Issuu

Apartment CANADIAN

VOLUME 16 / NUMBER 1 / MARCH 2019

HIGH HOPES FOR HELIO CANADA’S 1ST MIXED-USE RENTAL TOWER TO TARGET NET-ZERO ENERGY

plus

PA R T O F T H E

Q1 MARKET REPORT

ENERGY RETROFITS PM#40063056

WHAT’S TRENDING

P A R T

O F

T H E

CONSTRUCTI ON MATERI ALS CONSTRUCTI ON MATERI ALS ASPHALT PAVI NG ASPHALT PAVI NG CONCRETEPAVI NG CONCRETEPAVI NG SI TESERVI CI NG SI TESERVI CI NG BUI LDI NG RESTORATI ON BUI LDI NG RESTORATI ON WI NTER SNOW SERVI CE WI NTER SNOW SERVI CE LANDSCAPECONSTRUCTI ON LANDSCAPECONSTRUCTI ON

2 C 24 4HOU HOUR RE EME MER RG GE EN NC CY YS SE ER RV VI I CE E

4 5 3 41 16 6. . 52 24 4. . 30 00 00 0 e i ma i n o e g o c es st t i mat t i ng g@f @f or r es st t gr r ou up p. . ca a f o e g o c f or r es st t gr r ou up p. . ca a

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

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

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

COMMITTED TO EXCELLENCE SINCE 1986

EDITOR’S NOTE>>

Apartment CANADIAN

IMPROVING ENERGY PERFORMANCE

/cammediaedge /cdnapartmentmag /mediaedgecam

The multi-residential asset class doesn’t always make things easy. Aging building stock, heavy grid-reliance, capital restrictions and a challenging tenant base can often get in the way of other important priorities. But, as climate change and rising utility costs put pressure on owners to invest in new technology, everyone should be focused on how to increase their buildings’ energy performance. Our cover story for this issue focuses on Helio, a remarkable new apartment tower coming soon to London, Ontario. Designed to be as close to “net-zero energy” as any Canadian multi-residential building has ever come, Helio is slated to set the standard for the industry and inspire other apartment developers to follow suit. Read our article on page 16 and learn about the impressive strides being made by Sifton Properties on the path to targeting net-zero. From solar panels to lighting sensors, there’s a lot that can be done to generate savings. In this issue, we also look at “co-living” as a new trend in the rental sphere, property taxes from the perception of renters, Q1 market transactions, and a few of the new rental developments soon to be popping up across Canada. With affordable housing and critically low vacancies continuing to plague the nation, we also look at modular technology as an innovative, energy-efficient solution. As usual, we hope you enjoy the issue and please reach out via our website: www.REMInetwork.com if you have any questions, concerns, comments or ideas for future articles.

Publisher

Dan Christie

Editor

Erin Ruddy

Senior Designer

Annette Carlucci

Production Manager

Rachel Selbie

Contributing Writers

Graeme Huycke Andy Schwartze Barbara Carss Chris Seepe

National Sales

Kelly Nicholls Melissa Valentini

Digital Media Director

Steven Chester

Circulation

Anthony Campbell For sales information call (416) 512-8186

Canadian Apartment Magazine is published six times a year by:

5255 Yonge St., Suite 1000, Toronto, Ontario M2N 6P4 E-mail: info@mediaedge.ca

President Kevin Brown Group Publisher Sean Foley Copyright 2019 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 1712-140X Circulation 416-516-8186 ext. 234 circulation@mediaedge.ca

Sincerely, Erin Ruddy @CdnAptEditor

rent trends

ENERGY FACTS & FIGURES:

NET-ZERO ENERGY BUILDINGS produce as much energy as they consume in a year

A DEEP RETROFIT is an extensive overhaul of a building’s systems that can lead to energy savings of 60%

SOLAR PANELS provide clean, low-cost energy, and once installed they’re virtually maintenance-free

Subscription Rates: Canada: 1 year, $50*, 2 years, $90*, US $75 International $100, Single Copy Sales: Canada: $12* * Plus applicable taxes Requests for permission to reprint any portion of this magazine should be sent to Erin Ruddy. 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.

SMART TECHNOLOGY trumps parking as the preferred amenity for 44% of millennial renters

19,000 ELECTRIC VEHICLES were sold in Canada in 2017 (up 56% from 2016)

RENEWABLE ELECTRICITY GENERATION has increased by more than 17% since 2010, with solar and wind having the largest growth

Yes, we can! Since MetCap Living established itself as a leader in property management, we have routinely been asked one, simple question; “Can you help us run our property more effectively?” And, for well over thirty years, the answer has remained — Yes, we can! Our managers are seasoned professionals, experienced in every detail of the day to day operations and maintenance of multi-unit rental properties. From marketing, leasing, finance and accounting, to actual physical, on-site management, we oversee everything. We concentrate on revenue growth, controlling expenses, and strategic capital investment in your property to maximize your profitability over the long term — when you’re ready to discuss a better option; we’ll be there. You can count on it. Kazi Shahnewaz Director, Business Development Office: 416.340.1600 x504 C. 647.887.5676 k.m.shahnewaz@metcap.com

www.metcap.com

Apartment CANADIAN

VOLUME 16 / NUMBER 1 / MARCH 2019

FEATURE 22 C o-living: the Next Big Thing in Rental Housing? Experts weigh-in by Barbara Carss

COLUMNS 8 Transactions Sound Fundamentals Fuel Healthy Q1 10 CMHC Movable, Modular Rental Housing by Graeme Huycke 24 Newsworthy Industry Hot Topics 26 Insurance Some Claims are Just Plain Messy by Andy Schwartze 28 Perspective Multi-res Property Tax Rate Hits Tenants Hard by Chris Seepe

COVER STORY

DEPARTMENTS

16 The New Standard on Energy Performance Sifton Properties breaks ground on “Helio” by Erin Ruddy

Apartment CANADIAN

ON THE COVER:

VOLUME 16 / NUMBER 1 / MARCH 2019

Rendering of “Helio” Photo courtesy of Sifton Properties

Editor’s Note HIGH HOPES FOR HELIO CANADA’S 1ST MIXED-USE

30 Smart Ideas

RENTAL TOWER TO TARGET NET-ZERO ENERGY

plus

PA R T O F T H E

Q1 MARKET REPORT

ENERGY RETROFITS

P A R T

O F

T H E

P A R T

O F

T H E

PM#40063056

WHAT’S TRENDING

Your Complete Property Management Flooring Solutions • Superior Performance • Incomparable Reparability

Learn more, contact us today Jon Kronemeyer

National Sales Director - Property Management & National Accounts, North America jon.kronemeyer@torlys.com

RESIDENTIAL - OFFICE - RETAIL

STABILITY AND BALANCE

AT THE TOP!

As a sister company to ACE Painting, Cranfield General Contracting was formed in 2004 to further meet the remodeling demands of all our clients. Delivering superior quality and cutting edge solutions Cranfield provides major renovation services to include interior, exterior, in suite and common area upgrades.

UPGRADES | ELECTRICAL PLUMBING | MILLWORK

W W W. A C E G R O U P G TA . C A

ACE

GROUP OF COMPANIES

ACE

GROUP OF COMPANIES

Sound Fundamentals Fuel a Healthy Q1 Rental market insights from Morguard’s Keith Reading Affordability in the home ownership market and changing demographics continue to boost rental demand all across Canada, despite some economic slow-down. Conditions remain tight in most metropolitan areas, with new supply being a non-factor in terms of providing relief from shortages. Even Alberta is beginning to show increased signs of life. With the condo rental market also tightening, Keith Reading, Director of Research at Morguard, warns that supply will be an ongoing issue as families struggle to find accommodations they can afford. Meanwhile on the investment side, interest remains high with the supply shortage making the acquisitions market very competitive. Reading says capital will continue to flow freely into the sector from a variety of public and private sources, adding that “values are holding at the peak with modest upward pressure, given strong rental growth outlook.”

RECENT Transactions: Address

City

#of Units

Sale Price (Millions)

Sale Price/Unit

Purchaser

Linmark Portfolio

Montreal

253

$59.0

$233,202

InterRent REIT

15 Walmer Rd

Toronto

$30.0

$384,615

Belgrove Capital

6700 The Avenue Ave

Montreal

$29.8

$330,556

Mecyva Inc

29-31 Upper Canada Dr

Toronto

114

$23.4

$205,263

Westdale Properties

The Quarters

Calgary

199

$63.8

$320,352

Minto

Portofino

Edmonton

240

$55.9

$232,734

Skyline

8 | Canadian Apartment | Part of the REMI Network |

TRANSACTIONS >>

US Multifamily Deals in 2018 Insights from JLL anadian investors acquired USD $9.8 billion worth of multifamily properties in the United States last year, a jump of more than USD $3 billion over the previous record high in 2015. Even so, they underwrote a fairly small fraction of total multifamily transactions as the sector captured the largest investment share among commercial properties for the third consecutive year. JLL reports USD $167.5 billion in multifamily deals for 2018 versus USD $132 billion for office. Year-over-year investment volumes rose most dramatically in New York, at 73.3 per cent, but Houston. Los Angeles and Phoenix also experienced gains in excess of 31 per cent. Meanwhile, DallasFort Worth captured the second highest dollar value, in excess of $7.5 billion, despite a drop of more than 21 per cent from 2017. Rent and vacancy trends were generally positive nationwide with 4.2 per cent rent growth and a 30 basis point drop in vacancy despite an addition of 287,000 new units coming onto the market. In fact, absorption surpassed completions by 12.6 per cent. “Investors recognize the sector’s outperformance and defensive nature,” JLL analysts conclude. “The multifamily sector is expected to see the most favourable year-over-year investment trends of the real estate asset classes in 2019, underpinned by solid wage growth and what continues to be an under-supplied housing market at the national level.” A sizable jump in completions — up to 319,000 new units — is projected for the coming year, which is expected to cool rent growth somewhat. Analysts expect that will occur in both primary and secondary markets, while investors continue to favour the former. “The expanding interest in high-rise assets is the result of investors’ lessrisky approach of capital deployment concentrated in primary markets,” they observe — and foresee a similar trend in the office sector. “Investment in the office sector, in particular, is evidencing a flight to quality. Buyers will shift their focus to lower-risk markets, pursuing longer-term-hold assets that can weather cyclical changes,” they forecast.

That’s reflected in a 2.5 per cent jump in transaction volume in primary markets, to hit nearly USD $63 billion last year versus an 11 per cent decline in activity in the secondary and tertiary markets for a combined sales volume of just less than USD $57 billion. JLL analysts attribute this to “investors’ preference for best-of-best assets in secure and liquid markets”. Overall, there was an 5 per cent uptick in transaction volume from 2017, with single-asset deals accounting for more than 78 per cent of the year’s sales value. A 10 per cent decline in office transaction volumes is projected for 2019. Foreign investors are expected to be most interested in industrial portfolios, office in secondary markets, multifamily and select retail. Yields are pegged “at or near cyclical lows” with a “reassessment of pricing” anticipated for some assets and in some markets. Office absorption, completions and rent growth were uniformly positive last year, while the vacancy rate declined by 40 basis points. “Despite hiring and talent shortages, leasing activity is showing few signs of a slowdown. Office leasing reached 36.1 million square feet in the fourth quarter, marking one of the strongest quarters over the past two years,” JLL analysts report.

Building Science & Restoration Consultants Property Condition Assessments Capital Planning ■ Building Structure ■ Parking Structures ■ Building Envelope ■ ■

CONTACT Philip Sarvinis | Bill Gladu | Michael Pond | Jeremy Horst (416) 977-5335

rjc.ca

| www.REMInetwork.com | March 2019 | 9

CMHC REPORT >>

Movable, Modular Rental Housing Key findings from new Vancouver pilot project by Graeme Huycke

With increasing strain being placed on the current stock of affordable rental housing in Canadian cities, there is an immediate need to increase the supply, especially at below-market rental rates for low-income residents in core housing need.

onsequently, affordable housing developers are seeking strategies that increase capacity through unique partnerships, innovative building designs, and quick construction methods. An innovative response to Vancouver’s immediate housing needs was the rapid construction of a 40-unit building located at 220 Terminal Ave. on previously unused city land by the Vancouver Affordable Housing Agency (VAHA). In partnership with CMHC’s Affordable Rental Housing Innovation Fund (ARHIF), the project became a reality. The main objectives driving this project were to create: • A movable building with an adaptable foundation that permits the entire building to be disassembled and relocated to other sites with little to no impact on the land itself; • Factory constructed housing for fast, easy replication on a scale that rapidly

10 | Canadian Apartment | Part of the REMI Network |

increases the number of affordable housing units available to those in need; • A collaborative partnership model that encourages the participation and investments from a broad range of partners and stakeholders (municipal government, CMHC, and credit union); • A cost-effective housing development strategy that temporarily makes use of underutilized city-owned land— particularly that pending redevelopment in regions where land is prohibitively expensive; • An expedient housing solution that reduces the strain on existing single-room occupancies by quickly providing units for low-income residents; • Socially inclusive housing that is designed to be safe and responsive to the diverse and changing needs of tenants, in close proximity to support services; • Lower construction costs compared to similar housing options.

VAHA is a legally independent agent of the City of Vancouver that leverages city- and partner-owned land to create new housing projects that offer greater diversity of home options and greater affordability by securing innovative funding sources, building techniques and unique partnerships. This pilot project was developed with financial support from CMHC’s Affordable Rental Housing Innovation Fund (ARHIF) to explore the feasibility of temporary modular housing as a quick, and potentially replicable, affordable housing solution for low- and fixed-income residents. The ARHIF is an initiative that fosters the development and testing of innovative financing and business models while incorporating social inclusion, accessibility and resource efficiencies. To broaden awareness and knowledge of the results and impacts of this project, a comprehensive postoccupancy evaluation was commissioned by CMHC.

Over 25 Years’ Experience in Renovating Apartments and Condominiums

COMMERCIAL • INDUSTRIAL • RESIDENTIAL • INSTITUTIONAL General Renovations

Kitchen Renovations

Painting

Cleaning of Units

Plumbing*

Flooring

Bathroom Renovations

Electrical*

Fire and Flood Restoration

Custom Cabinetry

Drywall and Crown Molding

Fencing

* Use a Licenced Plumber and Licenced Electrician (ESA)

91 Pippin Road, Concord, ON L4K 4J9 Tel: 905-660-2353 / 905-669-8888 Toll Free: 1-888-660-2353 Fax: 905-660-8390 / 1-888-660-8390 sales@multitech2000.com

www.multitech2000.com

Municipal Licence No. T85-4186258

CMHC REPORT >>

2019 REMI Show and ISSA Show Canada

TWO SHOWS, ONE LOCATION, ONE COMMON GOAL

Proudly owned and operated by:

June 11 to 13, 2019

Proudly owned and operated by:

Metro Toronto Convention Centre, North Hall Toronto, Ontario, Canada www.REMIshow.com

www.ISSAshowcanada.com

The following areas were analyzed to assess the initial outcomes and extent to which the project objectives were met in terms of affordability, tenant satisfaction, social inclusivity, accessibility, energy use, replicability, and enhancement opportunities. A team of research consultants collected data and explored the social, financial and technical elements of the project by documenting the building’s physical characteristics, building operations and energy consumption, undertaking a tenant survey and building-management interviews, and characterizing accessibility, construction and operating costs.

ARE YOU CONTEMPLATING THE SALE 2019-01-30 11:02 AM OF YOUR APARTMENT PROPERTY? Project key findings:

ISSA Banner 2019 4.563x2.indd 1

Consider the following: • Who will represent your best interest? • Who will give your property maximum exposure? • Who will deliver the highest value for your property? With over 25 years of experience, tens of thousands of units sold, and hundreds of clients represented, we have consistently delivered superior results. Through our local and national coverage, we create maximum exposure, ensuring maximum value for your property.

33 & 77 Falby Court Ajax, ON 422 Suites - $274,882 Per Suite SOLD FOR $116,000,000*

25 Cougar Court Toronto, ON 236 Suites - $258,475 Per Suite SOLD FOR $61,000,000*

16 Towering Heights Boulevard St Catharines, ON 135 Suites - $222,589 Per Suite SOLD FOR $30,049,508*

55 Forty Second Street Etobicoke, ON 26 Suites - $282,692 Per Suite SOLD FOR $7,350,000

• Units rented at 70% below average market rent for a bachelor unit. A subsidy from the City makes up the difference between the operating costs and revenues ($375/month rental revenues). • Per-unit capital and operating costs are comparatively favourable to similar new housing options. • The ability to make temporary use of “free” unused municipal land was a major cost savings. • The modular approach resulted in a significantly faster construction schedule than usual. • The building achieved 12% energy and greenhouse-gas emissions reductions over the 2011 National Energy Code for Buildings. • The well-located City-owned site gives tenants access to transit and services. • 75% of respondents indicate a sense of ownership over their unit, despite knowledge of the temporary nature of the housing project. • 84% of tenants indicate that they are satisfied or very satisfied with the building (93% survey response rate). Based on the success of this pilot project for VAHA, this model is being replicated across British Columbia under other initiatives outside of the ARHIF, with investments to construct an additional 2,000 dwelling units.

* ADJUSTED FOR CAPITAL EXPENDITURES

CBRE Limited, Real Estate Brokerage National Apartment Group – Toronto DAVID MONTRESSOR** | Executive Vice President (416) 815-2332 | david.montressor@cbre.com ** SALES REPRESENTATIVE

12 | Canadian Apartment | Part of the REMI Network |

Please visit our website: www.cbre.ca/nag-canada

For more information visit us at www.cmhc.ca. To take advantage of CMHC’s Mortgage Loan Insurance, contact Graeme Huycke, Senior Specialist, Client Relations, Ontario Multi-Unit Underwriting at 416-250-2705 or via e-mail at ghuycke@cmhc.ca.

Practice Effective Corporate Governance Are your apartment assets CRB-approved?

It’s a matter of standard!

Let your investors and shareholders know how commited you are to the apartment assets you manage...become certified

CRB-approved!

Living GREEN TogetherTM crbprogram.org

well-run

well-managed

well-maintained

SPONSORED CONTENT

“Embedding datadriven heating controls in several of its properties has given Briarlane's properties the ability to adopt a more proactive and flexible approach to occupant comfort. ” “We recognized there was an opportunity to install smarter heat controls within several of its properties,” explains George Hantzis, Commercial Energy Solutions Manager at Enbridge. “To keep residents cozy throughout the winter, heating equipment is turned on at the onset of colder temperatures and stays on throughout the entire season. Although ideal temperatures are maintained on cold winter days, without the proper temperature controls in place, many buildings become overheated on milder days,” Added Hantzis. To a d d re s s t h i s , B r i a r l a n e i n st a l l e d advanced heating control systems at seven of its rental properties. The new controls connect directly to each building’s gas meter to provide real-time energy consumption feedback. The system then applies this feedback to optimize the heating system’s output to deliver the specific amount of energy needed to maintain the desired indoor temperature given outdoor conditions. Immediate results After one year, the retrofit paid off. In that time, buildings with the new system used less natural gas and eliminated nearly 1,100 tonnes of carbon emissions (the equivalent of planting over 18,000 trees). Funding support from Enbridge's energy e f f i c i e n c y i n c e n t i v e p ro g ra m s h e l p e d Briarlane clients receive over $98,784 in financial incentives. “The benefits of the new system were realized immediately,” reports Pat Brawn, Vice President and General Manager and Principal at Briarlane Rental Property Management Inc. “It prevented overheating, reduced energy consumption and associated costs, and improved resident comfort.”

Briarlane's savings by the numbers $94,784: Financial incentives received from Enbridge Gas Inc. 3.12: Years to estimated project payback 1,100: tonnes of avoided Carbon Emissions annually At last count, savings from the project are estimated to pay for the retrofit in little over three years.

buildings built before 1990. Even the most efficient buildings in the portfolio realized energy savings by optimizing controls.”

Paying it forward Embedding data-driven heating controls in several of its properties has given Briarlane's properties the ability to adopt a more proactive and flexible approach to occupant comfort. “The success of engagement has driven home t h e va l u e of ex p l o r i n g e n e rg y s av i n g technologies and techniques,” says Hantzis. “We have seen many successful applications of advanced control systems in multi-residential

Get with the program Enbridge’s energy efficiency programs are available to property stakeholders, like Briarlane, at no cost. Program participants receive technical support from an Enbridge Energy Solutions Consultant to help i d e nt i f y a n d q u a nt i f y e n e rg y eff i c i e n c y opportunities. Financial incentives are also available to cover up to 50 per cent of eligible project costs.

George Hantzis is Commercial Energy Solutions Manager at Enbridge Gas Inc. (operating as Enbridge Gas Distribution). For more information on Enbridge's energy saving programs, incentives and services visit enbridgesmartsavings.com/business, call 1-866-844-9994, or email energyservices@enbridge.com

FEATURE >>

Co-living: The Next Big Thing in Rental Housing? Analysts say the trend is real by Barbara Carss

rominent real estate analysts are promoting co-living as a potential next big thing in Canada’s ever-tightening rental housing market. CBRE identifies dormitory-style dwellings offering private bedrooms with shared kitchen and living space as an emerging trend in commercial real estate. “This style of apartment is designed to accommodate a greater number of renters while still responding to rising development costs and increasing rental rate sensitivity,” reports CBRE’s newly released Canadian Real Estate Market Outlook 2019 — which tags co-living as an example of “rethinking real estate” along with co-working, specialized facilities for last-mile delivery, food halls and proptech innovation.

22 | Canadian Apartment | Part of the REMI Network |

However, a recent study of planning policies in major Canadian cities suggests that local governments may not be so receptive to a concept more traditionally known as rooming houses or single room occupancy (SRO) buildings. Nor is student housing necessarily an effective analogy for selling the idea to decision-makers and prospective neighbours. University of Toronto adjunct professor Philippa Campsie notes that much of the current negative sentiment relates to the emergence of informal rooming houses in predominantly single-family residential areas near suburban post-secondary campuses. “When we (city dwellers, city planners, city councillors) talk about rooming houses, we usually talk about how best to regulate them, followed by how to enforce those regulations,”

she observes in a research paper released last year through the Neighbourhood Change Research Partnership. “The dilemma for municipalities is to regulate these new kinds of rooming houses in a way that protects tenants who need affordable housing near where they work or study, while placating residents who would prefer not to have rooming houses in their neighbourhoods.” Her overview of municipal regulations and licensing practices paints a picture of a nationwide stigmatized housing form, but that arguably validates the case for rethinking real estate. Paul Morassutti, vice chair of CBRE Canada, is fittingly philosophical. “Growth is often synonymous with discomfort. In many Canadian cities, real estate will remain at the forefront in both regards,” he muses.

FEATURE >>

“Availabilities will continue to be almost non-existent in major downtown centres. This will only add to frustration around housing accessibility and affordability coast-to-coast.” group, “Cap rates in this sector continue to be the lowest of any asset class in Canada and investors are increasingly open to sacrificing going-in yield in exchange for the possibility of future rent growth.” Even in the hard-hit markets of Calgary and Edmonton, the multifamily sector stands out as a bright spot. CBRE analysts project a slight increase in average rents for 2019, while the vacancy rate hovers around 5 per cent in both cities. New purpose-built rental housing is also due for completion this year, adding

about 1,700 units in Calgary and nearly 1,100 in Edmonton. Some investors are also looking at the pent-up demand for downtown housing options in light of still-rising vacancies in older office stock. “Due to financial inefficiencies, some owners are reviewing conversion opportunities as a viable option to repurpose these obsolete buildings. Recent projects in Edmonton have trended towards multifamily and hospitality conversions,” CBRE reports.

Building Envelope Repairs Balcony Modernization Parking Structure Rehabilitation

Accessibility and affordability frustrations The 2019 Market Outlook tallies market factors that could push local officials to reassess their assumptions and priorities — most notably, continuing low vacancy rates, steep housing costs that hinder rental turnover and intense competition as population growth outpaces new supply. Across the 13 large urban markets it surveys, CBRE projects a slight easing in the vacancy rate over the coming year, bumping upward from 2.4 to 2.5 per cent, but that will be accompanied by an increase of nearly 3 per cent, from $1,238 to $1,274, in average rent for two-bedroom units. “Availabilities will continue to be almost non-existent in major downtown centres,” CBRE cautions. “This will only add to frustration around housing accessibility and affordability coast-to-coast.” Drilling down to specific markets, Montreal will capture 35 per cent, or more than 12,100, of the new purpose-built units expected to be completed this year, pushing the city’s vacancy rate up 60 basis points to 2.5 per cent. Even with a projected $10 increase this year, the average rent for two-bedroom units — at $819 — will be well below the national average. Vancouver can also look forward to nearly 8,300 new purpose-built units and a 30 basis point jump in the vacancy rate, to 1.3 per cent. Meanwhile, about 5,550 new purpose-built units will come onto the Toronto market, but the vacancy rate is projected to slip 10 basis points, down to just 1 per cent. Average rents for two-bedroom units are expected to increase in both cities, to $1,539 in Toronto and $1,724 in Vancouver. On the landlords’ side of the equation, already record-low cap rates are expected to dip even further this year. Coupled with sluggish turnover that’s hindering opportunity to renovate and raise rents in existing units, CBRE points to “an aggressive appetite from both domestic and international capital” that could potentially finds its way to the envisioned co-living projects. “The stability of the sector has become increasingly enticing for investors given recent financial volatility, economic uncertainty and increased liquidity, which has placed significant upward pressure on pricing,” observes David Montresssor, executive vice president with CBRE’s national apartment

Roof Assessment & Replacement Window Upgrades Site Improvements Interior Upgrades New Amenities

Asset Transformation Consulting Engineers Project Managers Materials Testing & Inspection

DAVROC & ASSO C I ATE S L TD.

2051 Williams Parkway, Units 20 & 21 Brampton, Ontario L6S 5T4 t (905) 792-7792

DAVROC. CO M

| www.REMInetwork.com | March 2019 | 23

NEWSWORTHY >>

Industry Hot Topics New Rental Tower Breaks Ground in Vancouver’s West End

WL Realty Advisors officially broke ground on a 21-storey rental tower located at 1500 Robson Street in Vancouver’s West End. The ceremony took place in late February with Mayor Kennedy Stewart in attendance. When complete, the tower will add 128 purpose-built rental units to a neighbourhood critically lacking in vacancies. GWL Realty Advisors is developing the project on behalf of the owner, the London Life Insurance Company. “We are proud to be increasing the supply and diversity of rental housing in the west end of Vancouver,” said Ralf Dost, President, GWL Realty Advisors. “This new development will provide the neighbourhood with desperately needed rental units – especially those suitable for families – in a professionally managed building with great amenities. This project represents the type of community building we want to undertake in the City of Vancouver and for our investment clients.” In response to the shortage of family-oriented rental housing, a third of the building will be made up of two- and three-bedroom units suitable for families. The new building will also appeal for its indoor and outdoor amenities, including a fitness centre, a yoga room, several lounges and a rooftop patio featuring an outdoor fireplace and seating areas. The building will also be pet and cyclist friendly. With some of the highest land costs in the Vancouver market, new developments in the Lower Robson neighbourhood have tended to take the form of luxury condominiums. This new family-oriented rental

Zahlco Developments Invests in the Brantford Rental Market

ahlco Developments announced it has purchased two Brantford properties for the future development of a nine-storey rental apartment with ground floor retail space and adjacent townhomes. Currently the sites are occupied with rented townhomes and commercial units, however a proposal for site-specific zoning is in the works.

“We are excited to be a part of the growing community of Brantford and to continue working with the City on this upcoming project,” said Aaron Zahler of Zahlco Developments. “The Brantford market has been one of the strongest housing markets in the past two quarters and when you add in WLU and all of the infrastructure required to support its expansion,

24 | Canadian Apartment | Part of the REMI Network |

building will help break this trend while also supporting a car-free lifestyle, as residents will be able to live, work, shop and play within the downtown peninsula. “Developments like this one at 1500 Robson are adding muchneeded supply to the downtown rental market,” said Mayor Kennedy Stewart. “In order to alleviate the housing shortage in our city, we need more of all types of housing, and especially purpose-built rental. By incorporating larger units suitable for families into the design, this new tower at 1500 Robson will also help diversify the housing mix in the Lower Robson neighbourhood”. This development is the first project on the Robson corridor to be approved under the new West End Community Plan and is in line with the City’s policy of increasing rental housing density in the area. With construction now underway, the building is expected to be finished in early 2021. Following construction, the building will be professionally managed by GWL Realty Advisors.

we felt it was the right place to be investing,” added Ben Feferman, Managing Partner of Amuka Capital, which underwrote the deal. “There is so much appetite for rentals in the downtown core and we feel honoured to be a part of adding much needed supply in the marketplace.” According to the official press release, Zahlco Developments has put together an experienced team of lawyers, architects, engineers and city planners to implement the required zoning amendment and heritage approvals. City

Planner Mark Gladysz from HeritageDowntowns.com, who previously worked for the City to revitalize Downtown Brantford, is now helping developers navigate the planning and heritage processes in downtown cores across municipalities throughout the GTA and Southern Ontario. “The proposal by Zahlco will contribute to the city’s downtown revitalization and residential intensification goals by adding several hundred much needed new residential rental units, in an architecturally compatible building,” said Gladysz.

NEWSWORTHY >> • Rental rates have been increasing over the past four months in the combined area of Edmonton, Fort Saskatchewan, Leduc, Spruce Grove and St. Albert from $1,207 per month to $1,255 per month. • On a provincial level, Ontario had the highest average rental rates in January, with landlords seeking $2,164 per month on average, an increase of 2% from December ($2,123). • In British Columbia, the average asking rent was $1,583 per month, an increase of 4% from December ($1,520). • Alberta was also up month over month by 2%, rising from $1,257 in December to $1,285 in January.

Survey says…Rent Across Canada Continues to Rise

“The resale housing markets in several major cities in western Canada have slumped over the last six months, however, rental rates continue to increase in many of those municipalities,” said Ben Myers, president of Bullpen Research & Consulting. “Edmonton, Red Deer, Saskatoon, Regina, and Vancouver all experienced month-over-month increases in average rents for one bedroom units in January.” “With rising rents across the country, it is important when searching for a rental home to give yourself plenty of time to score a good deal — Rentals.ca recommends starting your rental search three months in advance,” said Matt Danison, CEO of Rentals.ca. “A lot of people begin the process too late, and unless they get lucky they might be forced to go with something either out of their budget or in an undesirable location.” The report suggests rent across Canada could increase further if credit availability remains tight, other economic data such as employment growth remain positive, and the stress test continues to delay first-time buyers from entering the real estate market.

he median monthly rent across Canada increased nearly 6 per cent in January over December to $1,747, according to the February National Rent Report created by Rentals.ca and Bullpen Research & Consulting. The National Rent Report charts and analyzes national, provincial and municipal monthly rental rates and market trends across all listings on Rentals.ca for Canada. As per the report’s findings, the median rent in Ontario was $2,091 in January, a full $1,000 per month higher than neighbouring Manitoba ($1,070) and Quebec ($1,039). Newfoundland remains the least expensive province in Canada, with a median rental rate of $843 per month, a slight increase from $830 in December. Other takeaways from the rental report include: • Toronto had the highest one-bedroom rents in Canada at $2,149 per month on average in January, an increase of 0.6% from a month earlier. A number of GTA suburban markets were among the most expensive cities for rents in Canada, with one-bedroom units going for $2,050 per month on average in Thornhill, $2,042 in Vaughan (includes Woodbridge and Concord), and $1,999 in Oakville. There have been about 10,000 apartments completed over the last five months in the GTA, and this increase in supply could keep rents stable. • The vacancy rate in Winnipeg has been 3% or lower for 20 years, and rental rates have increased by 2% or more for 19 consecutive years (per Canada Mortgage and Housing Corporation data). Developers have taken notice, building about 1,400 rental apartments in each of the last three years, the highest levels of annual rental apartment construction over the past 30 years. Despite the consistent rental increases, rates are still very affordable in relation to other Canadian cities.

A premier real estate services company in Canada DMS Property Management is one of Canada’s leading apartment managers with a portfolio of over 20,000 units

www.dmsproperty.com

416-736-2524

| www.REMInetwork.com | March 2019 | 25

INSURANCE >>

Some Claims Are Just Plain Messy Coping with a complicated insurance matter by Andy Schwartze One might think of a property loss as a fairly straightforward matter. After all, in the event of a fire or a flood, the ensuing mess is obvious to everyone and it’s just a matter of cleaning up and replacing what was damaged. A few short decades ago that was pretty much the case—the trades were brought in, the estimate presented, and the adjuster would give the OK for repairs to be started. Today things are much more complicated due to technology giving us greater insight into the damage.

here was a time when mould was not even part of a water damage discussion. Today it is often the primary concern. If damage required a tenant to vacate his/her unit there was nothing to discuss. The tenant had to leave and the contents were removed so that repairs could start promptly. That’s not how it works anymore. Current industry standard property insurance contracts are broader (in their coverage) today than they have ever been. There are certain principles that remain in place as being uninsurable and those are not unreasonable. Wear and tear, aging, improper workmanship—these are the typical barriers where the insurance industry says “no” and for reasons most of us can understand and accept. But a complicated claim is not hard to run into these days, especially when more than one unit is affected and the building is just plain old. The owner expects the property manager to handle the oversight of the claim, often without any additional compensation, and in such a way that the owner must pre-approve any expense item that is either uninsured or unrelated to the claim. The on-site staff is set upon by the inconvenienced tenants as to why repairs cannot be made immediately and quickly. Tenants that have contents to remove and who do not have insurance (about 50% of them) are either unwilling or financially 26 | Canadian Apartment | Part of the REMI Network |

unable to move them, resulting in experts not being able to assess the damage and cost to repair. Building management is stuck because it cannot remove someone else’s property without permission. Once the work is started, inevitably the matter becomes more complicated and expensive. Environmental work needs the required experts. Engineering work calls for drawings, and permits involve the municipality. Fire departments want fire watches implemented because sprinklers have been turned off or alarm systems compromised. Suddenly there are so many people involved in the claim that no single person has the ability to move things along. It is a situation we see all too often and it frustrates everyone involved. Nobody is happy and everyone blames someone down the chain. Cases that call for an independent claims consultant A good solution to this kind of “messy claim” situation would be an independent claims consultant hired with the goal of “expediting” matters. In other words, someone with specific claims training who is not in any way responsible to the various interests that are buzzing around like flies on a lightbulb.

This consultant would have the statutory authority to make decisions that are directed at ensuring that every interested party’s concerns are looked after to the extent to which these can reasonably be accommodated. The consultant would have binding authority as to the decisions made and would not be subject to recourse from municipalities, fire departments, owners, managers or insurers. The goal would be to use best efforts to speed matters in such a way that everyone gets in and out of the claim with the least inconvenience and at a reasonable cost. It would be a role that might be compared to that of an arbitrator. In a claims environment where there is little chance of everyone coming out with a happy face, it’s best for someone to ensure that the file is closed with the least discomfort to all. We need to remind ourselves that claims have become increasingly complicated, to a large extent as a result of aging infrastructure and more serious losses occasioned by water of all different types. Every ship needs a captain, and in that sense, we still don’t have a good mechanism that allows the various players who are dragged into a claim to be properly led through the process.

Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He can be reached at andy@takecover.ca.

MARCH 27, 2019 Metro Toronto Convention Centre

Reduce Operating Costs. Increase Building Performance. Retain Your Tenants. Register Today for Free Admission pmspringfest.com #PMSpringfestTO

Supported by

To exhibit or sponsor, contact Jeff Ingram: 416-512-3811 jeff.ingram@informa.com

PERSPECTIVE >>

Multi-res Property Tax Rate Hits Tenants Hard Breaking down the hidden costs in rent by Chris Seepe

any among the general public seem to believe that residential rental property owners pay the property tax as part of their operating costs. The truth is, every tenant in every municipality in Ontario pays property tax as part of their rent. These property taxes are a hidden part of each tenant’s living expense obligation to their municipality, which provides them with education, emergency service, garbage collection, roads and more. That means a significant portion of rental tenants, especially the vulnerable fixed income and affordable housing tenants, are paying taxes that are upwards of two times that of owners of a single family home or condo. The misperception derives from the landlord’s obligation to collect and remit this tax on the tenant’s behalf, much like every retail outlet collecting HST on behalf of the consumer. 28 | Canadian Apartment | Part of the REMI Network |

A rent reduction is allowed under section 131 of the Residential Tenancies Act (RTA) when the municipal property taxes for the residential complex have decreased by more than 2.49 per cent from one year to the next. Like so many things, this law does not apply to public housing. It doesn’t matter what the landlord’s property tax rate is. If the building contains seven or more units, then 20 per cent of the landlord’s total lawful rent must be paid back to the tenants. For less than seven units, the decrease is 15 per cent. All municipalities then send out a letter as required by the RTA directly to every tenant in a building providing legal advice that they are entitled to a rent decrease, and that no permission is required from the Landlord and Tenant Board (LTB) for the tenant to earn this rent decrease.

A landlord can pass on an extraordinary increase, which occurs when the property tax increase is greater than the current rent increase guideline plus 50 per cent of the same guideline. For example, this year the guideline is 1.8 per cent, so an extraordinary increase would be 1.8% + 0.9% (50% of 1.8%) = 2.7%. The landlord must then undertake a grueling and complex LTB application called a Rent Increase Above the Guideline (AGI). It takes an average six months to set an LTB hearing date after the application has been submitted, and another six months for the LTB to render its decision. The decision isn’t automatic like it is for tenants, despite the subject matter being exactly the same. And, although the landlord paid the tenant’s property tax up front, the landlord must give the tenant a minimum of 90 days’ advance written notice of the rent increase. Furthermore, the rent increase cannot occur

PERSPECTIVE >>

until the next anniversary date of each tenant’s annual rent increase. And further to that, the tenant has the right to challenge the AGI application at the LTB hearing. The Municipal Property Assessment Corporation (MPAC) reassesses a property’s

value from time to time, most often when it changes ownership. MPAC doesn’t set the tax rate. It only establishes property value, on which the tax amount is determined. The municipality then sets the property tax rate for each building type. In the City of Oshawa, for example, the rate for single family homes and condos in 2018 is 1.41per cent. Oshawa taxes apartment buildings at 2.48 per cent, almost double. Based on my own private research conducted in May 2017, all the municipalities of the Region of Durham were in the top 20 ‘worst offenders’ of this tax policy. Oshawa appears to be the third highest in the province, next to Hamilton and Orangeville. Clarington ranks fifth, followed by Whitby, Ajax, Pickering and Scugog. Some municipalities make no

distinction between apartment buildings and single family homes including Barrie, Markham, Vaughan (apartment building property taxes are lower than single family homes there), Stouffville, Newmarket and Aurora. It’s unlikely you’ll find any government documentation that explicitly states that residential rental tenants pay property taxes even though it’s common knowledge that every commercial tenant pays their prorated share of the commercial property tax via TMI – taxes, maintenance and insurance. Do residential rental property tenants pay property tax? Of course they do. It’s built into the RTA. It’s just cleverly disguised to shield the government from direct accountability when property taxes negatively impact tenants.

Chris Seepe is a published writer, ‘landlording’ course instructor, president of the Landlords Association of Durham, and commercial real estate broker of record at Aztech Realty in Toronto. He can be reached at cseepe@aztechrealty.com or by visiting his website: www.drlandlord.ca.

MOBILE FRIENDLY

VISIT US AT

CONTACT Michael Gnat Phone: 416-635-4835 Email: mgnat@midnorthern.com | www.REMInetwork.com | March 2019 | 29

Smart Ideas

ENERGY-EFFICIENCY

RETROFITS

Now is the time to invest in your building’s future

nergy-efficiency retrofits can significantly upgrade a building’s energy-consuming systems. Projects may involve improving or replacing lighting fixtures, ventilation systems or windows, or adding insulation where it makes economic sense. A thorough retrofit can substantially reduce a building’s operational costs, particularly in older buildings, while also attracting tenants and gaining a market edge.

MINOR RETROFITS With minor retrofits, building owners target “low-hanging fruit” – modifications that are lowcost, easy to implement and that offer good value for the money and effort invested. Examples: • Sealing with caulking or spray foam • Adding insulation • Upgrading lighting systems Although they are relatively simple, these projects can make a big difference to a building’s energy consumption.

MAJOR RETROFITS With a major retrofit, owners take a more holistic approach. Here, examples could include: • Replacing window glazing and doors • Updating inefficient heating and cooling systems • Installing low-flow faucets with sensors and automatic shut-offs • Installing sub-metering This level of retrofit is still minimally disruptive to building occupants.

DEEP RETROFITS With a deep retrofit, owners undertake an extensive overhaul of the building’s systems, which can save up to 60 percent in energy costs. Deep retrofits can be disruptive to occupants and should be timed wisely. Measures may include: • Significantly reconfiguring the interior • Replacing the roof • Adding or rearranging windows for increased daylight • Replacing the heating, ventilation and air-conditioning system with a renewable technology like a ground-source heat pump Visit www.nrcan.gc.ca/energy/efficiency for more info. 30 | Canadian Apartment | Part of the REMI Network |

SO, WHY INVEST IN ENERGYEFFICIENCY RETROFITS? By investing in retrofits, building owners can lower energy costs, reduce maintenance requirements, create a more pleasant interior environment for occupants, increase the value and productivity of the building, and reduce their environmental footprints.

Comfy living for tenants. Comfy energy bills for you. We’ll cover up to 50% of the cost when you upgrade to high-efficiency equipment The Affordable Housing Conservation Program provides financial incentives for high-efficiency space and water heating equipment, heat recovery, building automation systems and more.

Visit uniongas.com/aﬀordablehousing to learn more.