Apartment CANADIAN
VOLUME 21 / NUMBER 1 / JANUARY/FEBRUARY 2024
COMMITTED TO QUALITY
2FIFTEEN IN FOREST HILL, TORONTO, RAISES THE BAR ON SERVICE AND DESIGN
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EDITOR’S NOTE>>
NEW YEAR, SAME PROBLEM
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As we kick off 2024, affordable housing continues to be a contentious subject that doesn’t appear to be getting any closer to finding a resolution. With demand at an all-time high, and development slow to keep up, governments and housing experts are eagerly looking for rapid solutions to an increasingly complicated matter. Recent attempts to address the housing shortage range from capping international student visas to removing the GST on purpose-built rental construction, which are both steps in the right direction. Under the National Housing Strategy, initiatives such as the Housing Accelerator Fund and the Rapid Housing Initiative are doing what they can to spur new development, but given the rising costs associated with residential construction, and legislation making it nearly impossible to raise rents, only large-scale developers are finding ways to profit along the way. Meanwhile, new rental projects catering to higher net-worth individuals are proving to be quite successful. In our cover story, we discuss the impetus for “2Fifteen” in Forest Hill and the business case for catering to a demographic that values flexibility over homeownership. Other key topics covered in the issue include market dynamics, property insurance, interior design, building retrofits, and why curb appeal matters so much to today’s residents. As renting becomes a lifestyle choice in Canada for its unique benefits that include more freedom, the image portrayed by a property counts for a lot and should reflect the values of those that live within. We hope you enjoy the issue!
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RENTING VS. OWNING
Rent is rising in popularity. Here’s why: On average, Canadian homeowners spend 24% more than renters on monthly shelter costs Record-high inflation rates are putting more pressure on Canadian household budgets, making homeownership less viable for millenial and Gen Z residents
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While monthly rent payments may seem steep, homeowners are responsible for property taxes, condominium fees and mortgages
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VOLUME 21 / NUMBER 1 / JANUARY/FEBRUARY 2024
FEATURE 14 INTERIOR DESIGN DONE WELL Art at the heart of FourFifty the Well 16 THE IMPACTS OF NIMBYISM ON HOUSING SUPPLY UBC research highlights flaws of municipal planning process
COLUMNS 8 Transactions A Record Year for Rent Growth 10 CMHC The Push for More Rental Housing 24 Ask The Expert Decarbonizing Existing Rental Buildings 26 Newsworthy Industry Hot Topics 32 Insurance Let’s Talk About 2024
COVER STORY
DEPARTMENTS
18 THE NEW BENCHMARK FOR LUXURY RENTALS 2Fifteen brings ‘unparalleled quality’ to Toronto’s purpose-built rental housing sector by Erin Ruddy
4
ON THE COVER:
Apartment CANADIAN
Editor’s Note
VOLUME 21 / NUMBER 1 / JANUARY/FEBRUARY 2024
2Fifteen in Forest Hill, Toronto. Photo courtesy of DBS Developments.
COMMITTED TO QUALITY
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A record year for rent growth in Canada Insights from Yardi’s Q1-2024 multifamily report Canada’s multifamily market maintained a strong performance through 2023, and more of the same is expected this year given current supply-demand dynamics. While last year’s national average in-place rent increased 6.5 per cent to an alltime high of $1,480, the vacancy rate dropped to 2.7 per cent, the lowest level it’s been in years.
TOP 10 Q4-2023 TRANSACTIONS Address
Source: Morguard
City
Sale Price (Millions)
# of Units
Sale Price/ Unit
Purchaser
3385 Dundas St W
Toronto
$88.0
131
$671,756
Realstar Group
The Pinnacle/Wydlewood Estates
Calgary
$116.0
608
$190,789
Avenue Living
HUB Place
Vancouver
$68.0
114
$596,491
CAPREIT
2051-2061 Stanley St
Montreal
$69.0
178
$387,640
Fitzrovia
Nox Phase 3
Gatineau
$35.5
99
$358,125
Centurion Apartment REIT
Greenwin Montreal Portfolio
Montreal
$102.0
720
$141,667
Mainbourg
Cedar Ridge Apartments
Calgary
$53.9
263
$204,867
Empirio Capital
Sterling Hill Toronto Portfolio
Toronto
$69.8
220
$317,273
District REIT
9.
JPG Portfolio Harmony & Hollick Kenyon
Edmonton
$63.4
266
$238,158
Avenue Living
10.
2293 Eglinton Ave E
Toronto
$32.4
118
$274,153
Lankin Investments
1. 2. 3. 4. 5. 6. 7. 8.
8 | Canadian Apartment | Part of the REMI Network |
TRANSACTIONS >>
None of this bodes well for those seeking affordable rental accommodations, particularly given the heightened demand is expected to persist into 2024. The good news, according to Yardi, is that a consensus has emerged around the need to build more rental housing. Both the federal and provincial governments have upped their efforts to stimulate new supply by exempting developers from the 5 per cent GST and 13 per cent HST in Ontario; the federal government also deployed a $4 billion Housing Accelerator Fund. But, as Yardi points out, despite these and other new measures to bolster purpose-built rental development, “Starts are declining due to increasing costs of construction materials and labour, and the difficulty in lining up debt.” Rental data by region In terms of rent growth, Alberta led the provinces in 2023 with 10.4 per cent year-over-year increase, driven by Calgary (up 13.4 %) and Edmonton (up 7.9 %). The national growth rate for lease-over-lease rents—which represent new leases on units that are re-leased after becoming vacant—moderated slightly in Q4 2023 but remained high overall, rising 12.2 per cent annually. As Yardi noted, the quarterly decline was the first of its kind since Q1 2021, speculating that “it may be a sign that rents are peaking due to the trickle of new supply or the impact of affordability.” Meanwhile, new lease rent growth was strong across Canada, topping double digits in nine of the 12 cities and five of the seven provinces tracked by Yardi. Year-over-year growth was highest in Nova Scotia (16.1%) and Ontario (15.8%), while Toronto led among the cities with an 18.5 per cent increase due to its rapidly rising population. The weakest growth for new leases was recorded in Manitoba (3.4%)—something Yardi attributes to “Winnipeg not experiencing the robust gains seen in other cities.” In Quebec, rent growth remained strong at 6.8 per cent, but lower than other parts of the country. Montreal, known for its large student population and pool of educated workers drawn to the city’s diverse economy, has seen a slowing in population growth recently due to rising tuition costs and fewer permanent immigrants relative to other provinces.
Canada’s investment market A look back at 2023
Multi-suite residential rental properties remained a prime investment target for many groups; however, activity levels were muted given the high cost of debt. As Keith Reading, Director of Research at Morguard, notes: “Buyers in some cases were reluctant to acquire assets during a period of ongoing price instability. Leverage-dependent buyers were markedly less active than they were during the pre-pandemic period.” Despite prohibitively high interest rates, properties continued to sell across the country throughout 2023, albeit at a pace that was well below that of the past few years. Investors continued to exhibit confidence in the sector given a longterm track record of positive performance characteristics. How Canada compares to the U.S. Both Canada and the U.S. saw strong demand and rent growth in 2021 and 2022 following the pandemic, but last year, Canada’s rent growth increased while it flattened in the U.S. A big factor, according to Yardi, was the sharp supply response in the U.S. that led to the construction of the 1.2 million units now underway, and more than 1 million units to be delivered over the next two years. In contrast, there has been a disconnect between housing and immigration policies in Canada. Housing construction remains weak while the populations is growing at a much faster rate than it is in the U.S. Consequences of this include rapid rent growth, households migrating in search of more affordable locations, and renters staying in place longer to avoid substantial increases in housing costs.
| www.REMInetwork.com | January/February 2024 | 9
THE PUSH FOR MORE RENTAL HOUSING Large-scale developers play a critical role for achieving Canada’s housing goals Strong rental demand continued to outpace supply in 2023, according to CMHC’s newly released Rental Market Report. This resulted in less available purpose-built rental apartments and lower affordability in Canada’s primary rental market.
A
s per CMHC’s latest data, the national vacancy rate for Canada’s primary rental market reached a new low of 1.5 per cent in 2023, the lowest recorded rate since 1988 when CMHC began recording a national vacancy rate. Average rent growth for two-bedroom purpose-built units surveyed in both 2022 and 2023 reached 8 per cent in 2023, well above historical averages. “Again in 2023, strong rental demand continued to outpace supply in communities across the country, making it very difficult for renters to find housing they can af10 | Canadian Apartment | Part of the REMI Network |
ford,” said Kevin Hughes, CMHC’s Deputy Chief Economist. “The vacancy rates and rent increases we are observing are further evidence the current level of rental supply in Canada is vastly insufficient and the need to increase this supply is urgent.” Increased demand pressures Although most Canadian cities saw an increase in rental supply, CHMC says it was not enough to keep pace with the increased demand pressures caused by high population and employment growth. Higher mortgage rates and persistently
high home prices also continued to make it harder and less attractive for renters to transition to homeownership. As rental demand pushed up, the construction of new rental homes continued to be difficult for homebuilders facing higher costs for financing and construction materials, along with labour shortages. In terms of escalating rent prices, average national rent growth for a 2-bedroom purpose-built apartment accelerated sharply to 8 per cent from 5.6 per cent over the previous 12-month period. This new high is well above the 1990 – 2022 average
CMHC REPORT >> Supply grew in most markets, but not enough to prevent tightening 6.2%
3.7% 2.7% 1.8%
1.7%
Montréal
CANADA
0.6% -0.5% Vancouver
Edmonton
Calgary
Toronto
Ottawa
Source: CMHC
of 2.8 per cent and outpaced both inflation (4.7%) and wage growth (5%). Calgary tied Toronto in 2023 for the second-lowest vacancy rate out of the six largest Canadian cities, as Calgary was particularly affected by high levels of interprovincial migration, in addition to significant international migration. Montréal’s vacancy rate dropped to a low not seen since before the pandemic, while Calgary and Edmonton both saw their lowest vacancy rates in a decade. Meanwhile, vacancy rates held steady in Vancouver and Ottawa, with Vancouver remaining Canada’s | www.REMInetwork.com | January/February 2024 | 11
CMHC REPORT >>
“To launch the construction of new rental development projects, return expectations by investors need to be met.”
tightest major rental market with the highest monthly average rents. A challenging climate for developers As purpose-built rental developers in Canada continue to face an increasing number of market challenges, including higher construction costs, government fees, and lending rates compared to a few years ago, housing experts are in agreement more needs to be done to encourage new rental housing development. Although Canada and the Provinces introduced some promising new measures in 2023, including the Enhanced GST Rental Rebate program, according to another study by CMHC, released last December, achieving an adequate level of supply
would require an investment of at least $1 trillion. “The wavering economic environment characterized by higher interest rates, construction costs and development fees has put the financial feasibility of numerous planned rental projects to the test,” the report contends. “These more restrictive financial conditions have limited the flow of private investments into new purpose-built rental housing, resulting in a decrease of planned projects and further fueling the affordability crisis.” CMHC research conducted earlier in 2023 showed that most of the recent purpose-built rental housing stock in Canada is owned and developed by the private sector. To launch the construction
of new rental development projects, return expectations by investors need to be met. As a result, larger-scale developers with the deepest pools of capital and a greater ability to source upfront equity have been playing a significant role in the development of new rental housing. On the other hand, smaller developers with larger financial indebtedness were more likely to pause their new projects or reduce the number of future projects they’d originally planned to build. Of these, approximately 40 per cent indicated an intent to reduce the number of future projects while 30 per cent indicated they would put their new projects on hold. For most rental projects paused or cancelled in 2022, the limited return premiums were what motivated the decision. Mean-
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12 | Canadian Apartment | Part of the REMI Network |
CMHC REPORT >> while, developers who decided to move along with their projects saw the need to raise rents to offset increasing borrowing, construction, and development costs as their primary strategy to incur profit. Looking ahead CMHC estimates that larger-scale developers (1,000+ units) will be responsible for more than three out of four new rental units in the coming years; they also represent roughly nine out of 10 developers that are currently leveraging public sector funding, such as CMHC programs – hence incorporating a greater share of affordable housing units into their portfolios. That said, market rent was mentioned as the most common product strategy. Partnerships between larger institutional investors, such as pension funds and public companies (REITs), and private developers can allow for reduced upfront cost and greater access to alternative financing. These partnerships are critical moving forward and were mentioned by survey participants
as being increasingly leveraged to build new rental housing. Larger scale developers are seemingly putting more focus into creating affordable housing opportunities.
Collaboration and partnerships between different development typologies and investors will be foundational in the future rental housing development ecosystem.
For CMHC’s latest Rental Market Report, www.cmhc-schl.gc.ca
| www.REMInetwork.com | January/February 2024 | 13
Interior Design Done Well Art at the heart of FourFifty the Well There’s been plenty of buzz around ‘FourFifty The Well’ since the project began construction in November 2020. Featuring 592 purpose-built rental units, the 46-storey apartment tower, developed and owned by RioCan Living, is one of the marquee rental properties of ‘The Well’ community, a 7.7-acre mixed-use neighbourhood at Front and Spadina in Toronto. Now open to residents and professionally managed by Rhapsody, FourFifty The Well provides around-the-clock service, community programming, an abundance of amenities, and an “arts and culture-first design” to distinguish itself from other rental developments.
“A
t The Well, the idea of livability is real, with easy access to everything that Toronto demands, expects and deserves— transit, culture, wellness, sustainability, diverse food options, inspiring workplaces and curated entertainment,” says Catherine Salib, spokesperson for RioCan Living. “FourFifty The Well sets a remarkable standard of modernity and timeless elegance, both with its distinctive design and architectural brilliance.” 14 | Canadian Apartment | Part of the REMI Network |
From its dramatic curb appeal to its sophisticated art-centric interior, RioCan Living has created a unique experience within the rental space. One of the distinguishing characteristics of the building is its thoughtful interior design that uses an elevated neutral base punctuated with jewel-toned furniture pieces, organic shapes, and layers of texture. According to Salib, the furniture and accessories were curated with the building’s future ‘young professionals’ in mind. Complementing these features is a
meticulously curated art program featuring 52 works of art by 34 local artists dispersed throughout the common areas. Unlike most residential buildings where artwork is often an afterthought, FourFifty The Well was designed with art and culture at the forefront. RioCan Living carefully selected all 52 works of art to give the property a unique character and inform the interior design. Artwork selections range from playful to provoking and are expressed in a variety of materials and styles—from dyed silk and stained glass
FEATURE >>
to vibrant oil paintings, photographs, and digital collages. “The project’s focus on art and culture was brought to life through our art collection,” Salib says. “The pieces are featured throughout the amenity spaces and successfully weave a cultural fabric inherent to the project and the neighbourhood throughout the common areas.” Other design features In the lobby, a distinctive lighting fixture highlights the soaring 16-foot-high ceiling, and the monochromatic finishes accentuate the marble and limestone used throughout the space. The sitting area features vibrant jewel-toned bistro tables and chairs, providing the perfect place for residents to relax and chat, or wait for an
About FourFifty The Well Construction timeline: November 2020 to present with remaining units expected to be complete first half of 2024 Partners: RioCan Living (owner, developer) and Rhapsody Property Management (property manager) Size: 46 storeys, 592 rental units Uber before a night out. Exterior-wise, FourFifty The Well embodies a harmonious blend of classic and contemporary architecture. The building boasts a “European flare” at its base, and the tower incorporates geometric detailing in its balconies. “The elegant, staggered exterior design provides exceptional views facing south
towards the lake or north overlooking the city,” Salib says. “This purpose-built residential building stands out for pedestrians crossing the bridges over the railway tracks, strolling along Front Street, or exploring the broader King West neighbourhood.” In addition, the building offers an abundance of attractions on top of what’s already available throughout the greater mixed-use community. While the 7th floor is home to numerous amenities, including a billiards room, café, coworking space, kitchen and dining area, and a wraparound outdoor terrace with a dog run, the 46th floor is home to the fitness centre, offering a mix of top-tier equipment for cardio and strength training alongside stunning views of the lake. Find out more at: livingatfourfifty.com
| www.REMInetwork.com | January/February 2024 | 15
FEATURE >>
The impacts of NIMBYism on housing supply UBC research highlights flaws of municipal planning process
A new research paper from the UBC Sauder School of Business has found that city councillors are more likely to vote against large new housing developments when they represent an area with a heavy percentage of homeowners.
T
he study, titled “Homeowner Politics and Housing Supply,” comes as Canada faces an affordable housing crisis due to supply constraints and growing populations. The researchers used machine learning to examine 631 housing-related bills from the City of Toronto from 2009 to 2020. They connected that data with local demographics to establish the link 16 | Canadian Apartment | Part of the REMI Network |
between city councillors’ voting behaviours and the share of homeowners in the areas they represent. The homeowner rate rose for every 10 percentage points. The probability that a councillor would oppose a large housing development went up by 16 per cent. Another finding emerged: municipal politicians are even more likely to oppose housing construction applications if they
live in the neighbourhoods where big projects are being proposed. A councillor is three times as likely to oppose a 100-unit development if it is located in their own ward, compared to the same project being proposed elsewhere. UBC Sauder assistant professor and study co-author Dr. Limin Fang says local representatives tend to cater to the wants of homeowners because they are more
FEATURE >> likely to be long-time residents and voters. Renters, on the other hand, often support new housing because additional supply can mean more options and lower rents, as well as increased amenities. “Homeowners can pressure councillors a lot more than renters because the majority of renters are temporary—and renters may eventually become owners, but maybe not in the same neighbourhood,” Dr. Fang, who previously worked as a planner in the City of Toronto, said in a media release in January. “Owners, however, tend to want lowerincome earners kept out. “In single-family neighbourhoods in places like Toronto, owners say, ‘We don’t want rowhouses, because those people are lower income. They’re poorer than us,’” said Dr. Fang, who co-authored the study with University of Hawaii assistant professor Dr. Justin Tyndall, and Nathan Stewart, a researcher from the University of Toronto. “If you build a mansion in our neighbourhood, and the house is bigger than all the rest, we welcome you, because we want richer people in the neighbourhood—and if my neighbour has a big, luxurious house, that increases my property value, too.” Older people of European descent are far more likely to oppose denser housing, as are suburban homeowners compared to those living closer to downtown. The research also found that concerns around densification often stem from the fear of reduced property values and added pressure on parking and amenities. Dr. Fang says that if municipalities are serious about adding to their housing stock, they will likely need a less citizen-driven, more top-down approach. It’s not that homeowners and councillors are unethical, she explains; it’s the planning process itself that’s flawed. “Cities use a lot of public consultation, mediation and facilitation to make sure neighbours are happy,” she explained. “But only the people who are opposed to the development show up, and the whole development application process just goes on and on. And much of the time nothing gets built. “Homeowners have a vested financial interest in restricting housing supply because the less housing there is, the higher their property values. If you want to get anything built, public consultation is very important—but you can’t let the owners run the show.”
Saying No to NIMBYism Nimbyism stands for “Not In My Backyard” (NIMBY), and it typically refers to residents who are passionate about their communities and want to have a say in what gets built in the vicinity of their homes. Concerns may range from a condo development casting shadows on existing properties to whether local hospitals, schools and other services will be able to support a surge in population growth. Affordable housing developments often stir up fears about increased crime rates and lower property values, and this can get in the way or stall a housing project from moving forward. According to a 2023 survey commissioned by Habitat for Humanity Canada, 54 per cent of Canadians said that NIMBYism is one of the main barriers to making affordable housing available in neighbourhoods—which doesn’t bode well for rapid housing development in a time of crisis.
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| www.REMInetwork.com | January/February 2024 | 17
COVER STORY >>
THE NEW BENC FOR LUXURY R 2Fifteen brings ‘unparalleled quality’ to Toronto’s purpose-built rental housing sector
18 | Canadian Apartment | Part of the REMI Network |
CHMARK RENTALS By Erin Ruddy A new rental property recently opened in Forest Hill, Toronto, that most would liken to a luxury hotel. Elegant and well-appointed, the 20-storey building features 177 premium rental suites in a range of sizes and layouts. To be clear, this isn’t your typical Toronto apartment building. Every detail was carefully curated to resonate with its intended demographic, from the custom millwork and handmade Danish brick to the anodized bronze mullions that frame the oversized windows.
| www.REMInetwork.com | January/February 2024 | 19
COVER STORY >>
About 2Fifteen Address: 215 Lonsdale Road, Toronto, ON Size: 133 units over 20 storeys Architect: Diamond Schmitt Architects Designer: Wise Nadel Design Date of completion: 2024 Key amenities: 24-hour concierge, parcel management, bike lockers and repair station, 17th-floor terrace and lounge, fitness facility with expert-led classes, party and games room, chef’s kitchen offering cooking classes and wine tasting events, car wash and detailing service.
Photo courtesy of DBS Developments.
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s DBS Developments puts it: 2Fifteen is for ‘high net-worth individuals’ seeking flexibility, freedom, and carefree living without a long-term financial burden. Visually, the building was designed to blend seamlessly with the aesthetics of the surrounding estates that characterize one of Toronto’s oldest and wealthiest neighbourhoods. “2Fifteen stands out from other rental properties through its unparalleled quality and commitment to a worry-free lifestyle,” says Bryan Levy, CEO of DBS Developments. “Distinguished by the two professional doormen at the entrance, it draws inspiration from 5-star hotels and aims to elevate the long-term rental living experience. Also, DBS Developments oversees property management through DBS Communities, another arm of our company, to ensure the continuation of a hotel-inspired lifestyle after construction. This commitment to quality positions 2Fifteen to set a new benchmark for luxury purpose-built rentals in Toronto.” 20 | Canadian Apartment | Part of the REMI Network |
A lifestyle choice While the lack of affordable rental housing has been an intense subject among policymakers, the housing sector, and the public at large for years, Canada’s luxury rental market has been quietly growing. The appeal of this category, from Levy’s perspective, is that renting as opposed to owning offers flexibility for those who’d like to keep their money liquid. Target demographics at 2Fifteen include downsizers, young professionals, and seniors looking to shed the long-term financial commitment of a large, burdensome home. Renting removes the responsibility for property maintenance and adds the flexibility of leasing—and let’s not forget the plethora of high-end services and amenities that serve to only sweeten the deal. “Our residents appreciate the meticulous attention to detail we put into our amenities and services,” Levy says. “The small touches, such as a well-stocked gym fridge and highquality espresso machines, contribute to a luxurious living experience. Our party room and games room surpass typical condominium
or apartment standards, fostering frequent use by our residents who enjoy entertaining guests.” Envisioned by Toronto-based Diamond Schmitt Architects, the building reflects opulence and sophistication at every turn, including the suites that are outfitted with full-size Gaggenau appliances, quartz countertops, and spa-like bathroom fixtures. Day-to-day building activities are overseen by two fulltime concierges, a pair of distinguished doormen, a general manager, and resident experience coordinators who all ensure the needs of residents are met—much like the staff at a luxury hotel, only better given the first-name basis, familiarity, and ensuing relationships that develop. According to Levy, it’s touches like these that are contributing to the rise in popularity of luxury rental apartments among certain segments of income-earners. “We’re observing a specific clientele who don’t necessarily adhere to a standard 9 to 5 routine,” he says. “This includes high-level executives and CEOs who may find themselves
COVER STORY >>
“Renting at 2Fifteen offers a solution that aligns with their dynamic schedules, providing luxury and comfort without the commitments associated with homeownership.”
single detached home elsewhere in the city or further away.” In essence, Levy says the lessened commitment associated with renting aligns seamlessly with these lifestyles in that they remove the traditional constraints of homeownership, pointing out that the value becomes more apparent when you break down the realities of renting vs. owning a comparable-sized condominium. “With the monthly carrying costs of a mortgage, plus realty taxes, plus maintenance, not to mention the downpayment and equity that would be tied up in your condo, it all adds up to more money than your monthly rental payment,” he says. “At 2Fifteen, you can put down first and last months’ rent and use that capital in other more productive ways.” Whether short-term or long-term, rental communities fill a need that Levy and the
DBS team believe is only getting stronger. 2Fifteen is one of several rental communities the company is currently launching in the Greater Toronto Area. Other properties include Bela Square near Main and Danforth, comprised of two new residential buildings on Eastdale Avenue that will soon deliver 484 family-oriented rental units to the growing East York neighbourhood. Bela Square features thoughtfully curated amenities and services centred around “living well” and creating an enriching and vibrant environment for residents. From studio apartments to four-bedroom townhomes, DBS describes Bela Square as “a rental community that fits every lifestyle and raises the bar for connected city living.” For more information about this project, visit www.dbsdevelopments.ca
Rendering courtesy of Henriquez Partners Architects
travelling extensively throughout the year. For these busy professionals, owning multiple properties can be logistically challenging. Renting at 2Fifteen offers a solution that aligns with their dynamic schedules, providing luxury and comfort without the commitments associated with homeownership.” Another segment of residents may only live in Toronto half the year, preferring to spend the other half in warmer climates, such as Florida. For these individuals, the flexibility of renting is a huge selling feature as it takes the stress and worry out of juggling multiple properties. Families with children attending prestigious institutions like Upper Canada College make up another contingent of the tenant-base. As Levy puts it, “Renting in Forest Hill provides a convenient and luxurious living arrangement close to the school during the week, then on weekends or during holidays, they may return to their primary residence—which is perhaps a
Interior photos courtesy of Living Luxe
| www.REMInetwork.com | January/February 2024 | 21
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Decarbonizing Existing Multi-Unit Residential Buildings “The most sustainable building is the one you don’t build” As Canada’s 2050 net zero targets loom on the not-so-distant horizon, finding ways to decarbonize existing multiunit residential buildings (MURBS) in the most cost-effective way with minimal disturbance to occupants, is an urgent undertaking for the sector.
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ccording to Mohammed Fakoor, Associate at RJC Engineers, the goal isn’t just about retrofitting MURBS to address energy waste—it’s also about eliminating climate pollution, improving health and safety, and increasing resilience to extreme weather events. In other words, it’s no easy task. “Climate change is amping up the need to address our aging building stock,” he said, pointing out that existing MURBS account for approximately 38 per cent of our 24 | Canadian Apartment | Part of the REMI Network |
nation’s carbon emissions. “As the average temperature of the globe increases—especially once it passes the 2°C threshold— impacts will get out of hand and have dire consequences on the ecosystem. Building owners need to prepare for higher temperatures. The climate is changing, and our buildings need to change as well.” Going for green Unlike new buildings that are designed with greener, low carbon resilience
strategies embedded into all aspects of planning through to operations, carbon emissions were not a consideration for apartment buildings and condos borne of the 1960s and 70s. From poor insulation to cheap building materials, most MURBS from that era were anything but climate resilient. That said, the case for preserving rather than demolishing the existing buildings has been proven to bring greater rewards. “There is more value in reusing ex-
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isting materials, and in preserving buildlike intensive air-sealing and re-insulation, stock is crucial to achieve Canada’s ings versus tearing them down, because it balancing mechanical ventilation, and GHG target. produces greater environmental savings,” converting to district energy. • Resilient retrofits should address Fakoor said. “Simply put, the most sustainBut don’t let the cost and disruption deter both adaptation and mitigation. This able building is the one you don’t build.” you. is called Low Carbon Resilience (LCR). Still, the path forward isn’t easy. Most ret“There are multiple opportunities for • To have a holistic view for carbon rerofits are invasive and much harder to conexisting MURB owners that are known to duction of your retrofit strategies, opduct when a building is full of occupants. deliver incredible benefits beyond envierational carbon (which accounts for While there are ways to mitigate the disronmental, including improved comfort, 28% of existing emissions), embodied ruption on tenants—i.e. tackling the work beauty, safety, seismic resilience, HVAC, carbon from building materials and in chunks at a time and giving ample warnand operational savings—all while inconstruction (11%) and refrigerant ing—it’s never ideal for tenants until the creasing the value of the building,” he leakage should be considered. work is complete. said. “Retrofitting buildings is how we • It is also important to consider a comFakoor classifies the retrofits as shallow, steward our embodied emissions; it’s bination of enclosure, electrical and moderate, and deep, with greater rewards about Planning for the future while promechanical retrofits to ensure resiland more disruption the further you take the tecting the future, and it’s every building ient decarbonization strategies. upgrades. By now, most owners have already owner’s responsibility to do it.” • The impact of air leakage on space tackled the ‘low-hanging fruit’ of retrofits, such heating is significant, and building as fixture replacements and swapping out Additional tips and strategies owners should plan to improve the incandescent bulbs for LEDs. But moderate • Decarbonization of existing building air barrier system of the building. retrofits, such as updating mechanical systems and replacing windows, can account for energy savings of 30 to 50 per cent. Meanwhile, the Mohammed Fakoor is an associate at RJC Engineers. For more information, visit real improvements come from deep retrofits www.rjc.ca.
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NEWSWORTHY >>
Industry Hot Topics Canada announces cap on international students
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o contend with ongoing housing shortages, the federal government announced it will be limiting the number of international students in 2024 and 2025 by a minimum of 35 per cent, with some provinces, including Ontario, seeing up to 50 per cent reductions. The two-year cap comes after months of mounting pressure by the provinces to limit non-permanent residents due to a critical lack of available housing and infrastructure. Data shows that more than 800,000 international students were issued temporary study visas in 2022, and according to Immigration Minister Marc Miller, 2023’s numbers were on track to be more than triple the number of foreign students accepted to Canadian colleges and universities 10 years ago. In the January announcement, the minister said he hopes the two-year cap will give the federal and
provincial governments enough time to address a system that has been “taking advantage of high international student tuition” without providing the proper supports. The federal government currently opens its doors to up to 500,000 new permanent residents per year, but there is no limit on the number of non-permanent residents, which includes temporary workers and international students. While in Canada, most temporary residents require affordable rental accommodations near their place of work or study, and this influx of tenants has contributed to critically low vacancy rates. The newly announced cap will cut the number of approved study permits in 2024 to 364,000, and in 2025, the limit will be reassessed according to pending data.
Leon’s furniture announces plans for mixed-use development
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eon’s Furniture is one step closer to developing a master-planned residential community on 40 acres of land it owns at Highways 401 and 400 in Toronto. The next step includes developing a secondary plan with the City of Toronto before moving on to Phase 1, which involves building a new flagship retail store and corporate headquarters on the site. Subsequent phases will include the construction of 4,000 homes ranging from townhouses to high-rise buildings and community spaces. The company says it will be partnering with “top-tier developers” to co-lead the project. With a successful track record of building retail showrooms and large scale distribution centres across Canada, the company believes its expansion into housing will help address the housing shortage as it continues to move toward a centralized distribution model. “Rezoning this large parcel of land creates an unprecedented and historic opportunity, for the City of Toronto and the Company,” said Michael Walsh, President and CEO of Leon’s Furniture Limited. “By establishing more density as part of a multi-year, multi-phase development, we will be helping to meet the overwhelming demand for additional housing within the city, while generating substantial value for LFL shareholders. We would like to acknowledge the City of Toronto and the Province of Ontario for their help and support of LFL’s plans. LFL has been working closely with Councillor Frances Nunziata’s office, as well as the City of Toronto and looks forward to commencing public consultation.” Leon’s Furniture is the largest retailer of furniture, appliances and electronics in Canada. The company has 303 retail stores from coast to coast in Canada under various banners.
NEWSWORTHY >>
New affordable housing project coming to Eglinton Ave. E, Toronto
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he City of Toronto and CreateTO have named Civic Developments, Windmill Developments, and Co-operative Housing Federation of Toronto as the development partners for a new housing project at 2444 Eglinton Ave. E. When complete, the project will deliver 918 homes, including 612 rent-geared-to-income (RGI), affordable and market rentcontrolled co-operative homes, making it one of the largest affordable housing projects in Ontario in the past 25 years. “I’m pleased to announce the development partners for this site, which is helping us reach our affordable housing targets,” said Mayor Olivia Chow. “This project is a good example of how the City, not-forprofit housing providers and private developers can work together to get affordable housing built. This will be the largest co-operative housing development in Ontario to date and will serve as a roadmap to help guide future developments, because we need more housing and everyone at the table to deliver it.” Consisting of two co-op buildings and a market ownership building, the site also includes 3,580 square feet of community space and 12,770 square feet of retail space. Rents for the RGI and affordable co-op homes will be set between 40 and 100 per cent of Average Market Rent, as reported annually by the Canada Mortgage and Housing Corporation; additionally, 33 per cent of the affordable homes and 15 per cent of the market rental homes will be accessible. “The site at 2444 Eglinton Ave. E. offers much-needed longterm, not-for-profit affordable housing,” said Councillor Gord Perks (Parkdale-High Park), Chair of the Planning and Housing Committee. “The development will contribute to significantly boosting Toronto’s housing supply while creating a diverse, transit-oriented community for our residents.” Civic Developments, Windmill Developments and Co-operative Housing Federation of Toronto were selected as the development partners through a market offering process led by CreateTO on behalf of the City in 2021. As a pilot project by the CreateTO Board of Directors, the development team will undertake the process to obtain a zoning bylaw amendment and other planning approvals required to enable the final development concept. This project was made possible by the Housing Now Initiative, a program launched in 2019 to activate City-owned lands and stimulate the development of affordable rental housing. Construction is anticipated to start in 2024.
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NEWSWORTHY >>
Provinces push ahead on mass timber construction
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ritish Columbia, Ontario and Quebec are collaborating in an effort to open more doors for encapsulated mass timber construction (EMTC). The three provinces have jointly developed proposed code changes that would allow for taller mass timber office and residential buildings than are currently permitted, and introduce new eligibility for EMTC in long-term care, retail and low-to-medium-hazard industrial facilities and some assembly occupancies. Public feedback is invited through the Canadian Board for Harmonized Construction Codes (CBHCC) portal until February 16. The exercise is the first time provinces have worked together to harmonize their codes ahead of a triggering initiative from Canada’s model national code developers. National review and adoption could occur later, but, for now, the CBHCC is acting simply as a facilitator and has not contributed to the proposed changes.
“If some provinces adopt these changes before they are included in the national construction codes, it could help to demonstrate a code development
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process that is more responsive to provincial priorities while maintaining consistent code requirements in the building codes of those provinces that choose to adopt them,” accompanying analysis on Ontario’s regulatory registry states. The proposed changes establish varying height and total floor space thresholds for seven different occupancy categories, along with other design and safety conditions. Office and residential buildings would both be allowed to rise up to 18 storeys, with offices given leeway for larger total area, maxing out at 77,500 square feet (7,200 square metres) versus 65,000 square feet (6,000 square metres) for residential. Among the newly contemplated facilities, it’s proposed to allow: care homes of up to 10 storeys and 86,000 square feet (8,000 square metres); retail facilities up to 65,000 square feet; low-hazard industrial facilities up to 77,500 square feet; and medium-hazard industrial facilities up to 48,000 square feet (4,500 square metres). “EMTC buildings have demonstrated that they can achieve the same health, safety, accessibility, fire and structural protection as other types of construction,” Ontario’s regulatory analysis states. “The use of mass timber also has environmental benefits, supports the forestry sector and results in quicker construction projects with less disruption to surrounding neighbourhoods.”.
NEWSWORTHY >>
Surrey streamlines development timelines
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urrey has approved changes that exempt apartment buildings up to six storeys and commercial/office buildings up to three storeys from requiring Advisory Design Panel (ADP) review, provided they are supported by staff. These changes, combined with an earlier exemption of townhouse and industrial projects from urban design review, are estimated to reduce the number of projects at the ADP by 60-70 per cent and save several months on development application timelines. Surrey is also exploring whether building permits for new homes could be submitted for review after the preliminary layout approval process and prior to final subdivision to reduce the time for building permit issuance. “With the housing crisis in mind, this council is taking steps to speed up our development application timelines,” said Mayor Brenda Locke. “I thank our dedicated staff for working quickly to find solutions that will help significantly reduce processing times, while
not compromising urban design outcomes. These changes will result in homes being built faster, and in turn, better meet our growing community’s vital need for new housing.” The approved changes will: • exempt low-rise (up to six storey) apartment buildings and low-rise (up to three storey) commercial retail and office buildings from ADP review, provided they are supported through urban design staff review; • allow an option for high-rise (more than six storey) residential and mixed-use developments and larger (more than three storeys) commercial and select major projects to be scheduled for ADP review either prior to introduction to council, or following third reading and/or council’s “approval to draft” a Development Permit but before final approval at the applicant’s discretion, provided they are supported through urban design staff review; and
• refer projects to an ADP review prior to introduction to council if the design is not supported through urban design staff review. In such cases, the ADP will function as a “second opinion” and will form part of staff’s recommendations to council.
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NEWSWORTHY >>
Hamilton landlords react to new renovictions bylaw
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amilton will soon be the first city in Ontario to introduce a renoviction bylaw forcing landlords to obtain a licence prior to engaging in building upgrades that require a unit to be vacated. Based on similar policy in New Westminster, BC, the Renovation Licence and Relocation Bylaw is another way to deter landlords from displacing tenants and hiking rents. While advocates refer to its recent passing as a “trailblazing victory”, landlords in the Hamilton area are far less celebratory. In fact, the Hamilton and District Apartment Association (HDAA) says the new legislation will lead to a more competitive and unaffordable rental market by deterring investment, lowering rental supply, and creating a worse environment for the most vulnerable tenants in the city. “Housing providers will see Hamilton not as a place to invest, but rather a place to avoid and those who suffer will be our residents,” said Daniel Chin, President HDAA. “Although it may help address ‘bad faith’ renovictions, the licence fees will put more strain on housing providers, including the good and honest operators that make up the majority. Consequently, it will be more challenging for Hamilton landlords, and for many, it may no longer be economically viable to continue providing housing, especially in these unprecedented times.” Meanwhile, arguing for stronger tenant protections, Monica Ciriello, Hamilton’s director of licensing and bylaw enforcement, sees the new legislation as a positive step for the city—particularly after Hamilton recorded a 983 per cent increase in the number of N-13s issued between 2017 and 2022. “I am pleased that Committee supported this long-awaited bylaw, the first of its kind in Ontario,” she said, clarifying that it will not prohibit the issuance of an N-13 notice, but rather, ensure the City is informed and trigger the provision of information to tenants regarding their rights. This includes the first right of refusal to return to the unit at the same rate they were paying previously, and the right to temporary accommodations for the duration of the renovations paid for by the landlord. As the HDAA argues, the $700-license and exorbitant costs of renovating and rehousing tenants will only further dissuade landlords from investing in their properties, particularly if they can’t increase rents afterwards. “The RTA already doesn’t make it financially feasible to renovate properties and ask for N-13 evictions if the tenant intends to move back in,” Chin said. “The fact is, prices go up. In no other facet of our lives do prices stay the same. If we take this mindset, we should also
ask why our municipal and property taxes are not the same as they were 10 years ago. It is not feasible, and costs unfortunately increase over time.” Furthermore, the group asserts that provincial legislation already exists to dissuade unlawful renovictions. In June 2023, Ontario passed Bill 97, which amped up tenant protections and raised fines for ‘bad faith’ evictions. Landlords are now required to give tenants a 60-day grace period to return to their units at the same rate they were paying previously. If a landlord fails to comply, the tenant may file a complaint with the Landlord and Tenant Board (LTB) with fines for offences now up to $100,000 for individuals and $500,000 for corporations. But the reality, according to tenant advocacy group ACORN, is that ‘bad faith’ renovictions continue to happen all-too often and landlords are going unpenalized. “Renoviction shatters the lives of families, breaks long-held community bonds, drives up rents in the neighbourhood, increases homelessness and strain on social services, incentivizes landlords to allow their buildings to fall into disrepair and destroys existing stock of affordable housing,” ACORN Hamilton wrote in a recent update. “While tenants do have the legal right to return to their unit at their current rent once renovations are complete, ACORN has yet to see a landlord follow the law and honour these requests. The Renovation License and Relocation Bylaw aims to address this in many ways, most notably by requiring that landlords provide returning tenants with either suitable alternative accommodation for the duration of the renovations or compensation in the amount of the difference in rent.” At the end of the day, the HDAA says that landlords really just want the same outcome as the City: to have a healthy rental market with happy tenants who are able to afford their units. “There does not need to be an adversarial relationship. If all parties worked together cohesively, a more positive impact could be made for the benefit of everyone while making sure our taxpayer funds went even farther.”
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INSURANCE >>
Let’s talk about 2024 Practical tips to secure the best insurance rates by Andy Schwartze 2023 is now behind us, and hopefully so are some of the conditions that caused so much upheaval in recent years. Since 2020, every business has had to twist and turn one way or the other to get through some very unusual circumstances—none of which any of us were suitably trained to handle. While it is heartening to know so many businesses made it through, inevitably there were some casualties, and we can only sympathize with those that didn’t survive.
32 | Canadian Apartment | Part of the REMI Network |
INSURANCE >>
T
he insurance world, of course, not unlike banking, made it through—although there are still a few unknowns in the works. Attempts to have physical damage insurance contracts pay business losses arising out of the pandemic were a bit of a stretch, but the ultimate decisions on those questions will remain in the courts for awhile and eventually become settled law. The same goes for expecting liability insurers to be responsible for their clients’ handling of employee and customer safety during that time. Much of the pandemic has been uncharted territory and the assumption that “someone needs to be held responsible for its impacts” is just not realistic. The experience, however—together with ongoing losses in the larger areas like wind, wildfires, and flooding—has resulted in a reinsurance industry much hardened by the significant dollars that it has shelled out over the past few years. These companies pay out the big bucks when something catastrophic happens and they have become very disciplined in their dealings with the retail insurers that you and I negotiate with for our insurance requirements. Recognizing this stringent new reality isn’t easy, and if you find yourself inclined to react by suggesting you’ll take your business elsewhere, you’d better think again, especially if you are the owner or manager of an older apartment building. So, what can we do to make our buildings and portfolios more attractive? As a “frontline” broker relied upon by the underwriting management of an insurance program for multi-res properties, I have learned that any building I approach must give me the impression that it would be a pleasure to call it my home. It’s an appearance standard that immediately telegraphs how proud an owner is of his/her building. Cleanliness, neatness, and the attention paid to the exterior says a lot about what the interior will show an insurance inspector. And inside is where things get serious. An attractive, clean lobby invites appreciation—as does a property with walkways, parking areas and garbage areas in good condition. Nicelyappointed lobbies equipped with up-to-date security will add to that positive impression. Balconies are easy to assess, as is landscaping. “Would I want my mother living in this building?” is a question I frequently ask, and the answer should be yes. There is no excuse anymore for buildings to have ‘ancient bones.’ This means there must be proper interior emergency lighting, well-lit exit signs, clean carpeting, and the walls and ceilings should be in good condition. Boiler rooms need to be clean and up to date. Nothing gives a better impression than neat, uncluttered boiler and electrical areas. Old plumbing systems, like galvanized risers, are simply no longer justifiable. Electrical panels should be current; GFCI plugs and outlets are an important safety issue that inspectors will bring up in their report. Units with old-style 4 fuse sub panels of the 15-amp variety simply don’t provide the power requirements typically needed in an apartment and are easily tripped. Upgrading
to a more modern circuit breaker panel should already be well underway, even if to only replace fuses with breakers. In-unit hot water heaters should be on a base that will at least collect some leakage, long enough for the problem to be noticed. These units have a lifespan and there should be a record of their age and a plan to replace them before they spring a leak, as they inevitably will. Crumbling balconies do not go over well. As wonderful as balconies are for tenants, they will not escape the critical eye of an insurance inspector. And trash (which can take many forms) should not be allowed to accumulate anywhere on the property. Apartment buildings are, after all, people’s homes and they need to be respected and maintained just as a homeowner must look after a private residence. Insurers provide insurance policies that impact their balance sheets when claims happen. Just like the insurance buyer, they have the right to say no and the right not to renew. It’s a two-sided relationship that either side can easily leave. Making a building attractive and keeping its bones up to date makes the purchase of a good package of coverage, at a market reasonable cost, a whole lot easier. For questions regarding multi-residential housing insurance, please visit: www.takecover.ca
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| www.REMInetwork.com | January/February 2024 | 33
Smart Ideas
MAINTAINING A SAFE PROPERTY THROUGH WINTER It’s not just about snow removal!
Prioritizing resident safety is something all property managers should take seriously, but there’s nothing like plummeting temperatures to create the right conditions for a catastrophe. Winter hazards can range from slip and fall injuries to power outages, to frozen pipes and falling ice. Residential property managers must be extra vigilant this time of year to ensure their buildings are properly maintained. Here are a few tips to keep your tenants safe through the long, dark days of winter: 1. Of course, it’s critical to ensure all exterior roads and walkways are clear of snow and ice, but interior spaces must be equally prioritized. According to numerous studies, the most common complaints in multi-residential settings pertain to poor upkeep of common areas. This includes disorganized management, maintenance requests going ignored, puddles and hazards going unaddressed. Apartments and condominiums today have more security concerns due to the increased prevalence of online shopping, food delivery, and transient populations from short-term rental services. 3. This brings us to the second point: invest in a good security and surveillance system. All too often, points of entry are ignored, and this leaves the building vulnerable to unwanted visitors. Having a proper surveillance system will help restrict entry and alert management to any issues, reducing the risk of crime and giving tenants peace of mind. 3. If tenants, staff, or visitors do encounter an issue when entering or leaving the building, their concerns should be addressed in the timeliest manner possible. In other words, communication is key. The best property managers have systems in place to receive tenant feedback in real time and resolve matters quickly to the best of their ability. This especially holds true if there is a safety hazard, such as an icy walkway or a slippery entrance. Slip and fall injuries account for thousands of hospital-visits each year, and if negligence can be proven by the injured party, the building owner will be held accountable. For more tips and strategies, please visit us at www.reminetwork.com
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