to cycling enthusiasts, even offers storage for 200 bikes, space for making repairs and a vending machine that dispenses tire patching kits.
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Millennials don’t like to worry. They want secure, heated, underground parking, spacious, well lit laundry facilities (or better yet, a washer and dryer in the unit) security cameras and 24/7 on-site security. Many millennials also like the option of included utilities, which allow them to avoid budgetary surprises. On-site car sharing services, like Zipcar, are becoming more popular among luxury apartment communities, allowing urban millennials to skip the hassle of car ownership and insurance. Millennials don’t mind spending money; they love saving it. These amenities are not just luxuries. They can also save money. Budget conscious millennials can save several hundred dollars per month by not having a car. Add another $100 per month for gym membership, cut utility costs by using the business centre and save money by entertaining at home. One of the biggest payoffs comes by renting guest suites only when guests are in town. For example, the cost of an additional bedroom could be as much as $6,000 per year, compared to the cost of using a guest suite 10 times a year for a total of $2,000. To compete for the millennials’ attention, developers have to find ways to budget for these amenities. This complex equation requires the teamwork of developer,
architect and constructor to manage the large number of variables. Many developers are turning to the Integrated Project Delivery (IPD) method and Building Information Modeling (BIM) to manage these complexities. According to Brian Chamberlain, Owner of the Chamberlain Group of Architects and Constructors in Burlington, Ontario, “Developing a list of ‘must haves’ and ‘wants’ at the beginning of the process, and working with an integrated design and construction team can help to manage the risks and maximize the potential benefits within the project budget.” The real benefit comes by maximizing both rents and occupancy. With the right amenities, a luxury complex not only commands top dollar, it also has the most enviable commodity of all: a waiting list.
Heidi Lamar regularly contributes articles to a wide variety of publications, including Huffington Post, Canadian Lodging and Municipal World. When she is not creating PR buzz for her clients, Heidi oversees the operations of her commercial and residential rental properties. HeidiLamar@See-PR.com TakeCover_CAM_August_2013_FINAL.pdf
Congratulations to the Women of Influence on their contribution to the rental housing industry
CARMA Industries is proud to work with these extraordinary women to promote sustainable buildings.
Call today at 1-888-298-3336 or CarmaIndustries.com c 2013 CARMA Industries Inc. All rights reserved.
August/September 2013 13 Carma_CAM_August_2013.indd 1
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Accessible Housing By Design How to make a living space more livable The accessibility of your apartment building is an important consideration, now more than ever as new legislation and a better understanding of tenant needs emerge onto the scene. To help ensure your interior space is accessible to everyone, Canada Mortgage and Housing Corporation (CMHC) offers the following tips on what you should consider—particularly if you are undergoing upgrades and renovations: • If you’re in the market for a new building or planning significant renovations, keep in mind that open-concept floor plans are generally more accessible than floor plans with smaller enclosed rooms. Consideration should also be given to the location of each room in a unit. For example, it’s a good idea to keep the kitchen close to the dining area, and noisy spaces (such as a TV or recreation rooms) should be kept away from quiet spaces (such as bedrooms). • If someone in a wheelchair, walker or scooter lives in or regularly visits your apartment, your hallways should be at least 1,220 mm (48 inches) wide, with a turn-around space at all entrance areas, foyers and at the ends of hallways. Ideally, a path at least 915 mm (36 inches) wide should be provided into and through all living spaces. • Lighting can contribute to both the ambiance and safety of your building. To enhance safety, the lighting should be bright and consistent, especially along hallways and in stairwells. For residents, permanent night-lights next to bedrooms and bathrooms are a good idea. • The choice of materials and finishes you choose for your building will depend on your taste, budget and preferences; but remember that these choices may affect the usability of the units and common areas. For example,
contrasting colours and textures in walls may help people with low vision identify primary routes and functional spaces. • When buying furniture for common areas, choose pieces that are sturdy and stable. For visitors and residents who may have difficulty getting up from a seated position, consider providing at least one chair with a firm cushion, stable arm rests and a seat height of at least 450 mm (18 inches). • To improve the acoustic quality of a room and reduce background noises for anyone who is hearing-impaired, add “soft” elements, such as carpets, drapes, upholstered furniture and acoustic ceiling tiles. For people who are visually-impaired, “hard” surfaces, such as ceramic flooring or metal paneling can help enhance reflected sounds and assist with orientation needs, make a living area more “acoustically alive.” For more information on this, get a free copy of the “About Your House” fact sheet Accessible Housing by Design – Living Spaces, or find information on any aspect of the Canadian housing industry, at www.cmhc.ca. For over 65 years, Canada Mortgage and Housing Corporation (CMHC) has been Canada’s national housing agency, and a source of objective, reliable housing information.
To take advantage of CMHC’s Mortgage Loan Insurance, contact Paula Gasparro, Manager, Business Development, Multi-Unit Mortgage Insurance at 416-250-2731 or via e-mail at email@example.com. 14 www.canadianapartmentmagazine.ca
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of Influence Find out how four determined professionals used their brains, charisma charisma, and fearlessness to get ahead in a predominantly male industry By Erin Ruddy
Property management is a business that’s nearly impossible to define. It’s about maintaining the nuts and bolts of a building and nurturing relationships with the residents who call it home. It’s about keeping up with changing legislation and knowing when to retrofit a defunct boiler. From marketing and communications, to balancing books and mopping floors, managing an apartment building requires having the head smarts to be fiscally responsible yet the emotional intelligence to respect the scores of voices and cultures that exist, often inharmoniously, under one roof. Whether male or female, the hats worn by the field’s top professionals are as colourful as they are varied. But, as Bev Greene (Concert), Kris Boyce (Greenwin), Margaret Herd (Park Property Management Inc.) and Trish MacPherson (CapREIT) know, the more hats you wear, the further you will go. Earlier this summer, I had the pleasure of gathering with our four fearless females at Toronto’s National Club—ironically, a destination meant for gentlemen only up until as recently as 1992. What follows is a snippet of our conversations; the successes and frustrations, the trailblazing actions that propelled each woman toward her current position of influence. And though each property management professional had a uniquely inspiring story to share, the message at the heart of their stories is very much the same: work hard and love what you do if you want to succeed at this game. August/September 2013 17
Name: Kris Boyce Company: Greenwin Inc. Title: CEO Number of years in the industry: 29 Number of years with current company: 15 Work philosophy: Nothing is impossible. No matter what the previous day may have brought, wake up excited and prepared to face (and conquer) new challenges.
Name: Bev Greene Company: Concert Properties Title: Vice President, Property Management Number of years in the industry: 40 Number of years with current company: 13 Work philosophy: Put your heart and soul into all that you do. Show up and give everything you can each day.
How did you get your start in the industry? BEV: I started as a receptionist for a small family owned company. I did a bit of everything…answered the phone, dealt with the resident managers, did payroll, kept the tenant accounts, banking, and even drove the owner around. As the company grew I was given more responsibility and eventually a portfolio of buildings. KRIS: After graduating high school, I attended Seneca College’s Law Enforcement program. I wasn’t accepted as a police cadet. With great luck and timing, I accepted a job in February, 1984, as a Site Administrator for Metro International Inc. at 30/35 Charles Street in Toronto. That’s where I was taught the street smarts required to be on the front lines of the real estate industry.
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Name: Trish MacPherson Company: Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) Title: Vice President Sales and Marketing Number of years in the industry: 8 Number of years with current company: 8 Work philosophy: Build a great team to support your vision and continue to develop your vision through constant learning outside your comfort zone.
Name: Margaret Herd Company: Park Property Management Inc. Title: Vice President, Residential Property Management Number of years in the industry: 33 Number of years with current company: 33 Work philosophy: Attempt every task given and never say, ‘it’s not my job!’
MARGARET: I was hired at Park as an assistant to the accounts receivable clerk. It was all uphill from there. TRISH: I was recruited to join CAPREIT from my position as the head of marketing with a software and predictive analytics company. I have worked in functional areas from field sales to public relations, training and various marketing areas such as digital, print, and direct. I am definitely a marketing generalist. What are some of the biggest challenges you’ve faced in your career? BEV: Keeping up with the changing business environment and methods. For example, when I started there was no safe work or environmental legislation and everything was done manually. Residential staff was generally made up of retired people or those who did it temporarily while they looked for real work. Changing the mindset of owners and managers to recruiting qualified and career-minded site staff has been an ongoing challenge. KRIS: Wanting to be the best mother, manager, mentor, and role model –all wrapped up in one body. Property Management
is a 24/7 job. Juggling the demands of family and career has been one of my greatest feats yet. Every day of “doing it all” is just another day in the life of today’s professional woman. I’m cognizant, however, of the importance of switching my cell phone to vibrate every so often. MARGARET: I can’t quite answer that as challenges in this industry are many and constant. Every time you feel you’ve overcome one, another challenge or obstacle comes along. The OEB order was challenging as was returning to university at the age of 40, raising three children, and working full time. TRISH: The biggest challenge for me is keeping pace with organizational change and being a part of driving the company forward. There is no downtime and that can be a challenge as well as a motivator as the environment is exciting and fresh every day. What motivates you the most? BEV: I love the diversity—getting up and knowing that it will probably not be what I planned. The people who work in this business are wonderful and the interactions
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Cover Story with them are enjoyable and enlightening. I learn something new every day. Being able to solve problems and see positive changes in the buildings and the growth of the staff is extremely rewarding. KRIS: I take great pride in delivering the results promised to our owners, clients and employees. Relationships are paramount for any business to be successful. I love watching my team grow and evolve as we hit certain business targets. The happiness and success of my children is, of course, nature’s endorphin. MARGARET: Having supportive colleagues.
TRISH: We are always innovating at CAPREIT and that keeps every day interesting. I am involved in many more areas of the business than traditional marketing and the exposure to all areas, from international expansion to due diligence, AGIs and sub metering, keep the learning curve fresh. The last eight years have given me great exposure to the residential
business. I also work with a great group of people. We care about each other and that has gotten me through some tough times. What do you feel has been your greatest accomplishment in this business? BEV: I can’t pick out just one thing. Overall it is helping contribute to the success of the companies I have worked for and to the growth of the people that have worked with me. KRIS: Continuing my education while working full time, on call 24/7, raising a family, and commuting from Durham Region to the GTA for 30-plus years. Let’s do the time warp and remember a property manager’s job before cell phones—we had pagers, typewriters and long phone-booth conversations between site visits! MARGARET: Starting as an accounts receivable clerk and working my way up to my present position. Not many companies
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Cover Story offer advancement of this sort, however I had a great mentor who saw value in my being a pain in his side for constantly asking questions and, it may sound silly, but asking for more work. TRISH: I like to think that I’ve helped push the marketing side of this business forward for the industry. Be it in areas of pricing, digital marketing or other areas, we are always looking at ways to innovate and stay ahead of the curve to gain an advantage. I also think that we have built one of the best teams in the industry, be it in the corporate office, field or in marketing. I always say they make me look like good! What word of advice would you give to a young professional who wants to build a career in this industry? BEV: Nothing is black and white—there are many shades of grey in between, so it is important to be flexible and
TRISH: Getting building experience is a great place to start. Really understand what makes the company, what it is, and what drives profitability. Leasing and sales really are the life blood of the organization. From there you can get a viewpoint on all the facets available to you, from accounting to marketing and purchasing.
adaptable in this business. Respect and welcome diversity as that creates options and provides insight. You have to be able to think on your feet and make decisions quickly but at the same time make informed decisions. It is about common sense and your gut instinct—they will be the best tools you can rely on. KRIS: Be humble. Be okay with starting in an entry-level position where you can learn the business from the veterans and experts who are known for best practises. A true mentorship program enriches the mentor and mentee; each person pushes the other to achieve innovation and career satisfaction— without judgement along the way.
Did you have a mentor in your early years in this industry, someone who inspired you? BEV: Marlene Monk—she managed the company I started at in Calgary and gave me a chance right out of school. She taught me the business and encouraged me to take on new responsibilities. She saw something in me and I am grateful for her trust as it has been a long and successful career because of that chance she took with me.
MARGARET: I often say it to my grown children. Don’t say “no” or “it’s not in my work schedule” when asked to take on more duties at work. It only limits your knowledge and opportunity. Read about the industry, ask questions, and, most of all, recognize that you are in an industry that is constantly changing.
KRIS: My number one hero and mentor is my father. His last position before retirement was VP, Marketing & Sales for Dempster Bread Canada. One lesson
We’re proud of our exceptional homes The Remington, Vancouver
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Village Gate West, Etobicoke
We’re even more proud of our exceptional employees A strong foundation starts with the right people. After all, it is our team which brings their passion and creativity to all of Concert’s rental communities. And it’s talented individuals like Bev Greene, who share our commitment to honesty and integrity in all dealings, that make Concert a property management company ‘with a difference’. We are proud to have Bev, one of Canadian Magazine’s ‘Women of Influence’, on our team.
www.ConcertProperties.com Concert Half Page Ad for Canadian Apartment Magazine Size: 7.125" x 4.75"
August/September 2013 23
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I learned early in my career to leave the job at work. That has really helped me enjoy longevity in this industry.” - Bev Greene
Park Property Management Inc. Waiting approval
stands out in particular. He encouraged me to remember who represents your brand—your people. Dad would take coffees to the loading bays for the Dempster Bread drivers before they started their daily deliveries and thanked them for the hard day’s work ahead of them. MARGARET: Fred Dobbin, my predecessor. I worked for him for most of my career at Park. He taught me a great deal about the industry and allowed me the freedom to take on initiatives that I felt would be of benefit to our organization. There were no strict guidelines to my job duties, and therefore my position within the company evolved during my tenure. I was truly fortunate to have been given the ability to make my own job. TRISH: I think everyone at CAPREIT looks to Tom Schwartz as a mentor and a role model. He was instrumental in my hiring, and as the years have progressed, he has made sure that opportunities were open to me to pursue as I wished and was able. My current boss, Mark Kenney, is also a great at letting me develop my skill sets and push the envelope of innovation. How do you find balance in your life? BEV: I learned early in my career to leave the job at work. That has really helped me enjoy longevity in this industry. I give full commitment and effort to work and when I walk out of the door it does not go with me. I also believe that it is important to have some physical activity to help relieve the stress, so I work out and I love to play golf. Both require your full attention so it is easy not to think of work. KRIS: I am fortunate to be home again with Greenwin. You won’t find a more supportive, family-oriented environment. Work/life balance is one of today’s hotticket items. Both my team and my family are acutely aware of the importance of both, so when I veer too far toward work, my employees remind me: Balance. MARGARET: Now that my three children are adults, managing balance is quite
easy. However, when they were young it was, to say the least, challenging. I could write a book on this question. Both my husband and I worked. Our oldest son has Down syndrome and after he was born I only worked part time. Luckily, Park accommodated me in this regard. After my daughter and younger son were born, I went back to work full time. Not an easy task…but raising a family and working full time makes one a great multi-tasker! TRISH: I have two kids, 13 and 10, and although I can’t be home for them all the time I very rarely miss a school event or extracurricular function. I am lucky to be able to schedule my work and travel to fit with my life the majority of the time, and technology allows me to stay in touch. I use what I have at my disposal—from ‘Facetime’ to texting with my kids when I travel from coast to coast—and I keep in touch with work when I am home. I do shut down when I take vacation, which I do outside the city at least once per year. That is my time to be dedicated to my kids and refresh my energy for when I return.
Blaney McMurtry LLP congratulates Margaret Herd of Park Property, Kris Boyce of Greenwin along with the other women of inﬂuence on this well-deserved honour and salutes their continued leadership and successes
Where do you hope to see yourself five years down the road? BEV: Still at Concert. The company has plans to continue building and acquiring property, and I would like very much to be a part of that. KRIS: I would feel honoured and privileged to continue leading Greenwin for coming years while continuing to mentor and train our next generation of real estate professionals in Canada. MARGARET: Hopefully with Park and in the same position I currently hold, and if not that—retired!
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TRISH: I would like to continue my expansion deeper into other areas of the business, while continuing to push the marketing and sales function forward to obtain more profitability. I also love to travel. As we expand, I hope to experience more cultures and geographies and also improve my French!
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Qualifying for Construction Important tips for developers By Peter Cook and Robert Fleet Over the last number of years we have seen an increase in new purposebuilt rental apartment buildings across the country. There are several factors driving this growth. One reason is the condominium market has recently softened due to oversupply creating caution on behalf of developers, buyers and investors. Condominium projects are taking longer to sell out causing some developers to switch their focus to the rental market. Here are a few additional factors driving new rental construction: • Low interest rates for construction and take-out financing • The price per unit of aging, inefficient buildings requiring significant capital expenditures have reached levels close to the cost of building brand new • The wealth acquired by building, renting, and holding multi-family real estate long-term • A willingness by renters to pay a premium for higher quality units offering amenities that are unavailable with the current aging stock • The substantial increase in demand from investors to acquire apartment buildings and the significant shortage of buildings for sale to meet that demand
• Low average vacancy rate of 2.7% across the country • Lack of rent controls for new buildings in select provinces • Lower property tax rates with newly constructed condo titled buildings So how do you qualify? Lenders will expect developers to have a significant equity component. Typically, lenders will finance up to the lower of 75% of the market value or 85% of the total construction cost of the project. Depending on the financial strength of the borrower and the required equity, your lender may ask for additional collateral security. Timing is important. Reducing the time from the initial construction advance to substantial completion and lease up will reduce lender’s risk. A shorter construction period will help reduce the risk of predicting future rent levels, cap rates and long term take out interest rates. Permits, zoning and all other soft costs must be finalized prior to the first construction draw. A project too large may not be feasible from a single lender’s perceptive. In today’s market lenders will generally consider financing up to 200 units or a maximum of $30,000,000 in loan amount. Larger developments may require a syndication of lenders to finance the project.
Location is essential. Generally lenders prefer projects located in major centres, however secondary markets will be viewed on a case by case basis. Developer experience level is crucial. Lenders must have confidence the project is being completed by professionals, on budget and on time. CMHC insured mortgages are available for construction financing. Through CMHC’s program a developer may obtain their construction and take out financing terms prior to the start of the project. This will appeal to the investor planning to keep the building in their portfolio for the long-term. Other CMHC benefits include: • Up to 85% financing • Lower interest rates • Longer amortization • Lower lender fees • Larger geographical area In summary, qualifying for construction financing is not an easy process in today’s market. Construction financing is high risk and only a handful of lenders have funds available at this time. Borrowers routinely underestimate the detail, length of time and equity required to qualify.
Please contact either Robert Fleet or Peter Cook for more information or any detailed questions you may have. 28 www.canadianapartmentmagazine.ca
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Amenities Count, Now more than Ever Tenants today expect better common areas By Derek Lobo
For some apartment developers, amenities are little details—extras that get in the way of the bricks and mortar of a building. They think amenities don’t provide much revenue, so they aren’t considered important. These developers are leaving money on the table. Amenities are a vital part of every apartment building and a key way to stand out in a crowded field. 30 www.canadianapartmentmagazine.ca
Older buildings are under-amenitized. Newly built apartment buildings are immediately entering at the top of the market. Their units are newer and they’ve built in good amenity space—movie rooms, fitness centres, playgrounds, pools or community kitchens—right at the onset, as part of the building’s design. Prospective tenants see these amenities immediately and are predisposed to rent within that building. Landlords may wonder why amenities are important, since tenants are just looking for places to live. But tenants don’t just live in the apartment—they live in the apartment building. They sleep in their units, but it is in the common areas of the building where their living takes place. You may think that amenities are expensive because they don’t provide revenue, but landlords can get much higher rents in buildings with amenity space. This is especially critical for owners of suburban apartment buildings, as downtowns increasingly become hip places to live. Downtown apartments come with their amenities already built into the neighbourhood, as tenants have stores and restaurants within easy reach. Suburban apartment buildings, however, can compete by offering on-site amenities, which add value to the residents’ lifestyle. Facilities like a cyber café, a rooftop terrace or a stateof-the-art gym bring urban amenities into a building and build a community on your property that attracts tenants. Some amenities, however, change with the times. Granite countertops, for instance, have fallen out of favour compared to recycled glass and terrazzo. These are just as durable and far more eco-friendly. Amenities like free wireless Internet set your property as a 21st
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century community that potential tenants will flock towards. Look to the future: as electric cars gain a greater market share on our roads, those buildings without such stations will be ignored by renters who own these vehicles. Some amenities, however, are timeless. If your tenants have to walk or drive some distance to get to a good grocery store, or if no store is
provided in your building, your building will be at a huge disadvantage. Investors who install these amenities will reap considerable benefits in the form of higher net operating incomes. Student housing developers already know the benefits of amenities. By providing study rooms and fitness centres, or easy access to groceries, purpose-built
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student housing developments are able to attract more interest from students than a conventionally-built rental apartment unit, even if that unit is located closer to school. Student housing is also sold by the bed rather than by the unit, so that the cost of the amenities provided is actually quite inexpensive when considered on a pertenant basis. There are ways you can spend efficiently on amenities. As your building gets bigger, the cost of amenities goes down, as it’s amortized over more units. You should also try to make amenity space flexible. If it can have more than one use, it will be used more often—for example, a movie theatre that has movable chairs and a partition wall so it can be converted into a party room or rooms of various sizes. Older buildings looking to compete against newer developments can retrofit themselves to add amenity space that attracts potential tenants. Consider converting poorly performing retail space, or convert units currently on the ground floor. Make use of excess land on your property. In frame construction buildings, it makes sense to build a stand-alone amenity building, often referred to as a “clubhouse.” In condominiums, people are buying the steak. They are so interested in building equity that they’ll purchase units based on their long-term value in the marketplace, not necessarily caring what amenities the building has to offer. In apartments, you are selling the sizzle. The tenants have come for a place to live and sleep, and their units provide them with the bedrooms in which to sleep. To live, to be a part of a community, they need things to draw them outside of their apartments but keep them in the building. Amenities are an important element that keeps building life sizzling.
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Derek Lobo is the founder and CEO of ROCK Advisors Inc., Brokerage, with over a quarter century experience in advising developers and investors how to build new buildings or retrofit old ones. If you are looking for ways to improve your building’s net operating income, contact him at email@example.com
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The Good and the Ugly Why rates fluctuate (but don’t need to) By Andy Schwartze
Any apartment building owner who takes the time to unpack some dusty old financial statements can do a simple litmus test on insurance costs that should be very revealing. Take the insurance costs in the P&L of any year of operation and compare it to any other year’s equivalent number. The normal trend is that this one cost remains stable and reliable year after year. For buildings that are not beset by claims and which are not visually beat up, a well-rounded insurance program will offer steady rates at a consistent percentage. You will have other costs that are less benign over time. But, as we all know (some more than others), it is distinctly possible for these costs to come “off the rails.” Frequency of claims can cause a serious retraction of broad coverage offerings, the raising of deductibles, and higher premium costs. These things can be ugly to say the least. As we often say in the world of insurance, when it comes to acceptable risks, an underwriter only recognizes the “good” and the “ugly”— there are really no “bad” ones in between. There’s no need to revisit the world of slip and fall claims. We have learned time and again, that this 34 www.canadianapartmentmagazine.ca
type of claim is generally a sign of a deteriorating relationship between landlord and tenants. A significant number of these claims come from tenants, and in the majority of cases, the tenant has been careless and rather than accepting that, he or she decides to accuse the landlord of some form of negligence. The proof of this lies in that many of these claims are never paid against, and a few are paid small amounts to go away. The big ones are in the minority. Those of us on the insurance side of the apartment building business have client owners with big portfolios and spotless claims records,
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The collapse of a slab or a drowning in a pool are the two main frights of an underwriter. Finding insurance following such an incident can be very frustrating.”
while others seem to invite trouble from disgruntled tenants and/or visitors. Look at your building and then ask your partner if he or she would ever consider moving in and raising your kids there. If the answer is yes, be very proud and enjoy the fact that your tenants probably feel just as happy to call your property home. Top two hazards Occasionally, however, something big does happen and it always happens at a time and in a place that is least expected. Underground parking amenities are enormously practical and an attractive feature in the Canadian winter—but what if a concrete slab were to collapse as a result of weakened rebars in the supports that tie in to the below grade pillars? Equally attractive during the summer months are swimming pools, but few apartment buildings have the revenue base to be able to afford a full-time lifeguard. Instead, fencing is locked and tenants are warned via signage about the risks of the pool being unsupervised. But what if someone drowns? There are certainly other amenities that offer serious hazards, but in the insurance space, they just aren’t an issue in the overall pricing of insurance. The collapse of a slab or a drowning in a pool are the two main frights of an underwriter. Finding insurance following such an incident can be very frustrating. A couple of years forward, though,
and that claim will recede into history and the market will again embrace the owner. This is not to downplay the importance of a big fire (and they do happen on occasion) or a major water pipe burst, thanks to the city’s aging systems. But the real impact on insurability does boil down to a very short list of claims, which insurers absolutely dislike and treat as being a serious indication of an unwanted landord’s business. The way to a stable insurance cost is a very simple path worth following. Insurance companies are manned by humans, just as all businesses are. They are in the business of growing their balance sheets by seeing to it that premiums are adequate to pay claims, yet also leave a bit for the bottom line. And, at the end of the day, an underwriter’s attitude is going to be very simple: “If you don’t care about your building, well then, why should I?” Not an unreasonable position to take at all. Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He is a former President of the Insurance Institute, has taught in the community college system and provides continuing education to other brokers. He can be reached at firstname.lastname@example.org. For any comments, you can go to www.takecover.ca and post them on their new blog.
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Property Managers Start Caring About Car Sharing Service Can Attract Tenants, Cut Construction Costs By Daniel Viola
Why own a vehicle when you can borrow one? This is the central idea behind car-share services. Users pay a monthly or annual fee upon joining and a small charge based on the amount of time a car is used or the distance travelled. Members can quickly hop in any one of a company’s cars located throughout the designated area and start driving. No muss, no fuss. Car-share companies market themselves as convenient and cost-effective. The service is especially popular among 20and 30-somethings in urban centres, many of whom may consider car ownership a luxury — or even a hassle. This is the same demographic that overwhelmingly lives in rental apartments or purchase condominiums as their first property. Consequently, many property managers and developers are starting to take note. For industry members, implementing a car-share program on their property can 38 www.canadianapartmentmagazine.ca
be a way to market themselves as hip and ‘green’, and ultimately stand apart from their competition. When Toronto-based car-share company AutoShare began 15 years ago, its 16 members had to split three cars. Today, its 12,000-plus users (both individuals and businesses) have access to a fleet consisting of 23 different types of vehicles, including electric cars, hybrids and cargo vans. AutoShare has two main competitors in the GTA: Zipcar and car2go. President Kevin McLaughlin explains that to succeed, companies need access to prime urban real
Amenities Feature estate: parking spaces. “Relatively early on we started to realize the magnitude of the parking that we needed to find,” he says. To gain access to parking and, consequently, new customers, AutoShare has partnered with apartments, condos and property management companies. Its vehicles are currently in about three dozen multi-residential buildings. Generally, it has arranged to have one or two cars in each building, with more added when there is sufficient demand. To offer an added incentive, occupants of partnered buildings can also receive discounted sign-up fees. The service’s popularity has steadily grown, particularly among people living in midtown and downtown Toronto. “It’s not uncommon for 10 to 15 per cent [of residents in a partnered building] to be signed up,” McLaughlin says. This correlates with car sharing becoming more mainstream and seen as another part of urban living. McLaughlin says that this partnership with multi-res buildings results in a win-win situation. AutoShare rents the parking spaces it uses, meaning property managers don’t lose any parking revenue. The only significant change for the management is another feature to showcase when trying to sell units. “We’re providing an on-site amenity,” McLaughlin explains. “We can help the building become more attractive [to tenants].” Stewart Stockman is a manager at GTA property management company Compten Management Inc. His partnership with AutoShare began five years ago, when the company started parking two cars in the commercial lot shared between two of Stockman’s residential buildings in Toronto. The relationship has proven to be successful — so successful that those two initial spots grew to four, and then again to seven. “It creates revenue and you’re offering a service for your tenants,” Stockman says. “Any kind of benefits I can give to my tenants, any types of services, is a plus.” He adds that while about half of his tenants have personal cars, those who do not now have the option of taking out a shared car for day trips or quick errands. Overall, it has been a symbiotic relationship. “There isn’t a negative thing I could say,” he adds. In fact, Stockman says that he would like to expand the service to the other Comptenmanaged properties in the future. According to Joe D’Abramo, Toronto’s acting director of zoning by-law & environmental planning, car sharing can also benefit developers building new properties. In addition to receiving up to three LEED points, implementing a carshare program can reduce the minimum number of mandatory parking spaces required for multi-res buildings (a figure determined by the property’s location and the number and types of units it contains), thereby lowering construction costs. “The assumption here is that car
sharing spots in a building will lessen rates of car ownership,” D’Abramo says. Toronto commissioned a report in 2009 that found this assumption to be true — up to a certain point. The study found that car sharing particularly affected whether an occupant will own or eventually purchase a second vehicle. However, the report found that the reduction in car ownership is non-linear and eventually tapers off. “It works initially, for a couple of spots,” D’Abramo explains. McLaughlin states that in his experience, the parking space reduction is what really draws in developers. “More new condos are built with car sharing programs onsite because they want to reduce parking requirements in Toronto than want to meet LEED guidelines,” he says. Toronto has no citywide regulations as to how many parking spaces developers can remove if they add car-share spaces. Rather, City staff look at each proposal on a case-by-case basis. McLaughlin says he understands that the number of reductions tends to be four or five parking vehicles per car-share vehicle. As car-sharing services grow into surrounding municipalities — AutoShare recently expanded into Mississauga — McLaughlin expects to see more buildings promoting it as an added amenity: “I think in the not-so-distant future, it’s going to be more common.”
Daniel Viola is the editor of Property Management Report.
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Connecting with tenants on social media By Chaim Rivlin, RentSeeker.ca
Itâ€™s safe to say that almost all of us have a Facebook account in this day and age. In fact, according to 6S Marketing, Canada has over nine million active users on the social platform every day. Knowing that, doesnâ€™t it make sense to connect with your tenants via social media?
While it may seem daunting to create and manage social media accounts for your property, the process is actually quite simple. Facebook provides step-by-step instructions for setting up your
company (in your case, property) page, and most other social media channels, (i.e. Twitter, Pinterest, YouTube, Google +) are just as straightforward. Once you these set up, the biggest challenge is getting
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Marketing the word out to your tenants that the pages exist. Put up posters The most efficient way to let your existing tenants know about your social media presence is to put up signage in common areas around the building. List the reasons why “Liking” your page on Facebook will benefit them — will they
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be able to connect with other tenants? Vote on polls about building events? Provide quick feedback to you at any time of day? If so, let them know. For new tenants, you should inform them about your social media channels as soon as they sign the lease. Grab interest even earlier by including the link to your pages in all vacancy postings. You may also want to consider listing current vacancies on your Social Media channels—this will give your “fans” a chance to have access to your messages and building updates. Many times, current residents will refer family and friends to live nearby, and having updated information about what apartments are available for rent will increase chances of filling your vacancies faster. Update regularly When it comes to your messaging, the sky is the limit! Use your Facebook, Twitter and other social media pages to plan building events, post photos, notify of construction or power outages, advertise vacancies, or promote things of general interest to the tenants. A great example of this would be advertising shows or concerts at venues in the neighbourhood or even giving a shoutout to new businesses opening in the area. Even better, you could work out special deals with nearby businesses, exclusively for your tenants — the key being they need to connect with you on social media to get them. Other social media channels We’ve all heard of Facebook and Twitter, but what about the new kids on the block? Here is what they are and what they can do for you: Pinterest – This rapidly growing social media platform allows users to collect and “pin” photographs of things that inspire them. As a property manager, you could use this site to post images of your apartments for rent as well as photos of your amenities and services that are important to you and your tenants. Recipes for an upcoming building bake sale? Pinterest is the perfect place to post them!
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Marketing LinkedIn – LinkedIn is an excellent tool for networking with others, primarily to find jobs. However, the platform now boasts company pages much like the ones on Facebook, so this is another excellent way to connect with current or potential tenants. You are likely to capture the attention of professionals who would otherwise not have a Facebook account. Need more reasons to get social with your tenants? Check out some pretty amazing stats and learn more about social media marketing from sources like Mashable, TechCrunch, TechVibes, and others in this rapidly growing space. Facebook facts from 6S Marketing: First of all, it is important to qualify what Facebook considers to be ‘a user.’ An active Facebook user is someone who logs in on a computer (not a mobile device) and is only counted once every 30 days. • There are 15 million monthly active users in Canada on Facebook every month. This is half the population that logs into Facebook on a monthly basis • There are 9+ million active Canadian users a day • Canadians spend an average of over 400 minutes on Facebook per month • Canadians are one of the friendliest countries on the planet: on average we have 190 friends per user versus the rest of the world, which has an average of 130 friends per user • Facebook has a daily audience greater than two Super Bowls and six times that of Hockey Night in Canada
Connect with RentSeeker on: Twitter: www.twitter.com/RentSeeker Facebook: www.facebook.com/RentSeeker Pinterest: www.Pinterest.com/RentSeeker YouTube: www.YouTube.com/RentSeekerVideos
Chaim Rivlin is President & CEO of RentSeeker.ca, a Toronto Based, Canada Wide ILS and Online Marketing Company for the Apartment Industry. To learn more about RentSeeker.ca’s Marketing Services, contact us at: Contact@RentSeeker. ca or visit us at www.RentSeeker.ca.
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Going Coinless The benefits of cardoperated laundry machines By Susan Reynolds
Laundry is an important amenity in a building that impacts the ability to attract and retain good residents, operating expenses, and revenue. The laundry amenity can also be a great source of aggravation – equipment malfunctions, service calls, clothing claims, lost funds, jammed coin slides, water leaks, venting issues, theft and vandalism, just to name a few. Card-operated equipment provides some significant advantages over coin-vended machines, enhancing the net operating income contribution of a property’s laundry amenity and helping to increase the value of a building.
• Make it easier to implement increases in vends. Vends are restricted to increases of 25 cent increments with coin-operated equipment; with card-activated machines, vend increases can be implemented in penny increments; • Make it easier to price vends appropriately with time of day and variable pricing options. Coin-operated equipment provides the same pricing options but property managers are restricted to 25 cent increments.
Card-operated machines: • Remove cash from the building, reducing the potential for vandalism. It is not uncommon for thieves to peel back the top of a washer/dryer and coin box just to get at some change; • Make residents feel much more secure since the laundry room is cashless; • Make it easier for residents and can stimulate increased usage. Residents are no longer restricted by their available mix of coins and they don’t have to worry about collecting change. There are many card reload options available, including debit, credit, cash and code-based reloads;
Despite the advantages of card-activated equipment, machines should not be purchased outright because payment technologies are changing rapidly. Rather, it’s advised that property managers take advantage of a third party laundry services supplier and its supporting infrastructure. With a supplier’s purchasing power, product choices and the various financial options available, property managers can tailor a program to suit their individual building situation.
Susan Reynolds is director of marketing at Coinamatic Canada Inc.
We never lose sight of what tenants really want. More than shelter tenants are looking for a home. A refuge from a complex world. Our priority is to keep them happy, but we’ve learned you can’t unless you first have happy employees. That’s why we give our people the best training possible and empower them to make their own decisions. When we reward them well and treat them with respect, we know they’ll pass it on to your tenants. A study by J. D. Power and Associates suggests that satisfied tenants were almost twice as likely to renew their lease and over three times as likely to pay a higher rent. Over the years, we’ve created a whole culture around customer satisfaction. And it pays off in less turnover, more referrals and bigger smiles. We make them feel at home. More important than the address on the door are the people who stand behind it. www.oshanter.com O'Shanter Nest ad .indd 1
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No longer reserved for Manhattan Parking lots and swimming pools aren’t the only amenities apartment buildings are offering these days...some are going above and beyond with top notch services that have the word ‘luxury’ written all over them.
Simulated Golf Offer your tenants the ultimate golf entertainment and training experience with a simulated golf machine. Bring 18 holes of golf onto your property and you may never hear the word vacancy again.
Spas Forget simple fitness centres; why not let residents unwind in a whirlpool or sauna after their workout? While you’re at it, up the luxury quotient by offering a selection of spa treatments—the perfect finish to a long game of golf.
Cabanas If you’ve got a pool, why not take it a step further by adding private cabanas to your poolside patio? Of course, barbecue areas go hand-in-hand with cabanas—as does fresh towel service.
Video Game Arcade Billiards rooms, libraries and movie theatres are lovely and all, but add a video game arcade to the premises, featuring retro favourites like Pac-Man, Donkey Kong and Daytona USA, and you’ll attract every young professional under the age of forty.
Concierge Sounds upscale but having a concierge in the lobby of your building is more than a status symbol—it’s a security feature and administrative aid that could be very beneficial to the daily flow of your residence.
Catering Kitchen It’s already hot in NYC, so why not be among the first Canadian apartment buildings to offer a catering kitchen in yours? If you have a party room that’s popular, this could be your next step...(or leap). 46 www.canadianapartmentmagazine.ca
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A BuIldINg cAN’t MAINtAIN Itself. thAt’s where we coMe IN. Introducing Building Maintenance from Noble. We’ve got the right people and the right products to help you manage your property. No matter what type of building you run, you can rely on our expertise in construction, renovation and maintenance to help you find the products and solutions you need. We have an extensive inventory of leading brands, giving you a huge selection of parts and supplies. All with our 20 years of wholesale and distribution experience, and the convenience of our growing branch network and on-site delivery. Your job is challenging enough, that’s why you can count on us to deliver what you need, when you need it. we know your business. It’s our job.
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