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editor’snote THIRTY YEARS OUT FROM the inaugural issue of Canadian Property Management, the real estate industry has moved in directions unforeseen in the 1980s. Two acronyms now embedded in the lexicon – LEED and REIT– illustrate that evolution. Yet, proof of real estate's fundamental continuity can easily be found in urban skylines across the country. Ultimately, the story we tell is about lasting assets in a changing world. Over the years, we've profiled many such iconic landmarks, reflective of various 20th century development cycles and architectural styles. Whether Toronto's Canada Life Building, Montreal's Place Ville Marie or Winnipeg's Paris Building, they've contributed to the cultural landscapes and economic well-being of their cities through generations of workforce turnover. Canadian Property Management first hit the streets in a buoyant real estate cycle that left a legacy of downtown and suburban office development still prominently discernible – and in demand – throughout North America. Happily, the publication lasted through the subsequent downturn of the early 1990s – which many would call a "crash" – emerging into a new era of ownership structures, management strategies and operational challenges. Tenants' needs and expectations have changed equally dramatically from the days when land lines were the norm, typewriters were far from uncommon and fax machines furnished with rolls of destined-to-fade thermal paper were the height of office modernity. Nevertheless, Sandy McNair, the guru of tenant satisfaction surveys (one of the many management tools Canadian Property Management has witnessed at its embryonic stages) often notes that "too hot; too cold; too draughty" are still the perennial saboteurs of quality of the workplace environment. Today's owners and managers contemplate many circa-1980s' concerns (with the exception of fading fax paper), but with three more decades of complexities layered on top. Canadian Property Management remains committed to chronicling their efforts, in print and our 21st-century online presence. In addition to hitting the milestone 30th volume, this issue includes the 20th annual Who's Who in Canadian Real Estate survey. Toronto's BCE Place adorned our cover when the first survey was published in March 1996 – fittingly depicting the 53-million-square-foot portfolio of the leading Who: Brookfield LePage Management Ltd. Thank you to Jessy Chirayath, Sukhjit Gandhim, Alexander Voronin and Gill Daniels for collecting and coordinating this year's results.
Barbara Carss barbc@mediaedge.ca
VOL. 30 NO. 1
MARCH 2015
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TEL: (416) 512-8186 • FAX: (416) 512-8344 Published and printed eight times yearly as follows: Feb./ Mar., April, May, June/July, Sept., Oct., Nov., Dec/Jan. by MediaEdge Communications Inc. 5255 Yonge St., Suite 1000, Toronto, Ontario M2N 6P4 (416) 512-8186 Fax: (416) 512-8344 e-mail: circulation@mediaedge.ca Subscription Rates: Canada: 1 year, $60*; 2 years, $110* Single Copy Sales: Canada: $12* Outside Canada: US 1 year, $85 International $110 *Plus applicable taxes Reprints: Requests for permission to reprint any portion of this magazine should be sent to info@mediaedge.ca. Copyright 2015 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 0834-3357 Authors: Canadian Property Management 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. Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Property Management 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
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contents
Focus: Real Estate News & Trends 10 Real Estate Cycling Down: 2014 results from the REALpac/IPD Canada Property Index reveal lower returns, but analysts continue to favour real estate's stability among asset classes. 14 REIT Scrutiny: Ontario Securities Commission offers guidance on disclosure of distributions. 16 U.S. Acquisitions: Canadian investment in U.S. real estate is one of the largest cross-border capital flows globally. 23 Continuing Education Options: Real Property Investment Certificate introduced. 24 Who's Who in Canadian Real Estate: Results from the 20th annual survey of office, industrial, retail and multi-residential portfolios. 42 Workplace Trends for 2015: Airport cities, mindfulness programs and rateocracy shape employer-employee and vendor-customer relationships.
Articles: 34 Whole-building Retrofits: Energy-efficiency gains can be maximized when the interconnectivity of building systems is recognized. 38 Smart Technology in Practice: Training is essential to strategic application and successful outcomes.
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investment
Mild Symptoms of a Waning Cycle
AN UPSIDE TO DEC Real Estate Remains a Stable Performer Among Asset Classes By Barbara Carss
10 March 2015 | Canadian Property Management
REAL ESTATE INDUSTRY insiders now contemplating declining investment returns against prevailing trends for other asset classes generally conclude that their market is in reasonable shape. Recently released results for the 42 portfolios participating in the REALpac/IPD Canada Quarterly Property Index – representing more than 375 million square feet in 2,351 properties – pegged the total return for directly held standing investments in 2014 at 7.3%, down from the 10.7% index-wide performance of 2013.
Analysts note that's in keeping with Canada's waning real estate cycle following four years of double-digit returns and sustained outperformance of most other markets around the globe. On the flipside, however, current prospects for national bond yields are hardly buoyant. "In Canada, real estate is still probably the least-worse asset," mused Stephen Taylor, Vice President, Real Estate, with Healthcare of Ontario Pension Plan (HOOPP), as part of an immediate-reaction panel discussion in
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CLINING RETURNS conjunction with last month's release of the 2014 index results. "I think what the market is telling us right now is there are not a lot of places to go that are stable," concurred fellow panellist, Heather Kirk, Managing Director, Equity Research, with BMO Capital Markets. Even before a largely unforeseen drop in oil prices sidetracked the Alberta and Canadian economies in the second half of 2014, forecasters had expected a continued ebbing of the spectacular returns earlier in the decade, which
peaked at 15.4% nationally in 2011. Also true to earlier predictions, income return, at 5.2%, accounted for the bulk of total returns in 2014, with capital growth trailing at 1.9%. "7.3% clearly represents a market slowdown, but it's still a rate of return that would have been pretty good in many markets in 2013," Simon Fairchild, Executive Director with the index producer, MSCI Inc., told the gathering of real estate professionals in downtown Toronto. "Yes, we're at a historically low yield for real estate –
For market trends and analysis, go to
Canadian Property Management | March 2015 11
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“It's probably fair to say that Canada will underperform a lot of markets around the world, but that might not be a bad thing for some of the big pension funds that have diversified.” 5.2% – but, yes again, the same is true for interest rates." DOWNWARD CYCLE Both equities and bonds outperformed direct real estate in 2014, but REITs were the clear class of the field. As of January 31, 2015, the FTSE Canadian Capped REIT Index reports average annual one-year returns of 20.7%. "Listed real estate outperformed the wider stock market," Fairchild observed – a trend that Kirk expects will continue. "I think the REIT market is always looking for what is further out. Number one, it's a stock market, so it always overacts," she said. For unlisted properties, as Fairchild observed, a total return of 7.3% in 2014 is a better result than was recorded in Switzerland, Japan, Germany or France in 2013. However, Canada and the U.K. were previously somewhat on par with
total returns at 10.7% and 10.5% in 2013, while Canada's 2014 performance lags well behind the U.K.'s projected 17.9% total return. Looking back two years, the scenario was reversed as the Canadian index delivered total returns of 14.1% in 2012 versus 2.7% total returns in the U.K. "It's revealing that the Canadian market may be on a different path (with) different trends than what we are seeing elsewhere. The Canadian market seems to be on the wane and converging in on global norms," Fairchild said. "It's probably fair to say that Canada will under-perform a lot of markets around the world, but that might not be a bad thing for some of the big pension funds that have diversified." SECTORAL & REGIONAL BREAKDOWNS Drilling deeper into the numbers, Fairchild pointed to sectoral and
Annual total returns in historical context CANADA – TOTAL RETURNS STANDING INVESTMENTS
CAPITAL GROWTH INCOME RETURN TOTAL RETURN 10-YEAR ANNUALIZED TOTAL RETURN
% pa 25 18.5 16.0
20
16.4 16.8 14.6 12.9 15 11.5 10
5.0
4.3
5
0.2
7.0
1.9
18.7 18.3 15.8
12.9 11.9 10.6 9.2 8.8 8.3
11.2
15.4 14.2 11.0
7.3
10.8
11.8 11.4
3.8 -0.4
0 -5.5-6.4
-5 -10
Source: MSCI
12 March 2015 | Canadian Property Management
3 YEARS 5 YEARS 10 YEARS
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
-15
regional trends. After a multi-year run as the top performer, office properties delivered the lowest returns – 6.4% nationally – while industrial ranked first with total returns of 9.2%. Retail returns, nationally, were at 7.7% with multi-residential at 7.4%. For panellist Alain Dumaine, Senior Vice President, Global Portfolio Management and Strategic Planning, with Ivanhoé Cambridge, an earlier peak for industrial and lingering status for retail were among the few muted surprises of the day. "I expected it (industrial's top returns) would be in 2015," he said. "I would have thought that retail would be lower this year, not the second highest performer." Regionally, Winnipeg emerged the frontrunner among 10 individual metro markets and the broadly labelled "rest of Canada," delivering total returns of 10.2%. Four other cities – Regina, Vancouver, Calgary and Toronto – surpassed the national average of 7.3%, while Ottawa/Gatineau and Montreal trailed with returns of 4.4% and 4.1%. "As someone from Vancouver and someone who has a big industrial portfolio in Winnipeg, I was certainly happy to see that," reported Remco Daal, President and Chief Operating Officer with Bentall Kennedy. Nearly half – or 49.5% — of reported $5.5 billion net investment in 2014 occurred in Toronto. Even so, Calgary topped the list for development expenditure at $576 million ahead of Toronto's $466 million. Together, the two cities accounted for more than half of the development expenditure in Canada last year. (In contrast, although they were the top-performing urban centres, Winnipeg and Regina represent relatively small markets within the index.) Both the numbers and panellists' anecdotes highlight Calgary's slipping
investment 2014 total returns by sector and geography CANADA – TOTAL RETURNS IN 2014 BY PROPERTY SECTOR AND GEOGRAPHIC SEGMENT
ANNUAL TRENDS
2007 2008 2009 2010 2011 2012 2013 2014
status. Total returns of 8.8% in 2014 are well off 2013's 12.9% performance. "On the margins, already we are seeing people's expansions plans put off or, on renewal, they're taking less space," Taylor acknowledged. REITs tell much the same story. "A lot of the worst performers so far are the ones that are exposed to western Canada," Kirk added. That said, owners and investors are primarily bracing for a soft leasing market rather than longer-term repercussions. Few anticipate a flood of dispositions. "I don't think there will be any deals," Dumaine said. "We're going to stay through the cycle." "People have been more than paid for their risk in Calgary over the last 15 years," Daal affirmed. That could be the theme in general, as Fairchild remarked on the index's 10-year return rate of 11.4%. "I think that says, by itself, it has just been a phenomenal decade," he asserted. "Further, it's remarkable for a mature economy, and what's more remarkable is that, right slap-dab in the middle of that we had the global financial crisis." zz
2014 TOTAL RETURNS (%)
All Industrial All Retail All Residential All Office
9.2 7.7 7.4 6.4
Winnipeg Regina Vancouver Calgary Toronto Halifax Edmonton Rest of Canada Victoria Ottawa/Hull Montreal
10.2 10.0 9.1 8.8 7.6 7.0 6.7 6.2 5.5 4.4 4.1
ALL PROPERTY TOTAL
7.3
Source: MSCI Note: Based on investment flows within the IPD database. Annual trends (shaded cells) reflect range between peaks and lows.
negative returns flat to marginal returns high returns
“People have been more than paid for their risk in Calgary over the last 15 years.”
The preceding article is reprinted from the REMI network. See www.reminetwork.com.
IRELAND BRINGS GOOD FORTUNE FOR CANADIAN INVESTORS A subterranean starting point provides context for somewhat stratospheric investment returns on Irish real estate in 2014. While recently released annual results confirm the downward trend of Canada's real estate cycle, values elsewhere are recovering from the clobbering sustained in the 2008 financial meltdown. Notably, the JLL Irish Property Index reports an overall return of 41.7% for 2014. In contrast, 2014 results of the REALpac/IPD Canada property index – presented to gatherings of real estate professionals in Toronto and Vancouver last month – reported a 7.3% total rate of return on the directly held standing investments of the 42 participating portfolios. After five consecutive years of outperforming most other world markets, holders of Canadian real estate are now looking admiringly at peers who have diversified further afield.
"We all wish we were Tom Schwartz [president and CEO of CAPREIT] and went to Ireland a year ago," Michael Brooks, CEO of the Real Property Association of Canada (REALpac), observed during a panel discussion in conjunction with the release of the results. Analysts reiterate that Canada's extended run at the top of the global market hierarchy was inevitably bound to end. However, the same is true for Ireland's depressed status. For example, Dublin was among the hardest hit of the sixty IPD Global Cities with a 37.7% loss of value in its worst recorded year, 2008. Last year's record-setting returns are still making up for that loss. "The context of recovery off a low base remains important. Despite these increases, the Overall Returns Index remains 15.9% lower than the peak of the market in Q4 2007," the JLL Irish Property Index report advises. Similarly, JLL's Dublin Office Market Review and Outlook 2015 reports a 43%
increase in office rents since December 2013, which is still 20% lower than average rents in 2006. With no new space to be delivered to the market in 2015, further rent increases are projected, albeit at a more modest rate than last year. Office vacancy rates remained in the double-digits at 10.2% at year-end, but, again, were a vast improvement from 18% in the fourth quarter of 2013. All this suggests a market still in ascension – a trend also seen in other markets previously underperforming Canada's. The United States, with a total rate of return of 11.4%, and the United Kingdom, with a projected total rate of return of 17.9%, both had superior years in 2014. "I wouldn't be surprised if the Canadian returns were below the global index when it is released in April," noted Simon Fairchild, Executive Director with the index producer, MSCI Inc.
Canadian Property Management | March 2015 13
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DISCLOSURE OF REIT DISTRIBUTIONS SCRUTINIZED Ontario Securities Commission Calls for More Information
By Matthew Merkley and Eric Moncik IN THE CURRENT LOW interest rate environment, yield-hungry investors have been particularly attracted to real estate investment trusts (REITs), which, as tax-efficient, flow-through investment vehicles, aim to pay regular cash distributions to their unitholders. The Ontario Securities Commission (OSC) recently reviewed the disclosure provided by 30 REITs to assess the quality and sufficiency of disclosure provided concerning the sustainability of unitholder distributions. In Staff Notice 51-724 Report on Staff’s Review of REIT Distributions Disclosure, the OSC identifies four areas where, in its 14 March 2015 | Canadian Property Management
view, improvements are required. For these areas, the OSC has provided examples of acceptable disclosure. Content of Disclosure where Excess Distributions are Paid When a REIT’s distributions exceed its cash flow from operations, existing guidance in National Policy 41-201 Income Trusts and Other Indirect Offerings (NP 41-201) highlights the expectations of the Canadian Securities Administrators (CSA) concerning the provision of disclosure sufficient for investors to understand the risks relevant to the REIT and its distributions. The OSC Notice specifies that such risks include the
unsustainability of financing excess distributions by increasing levels of debt (as opposed to increases in underlying rents). The OSC found that 33% of the reviewed REITs paid distributions which exceeded cash flow from operations, and that none of these REITs provided adequate disclosure (per the guidance provided in NP 41-201) in their MD&A or annual information forms (in the risk factor section) concerning their excess distributions. The OSC Notice also provides that disclosure regarding excess distributions should be provided by REITs in situations where distributions would be in excess of cash flow from operations if non-cash
investment distributions (including distributions paid in connection with distribution reinvestment plans) were considered in quantifying the amount distributed, which the OSC found to be the case in 13% of the REITs reviewed. The OSC is concerned that the absence of such disclosure may be misleading to investors in such REITs. Consistency of Disclosure about Excess Distributions International Financial Reporting Standards (IFRS) permit REITs to record borrowing costs within either cash from operating activities (reducing cash flow from operations) or cash from financing activities (not reducing cash flow from operations). The OSC Notice notes that disclosure regarding excess distributions should also be provided by REITs in situations where distributions would be in excess of cash flow from operations if interest paid was classified as an operating activity on the statement of cash flows rather than as a financing activity, which the OSC found to be the case in 10% of the REITs reviewed. The OSC is concerned that the absence of such disclosure may be misleading to investors in such REITs.
Timely Disclosure where a Reduction or Termination of Distributions Occurs In its Notice, the OSC stresses that it is critical for investors to be provided with information on a timely basis in order to understand and assess the risks related to the sustainability of d i s t r i b u t i o n s . I t i s t h e O S C ’s expectation that sufficient advance notice of any prospective distribution reduction – either to conserve capital for use in future projects or because current distribution levels have become unsustainable – be provided to investors as soon as practicable and that, in the OSC’s view, any such reduction or elimination of distributions may constitute a material change.
items, it is the OSC’s view that, consistent with guidance in NP 41-201 and the CSA’s Staff Notice 52-306 Non-GAAP Financial Measures and Additional GAAP Measures, the REIT should provide disclosure that: • Reconciles AFFO to cash flow from operations, being the nearest IFRS measure • Presents cash flow from operations with equal or greater prominence than AFFO • States explicitly that AFFO does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers • Explains why AFFO provides useful information to investors and how the REIT’s management uses AFFO as a financial measure Presentation of Common Metrics such • Explains the nature of adjustments included within AFFO and employs the same as Adjusted Funds from Operations adjustments consistently from reporting Adjusted funds from operations (AFFO) period to reporting period. zz is a non-IFRS metric commonly used by REITs to represent the resources that have been generated by a REIT’s operations and are available for Matthew Merkley and Eric Moncik practise with the distribution to unitholders. When AFFO REITs group at Blake, Cassels & Graydon LLP. The represents a cash flow measure because preceding article is reprinted from a February 2015 the adjustments used to arrive at AFFO Blakes Bulletin. For more information, see the encompass adjustments for non-cash website at www.blakes.com.
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MAPPING PREVAILING CURRENTS FOR CAPITAL FLOW Canada is Predominant Foreign Investor in U.S. Real Estate
By Jeanette I. Rice
16 March 2015 | Canadian Property Management
investment
CANADIAN REAL ESTATE investment in the United States represents one of the largest cross-border capital flows in the world. Canadian direct investment in U.S. commercial real estate totalled $9.7 billion in 2014, with another $2.75 billion in closings as of mid-January 2015. Canada was the lead global investor in the U.S. last year, and the Canada-to-U.S. real estate capital flow was the third largest in the world, after the U.S.-to-United Kingdom and Hong Kong-to-China capital flows. Not only is Canada the largest foreign investor into U.S. real estate, but the U.S. is, by far, the primary destination for Canadian global capital. Of the $22 billion that Canada invested outside of itself in 2014, 44% went to the U.S. The next highest shares – 17% and 14% – went to Australia and the U.K. respectively. American real estate investors are also active acquirers of Canadian real estate, but the flow of American capital north into Canada is smaller than the flow south. In 2014, U.S. direct investment in Canadian real estate totalled $2.2 billion, less than one-quarter of Canadian investment in U.S. real estate. Over the past four years, Canadian investment in U.S. assets has been extraordinary, averaging nearly $10 billion annually. Canadian investors find U.S. real estate attractive for many of the same reasons that other countries do. The U.S. has offered attractive investment opportunities based on potential value creation, healthy cash flows and favourable risk-adjusted returns.
With a population of 36 million and just six metropolitan areas with populations greater than a million, Canada has a very limited number of markets in which to invest. The U.S., in contrast, has 52 such metros. Canada’s metros are certainly not all alike, but they generally do not offer enough geographic and economic diversification to satisfy the investment strategy goals of institutional investors. A high incidence of institutional ownership in Canada means that Canadian properties are held longer and traded less often. Development activity brings fewer opportunities to transact in Canada than in the U.S., since institutional capital is the major partner in development activity and will often hold the development for the long term. Property market cycles in Canada also tend to be less volatile than in the U.S., muting the need or desire to transact more often. Due to its size and diversity of market performance, the U.S. typically offers a much greater variety of opportunities to satisfy different investment styles: core; core plus; value-add; and opportunistic. However, since most Canadian global investors are large institutional owners – pension funds and REITs, in particular – Canadian investment in the U.S. tends toward the core/core plus end of the investment spectrum. Even more than for other global investors, the U.S. is familiar territory for Canadians. Most Canadians know its
DIVERSIFICATION IN FAMILIAR TERRITORY Certainly, the level of Canadian investment is highly correlated with the health of the American markets and investment climate, but over and above the fundamental considerations when it comes to investing in the U.S., Canadians have their own particular reasons to seek opportunities, and the largest factor is the need and opportunity to find product and to achieve greater diversification.
Over the past four years, Canadian investment in U.S. assets has been extraordinary, averaging nearly $10 billion annually.
geography well and the real estate professionals among them tend to understand the dynamics of major U.S. markets. American cities are easily accessed (via communications or travel), with few significant language, cultural or political barriers. National economic trends and real estate drivers in the two countries are very similar, and the differences between legal and tax systems are less complicated than commonly found among most other countries. Canadian investment is more geographically widespread across the U.S. than other global capital. This should not be surprising given the magnitude of Canadian investment, its high degree of familiarity with U.S. markets beyond the gateway cities, and the relatively low cost and time commitment for Canadian investment professionals to travel to U.S. markets. Even so, most of the institutions that invest beyond Canadian borders need to invest in large amounts, a structure which favours the gateway cities. With Cana d a ’s d o l l a r h a v i n g strengthened relative to the U.S. dollar through most of the 2002-11 period, Canadians could buy increasingly more U.S. real estate with the same dollar. Late in 2012, however, the Canadian dollar began to weaken. From its September 2012 peak of $1.03, the exchange rate has dropped to the mid-January 2015 rate of $0.84, for a 21% decline – enough to alter underwriting and investment decisions.
Canadian Property Management | March 2015 17
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The top five U.S. destinations for Canadian capital in the office sector are: Manhattan, Boston, Seattle, Denver and Dallas.
ASSETS & MARKETS Office Canadian investors appear to prefer longer-term holds and understand longer-term value creation; they are therefore willing to “pay up” for office assets. 45% of Canadian capital was invested in office assets last year, and most of the $2.75 billion in deals expected to close soon is in office. The most notable current U.S. office acquisition by a Canadian organization is that of Ivanhoé Cambridge, the real estate arm of the Caisse de dépôt. Ivanhoé is under contract to buy 1095 Sixth Avenue for an approximate and staggering $2.25 billion. Reportedly this transaction will be the highest price paid for a New York office building since 2008. Ivanhoé’s partner is Chicago-based Callahan Capital Partners; the Blackstone Group is the seller. The million-square-foot building is anchored by MetLife and is located at 42nd Street and Sixth, across from Bryant Park. The top five U.S. destinations for Canadian capital in the office sector are: Manhattan, Boston, Seattle, Denver and Dallas. Canadian investors bought only one office asset in Los Angeles and only one in Washington, which are typically attractive markets for global capital.
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18 March 2015 | Canadian Property Management
Premier_Elevator_1/2_Island_2014.indd 1
Hospitality C a n a d i a n investment in hospitality assets was substantial last year, at $2.2 billion and 23% of the total. The share is also higher than other foreign investment in the U.S. The largest hospitality transaction was B r o o k f i e l d A s s e t M a n a g e m e n t ’s acquisition of the upscale 998-room Diplomat Resort & Spa, located in Hollywood, Florida (the Fort Lauderdale area), for $535 million ($536,000 per door). This was the second-largest hotel acquisition in the U.S. last year. (Note that in May 2014, Brookfield acquired Thayer Lodging, based in Annapolis, Maryland, and its 72-property hotel portfolio. This entity-level acquisition is not counted in the totals, however.)
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investment
Canadian investment in retail fell by 15% in 2014, while non-Canadian capital showed renewed interest. Just 7% or $668 million of Canadian total acquisitions were in retail. Other large Canadian hospitality investors in 2014 were American Hotel Income Properties (AHIP) R E I T ( b a s e d i n Va n c o u v e r ) , We s t m o n t H o s p i t a l i t y G r o u p (Toronto) and Westbank (Vancouver). Collectively, they acquired $514 million in hotel properties. Multi-family Canada invests more in U.S. multifamily assets than other global investors, with a 17% market share and a $1.7 billion total. The investments are more of a mix of
garden and urban mid/ high-rise rather than mostly the latter, which is common among the
other global investors. The leading metros for Canadian multi-family investment are: Houston, Phoenix, Austin, Atlanta and Dallas. Austin’s presence in this group is particularly interesting because, to date, the metro has
attracted minimal foreign investment despite its renowned high growth rates and tech economy. Canadians may change this global oversight. Canada’s leading multi-family investors include two institutional investors: Canada Pension Plan Investment Board (CPPIB) and Pure Multi-Family REIT (Vancouver). The others – with at least $100 million, however, and in contrast to the other property types – are all private companies, including Starlight Investments (Toronto) and Venterra Properties (Toronto). Retail It's not totally surprising that Canadian investors shied away from the retail sector in 2014 given the challenges the U.S. retail market is still facing. What is surprising, however, is that Canadian investment in retail fell by 15% in 2014, while non-Canadian capital showed renewed interest. Just 7% or $668 million of Canadian total acquisitions were in retail.
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investment
Possibly distorting the retail picture, Canadian investment in the U.S. retail sector may be coming via non-direct avenues more than is the case for other property types. Other than the troubled Summit Park Mall in Niagara Falls, NY, Canadians bought no regional malls in the U.S. in 2014, instead acquiring mostly neighbourhood and community centres. Toronto-based Slate Retail REIT was the largest buyer of retail assets, f o l l o w e d b y i t s a ff i l i a t e S l a t e Properties, an investment management firm. OMERS was the third largest buyer. Washington, D.C. attracted the largest amount of capital for retail product.
Industrial Given the strength of the industrial market and the very active investment by domestic buyers of U.S. industrial assets, Canada’s 6% market share for industrial seems surprisingly low. One challenge for all global and large-scale investors is that only medium- to large-sized portfolios are worth their attention. The number of industrial property portfolios on the market in the U.S. has certainly expanded over the past few years, but the Canadians compete with a wide audience. Toronto-based Brookfield Asset Management followed another approach to expand its U.S. industrial platform. In 2012, Brookfield acquired two U.S. firms: Verde Realty and IDI, both of which had large primarily U.S. portfolios. The top four destinations for industrial investment in 2014 were Memphis, Chicago, Indianapolis and Atlanta – all core industrial markets. Among the top five industrial buyers were three REITs: Pure Industrial
REIT (Vancouver), WPT Industrial REIT (Toronto) and Granite REIT (Toronto). Winnipeg-based Artis REIT was also active and ranked 12th for U.S. industrial investment. PSP was the third largest investor of U.S. industrial product. zz Jeanette Rice is Americas Head of Investment Research with CBRE Research. The preceding article is excerpted from a January 2015 CBRE Research About Real Estate article. For more information, see the website at www.cbre.com/research/gateway.
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professionaldevelopment
Continuing Education for Career Growth Real Property Investment Certificate Responds to Industry Demand By Edward Byers CANADIAN REAL ESTATE professionals now have a classroom-based learning and networking option as they pursue career growth. The newly launched Real Property Investment Certificate (RPIC), offered by the Real Property Association of Canada (REALpac), is a six-course program responding to the industry's demand for comprehensive continuing education. “Canadian real estate companies need a cost-effective way to train their people and ensure those making real estate decisions have a baseline of knowledge to make the best decisions,” observes Michael Brooks, REALpac's CEO. "The Real Property Investment Certificate will facilitate and fast-track professionals who are transitioning into new roles, enabling effective succession planning and ensuring baseline knowledge for all staff." Candidates for the certificate must complete four mandatory core courses and two electives, for a total of 96 hours of intensive exposure to commercial real estate fundamentals through a mix of lectures, case studies and guest speakers. Students working in a range of different disciplines within the industry – finance, management, brokerage services, etc. – will also have an opportunity to share experiences and learn from each other in a structured setting with expert guidance. Course instructors are drawn from industry professionals applying their own practical knowledge gleaned from exposure to tested standards and innovative practices at leading companies. They will explore theories behind decision making and the interrelated nature of disciplines such as valuation, finance and investment, law, capital markets, leasing, lending, sustainability, asset management and development. For example, real estate capital markets have evolved over the past 15 years to include more sophisticated and diverse capital structures and investment opportunities in private and public markets, with institutional ownership taking on an increasing presence in the marketplace. The capital markets & investing course — one of the four mandatory credits — will focus on various ways of raising capital across the real estate sector, REIT vs. corporate structures, the IPO process, related valuation and performance
measurement concepts in the public markets, and current issues facing the capital markets with a focus on governance. Three other core courses: introduce tools and refine concepts and techniques that will improve investment, financing and risk management decisions; offer a practical understanding of valuation methodologies and techniques in the context of all major asset classes; and examine the many facets of real estate law underpinning purchase agreements, leases, construction contracts, loan documents and development agreements. Meanwhile, the choice of five elective courses drill deeper into business areas such as commercial lending, asset management, development, leasing and sustainability. "It's a fulsome, cost-effective, time-sensitive curriculum in a country that lacks a Master's degree program specifically devoted to commercial real estate and has few MBAs with a real estate specialization." Brooks says. "REALpac’s longstanding relationship with the industry allows a top-tier selection of leaders to develop curriculum that responds to the skills and knowledge needed to perform in each of the respective disciplines. The main goal is to cultivate well-rounded professionals by offering cross-competency integration." Enrollees have up to five years to complete six required credits. Each of the two-day courses will be offered at least once yearly, with some at more regular intervals depending on demand. Courses are also aligned with professional development in other accrediting associations and may be used for continuing education credits through BOMI International, the Appraisal Institute of Canada, the Canadian Association of Accredited Mortgage Professionals, the Canadian Institute of Professional Planners and RICS, the Royal Institution of Chartered Surveyors. zz
Edward Byers is manager of professional development and events with REALpac. For more information, see the website at www.realpac.ca/?page=RealPropertyInvestme Canadian Property Management | March 2015 23
2015 Who’s Who
Welcome to the 20th annual edition of Who’s Who in
Canadian Real Estate. This year’s list represents all facets of the property management business, including third-party management firms, development/management firms, financial institutions, REITs, insurance companies and pension funds. The inaugural edition, published in February 1996, quickly became an essential industry-defining resource, and we trust this updated list will serve the needs of our information-driven readers. Although this listing is considered a current and comprehensive listing for the industry, by the nature of the data-gathering process, it is not exhaustive. In addition, Who’s Who in Canadian Real Estate is not a ranking, and should not be misconstrued as such. Every effort
Office Manage Only
millions of sq. ft.
Brookfield Johnson Controls SNC-Lavalin Operations & Maintenance Inc. CB Richard Ellis Ltd. GWL Realty Advisors Bentall Kennedy Colliers International Triovest Realty Advisors Inc. Oxford Properties Group Canderel/Humford Morguard
88.590 87.700 42.296 28.582 27.482 16.817 13.944 7.084 6.100 5.703
millions of sq. ft.
Office Own Only
Healthcare of Ontario Pension Plan Inc. (HOOPP) Investors Group Ivanhoé Cambridge Inc. Concert Properties Ltd. Crombie REIT BTB REIT Northam Realty Advisors Ltd. H&R REIT Industrial Alliance Fiera Properties
Office Own & Manage
Dream Office REIT Brookfield Property Group Manulife Real Estate Cominar REIT Cadillac Fairview Corporation Ltd. Oxford Properties Group H&R REIT Allied Properties REIT Morguard Ivanhoé Cambridge Inc. 24 March 2015 | Canadian Property Management
9.900 5.278 1.539 1.251 1.059 0.928 0.870 0.805 0.612 0.546 millions of sq. ft.
24.200 20.400 15.800 14.994 14.048 13.513 13.223 10.558 8.194 7.401
has been made to ensure the accuracy of the figures that follow. However, listings are based on data that was supplied, but not independently verified. If you have any questions or comments, please contact the editor at barbc@mediaedge.ca Thanks to all who took the time to send in the data. We appreciate your input. If you were not represented in our listing and would like to appear next year, you can obtain a copy of the official survey from our publishing offices at: Canadian Property Management 5255 Yonge Street, Suite 1000, Toronto, ON M2N 6P4 Tel: (416) 512-8186 Fax: (416) 512-8344 www.reminetwork.com/canadian-property-management
Retail Manage Only SNC-Lavalin Operations & Maintenance Inc. FCR Management Services Inc. Brookfield Johnson Controls Bentall Kennedy CB Richard Ellis Ltd. Colliers International Cogir Management Morguard Avison Young Real Estate Management Services Oxford Properties Group
Retail Own Only First Capital Realty Crombie REIT Retrocom REIT Healthcare of Ontario Pension Plan Inc. (HOOPP) Investors Group Ivanhoé Cambridge Inc. CREIT Management LP H&R REIT Calloway REIT BTB REIT
Retail Own & Manage
RioCan REIT Calloway REIT H&R REIT Cadillac Fairview Corporation Ltd. Ivanhoé Cambridge Inc. Cominar REIT Westcliff Management Morguard Oxford Properties Group CREIT Management LP
millions of sq. ft.
32.500 23.411 22.037 17.078 10.124 8.759 7.060 6.381 5.100 5.092
millions of sq. ft.
24.300 14.489 7.515 6.500 4.194 2.746 2.100 2.089 1.650 1.011 millions of sq. ft.
38.500 25.970 17.292 16.875 15.419 12.845 9.385 9.195 7.870 6.829
Top 10 Apartment Manage Only
millions of sq. ft.
Metcap Living Management Inc. The DMS Group Greenwin Inc. Gateway Property Management Corporation Briarlane Rental Property Management Inc. GWL Realty Advisors Vertica Resident Services Sterling Karamar Property Management Cogir Management Shelter Canadian Properties Ltd.
Industrial Manage Only Bentall Kennedy SNC-Lavalin Operations & Maintenance Inc. Triovest Realty Advisors Inc. GWL Realty Advisors CB Richard Ellis Ltd. Colliers International Blackwood Partners Corporation Realspace Management Group Inc. EPIC Realty Partners Avison Young Real Estate Management Services
Other Manage Only
in Canadian Real Estate
18.834 14.848 12.705 11.064 10.199 9.548 9.011 7.800 6.156 5.421
millions of sq. ft.
43.033 19.350 19.294 17.830 17.403 11.250 8.815 5.573 3.989
Apartment Own and Manage
millions of sq. ft.
1.907 1.683 0.961 0.904 0.715 0.561 0.263 0.104
CAPREIT Boardwalk REIT Realstar Management Homestead Land Holdings Ltd. Timbercreek Asset Management Killam Properties Inc. Minto Properties Inc. Skyline Apartment REIT Drewlo Holdings Inc. Oxford Properties Group
31.986 29.500 27.300 21.830 16.053 12.078 11.869 10.742 8.998 7.590
millions of sq. ft.
Industrial Own and Manage
millions of sq. ft.
millions of sq. ft.
Healthcare of Ontario Pension Plan Inc. (HOOPP) Lanesborough Real Estate Investment Trust Concert Properties Ltd. Ivanhoé Cambridge Inc. Dorset Realty Group Investors Group Fiera Properties Industrial Alliance
Industrial Own Only
Healthcare of Ontario Pension Plan Inc. (HOOPP) Investors Group Concert Properties Ltd. Fiera Properties BTB REIT Ivanhoé Cambridge Inc. H&R REIT PRO REIT Industrial Alliance Old Oak Properties Inc.
11.400 9.126 4.452 3.026 1.399 1.069 0.477 0.261 0.206 0.064
H&R REIT PIRET Cominar REIT Dream Industrial REIT Morguard Oxford Properties Group CREIT Management LP Granite REIT Prologis IAM Real Estate
22.050 17.530 17.413 17.000 14.149 10.122 9.140 7.800 7.596 4.066
3.800 millions of sq. ft.
Brookfield Johnson Controls 37.187 CB Richard Ellis Ltd. 23.571 SNC-Lavalin Operations & Maintenance Inc. 14.335 The Regional Group of Companies Inc. 7.500 Cogir Management 6.580 Shelter Canadian Properties Ltd. 3.522 Colliers International 2.638 The DMS Group 1.402 GWL Realty Advisors 0.899 Avison Young Real Estate Management Services 0.800
Condo Manage Only
Apartment Own Only
Other Own Only
millions of sq. ft.
Temple Hotels Inc. Oxford Properties Group Ivanhoé Cambridge Inc. Crombie REIT Morguard Martello Property Services Inc. PRO REIT Cadillac Fairview Corporation Ltd. Concert Properties Ltd. Lanesborough Real Estate Investment Trust
3.391 3.273 3.231 1.831 0.581 0.250 0.225 0.188 0.145 0.106
Other Own and Manage
millions of sq. ft.
CAPREIT Realstar Management NorthWest Healthcare Properties Fortis Properties Corp. Kevric Real Estate Corporation Dorset Realty Group Northland Properties Inc. Gillin Engineering & Construction Ltd. Shelter Canadian Properties Ltd. Sterling Group Inc.
28.278 5.500 4.600 2.843 1.911 0.950 0.871 0.645 0.440 0.400
millions of sq. ft.
FirstService Residential 109.853 Brookfield Condominium Services Ltd. 71.122 Del Property Management Inc. 67.522 Associa Canada 50.520 Wilson Blanchard Management Inc. 34.008 Rancho Management Services Corp. 27.628 ICC Property Management Ltd. 16.981 Gateway Property Management Corporation 16.355 Pacific Quorum Properties Inc. 15.204 AWM-Alliance Real Estate Group 14.355 Canadian Property Management | March 2015 25
W h o ’s W h o i n C a n a d i a n R e a l E s t a t e
32.500
14.335
22.037
37.187
FirstService Residential
109.853
CB Richard Ellis Ltd.
94.885 42.296
17.403
10.124
1.491
Bentall Kennedy
90.707 27.482
43.033
17.078
3.114
Brookfield Condominium Services Ltd.
71.122
71.122
Del Property Management Inc.
67.522
67.522
CAPREIT
61.267
GWL Realty Advisors
59.881 28.582
H&R REIT
55.937
0.585 17.830
0.805 13.223
0.418
3.023
0.477 22.050
Ow ns &
19.350
147.815 88.590
Ow ns &
153.885 87.700
Brookfield Johnson Controls
Ow ns &
SNC-Lavalin Operations & Maintenance Inc.
Ow ns &
2015
109.853 23.571
31.986
9.548
2.089 17.292
Oxford Properties Group
54.545 7.084
13.513
10.122
5.092
7.870
7.590
3.273
53.894 5.703
8.194
14.149
6.381
9.195
6.091
0.581
Associa Canada
51.654
1.134
50.520
Colliers International
46.911 16.817
3.643
3.805
Cominar REIT
45.252
14.994
RioCan REIT
39.833
1.303
Triovest Realty Advisors Inc.
37.985 13.944
19.294
4.193
0.554
Wilson Blanchard Management Inc.
36.265 1.265
0.653
0.224
0.110
Rancho Management Services
33.971 1.283
1.871
3.122
Ivanhoé Cambridge Inc.
32.961 0.325 1.539
0.177 2.746 15.419
Realstar Management
32.800
Cadillac Fairview Corporation Ltd.
32.407
0.395 14.048
0.901 16.875
Healthcare of Ontario Pension Plan Inc. (HOOPP)
29.707
9.900
6.500
11.250
7.401
8.759
17.413
1.069 0.151
11.400
2.085
2.638
12.845 38.500
0.030
34.008
0.006
0.067 27.628
0.904
3.231
27.300
1.907
Boardwalk REIT
29.500
29.500
28.419 0.390
0.179 16.355
Calloway REIT
27.620
1.650 25.970
First Capital Realty
24.300
24.300
Dream Office REIT
24.200
FCR Management Services LP
23.411
Homestead Land Holdings Ltd.
21.830
Cogir Management
21.286 0.808
CREIT Management LP
21.026
Brookfield Property Group
20.400
0.038
0.196
0.127
0.060 11.064
24.200
0.280
2.919
23.411
7.060
9.140
2.100
21.830
6.156
0.370
6.580
Metcap Living Management Inc.
20.226 0.022 19.159
5.278
0.042
9.126
18.834
4.194
2.400
1.328
0.561
Manulife Real Estate
19.100
15.800
Minto Properties Inc.
18.767
2.296
The DMS Group
18.405 0.303
1.256
0.596
14.848
1.402
AWM-Alliance Real Estate Ltd.
17.745 0.622
0.611
1.208
0.710
0.239
PIRET (Pure Industrial Real Estate Trust)
17.530
Untitled-3 1
0.033
6.829
20.400
Investors Group
26 March 2015 | Canadian Property Management
5.500
0.188
Gateway Property Management Corporation
0.049
28.278
0.899
Morguard
1.515
Man ages
Other
Ow ns &
Condo
Man ages Man ages Onl y Ow ns & Man ages Man ages Onl y Ow ns O nly
Man ages Man ages Onl y Ow ns O nly
Apartment
Tota l (in Sq. Fo mill o ions tage ) Man ages Onl y Ow ns O nly
Man ages Man ages Onl y Ow ns O nly
Retail
Man ages Man ages Onl y Ow ns O nly
Industrial
Office
0.300 0.577
4.025
0.600
11.869
14.355
17.530
15-03-24 2:48 PM
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W h o ’s W h o i n C a n a d i a n R e a l E s t a t e
Crombie REIT
17.379
1.059 0.020
14.489
17.006 0.257
17.000
ICC Property Management Ltd.
16.988
16.981 0.007
Shelter Canadian Properties Ltd.
16.661 0.139
3.565
Timbercreek Asset Management
16.053 3.764
0.050 12.705
3.758
17.000
1.143
0.306
0.356 0.011
Canderel/Humford
16.045 6.100 0.084
2.069
Pacific Quorum Properties Inc.
15.636
0.014 0.615
0.528
3.522
0.030
0.289
0.082
0.418
15.204
14.835 0.189
2.750 0.585
1.018 0.715
6.875
14.430 0.401
0.802
0.689
10.199
2.340
Avison Young Real Estate Management Services
14.200 4.500
3.800
5.100
Concert Properties Ltd.
13.038
Killam Properties Inc.
12.078
4.452 1.308
1.240
0.050
0.016
3.765
0.145
11.805 0.451 11.618
1.550
Skyline Apartment REIT
11.223
0.482
The Regional Group of Companies Inc.
11.110 0.800
0.200
0.600
Blackwood Partners Corporation
11.042 1.364
8.815
0.862
7.800
0.274
9.385
0.153
10.742 1.650
0.360
7.500
Allied Properties REIT
10.618 0.060
ComField Management Services Inc.
10.280 0.080
0.900
5.250
4.050
Berkley Property Management Inc.
9.760 0.750
0.410
0.250
5.400
2.700
EPIC Realty Partners
9.456 3.904
3.989
1.563
Canlight Hall Management Inc.
9.143 0.280
0.050
0.130
Vertica Resident Services
9.011
Park Property Management Inc.
9.004
0.042
7.417
Drewlo Holdings Inc.
8.998
8.998
NewWest Enterprise Property Group Inc.
8.693 3.828
Royale Grande Property Management Ltd.
8.450
Granite REIT
7.800
7.800
Prologis
7.596
7.596
Retrocom REIT
7.515
Realspace Management Group Inc.
7.507 1.112
Agellan Capital Partners Inc.
7.500
Plaza Retail REIT
6.600
6.600
Harvard Property Management Inc.
6.597 1.610 0.060
0.711
2.001
M&R Holdings
6.186
0.077
GPM Property Management Inc.
6.177
Globe General Agencies
6.150
0.300
5.850
10.558
0.212
0.004
0.041
1.504
2.242
5.573
3.700
2.341
0.043
9.011
0.184
1.301
1.247
0.356
0.075
0.183
1.115
6.067 0.840 0.612
6.000
ONNI Group
5.924
Untitled-3 1
0.206
0.114
2.530
0.104
1.840
0.789
3.208
Industrial Alliance
0.760
0.099
8.450
0.822
0.005
3.974
8.280
7.515
3.725
0.124
0.360
0.250
Percel Inc.
28 March 2015 | Canadian Property Management
0.950
12.078
Sterling Karamar Property Management
0.235
0.080
0.800
Westcliff Management
0.295
2.040
0.961
0.440
16.053
Dorset Realty Group
1.090
0.933
3.271
5.421
Briarlane Rental Property Management Inc.
1.251
0.205
Man ages
1.831
Greenwin Inc.
0.602
0.115
Ow ns &
Man ages Man ages Onl y Ow ns & Man ages Man ages Onl y Ow ns O nly
Other
Ow ns &
Man ages Man ages Onl y Ow ns O nly
Condo
Dream Industrial REIT
0.905
0.101
Apartment
Ow ns &
Ow ns &
Man ages Man ages Onl y Ow ns O nly
Ow ns &
Tota l (in Sq. Fo mill o ions tage ) Man ages Onl y Ow ns O nly
2015
Retail
Man ages Man ages Onl y Ow ns O nly
Industrial
Office
6.172
6.000
0.644
0.150
15-03-24 2:48 PM
W h o ’s W h o i n C a n a d i a n R e a l E s t a t e Other Man ages
Condo
Man ages Man ages Onl y Ow ns & Man ages Man ages Onl y Ow ns O nly
Man ages Man ages Onl y Ow ns O nly
Apartment
0.950
0.500
0.475
0.405 0.521
2.850
0.085
Strathallen Capital Corp
5.700
2.000
3.700
Fortis Properties Corp.
5.685
1.733
1.110
2.843
Terracap Management Inc.
5.646
0.236
1.600
0.110
SDM Realty Advisors Ltd.
5.575 1.775
2.825
0.975
LaSalle Investment Management
5.571 2.537
2.641
0.211
2.960
3.700
0.464
2.250
0.356
0.250
0.010
Kevric Real Estate Corporation
5.483 0.113
5.071 0.646
2.111
0.631
Canreal Management Corp.
4.918 0.195
3.556
1.167
Northam Realty Advisors Ltd.
4.912 0.212 0.870
3.368
4.871
0.894
0.928
0.174
0.214
0.186
1.399 0.497
1.011
0.025 0.152
0.919
0.010
0.064 0.143
Menkes Property Management Services Ltd.
4.760 1.919
0.795
1.723
0.150
4.709
4.066
0.643
NorthWest Healthcare Properties
4.600
Warrington PCI Management
4.560 1.561
Fiera Properties Ltd.
4.525
Colonnade Management Ltd.
4.300 2.000
Devon Properties Ltd.
4.115 0.116
0.144
3.659
0.197
Landmark Properties Inc.
4.020 0.649
0.273
0.132
Dayhu Group of Companies
4.000
Crown Property Management Inc.
3.845 1.405
0.560
1.546
3.026
1.400
2.967
0.288
0.691
0.605
0.900
4.000
2.440
Centurion Apartment REIT
3.828 3.817
3.817
Anthem Properties
3.570
0.048
Hollyburn Properties Ltd.
3.495
Temple Hotels Inc.
3.391
0.294
0.064
0.060
3.250
Prospero International Realty Inc.
3.219 0.141
1.162
Kelson Group
2.970
0.070
First Gulf Corporation
2.947 0.250
0.544
Wycliffe Property Management Ltd.
2.923
0.031
Melcor REIT
2.874
1.409
0.221
Immomarketing Inc.
2.850
0.004
0.003
KRP Properties
2.800
2.800
Lawrence Construction Ltd./Grant Management Ltd.
2.755 0.055
0.235
Skywater Property Management
2.700
Aspen Properties
2.650
Gulf Pacific Property Management
2.548 0.697
The Brown Group of Companies Inc.
2.488 0.011
0.034
0.317
0.386
0.164 0.343
1.591
1.612
0.020
2.900
1.386
0.207 0.049
0.794
0.842
1.058
0.603
0.089
0.017
0.977
3.391
3.353 0.503
0.240
0.021
3.435
3.250 0.284
0.043
3.227
Old Oak Properties Inc.
Untitled-3 1
0.154
3.828
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30 March 2015 | Canadian Property Management
4.600
0.263
Skyline Commercial REIT
0.159
1.911
0.612
IAM Real Estate
0.546
0.136
0.183
Downing Street Property Management Inc.
BTB REIT
Ow ns &
1.050
0.100
Ow ns &
0.750
5.732 0.793
Ow ns &
5.750
Shindico
Ow ns &
Martello Property Services Inc.
Ow ns &
2015
Tota l (in Sq. Fo mill o ions tage ) Man ages Onl y Ow ns O nly
Man ages Man ages Onl y Ow ns O nly
Retail
Man ages Man ages Onl y Ow ns O nly
Industrial
Office
0.111
2.747
0.432
0.270
0.139
0.007
0.923
0.138
0.142
2.700
2.650 0.259
0.067
0.502
1.322
0.270
0.044
0.563
0.009
1.292
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1.910
Ronmor Holdings Inc.
1.923
WJ Properties
1.921
Northcan Property Management
1.906
Man ages
2.025
Lanesborough Real Estate Investment Trust
0.400
Ow ns &
O'Shanter Development Company Ltd.
Other
Man ages Man ages Onl y Ow ns & Man ages Man ages Onl y Ow ns O nly
2.100
0.076
Condo
Ow ns &
2.195 0.693
State Building Group
0.162
Man ages Man ages Onl y Ow ns O nly
East Port Properties Ltd.
1.507
Apartment
Ow ns &
2.226
Ow ns &
Arnon Corp.
Ow ns &
2015
Tota l (in Sq. Fo mill o ions tage ) Man ages Onl y Ow ns O nly
Man ages Man ages Onl y Ow ns O nly
Retail
Man ages Man ages Onl y Ow ns O nly
Industrial
Office
0.081
1.502
0.100
0.081
1.000 0.405
0.040
0.464
0.307
1.000 1.620
1.683
0.106
1.152
0.089
1.819
0.106 0.109
0.013
1.800
Equity Hill Properties Group
1.879 0.147
0.018
Tillyard Management Inc.
1.831 0.726
1.010
0.095
1.604
Atlantis Realty Services Inc.
1.806 0.136
1.408
0.228
0.034
Canpro Investments
1.790 0.830
Equitable Real Estate Investment Corp.
1.765 0.303
0.745
Northland Properties Inc.
1.740
Taylor Property Management Inc.
1.696 0.080
BlueStone Properties Inc.
1.676
0.229
0.640
Madison Properties Inc.
1.650
0.800
0.450
0.400
Metcalfe Realty Company Ltd.
1.623
1.280
0.147
0.092
0.103
IMP Group International
1.462
0.056
1.124
0.283
Royop Development Corporation
1.400 0.014
0.031
Huntington Properties Ltd.
1.394 0.105
0.936
0.112
0.005
0.255
0.497
0.016
0.698
0.790
0.080
0.601
Ashelron Ltd.
1.355 0.900 1.350
Richmond Property Group Ltd.
1.330 0.230
Gillin Engineering & Construction Ltd.
1.280
0.635
Antrev Management & Consulting Inc.
1.272 0.573
0.137
0.229
0.021
Skyline Retail REIT
1.167
1.167
York Heritage Properties
1.085 0.229 0.100
0.756 0.219
Les Enterprises Axwood
1.057
PRO REIT
1.044
Concorde Group Corp.
1.010
0.080
0.419
Busac Real Estate
0.100
0.311
0.123
0.125
0.100
0.375
0.010
0.400
0.285
0.261
0.600
0.225
0.370
Armadale Property Management
0.973 0.077
0.183
0.311
Merkburn Holdings Ltd.
0.919 0.013
0.291
0.097
Tower Building Management
0.909 0.354
0.200
Twin City Management Ltd.
0.903
0.050
0.853
Kroma Management
0.822
0.822
Greenwood Lane Inc.
0.763 0.061
0.216
0.032
0.010
0.035
0.340
Evton Capital Partners
0.696
0.243
0.061
0.100
0.041
0.125 0.125
0.024
0.071
0.498
0.019
0.059
0.010
Shepherd Village Inc.
0.675 0.660
0.195
Gistex Inc.
0.637
0.080
Untitled-3 1
0.307
0.355
Aldgate Group
32 March 2015 | Canadian Property Management
0.645
0.430
0.433
0.540
0.871
1.600
0.807
0.056
1.340
0.215
0.526
0.430
0.210
0.134
0.332
0.035 0.170
0.387
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W h o ’s W h o i n C a n a d i a n R e a l E s t a t e
Glenview Management Ltd.
0.583 0.226
0.208
0.051
0.042
0.014
EmTwo Properties Inc.
0.576 0.067
0.058
0.117
0.334
Fyrst Avenue Property Management Inc.
0.575 0.300
0.065
0.030
0.035
Loncom Property Management
0.438 0.055
Allstate Insurance Co.
0.400 0.400
Rathcliffe Properties
0.400
Sterling Group Inc.
0.400
0.110
0.250
0.040
Ow ns &
0.600
Ow ns &
0.600
Ow ns &
2015
Ow ns &
Fana Group of Companies
0.018
0.018
0.024
0.035
0.075
0.400
Lloyd Zerker Realty Ltd.
0.393 0.013
Gold Castle Holdings Ltd.
0.352
0.225
Summa Property Management Inc.
0.345
Edie & Associates
0.344
Creative Realty Corp.
0.295
0.290
Abe Gitalis Real Estate Ltd.
0.285
0.240
Goodwood Property Investment Ltd.
0.284
0.004
Chester Developments Ltd.
0.279
0.040
0.300
0.155
0.181
0.141
0.143 0.005
0.025 0.010
0.239
RW Commercial Property Management Inc.
0.250 0.250 0.233
REMCO
0.200
0.200
Sluis Properties
0.110
0.020
Leimerk Developments Ltd.
0.109
0.109
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0.060
0.020
0.270
Nelson Education Ltd.
Oak Bridge Properties Inc.
0.400
0.052
0.023
0.201
Man ages
Other
Ow ns &
Condo
Man ages Onl y Ow ns & Man ages Man ages Onl y Ow ns O nly
Man ages
Man ages Man ages Onl y Ow ns O nly
Apartment
Tota l (in Sq. Fo mill o ions tage ) Man ages Onl y Ow ns O nly
Man ages Man ages Onl y Ow ns O nly
Retail
Man ages Man ages Onl y Ow ns O nly
Industrial
Office
0.233
0.032
0.091
0.029
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energymanagement
ROLLING OUT COMPREHENSIVE RETROFITS Whole-Building Approach Expands Opportunities for Savings By Sameer Kwatra and Chiara Essig UTILITY RATEPAYER-FUNDED programs have traditionally focused on providing incentives for energy efficiency measures that target specific equipment or components. Buildings, however, consist of a number of systems such as lighting, heating and cooling, ventilation and hot- and cold-water delivery. These systems are interrelated; changes in one often affect energy use in the others. Maximum efficiency gains can be achieved by analyzing the building as a whole and taking into account the interactive effect of the energy use of its various systems. The American Council for an Energy Efficient Economy (ACEEE) interviewed program operators and studied program literature as part of a report on effective methods of implementing comprehensive energy retrofits in commercial buildings. This includes practices around the various stages of a program from prospecting and design to measurement and verification. 34 March 2015 | Canadian Property Management
PROSPECTING The majority of programs to date have focused on large customers. However, opportunities for comprehensive retrofits exist with all kinds of customers: for example, large, medium and small businesses, diverse sectors such as office buildings and more cohesive sectors such as health care and education buildings. To create a pipeline of prospects, programs can offer low-cost energy assessments and audits as a starting point. The increasing sophistication of remote data analytics is enabling a higher number of energy audits at a fraction of the cost. Some programs pair energy audits with benchmarking tools such as ENERGY STAR Portfolio Manager. To increase the effectiveness of outreach efforts, programs have also benefited from developing a network of partners such as trade allies, local government agencies, regional efficiency organizations, building owners and management associations and other regional utilities.
While energy savings from comprehensive retrofits are attractive, communicating the non-energy benefits of comprehensive retrofits makes for a stronger business case. These benefits include increases in property value, lower operating expenses, greater occupational comfort and satisfaction and improvement in air quality through emissions reduction. DESIGN AND IMPLEMENTATION In most cases, comprehensive retrofits are part of, or a variation on, the custom-projects incentives that programs have been offering for a long time. To move away from isolated efficiency measures, some programs make implementing multiple measures a necessary condition of participation and others offer a bonus incentive above the one for standard prescriptive measures. In addition to efficiency rebates, it is good practice to bundle other benefits into the program package. Programs commonly provide access to a no-cost or cost-
energymanagement subsidized energy audit and they also offer technical support in the form of remodelling, design improvements and operational assistance. To overcome the high upfront investment for comprehensive retrofits, some programs link up with private or government agencies to offer low-cost loans, extended terms and/or relaxed underwriting. In terms of implementation, not all projects are completed in one go. Some use a phased approach, with each phase lasting about a year and targeting successively deeper savings. This approach reduces the upfront capital cost and helps secure a longer-term commitment to efficiency. EVALUATION, MEASUREMENT AND VERIFICATION (EM&V) EM&V serves a variety of purposes: verification of savings, establishing a basis of incentive payment, reducing uncertainty of savings estimation, monitoring postretrofit systems performance and finding additional opportunities for savings. The U.S. Department of Energy (DOE) has published a whole-building analysis protocol under the Uniform Methods Project. It provides M&V approaches based on an analysis of billing data pre and post retrofit. Some programs use the U.S. Environmental Protection Agency's (EPA) ENERGY STAR Portfolio Manager to track savings impacts, and they collect performance reports from Portfolio Manager to support evaluation efforts. A few programs include ongoing commissioning requirements and post-installation verification of savings. MARKET PENETRATION There are a variety of strategies that programs have adopted to improve the market penetration and effectiveness of comprehensive retrofits. To begin with, quite a few administrators now have segment-specific programs. Facilities such as restaurants, schools, nursing homes and warehouses have similar energy-use characteristics within their own type and can be good targets for comprehensive retrofits. On the other hand, each comprehensive retrofit project is unique and requires a sophisticated approach to simplify the relationship with the customer through modelling, measure selection, financing and implementation. Programs that provide streamlined, end-to-end support tend to
have more satisfied customers. Effective programs identify savings, help procure funding, provide technical assistance and offer incentives for ongoing optimization. Program incentives should be structured to encourage a whole-building analysis and installation of multiple measures. Since comprehensive retrofits are timeand capital-intensive, some programs offer a phased approach to successively deeper
savings. While efficiency measures are identified through a comprehensive wholebuilding energy audit, the implementation is staggered over a period of time, thus alleviating the disruption to operations and reducing upfront investment. Granular real-time energy-use data and advanced analytical capabilities are creating new opportunities for whole-building assessments, identification of comprehensive
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energymanagement savings and automated monitoring and tracking of energy systems performance. Effective programs are increasingly making use of these tools, especially to complement in-person energy audits. Trade allies are an indispensable partner in the outreach and implementation of comprehensive retrofits. Programs looking at a long-term strategy should develop a network of trade allies and offer them training, certification, program materials and an incentive to participate. It is critical to align program benefits with the business mission of the prospect. Efficiency retrofits provide non-energy benefits such as health, safety, comfort and productivity improvements in conjunction with energy savings. Helping customers achieve their primary business or institutional mission through efficiency is more effective than trying to sell the benefits of efficiency on their own.. zz
ATTRACTING COMMERCIAL CLIENTS
The preceding article is excerpted from the American Council for an Energy-Efficient Economy (ACEEE) report, The Promise and Potential of Comprehensive Commercial Building Retrofit Programs. For more information, see the ACEEE website at www.aceee.org.
Program administrators can promote comprehensive retrofits through a range of strategies: Raise awareness. Either directly or through their trade allies, program administrators often have multiple touch-points with commercial building owners and managers. They can leverage their marketing and outreach efforts to educate property managers about the business case for comprehensive retrofits. Identify opportunities. With access to metered building energy-use data, it is easier for utilities to benchmark the performance of comparable buildings and help them identify and prioritize energy savings opportunities, especially for customers with a large portfolio of buildings. Create a market for efficiency. Efficiency is a low-cost resource to meet rising energy demand. Since they "buy" kilowatt-hours saved with incentives and rebates, utility programs often set the "price" for efficiency. Program benefits including financial incentives can help create a market for energy savings through comprehensive retrofits. Assist with project management. Comprehensive retrofit projects often involve coordination with multiple stakeholders. Since most incentives require monitoring and verification of savings, program administrators have a long-term interest in the implementation and completion of the project. Program staff and partners can provide the coordination to keep things running smoothly. Help with financing. Program incentives can play a significant, if not decisive, role in determining the fate of a retrofit project. Comprehensive approaches may include energy efficiency measures that may not meet financial requirements (e.g. payback or IRR) on their own.
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corporatestrategy
SUSTAINABLE CONTEXT FOR GEN Y SKILL SETS
Smart Learning is First Step to Leverage Smart Technology By Rebecca Melnyk CLIMATE CHANGE is no longer a debatable, foggy topic, but rather a flurry of factual evidence, synchronized with environmental and cultural discourse around the globe. A recent survey conducted by the Environics Institute for Survey Research and the David Suzuki Foundation found the majority of Canadians accept the scientific facts that global warming is happening and is caused by human activity. Acceptance aside, Environment Canada now warns that, unless new 38 March 2015 | Canadian Property Management
action is implemented, the country may not meet its 2020 target of a 17% reduction in greenhouse gas emissions. Building strategies to help reduce carbon emissions have never been more critical. With 50% of Boomers set to retire from the facility management sector, there remains a probable gap successive generations must fill. And whether or not Millennials entering the workforce find global warming a viable cause, there’s little doubt the
planet faces difficult challenges; accordingly, Generation Y has no choice but to respond and help reverse post-industrial damage. At a PM Expo seminar in December 2014, titled, “Is smart the new green?” Jiri Skopek, Managing Director at Jones Lang LaSalle (JLL), urged attendees to consider how future facility managers will definitely be part of climate change action, mainly through their involvement with smart
corporatestrategy building technologies. Millennials are computer savvy, surrounded by a state of environmental urgency. However, with the advent of smart technology comes a potentially small workforce – one that may or may not understand how to operate such systems – along with less enthusiastic facility owners and board members who remain skeptical of issues like capital versus long-term costs. Skopek remains positive in light of such barriers. “Any kind of cultural change takes time, especially with an older generation who may be reluctant to adopt smart technology,” he says. “Younger generations, however, will be more attuned to know how to operate this technology.” The marketplace will soon see several new systems of varying sophistication, from simple energy monitoring to full building analytics and ongoing commissioning. For instance, Skopek sees JLL’s IntelliCommand by Pacific Controls at the forefront, a global, smart-building, cloud-based portfolio management solution that provides 24/7 real-time remote access to control buildings and reduce carbon footprint and energy costs by 18%. ADDRESSING THE TRAINING GAP Yet, complex systems need someone who can understand and maintain them. Jim Bechard, Professor of architecture in the facility management program at Conestoga College, says although building changes are undeniably advancing, smart technology isn’t always helpful – some owners don’t have resources to fully implement technology properly or workers aren’t trained in managing it correctly. “The technology younger generations are adopting is communication technology, like access to basic info, but when you switch to computers tied to technology in buildings, you still have to have training," says Bechard. “They might adapt to it easier than older generations, but it still takes understanding of what all those parts do.” The program at Conestoga College is more management-based, where students are schooled in thinking about how this technology functions and is useful. Through courses like building automation and control systems to the role of sustainability among people and technology, the classroom
“Rather than the tactical work that’s being done today, people will have time to do more strategic work, looking at how buildings are optimized; they’ll become more productive, devoted to a higher level of work.” addresses smart technology according to how vendors will be selected and what software best connects to different business needs, which vary by organization. As systems advance and more job positions open up, in-depth training in operating smart technology will become pivotal. “It will be absolutely necessary,” adds Skopek, who remembers the early days of management, when companies would hire computer experts who knew computers, but nothing about facility management. “They sat behind a computer the whole day and played Solitaire while the building ran in default mode, defeating any advantages of building automation systems,” he says. “Advanced systems without the interpretative help of subject experts will make the untrained operator dumber. Training and expert help must be combined.” Steve Lockwood, Accreditation and Academic Affairs Director for the International Facility Management Association (IFMA), has been in the facility management industry as a teacher or manager since 1977. “If you don’t have an internal staff who knows how to maintain systems, you lose all the value,” he says. “You have to have a knowledgeable and competent skill source. And as students graduate, the value they’re bringing are these competencies that can immediately impact a company.”
According to Nancy Sanquist, Real Estate and Workplace Industry Lead at Manhattan Software and chair of the research committee for IFMA, companies are gradually recognizing the value students will bring and responding to the training gap. “They’re creating training programs to create the workforce they will need to operate connected buildings of the future,” she says. “It’s actually the private sector getting involved in many ways, providing technology that schools can’t necessarily afford.” In Canada, companies like Cisco have been providing technology for programs like George Brown College’s relatively new Advanced Diploma in Building Automation – Electromechanical Engineering Technology. This program teaches students to install and operate smart technology in all building types, while also placing them on a career path to various management roles, such as property or facility management.
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Canadian Property Management | March 2015 39
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At the same time, Sanquist says Manhattan Software, for instance, is developing new programs such as virtual reality gaming technology to aid smart learning at an early high school level. Such engaging programs are connected to IFMA’s Global Workforce Initiative that Sanquist originated along with Diane Coles Levine to entice students to consider facility management as a career. As for the ease of understanding rapidly advancing technologies at the post-secondary level, Sanquist feels one of the most important aspects of training is that students leave a program with a thorough knowledge of technology, and this goal should only become more attainable. “Because of the consumerism of technology, the applications being developed now are going to be easier to use and very mobile,” she says. “You’re seeing the same characteristics on enterprise systems that you would with consumer technology. They won’t be quite as difficult to use or implement as they are now.” STRATEGIC WORK “Smart will make people smarter,” adds Skopek. “The advancement of technology will actually help people manage a building more effectively. They’ll be given pointers on what to look at. The technology will offer information on what does and doesn’t work and what needs fixing. Whether workers are experienced or not, they’ll constantly be reminded of how to be more effective.” For example Sanquist envisions a future where HVAC systems will predict when they’re about to breakdown, ultimately repairing themselves. “Rather than the tactical work that’s being done today, people will have time to do more strategic work, looking at how buildings are optimized; they’ll become more productive, devoted to a higher level of work,” she predicts. As smart buildings reach beyond their own walls and into the surrounding community, in a sense influencing the local economy, sustainability and the climate change movement, strategic work will ultimately broaden in scope. Sanquist refers to John Schoettler, Amazon’s Director of Global Real Estate and Facilities, who was recently on the front page of the New York Times. Part of the reason Schoettler made the cover was because Amazon is building more than a dozen buildings in downtown Seattle. Because of this Amazon-inspired neighbourhood, Schoettler is on the boards of the Downtown Seattle Association and Seattle Metropolitan Chamber, which he will soon chair. “The linkage between facility managers, buildings and the community those buildings are in, is starting to play a more important role,” says Sanquist. “And that’s part of the sustainability movement.” In Canada, as the developing Waterfront Toronto community aims to be one of the most sustainable in the world, every building must achieve a minimum LEED Gold certification, surrounded by a pedestrian- and cyclist-friendly neighbourhood, all contributing to larger green goals. The UN Intergovernmental Panel on Climate Change (IPCC) has put forth studies showing the planet grew one degree warmer over the past 50 years, and there’s a 15 to 20-year window before the planet hits the two degree mark, where action, such as smart building technologies to reduce carbon emissions can proactively mitigate damage and hopefully create sustainable change. As sustainability becomes more urgent and energy targets persist, a number of facility managers will retire. If smart is indeed morphing into green, as Skopek and other experts hypothesize, then training and encouraging a future workforce to better understand and operate smart technology could help address both issues. zz Rebecca Melnyk is Online Editor of the REMI Network.
40 March 2015 | Canadian Property Management
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Canadian Property Management | March 2015 41
workplacetrends
GAUGING YIELDS ON HUMAN CAPITAL Creative Workplace Inputs Promote Productivity and Profitability By Michelle Ervin AIRPORT CITIES, mindfulness programs and a phenomenon coined “rateocracy” are among the emerging forces shaping employees’ quality of life, according to Sodexo’s 2015 Workplace Trends Report, released earlier this year. Produced annually, the report draws on principal research, clients, academia and leading facilities management and human resources trade organizations. AIRPORT CITIES Dr. John Kasarda, President and CEO, Aerotropolis Business Concepts, likens airports to routers in a sort of “physical Internet” that moves people and products the way the digital Internet moves data and information. In Aerotropolis: Airports as the New City Center, an Airport World Magazine article republished in Sodexo’s report, Karsarda writes about the trend toward transit-oriented development, and in particular, cities being built around airports. Not only do business travellers have access to office services and business support staff in concourse-connected hotels, but some corporations are even locating their headquarters in these airport cities. Karsarda points to KPMG, which has located its European headquarters in The Squaire, a two-million-square-foot office and hotel complex at Frankfurt Airport. “Airport city and aerotropolis development is gaining substantial traction,” he writes. “I’ve identified over 80 airport cities and broader aerotropolises (airportcentred urban economic regions) around the world that are either already operational or in early stages of development.” MINDFULNESS PROGRAMS Research has well established the link between greater employee stress and greater 42 March 2015 | Canadian Property Management
health risks, productivity losses and medical costs, write eMindful’s CEO, Kelley McCabe Ruff, and Chief Scientific Advisor, Dr. Ruth Wolever. In the Sodexo report, in the article Mindfulness at Work: Addressing Medical Costs, Absenteeism and Workplace Productivity, the co-authors share research supporting mindfulness as an effective and targeted solution for employers. McCabe Ruff and Wolever tout as its benefits reduced stress; improved alertness, productivity and sleep; enhanced brain and immune function; and improved glycemic control in diabetes. In particular, the co-authors highlight the case of Aetna, a U.S. health company that assessed two mindfulnessbased programs, one on-site and one online, in a randomized control trial. Based on self-reporting, participants’ stress levels dropped 36%, their sleep disturbances dropped 29% and their pain levels dropped 34%. “The findings for participants taking the course in eMindful’s online classroom were equivalent to the findings of those taking the program through conventional on-site classes,” they write. “Furthermore, those taking the online program had a superior retention rate in the study.” RATEOCRACY Robert Moran, Partner, Brunswick Group, defines “rateocracy” as democratic and transparent real-time ratings. In Rateocracy: Working and Managing in an Era of Extreme Transparency, a THE FUTURIST Magazine article excerpted in Sodexo’s report, Moran writes that employees already rate their employers on websites such as Glassdoor.com.
“Soon,” he predicts, “we will also rate corporations on their behaviour and have real-time mobile access to the aggregated, stakeholder-generated reputation scores of nearly every corporation on the planet.” One of rateocracy’s main implications is the need for 24/7 reputation management. But as much as this phenomenon is new, Moran says, it is also a return, in some ways, to the kind of reputation management required of the small-town business. Says Michael Norris, Chief Operating Officer, Sodexo: “When workers and customers can instantly share their opinions of a company with thousands of people, concerns like morale, transparency and fairness become an integral part of how businesses manage their reputations. “The goal of the Workplace Trends Report is to evaluate how ongoing changes, like the growing power of one person to influence a company’s reputation, are affecting the everyday experiences of employees and their managers.” Sodexo’s 2015 report also highlights the increasing prevalence of familyfriendly provisions, and the importance of ensuring they are effective in reducing work-family conflict. And the report includes a special section on the International Facility Management Association (IFMA) Foundation’s efforts to make facility management a profession of choice for students as a skills shortage looms. zz
Michelle Ervin is the Editor of Canadian Facility Management & Design. The preceding article is reprinted from the REMI network at www.reminetwork.com.
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