Editor’s note

from CPM April 2021

by MediaEdge

Reckoning With Entrenched Inequities: Investors

VOL. 36 NO. 1 APRIL/MAY 2021

Editor-in-Chief Barbara Carss barbc@mediaedge.ca

Sean Foley seanf@mediaedge.ca

Contributors Kathryn Fuller, Sienne Lau, Lynn McGrade, Rebecca Melnyk, Gerald Ngan, Erin Ruddy, John Stanley

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editor’snote

THESE DAYS, public health officials have become something akin to harried parents on a tedious road trip. They’re not only tasked with safely steering the pandemic response through hazardous traffic on an uncharted route, they’re also trapped with restless passengers repeatedly asking: Are we there yet?

As is often the case with arduous journeys, we didn’t know exactly what flattening the COVID-19 curve was going to entail when we set out 14 months ago. In those early days, “unprecedented” was an overworked adjective, but, in retrospect, there have been a lot of familiar parallels with the challenges that arise in any long and complicated project. Looking back at the obstacles encountered, fixes formulated and lessons learned, we can be heartened that surely we’ve now covered more ground than the distance still to be travelled.

Accordingly, in this issue, we review some of the pandemic’s repercussions for real estate and discuss some possibilities for a pending vaccinated world. Commercial real estate value and investor confidence slipped last year as the Canada Annual Property Index recorded a negative total return for a rare third time in the 21st century, transaction volume fell by about 50% and industry insiders responding to the Canadian Real Estate Sentiment Survey went into the fourth quarter generally feeling less optimistic than they had three months earlier.

Nevertheless, industrial assets registered impressive gains in 2020. Economists also underscore one seeming truly unprecedented aspect of the COVID-19-triggered recession. Higher-income earners have largely remained employed and have presumably been stockpiling cash as they await renewed opportunities to spend.

Analysts generally concur recovery in the office and retail sectors will be contingent on stable tenants, returning employees and consumer confidence — factors that can’t be accurately gauged until public health restrictions are eased and emergency financial aid programs wind down. For now, there are plenty of theories about COVID-19’s impact on how we work, shop and choose to balance the convenience of home offices and online purchases with needs for social interaction and stimuli.

We outline a few of them in this issue. We also explore the burgeoning influence of ESG (environmental, social, governance) frameworks and benchmarks that could underpin the reassurance investors and tenants will be seeking that buildings are secure, healthy and positioned for the next and subsequent post-pandemic disruptions.

Meanwhile, in a year when the investment performance gap of industrial and retail assets stretched even wider, updated municipal assessment rolls accentuate that all non-residential property owners have a vested interest in office and retail recovery. We report on tax shifts now occurring in Calgary and Vancouver and the threat of what’s to come in the Greater Toronto Area.

Finally, this issue includes the 2021 Who’s Who in Canadian Real Estate survey. Thank you to Gerald Ngan for so ably collecting and coordinating this year’s results.

Barbara Carss barbc@mediaedge.ca @BarbaraCarss

Focus: Real Estate News & Context

6 2020 Investment Returns: Canada Annual

Property Index records a rare decline in value following a year of COVID-19-related uncertainty. 12 Market Confidence Falters: Canadian Real Estate

Sentiment Survey finds senior executives generally expecting asset values to decline. 16 Office Demand Outlook: New construction adds to worries about pandemic-prompted changes to work routines. 20 Emerging Workplace Options: A minority of office workers foresee a fulltime return to formal offices, but few want to work offsite more than a couple of days per week. 24 Assessing Climate Risk: Canadian real estate assets are generally more exposed to associated financial and regulatory stresses than to the physical threats of extreme and highly volatile weather. 28 ESG Investing: Securities regulators are conducting reviews to test claims against reality. 31 Light Industrial Tax Shock: Value gains and losses reshape the non-residential assessment base.

37 Who’s Who in Canadian Real Estate: 26th annual survey of commercial players and portfolios. 50 Healthy Building Momentum: COVID-19 is intensifying pressure to support building occupants’ physical, social and emotional well-being. 54 Vacation Property Vacuum: Short-term rental feels the pandemic pinch. 56 Reckoning With Entrenched Inequities: Investors, owners and managers look to rebalance hierarchies, broaden input, expand opportunities and reap the resulting returns.

Departments

3 Editor’s note

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