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Home buyers in the GTA will largely focus on detached housing

A significant proportion of those planning to buy homes in the Greater Toronto Area this year are going for detached housing, according to a new report by the Toronto Residential Real Estate Board.

The share of those seeking this type of property stood at 42% as of fall 2019. This was markedly lower than the 54% reading in fall 2015, mainly due to the impact of the OSFI-mandated mortgage stress testing.

“In order to adjust to the more stringent qualification standards, intending buyers followed a number of different paths. The most common responses involved changing home price, type or location,” TRREB said. “Some intending buyers also looked to alternate lenders, such as credit unions or the secondary lending market.”

Overall, however, sustained demand will continue driving activity in the detached segment this year. The trend is expected to further amplify the market’s already severe inventory issues, which were already quite apparent in 2019.

“After more than three years of slower market activity brought on largely by changes in housing-related policies at the provincial and federal levels, home sales will move closer to demographic potential in 2020. The key issue, however, will be the persistent shortage of listings. Without relief on the housing supply front, the pace of price growth will continue to ramp up,” TRREB Chief Market Analyst and Director of Service Channels Jason Mercer explained.

“Policy makers need to understand that demand side initiatives on their own will only have a temporary impact on the market.”

The TRREB predicted that the region’s home sales numbers will likely reach 97,000 this year, which will be 10.5% larger on an annual basis. Price growth will also see similar gains, with a near-10% increase to reach an overall average sales price of around $900,000.

“This forecast rate of growth presupposes that price growth will continue to be driven by the less expensive mid-density low-rise home types and condominium apartments,” TRREB stated. “If the pace of detached home price growth starts to catch up to that of other major home types, the average selling price for all home types combined could push well past the $900,000 mark over the next year.”

 

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Toronto Named 6th Happiest City in the World: Report

Despite real estate prices that are forcing millennials to look elsewhere in Ontario, and a public transportation system that leaves too many stranded too often, it turns out Toronto residents are pretty happy despite these circumstances. In fact, Torontonians have it pretty good compared to other urban centres, which is why the City was just ranked one of the happiest in the world in a new report.

Knight Frank, a global real estate consultancy, just released its inaugural “City Wellbeing Index,” which “gauges the quality of life in the world’s most-liveable cities.”

The survey analyzed 40 global cities and used eight measures to “identify those urban centres that are enabling citizens to achieve a higher level of wellbeing.”

While Knight Frank said the measures are subjective, the criteria used to rank the cities included measurements like a city’s overall greenspace, annual hours of sunshine, crime, traffic congestion, happiness, quality of healthcare, work-life balance, and governance.

The wellbeing survey’s results show that European cities dominate, with Norway’s capital, Oslo, taking the top spot, followed by Zurich and Helsinki tied in second place, and Vienna in fourth.

Madrid rounds out the top five, with Stockholm in sixth place. The highest-ranking for Australasia is Sydney in seventh. For North America, Montreal is highest in ninth place, for Asia it is Singapore in the tenth and in the Middle East Dubai takes the fifteenth spot.

As for our fair city, Toronto made it into the top 25 highly-liveable cities and placed 13th for overall wellbeing in 2020, followed by Seoul, Dubai, and Lisbon, respectively.

But what’s important to note is that Toronto tied with Montreal for being the 6th happiest city in the world, receiving a score of 9.2 out of 10.

“There is a growing focus on wellness as a measure of national performance: something that has in the past been assessed in purely economic terms, generally measured in the form of GDP,” reads the report.

“However, there is no universally accepted method of measuring wellbeing, nor how it pertains to wealth creation. We therefore decided to develop our own index using eight measures to identify those urban centres that are enabling citizens to achieve a higher level of wellbeing.”

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Power of sale properties must seek full market value: Ask Joe

If I purchase a power of sale property, will I get a great deal?

Let’s start by explaining “power of sale” in plain language: if I borrow money from a bank, and we agree in a contract that the property is my guarantee the money will be repaid, the bank can take possession of the property if I don’t replay the funds according to the terms in the agreement. The bank can then sell it, and give me any money that is left over after taking the amount I owe them.

It is a common misconception that power of sale properties are sold below their value. In fact, lenders are required by law to take reasonable steps to get market value for the property.

A power of sale purchase brings complicating factors. I strongly advise that potential power of sale buyers enlist the services of a real estate brokerage and a lawyer specializing in real estate.

It’s important to know that a power of sale property is sold as is. For example, the lender won’t know whether the basement has a history of flooding, or if there are other defects. Unlike a typical transaction, you can’t ask the seller about the condition of the property, or negotiate with them to repair defects. When you agree to purchase the property, you agree to buy it with defects and all. Any costs for repairs and renovations will be your responsibility.

For this reason, I recommend that you talk to your salesperson about your options for a home inspection. A home inspector, contractor or structural engineer may identify underlying problems with the home’s major systems, like heating and cooling, electrical, foundation and so on. You may be able a make your offer conditional on your satisfaction with the inspection results. However, depending on the condition of the structure or the terms of the sale, an inspection may not be possible.

There are also legal aspects to consider. For example, if a tenant or the owner is still living in the property, you may have to comply with certain provisions of the Residential Tenancies Act, 2006. A real estate lawyer can provide you with guidance on how to navigate such a situation. A lawyer’s review of the documentation from the lender is also a good idea, since the documents can be complicated and difficult to interpret.

Also keep in mind that the person who took out the mortgage may have a right that permits them to catch up on their mortgage payments and keep the property. This happens only occasionally in practice, but be aware that it can happen.

Power of sale proceedings are highly technical, and consumers should seek the advice of an experienced lawyer and real estate salesperson. Doing some research to understand potential issues and hiring the proper experts will help make a power of sale transaction a positive experience

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What’s driving talented workers out of Toronto? Five young people on why they left the city

Over the next 10 years, the population of the Toronto area will hit 8 million people. How will the city handle the rapid growth and fill its ever-increasing employment needs?

Already experts are pointing to a talent gap in Toronto — too few people to fill the jobs needed in information technology, the skilled trades and health care. Experts warn that without government, industry and schools working together, those skills gaps could grow even bigger by 2030, exacerbated by retiring baby boomers, Toronto’s high cost of living and lingering bias against blue-collar work. So what can the city do to retain talent and attract skilled workers?

We asked five people why they left Toronto to pursue work opportunities. Their reasons shed light on what Toronto could do to hold on to talent. Here’s what they had to say.

Ryan Radersma, 25

Left Toronto for: Los Angeles in 2017

Works in: Film and TV industry as a marketing producer

Why did you leave?

I had no choice! Toronto is my favourite city in the world, but after having sent out hundreds of applications to jobs I was qualified for without receiving even a single callback, I reached out to contacts I had made during a previous internship in L.A., and was able to score an interview on the very first job I applied for here. I’ve spent three years in L.A. now; I continue to apply for jobs in Toronto hoping to one day be able to move back … without success. Meanwhile, it’s a completely different world here — recruiters in the media industry reach out to me regularly to offer interviews I can’t accept due to my very limited work visa. I hope one day to be able to do what I love in my home country, but unless some drastic expansion of the Canadian media industry occurs, it doesn’t seem likely. And it’s a shame.

Samuel Yuen, 25

Left Toronto for: Apple, Cupertino, Calif., in 2017

Works in: Consumer electronics and technology as a product design engineer

Why did you leave?

Primarily, I left Toronto and moved to California because the Bay Area simply offers better opportunities in tech — both in terms of quantity and quality of opportunities when compared to what can be found in Toronto. It doesn’t even feel like it comes close. I found this especially true for hardware and product development jobs (electrical and mechanical engineers).

The available positions are much more compelling in the Bay Area in terms of both total monetary compensation as well as the opportunity to work on interesting and challenging projects or problems with large scope and impact. There’s also a good variety of tech companies, all of varying sizes, to choose from and work at. This gives me more flexibility in terms of career development, growth, and where I want to go next.

Another reason I left is because most of my friends from university also moved down to the Bay Area when we graduated. I think they also left Toronto for better opportunities and it’s way easier to move to a brand-new place with people you already know and hang out with. Lastly, I like being outdoors and I find that there are a lot more things to do in California (surf, ski, hike, etc.) and you’re a lot closer to the mountains! And I can’t complain about the weather in California.

Mecha Clarke, 28

Left Toronto for: Ghana in 2018, has returned, but is planning to go back

Works in: Art, graphic design and UX/UI experiential design as a volunteer

Why did you leave?

While my (former design) job was very rewarding, as I worked with great people and on very impactful projects, I had wanderlust and felt the strong desire to get out of Toronto for a bit. Although an extended vacation was my first thought, I quickly remembered that I would still need to be able to financially support myself and develop my skills, so I reached out to a non-profit volunteer organization whose objectives aligned with my vision for my first overseas volunteering experience. Working closely with the program co-ordinators, we were able to come up with a custom mandate geared toward building the capacity of a local NGO in Ghana in the areas of graphic design, website design, creative writing and more.

Something I think about now that I’m back in Toronto is how saturated the graphic design field is here versus the complete lack of that industry in Ghana, a country that prioritizes STEM occupations. Finding a design job in Toronto is a very strenuous task and, unfortunately, really feels like it’s entirely about who you know. In Ghana, my skills were a major asset to the organization and I secured many freelance projects that definitely had the potential to become full-time positions had I been interested. I do have plans to go back.

Eva Konca, 30

Left Toronto for: London, U.K., in 2015

Works in: Fashion and HR as a resourcing specialist

Why did you leave?

I felt there weren’t many opportunities in Toronto within the fashion industry and London was recommended to me by a few friends and acquaintances who had moved there (from Toronto). I was also curious to see what the lifestyle was like in Europe.

The main reason I moved was because of the opportunities to connect and network in Europe in the fashion field that wouldn’t be accessible or as rich in Toronto. Now I’m very well connected in the industry and can find work easily.

Chris Plosaj, 33

Left Canada for: Hong Kong in 2015

Works in: Digital strategy and e-commerce as a design and development specialist

Why did you leave?

I felt undervalued as a designer. The design industry is more mature in Canada, but there is also an oversaturation of designers. Also, Hong Kong provides a much better salary, less taxes.

I also left to have fun and to challenge myself and gain a new career perspective. In Hong Kong you often compete with the best and working in Asia I’ve learned more in a year than I did in three years working in Canada. Things move at a much different pace here.

Also, a big reason is Hong Kong’s approach to hiring. Many companies in my industry actively seek to hire some expat employees and everyone works through recruitment agencies. In fact, it’s pretty much the only way to get a job here and it means that you constantly have a network of recruiters and are being regularly approached about work opportunities. In fact, on a random holiday in Hong Kong, I met a recruiter that helped me find a job here and move within the same year. The rest is history.

Disclaimer: I lived in Hong Kong as a kid for some time, and although moving back here didn’t feel as familiar as you might expect, it was a bit easier to find work since I didn’t need a work visa.

 

One Toronto. Two possible futures. Ten years to get it right. Toronto has never been bigger, bolder and more successful – or faced so many serious problems. To attract talent and grow sustainably, we need to address the city’s transportation, affordability and infrastructure needs. If we ignore these threats, the inner city buckles. It’s time to start thinking about solutions.

 

TORONTO 2030: TEN YEARS TO GET IT RIGHT

Over the next year, the Star will tackle the biggest problems preventing our city from realizing its true potential

It’s 2020 and Toronto has never been bigger, bolder and more successful — or faced so many serious problems.

The next 10 years will transform our city into one of two possible futures.

In the first, we invest in the city’s transportation, housing and infrastructure needs. Torontonians find affordable places to live, the transit system works, green spaces flourish and talented workers flock to the city, increasing tax revenues — which leads to more investment.

In the second scenario, politicians squabble, we ignore the city’s needs and Toronto buckles, straining to cope with congestion, overwhelmed infrastructure and housing that’s out of reach for most.

The Greater Toronto Area’s population is projected to hit 8 million by 2030, it will be 10 million by 2045.

If we want a safe, livable city we need to start thinking about solutions now.

Over the coming year, the Star will take on a different challenge each month, turning to the brightest minds in the city to propose practical solutions that will make Toronto a better place to live.

 

THE ISSUES WE LOOK AT WILL INCLUDE:

februaryThe talent gap
marchTransportation gridlock
aprilGreening our environment
mayThe housing problem
juneInvesting in infrastructure
julyTechnology for the masses
augustLabour and the new economy
septemberMaking Toronto affordable
octoberSafety and crime
novemberWhy taxes aren’t working
decemberPulling it all together

What kind of Toronto would you like to see in 2030? Tell us your vision for the future at thestar.com/toronto2030 and #toronto2030.

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Borrowing to buy a house? Mortgage rates to fall following Bank of Canada rate cut

Variable rate mortgage holders are the big winners from the Big Six banks’ moves to match the Bank of Canada’s 50 point reduction to its trendsetting interest rate.

According to rate comparison  variable rate customers will see rates drop by half a per cent for interest cost savings of roughly $500 per year for every $100,000 of mortgage.

Those with adjustable-rate mortgages will see monthly payments fall by about $24 per $100,000, while variable-rate customers will continue to make the same monthly payment but their portion directed to principal will rise while the amount paid in interest will fall. Home backed and regular lines of credit will drop as well.

All of this follows the Bank of Canada’s decision Wednesday to lower its overnight target rate by 50 basis points to 1.25 per cent — the lowest since the 2008 recession — due to fears of a deepening economic downturn caused by the coronavirus and after the U.S. Fed imposed an emergency 50-basis-point cut.

There had been expectations that the banks would not pass on the full BoC cut, but Canada’s largest bank, RBC, led the way Wednesday evening, announcing a 50-basis point reduction to 3.45 per cent for its prime rate effective Thursday, which is used to set the rate at which banks lend to customers with good credit.

The other big banks — Bank of Nova Scotia, TD-Canada Trust, CIBC and BMO followed suit with National Bank of Canada confirming Thursday that it will also lower its prime rate by 50 points to 3.45 per cent as of Friday.

Rob McLister, RateSpy founder, said the the lowest widely available variable rate will drop immediately to roughly 2.34 per cent from 2.84 per cent, while the 2.59 per cent rate for the lowest conventional five year fixed-rate mortgages will fall in the short term due the lower prime and downward movement in bond yields which normally signal falling mortgage rates. He said fixed rates will trend lower as economic data continues to soften, “but we’ll have to wait and see by how much.”

Many observers expect the Bank of Canada to announce another 25 point rate cut next month — possibly another quarter-point cut before the end of the year, which would bring Canada’s overnight rate to 0.75 per cent.

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Bank of Canada believes this time rate cut will bolster housing market, not fuel froth

Bank of Canada Governor Stephen Poloz suggested Thursday that lower interest rates would not send home prices skyrocketing, but could instead help bolster consumer confidence and the housing market amid the spread of the new coronavirus.

Poloz told reporters following a speech in Toronto that the recent “shock” could weigh on people’s minds, possibly prompting them to be more cautious and hold off on making big purchases, a risk the central bank sought to get ahead of.

“My expectation is that we’ll see consumer confidence declining … as this unfolds, and that our hope is that lower interest rates will in some way mitigate that decline,” Poloz said.

Poloz’s comments came the day after the central bank cut its key interest rate by 50 basis points, to 1.25 per cent, citing the “material negative shock” the virus has given the forecast for the global and Canadian economies.

The Bank of Canada had held off from cutting its rate earlier in the year, but a lot has happened since the January rate announcement, Poloz noted. This includes the economic disruptions caused by COVID-19, which had prompted the U.S. Federal Reserve to cut its key rate the day before the Bank of Canada did.

“The outbreak and its effects could be more persistent,” Poloz said Thursday in a speech.

“Consumer and business confidence could be set back for a longer period of time, causing economic growth to slow more persistently. This could include longer-term layoffs, for example. At this point, we simply do not know.”

There have been other developments in 2020 as well, such as rail blockades and teacher strikes in Ontario, Poloz noted. The central-bank’s governing council, he added, had agreed the current dangers to the economy are more than enough to offset continuing concern about financial vulnerabilities.

“Indeed, declining consumer confidence would naturally lead to reduced activity in the housing market,” Poloz said. “So in this context, lower interest rates will actually help to stabilize the housing market, rather than contribute to froth.”

The Bank of Canada’s rate cut is expected to give homebuyers more purchasing power and has already led to drops in variable mortgage rates at commercial banks. Poloz, though, said the central bank expects the so-called B-20 mortgage guideline, which includes a stress test for loans that are not insured against borrowers defaulting, “will continue to improve the quality of the stock of mortgage debt.”

Even so, changes planned by the federal government and a federal regulator to the insured and uninsured mortgage stress tests could stoke further housing activity. Those tweaks are expected to lower the “floor” on the minimum rates, making it easier for borrowers to qualify.

Poloz called it a “desirable change,” because it will make the stress tests more responsive to actual interest-rate movements. Those rates have been falling, but the federal government has also proposed having a two percentage point “buffer” for the new benchmark rate for the stress tests.

If debt increases because interest rates are lower, Poloz suggested it would at least be “higher-quality debt” contributing to the rise.

“So that’s good reassurance to the central bank, which is trying to take account of these competing trade-offs,” he added.

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GTA Investment Transaction Stats – Q4 2019

Near Record Year for GTA Investment Activity
Total investments increased by 7% to $22.6 billion compared to $21.1 billion recorded in 2018. Driven by a record fourth quarter, overall investment volumes in 2019 rank second highest all time and was only outpaced by the record setting 2017 totals of $23.5 billion.

The GTA market continues to be the most desirable and stable market as investors maintain a diversified approach in maximizing their returns in this competitive landscape. According to Altus Group’s Investment Trends Survey in Q4 2019, Toronto was the only market that showed a rise in momentum on the location barometer. Although average transaction volumes remained flat in comparison to the previous year, the average deal size increased. For the first time, the fourth quarter witnessed total investments topping the $7 billion dollar mark with four asset classes each exceeding $1 billion. Apartment and industrial registered records with $2.1 billion and $1.4 billion, respectively, to go along with the residential land and office sectors which registered $1 billion and $1.3 billion, respectively.

 

Despite continual global economic and geopolitical concerns, 2019 saw the GTA market trend upwards in comparison to 2018 when investors cautiously navigated through the uncertainties and continued supply constraints. A combination of low interest rates, stock market uncertainty and the stability of real estate in Canada resulted in an increased appetite for real estate assets. According to Altus Group’s Investment Trends Survey, overall cap rates continued to trend downards from 5.02% in Q4 2018 to 4.98% in Q4 2019.

The land sectors (residential, ICI and residential lots) collectively accounted for $7.9 billion in Q4 2019. Despite a 6% decline compared to 2018, the land sectors once again lead the way as residential and mixed-use development projects continue to rise and transform the GTA landscape. The 2019 land sectors were highlighted by two landmark transactions. East Harbour Lands, a 38 acre site located just east of Downtown Toronto was acquired by The Cadillac Fairview Corporation for a total of $690 million. This transit-oriented mixed-use development will add nearly 10 million square feet of commercial space upon completion. The largest residential transaction in 2019 was the sale of the former Celestica campus at 1150 Eglinton Avenue East in North York, which was acquired by Aspen Ridge Homes for $347.8 million. The 60.5 acre site is planned to be a live, work, play mixed-use development which will have direct access to the soon to be completed Eglinton Crosstown LRT system.

The apartment market sector saw an increase in investments as it registered a total of $3.8 billion, a 40% increase from the previous year. As housing shortages and affordability persists, together with the ever-growing population in the GTA, the multi-family asset has proven to be one of the most stable and desirable commodities. Investors also ranked Suburban Multi-Unit Residential product as one of the top products to buy in Altus Group’s latest Investment Trends Survey Property-Type Barometer. Starlight Investments continued their aggressive acquistion strategy this year, highlighted by their end of year portfolio acquisition of 44 buildings in Ontario, 28 of which were located in the GTA. The overall acquisition totalled approximately $1.7 billion in investments. In addition to this portfolio, Starlight was a consistent investor throughout the year acquiring approximately $2.2 billion in multi-family assets, representing 57% of the $3.8 billion total investments in the apartment sector for 2019.

The industrial sector tied the residential land sector for the highest total investments in 2019, registering $4.4 billion representing a 31% year-over-year growth. As the availibility for industrial assets remains tight in the GTA market, sale prices and rental rates are expected to continue to rise. End-user investors are experiencing an increase in challenges as pricing and demand for industrial assets increase from all investor types. The two largest industrial transactions to take place in 2019 were the sales of newly constructed data centers, an emerging asset class which is beginning to evolve into a conventional asset class as demand for 5G and cloud computing expands. Investors are also seeing data centres as suitable for asset diversification and an attractive return on investment. The largest sale was 45 Parliament Street in the City of Toronto which was acquired by U.S. based Equinix REIT for a total consideration of $223 million. The second largest sale was 80 Via Renzo Drive located in the City of Richmond Hill which was purchased by AIMOCo for a total consideration of $215 million.

The retail sector was the most active in 2019; however, that did not translate to the overall lead in investment totals. The majority of trades were below $5 million which were primarily acquired by Canadian based private investors. The largest retail transaction registered in 2019 was the 50% interest sale of Stockyards Village in the City of Toronto for $88.5 million, acquired by RioCan REIT which now owns a 100% interest in the property. As the everchanging landscape within the retail sector persists, we will continue to see investors take advantage of the opportunity to re-position their assets to maximize their returns. 2019 saw multiple high profile shopping centres submit development proposals for large scale transformations. Some of the notable shopping centres include Yorkdale Mall, Sherway Gardens, Scarborough Town Centre and most recently Square One in the City of Mississauge, which proposes nearly 18 million square feet of density once complete. These assets benefit from their locations along major road networks and already-in-place transportation infrastructure as well as expansive surface parking lots primed for increased density.

For the sixth year in a row, we witnessed an increase in total investments in the office sector. 2019 registered a total of $4.1 billion which was a 2% year-over-year increase. With vacancy rates in downtown Toronto at an all time low of 3.2%, office assets continue to be in high demand as seen in three of the four largest transactions in the downtown Toronto area. The largest sale was Atrium on Bay, a 1.1 million square foot property which was acquired by KingSett Capital and TD Greystone Asset Managment for $640 million. Another notable downtown Toronto transaction, which ranks fourth in 2019, was the sale of 111 Peter Street acquired by iA Financial Group for a total consideration of $185 million. With the lack of supply of rental space in the market, owners of this nine-storey, 252,000 square foot property have commenced discussions with the City of Toronto for the development of five additional storeys atop the existing structure which would add an additional 92,000 square feet of rentable space.

As we enter the new decade, investors face increasing global economic uncertainties which will impact their decision making. Purchaser activity in 2019 was predominately Canadian based private investors. Institutional buyers acquired the larger assets and foreign investors were not prevalent. As the stability in the Canadian real estate market attracts Canadian and foreign investors, the GTA market will continue to be the preferred Canadian investment market.

“Investor demand will continue to be strong in 2020, with investors continuing to look for stable yields and opportunities, the challenge remains with the lack of product. Both ICI and residential land, apartment and industrial will continue to be the most sought after assets in 2020, with cap rates expected to remain flat and lower compression for assets with potential higher returns”, noted Raymond Wong, VP, Data Operations, Data Solutions at Altus Group.

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5 Reasons Why 2020 is The Year To Buy Real Estate

Lower mortgage rates, lower home prices, and the rise in buyer confidence means a busy year ahead for realtors

Thinking of buying a home? Well, 2020 could be your year! Real Estate experts across the country are optimistic this year will see an upswing in the market, and more first-time homebuyers will have the keys to their new front door.

Here’s what we know: 2018 and 2019 got off to a slow start, but 2020 has already proven to be a year with positive surprises. Here are some market trends that may sway your opinion and have you headed to your favourite real estate agent.

1. Lower Mortgage Rates
The Bank of Canada’s five-year benchmark qualifying rate dropped last year. Why is this important? Benchmark rates are interest rates set by the bank of Canada that are useful in financial contracts such as mortgages. Make sure you talk to your Real Estate Professional or Mortgage Broker to discuss your eligible rates.

When we see fast economic growth and higher inflation combined with low unemployment, mortgage rates tend to rise. When the economy is slowing down, inflation falling and unemployment increases, mortgage rates tend to decline. It gets tricky when these economic trends don’t co-exist.

Economists are forecasting a slower economy as the year progresses due to challenges in the export market and international trade. That’s actually good for mortgages. However, the national unemployment rate is low and expected to stay low as the demand for skilled trades continues to rise. Despite the discrepancy, the Canadian Real Estate Association remains optimistic.

2. BC Assessment
In Vancouver, housing prices have experienced a slight dip in pricing in some areas due to the BC Assessments released in January. This lowering of assessed value in some regions bodes well for buyers who are trying desperately to find affordability in an area that boasts some of the most expensive homes in the country.

3. More Secure Long-term Investment
There are some great financial incentives only available to homeowners. If you currently own or are thinking about buying, make sure you take full advantage of things like possible tax breaks and incentives, building equity, new housing rebates and more. Read this for a closer look.

4. Millennials Looking for Good investment
Now that Millennials are into their late 20s and 30s, they are moving away from rentals and entering the world of homeownership. Millennials now make up the single largest group of Canadian homebuyers.

With recent changes to the Stress Test, the BC Assessments causing prices to drop in that region, first-time homebuyers’ programs and incentives, and lower interest rates across the country, the planets are aligning in 2020 for millennials to break into the housing market.

In a recent interview with the Vancouver Sun Ashley Smith, president of the Real Estate Board of Vancouver says affordability is a critical factor for millennials when it comes to buying a home (especially) in the Vancouver region, adding that a condo may be an attractive option.

“While many people still dream of owning a detached house, others prioritize an urban setting over the traditional white picket fence. I do think there is a shift for many millennials more towards lifestyle rather than square footage,” Smith says.

In addition to price, Millennials are the driving force for technological advancements in the Real Estate industry and industry trends. Environmental footprint, electric car plug-ins, sustainability, and green space are all factors that come into play for millennials.

5. Expand Your Search: Get More Bang for Your Buck
We all know the location of your home can have a significant effect on its price. By looking slightly outside of a popular neighbourhood but still within its reach, you can increase the affordability factor, get into your home sooner, and experience more bang for your buck.

Not only will you find more housing affordability, but you may also see a decrease in property taxes. In addition to the price, location is often close behind. Once all the musts are checked off your list, like schools and amenities, spreading your wings just slightly outside the preferred area may give you many benefits without sacrifice.

Most real estate professionals and economists agree that 2020 has a bright future for the industry. Convinced the timing is right for you to take the leap into homeownership? Contact our agents today.

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A study on expanding housing options in Toronto

The City of Toronto is currently studying ways to increase housing options/supply and planning permissions in areas of the city that are designated as Neighbourhoods in the Official Plan.

These are areas that are sometimes referred to as the “Yellowbelt”, because they are seeing very little intensification and, in a number of cases, actually losing population. (They’re also colored yellow in Toronto’s land use map.)

Ultimately, the goal is to encourage more “missing middle” type housing forms; housing that is denser than single-family homes but smaller in scale than say mid-rise housing like Junction House.

Here are a couple of interesting charts from the City. Based on Toronto’s Official Plan, “Neighbourhoods” make up 35.4% of the city’s land area.

In Toronto’s Zoning By-law, the “Residential” category makes up 47.1% of the city’s land area.

Digging deeper, 31.3% of Toronto’s total area is zoned for only detached houses — which would mean no missing middle type housing. But 15.8% of the city’s total area is already zoned to permit other types of low-rise residential buildings, such as duplexes and triplexes.

So why isn’t more of that happening?

As we’ve talked about before on the blog, the problem is that it is exceedingly difficult to make the math work on projects of this scale, which is why most developers don’t want to do them. The web of bureaucracy that you need to navigate in order to build anything in the city is also imposing for non-developers (and developers really).

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Real Estate in 2020 – What You Need to Know

Introduction

Last year was nearly unprecedented for the Canadian commercial real estate industry. Canada outperformed its G7 peers riding on the strength of its welcoming immigration policies, attractive labour pool and stable operating environment. In 2020, the industry will not only move forward, several sectors will reach top speed.

At a time of trade hostilities and geopolitical shifts, Canadian commercial real estate emerged as a feel-good story – no longer simply a safe haven for investment, it is now a top destination for domestic and global capital. Gone are the days of promising Canadian graduates embarking for bigger opportunities abroad. This trend has reversed course and the world’s most prominent companies are establishing themselves in Canadian cities, attracted to the relative affordability of these markets and their deep pools of talent. Brain drain no more, big gains are likely.

Canadian commercial real estate has traditionally been conservative as an industry, unaccustomed to exuberant highs and bullish forecasts. Course corrections and adjustments will inevitably happen and it will be important to avoid knee-jerk reactions at high speeds. If the sector grows overly cautious or takes its eyes off the road ahead, it risks losing momentum and undermining our country’s competitive advantage. This appears to be Canada’s decade for the taking and there will be incredible opportunities for commercial real estate along the way.

Momentum Markers: Demand and Rising Rents

Record demand and strong fundamentals are the product of countless decisions over many years. In fact, commercial real estate is a lagging beneficiary of policy decisions, technological developments and societal changes across multiple decades. The record-setting pace of Canadian real estate growth largely stems from two forces. First, that Canadian cities have become sought-after destinations for businesses, residents and investors. Second, that real estate is widely regarded as a stable yet high-yielding investment.

Whether it’s in the form of accelerated rent growth, strong tenant demand or an unprecedented development pipeline, record-setting performances have become ubiquitous in Canadian commercial real estate. Prime office rents increased from 10.0-20.0% across the country between 2018 and 2019, up by 20.9% in Vancouver, 14.2% in Montreal and 10.1% in Toronto. Meanwhile, national industrial rents rose by $0.95 per sq. ft., or 12.3%, the largest annual increase on record. Overall national apartment rents were up by 4.2% year-over-year. This is particularly striking given that these figures include suites in markets with rent control. Even asset classes in transition are experiencing success, as evidenced by strong rental growth in high-end retail centres.

In 2020, further rental rate increases appear to be unavoidable amid record-low vacancy and strong demand. The traditional business cycle no longer seems to apply. The bull market is in its 11th year, with unmet tenant demand carrying over from one year into the next. Nearly 70% of downtown office space under construction nationally has been pre-leased and over 50% of the record amount of industrial space under construction has been spoken for.

TOP DESTINATION
Investment in Canada could exceed $50 billion

Interest from investors is supported by Canada’s world-leading banking system, attractive currency play and levered returns. The favourable financial landscape will attract more investors from around the globe and support property value growth in 2020. Optimism increases when one considers that the amount of capital on the sidelines, known as “dry powder”, is at an all-time high. The pressure to deploy capital is high as yields across the investment spectrum continue to shrink. Investor demand for commercial real estate extends beyond traditional core markets to include nodes such as West Queen West in Toronto, and smaller markets like Kitchener-Waterloo, Hamilton and the B.C. Interior.

Montreal, once a major city with second-tier investor interest, saw its investment volume climb to a record $7.5 billion in 2019, up from $6.0 billion the previous year. Investment volume could jump to more than $8.0 billion in 2020, significantly above its $4.6 billion 10-year average and a new record for commercial property transactions in that city. Canadian commercial real estate has transitioned from being regarded as a safe haven investment to a primary investment destination. However, investors assessing an increasingly limited range of top-end, core offerings have had to get creative when it comes to finding larger opportunities. This sets the stage for further mergers and acquisitions, and large-scale portfolio activity in 2020.

While 2019 fell short of hitting a fourth consecutive record for investment volume, 2020 is off to a roaring start, teeing up what could be an unprecedented $50.0 billion year. In response to this seemingly relentless bull market, construction activity is ramping up. While rising construction costs are challenging development pro-formas, market watchers are waiting to see if office and industrial rent growth will moderate following years of rapid increases. New technology is another factor that could have unexpected impacts. But most tangible will be the effect of e-commerce on the performance of bricks-and-mortar stores. While these factors may signal some moderation in the years ahead, they are unlikely to slow the momentum of the Canadian commercial real estate market in 2020.

Inside Out: Real Estate from the Tenant Perspective

 

As rental rates continue to climb amid record-low vacancy rates, tenants are having to make difficult choices in order to secure space that keeps them relevant and productive over the lifespan of a lease. A lack of desirable square footage in major centres is presenting a serious challenge to many companies looking to enter or expand in the Canadian market. Across the country, quality commercial space is increasingly being treated as a commodity. Touring multiple locations that align with a tenant’s desired size, location and quality of space is a rarely afforded luxury. Out of necessity, tenants are now encouraged to move quickly toward viable solutions. Landlords trying to accurately determine the value of indemand office space, warehouses and serviced land are occasionally resorting to something akin to spot pricing

Inside Out: Real Estate from the Tenant Perspective

As rental rates continue to climb amid record-low vacancy rates, tenants are having to make difficult choices in order to secure space that keeps them relevant and productive over the lifespan of a lease. A lack of desirable square footage in major centres is presenting a serious challenge to many companies looking to enter or expand in the Canadian market. Across the country, quality commercial space is increasingly being treated as a commodity. Touring multiple locations that align with a tenant’s desired size, location and quality of space is a rarely afforded luxury. Out of necessity, tenants are now encouraged to move quickly toward viable solutions. Landlords trying to accurately determine the value of indemand office space, warehouses and serviced land are occasionally resorting to something akin to spot pricing

Large institutional office tenants, scaling technology companies and distribution centre tenants are better able to take these hurdles in stride, while smaller tenants are more likely to struggle to adapt to these shifting dynamics. In some instances, government real estate tax rates, not rental rates, are causing problems. In Calgary and Edmonton, rising taxes have driven industrial tenants outside of the city limits. Prohibitive property taxes have forced some retailers to close shop altogether in these, and other, urban centres.

Sensors to help repurpose and optimize space

Where margins are healthier, tenants are mostly motivated by alignment with corporate culture, ease of transaction and flexibility in their real estate strategies. In years past, a top office tenant might have been tempted by a heavily induced 10-year deal; today they seek the agility of a one to three-year deal, even if it comes with a hefty price tag. Even once space is secured, other challenges present themselves. The rapid growth of technology, changing demographics and a shifting global economic environment have all led to increased unpredictability. At a time when businesses are driven to be more dynamic, long-hold leases make adapting to change increasingly difficult. Addressing changing business and employee needs often requires adapting workspaces. Increasingly, everything from meeting rooms to cafeteria spaces will be monitored with the help of sensors so that they can be repurposed and optimized during an existing lease.

Meanwhile, industrial tenants are making decisions in a world of increasing automation. Flexibility in built form is key, especially when the capabilities of future technology remain largely unknown. And while some tenants can relocate to increasingly distant suburbs in search of cheaper rent, others from last mile logistics, film production and self-storage cannot. Rising build-out costs, trades shortages and lengthy permitting processes can also add stress prior to occupancy. While real estate costs currently represent only a fraction of the overall price tag for office and industrial occupiers, high rents combined with limited quality space could begin to create friction in business decision-making and slow economic growth. It is in the best interest of all stakeholders, especially government and landlords who have multi-decade investment horizons, to help attract and support tenants in this era of dynamic change.

Creative Solutions: Occupiers Rising to the Challenge

Occupiers looking to succeed in a tight market will need ingenuity, resolve, advance planning and the guidance of industry experts. In cities across the country, office tenants are adapting their plans as they are met with harsh realities. When growth across contiguous floors is not possible, more and more office occupiers are considering a hub and spoke model, where a traditional office houses the headquarters of the business and secondary locations, whether in the same market or a different city, enable agility and growth.

Downtown connectivity and amenities will remain highly sought after, however, non-core locations with transit connectivity will attract new office development and eager tenants in 2020. In Toronto for example, the Junction, Downtown East and Liberty Village will become increasingly mainstream office nodes. Where space is entirely lacking or misaligned with occupier requirements, tenants will continue to turn toward coworking and flexible real estate operators, which provide much needed agility and desirable amenities in otherwise unyielding markets.

Occupiers hoping to densify an existing or new space may also come up against unforeseen limitations. Cost-efficient workplace strategies, including dedicated floors to hot-desking and open workspaces, were once lauded as a way to justify steep rental costs, but have proven to be problematic. These strategies are being re-evaluated to account for the potential loss of productivity, increase in noise, and lack of opportunities to personalize surroundings

CREATIVE SOLUTIONS: OCCUPIERS RISING TO THE CHALLENGE

In the industrial market, very limited large bay options are forcing tenants to reconsider their desire to have all operations housed in a single distribution centre in a major centre. To avoid the operational and transportation inefficiencies that an ill-suited site might cause, companies are pivoting to bookend the city with smaller mid-sized locations. The role of strategic partnerships is also growing. As operations become more complex and the availability of space remains low, companies are solving for this by outsourcing functions which had formerly been completed in-house to third-party logistics firms. As lease terms extend and skilled labour becomes increasingly expensive and scarce, some industrial occupiers are turning to technology and automation to help drive performance. Automation implementation costs are expected to decrease as industrial robot costs are forecast to fall another 50% over the next five years. For their part, wages are up 7% to over 20%, depending on the specific role, and are only forecast to keep rising.

Other efficiencies are being found in built form, with clear heights increasing to maximize cubic space and allow for impressive racking systems to be built right into the frame of industrial facilities. 40’ clear heights will be the new norm for speculative developments, while build-to-suit construction has made 90’ clear heights possible. Not long ago, these types of buildings and multi-storey distribution facilities would have been unthinkable. For their part, retailers are embracing the evolution of the omnichannel model, reaching their customers through a successful online presence bolstered by fewer, but higherprofile, bricks-and-mortar locations in primary markets. Portfolio trimming will allow service-focused tenants, from boutique fitness to food and beverage companies, to step up to the plate to occupy well-located street-front centres. No matter the sector, planning ahead is the only real solution for tenants facing difficult circumstances. Further steps must be taken to increase agility, including the involvement of the entire C-suite to better forecast headcount growth and hiring workplace experts to help de-risk the process.

While commercial real estate trends typically emerge and become most prominent in Canada’s largest cities, there’s plenty happening in its smaller markets. Global events and broader workplace trends are shaping investment and real estate decisions across the country, which will put smaller cities in the spotlight in 2020. Capital flows typically gravitate to core assets in major markets. While this will remain true in 2020, the dynamics at play will support healthy investment volumes in secondary and tertiary markets. Domestic players looking to compete with foreign capital in major markets and de-risk their portfolios have already begun targeted disposition programs that will unlock assets in smaller cities. Expect mid-sized domestic players and private capital to jump at the chance to acquire higher-yielding assets in places like Ottawa, Waterloo Region and the province of Quebec in the year ahead.

Smaller markets are also expected to receive a boost from a variety of real estate trends, including spillover from highdemand major markets. Logistics companies are making their way to areas around Toronto, increasing demand in Milton, Pickering Ajax, Hamilton, Kitchener-Waterloo and Guelph. Office tenants in Vancouver are increasingly comfortable with options in Burnaby and beyond. This trend can be seen across property types, as tenants search for more suitable offerings further afield. In fact, desirable submarkets located within secondary cities with serviced land and a pool of skilled labour could expect to see rents rise by as much as 15.0% in the coming year.

And despite the fact that major players have exited some of the smaller retail markets in recent years, local ownership and knowledge can give properties new life. Locally-driven innovative strategies are expected to transform portions of malls and community centres into office spaces and homes for public services like police departments and libraries. Significant opportunities for land sales and development exist in secondary markets with public transit connections. Suburban “downtowns” are popping up in major geographies, including Vaughan Metropolitan Centre, Downsview Park and Downtown Markham in the Greater Toronto Area. There are also intensification opportunities for retail centres, hotels and seniors housing complexes that become unlocked by transit expansions beyond dense urban cores. This is already playing out in the areas surrounding Vancouver and Montreal where large public transit investments are taking shape. While it is easy to focus on activity in major markets, there are large suburban populations and vibrant businesses across Canada. Smaller cities will get a closer look in 2020.

New & Evolving Uses

Amid limited space and high demand, sectors across the Canadian commercial real estate industry are embracing innovative uses of space. Office tenants and developers are exploring new workplace solutions, balancing cost with organizational culture. As tech companies continue to set a new standard for unique modern offices, other businesses are taking note, implementing new technologies like employee sensor-monitoring, virtual reality decision making and data-driven headcount modelling. In the multifamily sector, much has been made of co-living, which offers residents high-quality units with shared living spaces and amenities. While U.S. and UK based companies Common and Node are beginning to establish themselves in the Canadian market, they are unlikely to challenge the existing traditional rental model anytime soon. Meanwhile, the retail sector is rethinking uses for spaces in prime locations. Storefronts are being transitioned into pick-up stations for everything from food to apparel, while secondfloor and podium retail spaces in mixed-use properties are being leased for office use.

The rise of “ghost kitchens” – food preparation and cooking facilities set up for delivery-only meals – are most likely to be found in sites with laneway access near prominent downtown locations. More problematic retail properties in the downtown and suburban areas of major markets are getting a second life when redeveloped for other purposes on valuable land. In the industrial sector, former manufacturing sites are being redeveloped with great success. In the past year, announcements have been made for planned projects that will transform a former Schneider’s meat plant in Waterloo Region into an 11-building, 2,800-unit residential project, while a former Maple Leaf Foods plant in the Zorra Township of Ontario will be redeveloped into a similar 800-unit residential project. In markets where population density is high and rents are climbing, interest in multi-storey industrial buildings is gaining traction. One such project was unveiled by Oxford Properties in 2019 in their Riverbend Business Park and is set to be complete by 2022. Additionally, with online grocery delivery set to skyrocket in the coming year, the number of cold storage facilities will need to increase to keep up with demand. These creative uses are what will allow businesses and landlords to maintain momentum despite the complications of a tight real estate market and a rapidly growing economy and population

Focus on Structural Issues: Affordability, Infrastructure and Climate Change

Along with the start of a new decade, significant structural issues are impacting cities across the globe. These issues will have a more profound impact than the ups and downs of the business cycle, which has traditionally preoccupied the commercial real estate industry. Three structural issues in particular will be in focus for businesses, employees and residents in 2020: affordability, infrastructure and climate change. In major cities like Toronto and Vancouver, where the cost of living continues to outpace income growth, homeownership is increasingly out of reach.

This has the potential to drive Millennials and low to middleincome workers away from downtown cores. Adding the necessary housing density is challenging in the face of the so-called “yellow-belt,” or the swathes of low-rise homes protected by restrictive zoning in Toronto. As housing prices rise, transit infrastructure will become even more important. People living outside major downtown cores will need to commute from further away. This will be a major issue as urban infrastructure is already operating at or near planned capacities and suffering from under investment.

 

FOCUS ON STRUCTURAL ISSUES: AFFORDABILITY, INFRASTRUCTURE AND CLIMATE CHANGE

A Statistics Canada study released in 2019 found that 1.5 million Canadians spent at least 60 minutes commuting to work, with 57.0% commuting by car. In addition to lost time, studies have shown that longer commutes reduce productivity, affect health and wellbeing, clog roads and slow the movement of goods. If this under investment in transit continues, it has the capacity to restrict business growth, with new commercial space fighting for proximity to a limited number of transit hubs. Meanwhile, the threat of climate change hangs over these conversations. Wildfires, heat waves, intense rainfall and other natural disasters are increasingly common and will shape tenant, landlord and investor decision making. Low-risk areas will likely attract demand and experience rising prices. This phenomenon is known as “climate gentrification” and sees stakeholders with greater resources locating strategically to the disadvantage of others. Landlords have long fixated on green building standards as the primary method of addressing climate change. Retailers are also getting on board with zero-waste stores growing in popularity and consumers open to paying more for sustainable goods. While these efforts are important, the impact of climate change is being felt now and more focus and resources will need to be directed toward mitigation.

The construction industry is one of the primary contributors to climate change and will be key to mitigation strategies. As a result, real estate will shift to the centre of climate change conversations. While change can slow momentum, there is a lot of positive, new activity that could stem from environmentally friendly practices to mitigate and lessen climate change. Canadian cities must look to global best practices and be leaders in addressing important structural issues. Left unaddressed, these forces have the potential to not only slow commercial real estate momentum, but worsen incomeinequality and sow the seeds of social discord.

2020 in Context

An unprecedented bull market and supportive macroeconomic conditions have allowed the Canadian commercial real estate market to gain momentum. There are challenges, including rising rents, limited availability, new technologies and increased unpredictability; however, creative real estate solutions have allowed most stakeholders to flourish. As the market accelerates towards top speed, course corrections and market adjustments will need to be skillfully managed.

In order to retain top talent and maintain Canada’s elevated global status, cyclical concerns will need to be balanced with structural issues, including affordability and lacking infrastructure. These factors, combined with the pressing realities of climate change, will test traditional processes and built form.

There is plenty of reason for optimism. Ingenuity across our industry shows that creative solutions and resolve can make the most of challenging situations. In 2020, government, landlords and tenants must work together to create the preconditions for continued success, and embrace agility, resourcefulness and innovation. Most importantly, all stakeholders will have to broaden the scope of long-term planning. It is worth celebrating Canadian commercial real estate’s record momentum. That success was hard won. Now we must rise to the new challenges and opportunities that lie ahead.

Industrial Availability Rate at All-Time Low

Industrial Availability Rate at All-Time Low Victoria’s industrial vacancy rate ended 2019 at a record-low as e-commerce growth, B.C. cannabis production and a construction boom increased demand for distribution and warehouse space. The tightness of the market was compounded further by an industrial land crunch. The resultant scarcity of new supply coupled with strong demand looks poised to continue placing pressure on rental rates into 2020.

New Affordability Mandate at Odds with Industry

Despite concerns from the real estate community, city council implemented a new inclusionary housing policy in 2019. The policy requires that 20% of new suites, in projects with greater than 60 units, be affordable rentals. While it does include clauses aimed at aiding the financial viability of these projects, it may end up slowing new construction and reducing the supply of both market rentals and condos.

 

Office Conversions: Interesting but not Impactful

Stakeholders continue to look for solutions to the historically high vacancy rates in downtown Calgary. The repurposing of empty offices into other uses has been the most widely discussed solution, however challenges with this strategy remain. These include non-viable floorplates, complex construction and a lack of 100% vacant properties. While few candidate buildings may proceed, the number of viable conversions is limited and will only have a minor impact on the 11.5 million sq. ft. of vacant space downtown.

Optimism on the Oil Front

There is some optimism surrounding Canadian oil and gas moving into 2020 as the Alberta government recently announced curtailments will remain in place throughout the coming year. WTI prices have climbed into the $55 range and construction on the Trans Mountain Pipeline and Enbridge’s Line 3 Replacement are underway. That said, the capital spending budgets of many major players remain muted.

Industrial Development Cycle Coming to an End

Another industrial development cycle is coming to a close after nearly 3.2 million sq. ft. of new space was delivered in 2019. Elevated new supply has meant that, despite 12 consecutive quarters of positive absorption and a healthy market, the availability rate increased in 2019. As this development cycle subsides, elevated demand should result in the availability rate reaching an inflection point in 2020

Hot Rental Market, Hot Investment

While office development has come to a halt in recent years, cranes dominate the city with the construction of rental apartment buildings rather than commercial towers. The multifamily market has become increasingly competitive due to economic uncertainty driving homeowners to rental units, new mortgage stress test regulations limiting the ability to buy and unique amenities attracting tenants. Multifamily assets will continue to be amongst the most sought-after investments in 2020

Office Conversions: Interesting but not Impactful
Stakeholders continue to look for solutions to the historically high vacancy rates in downtown Calgary. The repurposing of empty offices into other uses has been the most widely discussed solution, however challenges with this strategy remain. These include non-viable floorplates, complex construction and a lack of 100% vacant properties. While few candidate buildings may proceed, the number of viable conversions is limited and will only have a minor impact on the 11.5 million sq. ft. of vacant space downtown.

Optimism on the Oil Front
There is some optimism surrounding Canadian oil and gas moving into 2020 as the Alberta government recently announced curtailments will remain in place throughout the coming year. WTI prices have climbed into the $55 range and construction on the Trans Mountain Pipeline and Enbridge’s Line 3 Replacement are underway. That said, the capital spending budgets of many major players remain muted.

Industrial Development Cycle Coming to an End
Another industrial development cycle is coming to a close after nearly 3.2 million sq. ft. of new space was delivered in 2019. Elevated new supply has meant that, despite 12 consecutive quarters of positive absorption and a healthy market, the availability rate increased in 2019. As this development cycle subsides, elevated demand should result in the availability rate reaching an inflection point in 2020.

Hot Rental Market, Hot Investment
While office development has come to a halt in recent years, cranes dominate the city with the construction of rental apartment buildings rather than commercial towers. The multifamily market has become increasingly competitive due to economic uncertainty driving homeowners to rental units, new mortgage stress test regulations limiting the ability to buy and unique amenities attracting tenants. Multifamily assets will continue to be amongst the most sought-after investments in 2020.

 

 

Office Conversions: Interesting but not Impactful
Stakeholders continue to look for solutions to the historically high vacancy rates in downtown Calgary. The repurposing of empty offices into other uses has been the most widely discussed solution, however challenges with this strategy remain. These include non-viable floorplates, complex construction and a lack of 100% vacant properties. While few candidate buildings may proceed, the number of viable conversions is limited and will only have a minor impact on the 11.5 million sq. ft. of vacant space downtown.
Optimism on the Oil Front
There is some optimism surrounding Canadian oil and gas moving into 2020 as the Alberta government recently announced curtailments will remain in place throughout the coming year. WTI prices have climbed into the $55 range and construction on the Trans Mountain Pipeline and Enbridge’s Line 3 Replacement are underway. That said, the capital spending budgets of many major players remain muted.

Industrial Development Cycle Coming to an End
Another industrial development cycle is coming to a close after nearly 3.2 million sq. ft. of new space was delivered in 2019. Elevated new supply has meant that, despite 12 consecutive quarters of positive absorption and a healthy market, the availability rate increased in 2019. As this development cycle subsides, elevated demand should result in the availability rate reaching an inflection point in 2020.
Hot Rental Market, Hot Investment
While office development has come to a halt in recent years, cranes dominate the city with the construction of rental apartment buildings rather than commercial towers. The multifamily market has become increasingly competitive due to economic uncertainty driving homeowners to rental units, new mortgage stress test regulations limiting the ability to buy and unique amenities attracting tenants. Multifamily assets will continue to be amongst the most sought-after investments in 2020.

 

 

Amenity-Rich Properties to Outperform

Across all asset classes, tenants are demanding more from their built premises. Landlords not adapting and ensuring that their buildings meet evolving tenant demands will be left behind. Particularly important for purpose-built multifamily rental product, amenity spaces need to be well planned to create an environment that will draw tenants.

Punitive Property Tax Increases in the City

As property taxes continue to increase in the City of Edmonton, industrial tenants have taken the lead in beginning to consider more cost-effective options, including new facilities in surrounding communities. The lower tax environments of Nisku, Leduc and Acheson can result in rent differentials of $1.00 to $2.00 per sq. ft., which can often materially impact site selection processes.

Tech Demand to Continue
With world-class AI research and development at the University of Alberta, talent is flocking to the city and boosting the footprint of the technology industry in Edmonton. Over the past five years, Edmonton has seen a 25.7% increase in tech talent, with over 28,400 technology workers in the city. This growth trajectory is expected to continue and will be a main driver of the office market.

Alberta’s Industrial Heartland Gains Momentum
Located northeast of Edmonton, Alberta’s Industrial Heartland is rapidly becoming a leading industrial market to watch. Home to over 40 companies in a variety of sectors including manufacturing, oil, gas and petrochemicals, the Heartland has received over $40.0 billion of investments. With two multibillion-dollar petrochemical plants under construction, continued growth in this area will have positive spillover effects for service companies in the region.

Flight-To-Quality Wave to Hit in 2020
New Class AA office space at River Landing has triggered a flight-to-quality for many of Saskatoon’s marquee tenants. With the first of two new office towers slated to open in early 2020, we will begin to see the impact on second-tier product as tenants shuffle and relocate into upgraded space. It is anticipated that vacancy will rise in the short-term with few tenants lined up to backfill aging product.

Industrial Market Finds Its Footing
Building on steady improvement in recent years, the Saskatoon industrial market continued to make gains in 2019. Due to limited new construction and rising tenant demand, the market has been able to rebalance from the last wave of construction and decrease availability to a healthy 8.0%. With rents holding steady at $9.50 per sq. ft., there remains significant runway for future growth.

Mixed-Use Development on the Rise
Hoping to replicate the success of No.1 River Landing, several developers have announced plans for mixed-use projects in Saskatoon. Supported by strengthening demand for new apartments and condos on the downtown periphery, 2020 will see construction begin on a 17-storey, mixed-use condo project on Broadway, while plans have been announced for multiple towers on either side of University Bridge.

Uncertainty Remains in the Regional Economy
Maintained softness in commodity and oil prices continues to create uncertainty for Saskatoon’s economic outlook, leading to caution in the real estate sector. However, and in spite of the challenging landscape, a conservative development pipeline across asset classes has allowed market fundamentals to stabilize.

Industrial Market Rebound
After years of economic uncertainty, the tide has started to turn on Regina’s industrial market. Development has slowed amidst high land and construction costs, allowing the market to absorb much of the excess industrial supply. Meanwhile, a more stable availability rate in 2020 should relieve the current downward pressure on rents, which have steadily decreased from their peak since 2016.
Inflow of Capital from Out-Of-Province
Across asset types, quality product is being traded in Regina at a premium relative to comparable assets in neighbouring provinces. With Class A product achieving cap rates above 7.0%, and Class B and C assets over 8.0%, Regina has seen a significant amount of capital flow in from out-of-province as investors seek higher returns across Saskatchewan. This trend is expected to continue into 2020.
Lingering Effects of Flight-to-Quality
Regina’s office market remained relatively stable in 2019 despite softness in commodity pricing. The market has seen a significant flight-to-quality in recent years which has resulted in Class A vacancy dipping below 4.0% as Class C has neared 30.0%. With limited tenants to absorb dated product, landlords have been forced to offer increasingly aggressive incentives to fill Class B and C space.
Cost-Effective Opportunity at the GTH
The Regina Bypass is expected to boost accessibility and growth at the Global Transportation Hub (GTH). Located west of Regina, the GTH is an 1,800-acre industrial and logistics park with direct access to Canadian Pacific’s main rail line. With 679-acres of serviced land available at $256,000 per acre, the GTH offers competitively priced land at roughly half the cost compared to within city limits.

Rising Industrial Rents Improving Feasibility of New Construction
As tenants become acclimatized to new highs in rental rates, expect to see more industrial construction in 2020 that will finally bridge the gap between existing inventory and muchneeded new supply. With some renewal rates approaching $11.00 per sq. ft. and new construction rents commanding about $12.00 per sq. ft., users are taking a harder look at new developments and build-to-suit opportunities.
Glut of Downtown Vacancy Permeating Downwards to Class B
With the new 365,000 sq. ft. office tower at True North Square (‘TNS’) nearly 100% leased, a glut of office space is working its way through the downtown market. With overall absorption rates expected to remain anemic, the Class B market will experience the next chapter of the TNS effect. Further impacting this are the proposed Portage Place Shopping Centre redevelopment and the amalgamation of Wawanesa’s offices into the newly announced fifth tower at TNS.
Once a Revitalization Dream, Now a Starring Role
The Sports, Hospitality and Entertainment District (SHED), once an urban revitalization dream, is now a very real and vibrant new district. The SHED is coming alive with tech tenants like SkipTheDishes, high-end hotels such as Sutton Place, food halls and new purpose-built rental towers. Additional investments along the fringes of the district are expected to exceed $400.0 million over the next five years.

Stability is Attractive in Times of Uncertainty

Debt and equity markets are anticipated to increase asset allocations to real estate and investors seeking to recalibrate geographic allocations or asset mixes will look to Winnipeg. Industrial, apartment and mixed-use properties will remain in demand in 2020 with emphasis on assets with strong rent upside potential.

Population Growth to Fuel Residential Construction
Windsor made headlines in 2019 after recording some of the largest rental and residential sale price gains in the country. Fuelled by population growth, expect residential construction activity to continue at full steam in 2020 as a record number of building permits will add to the 1,700 multifamily units currently proposed or under construction.
Industrial Stability Ahead
The development pipeline is anticipated to moderate slightly in the year ahead after an influx of existing options hit the market in 2019 and raised the availability rate to 3.2%. On the demand side, continued stability is expected as industrial users look to take advantage of new, high-quality inventory now available.
Office Market to Tackle Vacancy
Highlighted by a lack of modern office offerings, well located Class A and B suburban properties are expected to drive rent premiums in 2020 with limited quality options over 5,000 sq. ft. In contrast, the downtown office market could see strong municipal support for residential conversions, providing relief to the persistently elevated Class C vacancy rate.
Gordie Howe Bridge Construction Continues
Construction started on the $5.7 billion Gordie Howe International Bridge in 2019. Considered to be the most significant infrastructure project in the region’s history, the 2.5-kilometre bridge will span six lanes and create over 2,500 jobs. Expect capital to target residential, industrial and land assets in the region as the project nears completion in 2024.

Multifamily Pipeline to Change Downtown
Skyline Developers are pushing ahead with new high-rise developments that will change London’s downtown skyline. Forecast to deliver 1,300 new units with another 2,000 in the planning and permitting stages, this development cycle is expected to boost population figures in the city’s core. In turn, this should help to increase the performance of all assets and lead to greater investment activity.
Velocity in the Investment Market
London experienced strong levels of investment activity in 2019 with the top 20 deals totalling nearly $350.0 million in value. Investors will continue to be active throughout 2020 with larger institutions taking advantage of market conditions and disposing of non-core holdings in London, often purchased by smaller private capital buyers.
Solid Office Leasing Activity to Continue
Following the completion of several lease transactions over 20,000 sq. ft. in 2019, London’s office market is poised to build on current momentum with a number of large deals in the pipeline for 2020. Leasing activity is expected to remain high as landlords look for creative opportunities to further stabilize assets.
Record Investment to Build on Industry Diversity
Historically tied to the manufacturing and automotive industry, London’s economy has diversified since 2008 with the rise of the city’s technology, food production and defense sectors. This is highlighted by Maple Leaf Foods’ new $660.0 million poultry processing facility, which is the largest single food production investment in Canadian history. This plant will employ 1,450 people and generate $1.2 billion of annual economic activity once operational in 2021.

Industrial Developers to Capitalize on Market Conditions
Strong fundamentals across Waterloo Region have led to record-low availability rates and accelerated rent growth. Spurred on by current conditions, new speculative construction in the pipeline has developers looking to capitalize on the bottleneck of demand in 2020 and 2021 amidst limited market opportunities. Given recent growth, a robust labour pool and highway accessibility, the industrial market is forecast to continue to perform well in 2020.

Injection of Best-in-Class Product on the Horizon
With no new supply added to the office market since 2018, Waterloo Region is seeing growth through exciting new construction developments. Highlighted by 345 King West by Perimeter and Fiera Properties and GloveBox (fall 2021 occupancy), these projects, both in Kitchener’s Innovation District, will bring best-in-class product to the Region, exemplifying market confidence and the prospects of future growth.

Downtown Kitchener Going Higher
New downtown high-rise developments continue to reshape the landscape of the Region, particularly in Kitchener with over 3,000 residential units in the development pipeline totalling approximately $700.0 million in value. New projects have been well received by the market, as demonstrated by the success of advanced unit sales and a deep buyer pool.

Land Pricing and Investment Volumes on the Rise
Shrinking supplies of developable land across the Greater Toronto Area (GTA) have made Waterloo Region an enticing market for developers and investors. The recent success of new builds throughout the Region, a healthy price spread against the neighbouring suburban GTA market and a competitive and growing investor landscape are set to compound the current growth of land pricing and investment volumes further in 2020.

New and Rejuvenated Industrial Product to Benefit Market
Industrial availability and rental rates will rise in the short-term in response to projects that will modernize inventory. Stelco is subdividing and revitalizing their existing property, meanwhile one of the largest owners in the Bayfront Industrial Park is rejuvenating over 700,000 sq. ft. of underutilized space. New spec construction in the Airport and Stoney Creek Business Parks is also expected to deliver in 2020. This activity is a welcome occurrence for the market demonstrating the commitment of owners to attracting modern manufacturing businesses.
Tech Companies Increasing Interest
Affordable living and an appealing arts and culture scene are attracting Millennials to Hamilton. With lower operating costs as an added benefit, technology companies are following the talent to the city. Recent announcements include Q4 Inc., a Toronto-based software company, which is expanding operations to Hamilton and bringing 140 new jobs to downtown.
Raised Questions Around Cancelled LRT
Metrolinx cancelled Hamilton’s proposed LRT in late 2019 and left many wondering what would happen to the properties purchased along the route. Investors who purchased into the corridor did so with the expectation that the LRT would bring higher density developments. The City is now waiting for the five-person task force to determine how the $1.0 billion provincial transit and infrastructure funds will be spent.
Made in Hamilton Solution
The City of Hamilton is reviewing proposals to modernize and repair the aging FirstOntario Arena and Convention Centre in downtown Hamilton. Two local groups have made pitches offering new facilities including residential, commercial and hotel uses, with one group suggesting their concept could be completed in 12 to 14 months.

 

The Challenge of Planning for Office Space Needs
Tight downtown market conditions have placed pressure on office rents to the point where at times they approach spot pricing. While users must act quickly to secure space, the accelerated pace of change has made forecasting headcount growth increasingly difficult.

Record New Supply Remains Insufficient
Despite industrial development at record levels, it remains insufficient to satisfy the pent-up demand in the market. A lack of available space due to preleasing will drive further rent growth with new demand to come from the industries that cannot locate away from the city.

Retailers Trim Portfolios to Secure Premier Locations
Retailers have become more strategic by shedding smaller, second-tier stores in favour of premier destinations, particularly in top-performing urban malls. In turn, savings from a trimmed portfolio are being put towards securing high-quality locations.

Premier Destination for Global Capital
Toronto was once again the nation’s most active investment market in 2019. While the city continues to benefit from its status as a global safe haven, investor interest is increasingly being driven by the sector’s performance and potential for income growth.

Land Activity to Surge on Development Demand
The land market is set to be the most active in recent years as buyer confidence returns. Housing affordability issues are driving demand and residential development and periphery markets with serviced land near high-order transit will see strong growth.

Alternative Asset Classes Thrive
Liquidity for non-core asset classes like seniors housing and hotels has grown recently. Well-capitalized investors expanding their search for yield, an institutionalized marketplace and strong fundamentals will place pressure on pricing in these sectors into 2020.

Aging Federal Government Inventory
Almost 30% of the Federal Government’s owned buildings in Ottawa are rated in “critical” or “poor” condition according to a recent Federal Government report. The amount of space contained within these buildings represents over 14.3 million sq. ft. of office space that will require significant renovations. With Ottawa having a total compliment of only 2.6 million sq. ft. of vacant office space, we anticipate that the Government’s need for functional space will be a continued driver for absorption and growth.
Continued Tech Growth
Ottawa’s technology sector continues to see two-pronged growth in the city divided between the downtown urban tech hub and the Kanata suburb. The downtown core is expected to see few large blocks of space come to market in the short-term that will provide growth opportunities in the core. Conversely, Kanata is experiencing a lack of space to
accommodate existing requirements. With only about 400,000 sq. ft. of vacant space, the 600,000 sq. ft. of active new tenancies will face a space crunch requiring the construction of new buildings to fully meet occupier demands.
Industrial Rent Growth Needed for More Development
The industrial market continues to perform well with little available space, strong demand and rising rents. While rental rates reached record levels in 2019, they have not yet reached a point that supports new construction. As such, further increases in rental rates are needed before new development becomes financially feasible. Given the significant rent growth seen in the last few years, it will be interesting to see if tenants are able to absorb these required increases or whether they will search for opportunities outside of the urban boundary.

Montreal’s Industrial Market Heats Up
Montreal’s industrial market looks poised to test record occupancy and pricing levels in 2020 due to continued strong leasing activity and pent-up demand. New mid-bay product is expected to kick-off on spec to serve growing distribution and logistics requirements, with Amazon’s new facility acting as a cue for others considering establishing fulfillment or last-mile facilities in the Greater Montreal Area (GMA).

No End in Sight for Elevated Office Demand
Alongside expanding local users, a variety of new tenants are entering the GMA office market and driving activity for midsized spaces. Widespread demand for access to Montreal talent is anticipated from knowledge-based companies as the City solidifies its standing as an international tech hub for AI and gaming. Upon completion, the REM will increase connectivity across the GMA and should spur suburban growth.

Investment Market to Carry Positive Momentum into 2020
Boosted by solid market fundamentals and a healthy economic outlook, Montreal’s investment market will remain active in 2020 across all asset types. Multifamily product will be highly sought-after, land prices in the core are expected to approach all-time highs and the limited availability of industrial assets will require investors to be creative and flexible if they wish to access the market.

20-20-20 Rule & REM to Reshape Housing Across the GMA
Coming into effect in 2021, the controversial 20-20-20 rule will promote the construction of social, affordable and family housing in new residential projects in Montreal. Projected to raise condominium prices by 15%, additional impacts are likely to include urban projects shifting to higher densities to curb costs and an increased interest in suburban areas not subject to the rule. The greatest beneficiaries will be REMadjacent sites in the South and often overlooked East.

E-commerce Driven Industrial Demand Gaining Ground
Aimed to serve online order processing, Simons’ new 1.1 million sq. ft. fulfillment centre is scheduled for delivery in early 2020. Stemming from the growth of e-commerce, further tenant demand is expected. For their part, Simons will leverage their expertise in collaboration with the Ministry of Economy, Science and Innovation to transform their existing distribution centre into a multi-client e-commerce accelerator.
Quebec Reinforces its Position on the Canadian Scene
A testbed for Canada’s first pre-commercial 5G wireless network, Quebec City continues to garner attention on the tech scene. Key industries, including IT and communications, video and digital gaming, and the lucrative life sciences technologies, will lead to greater office momentum as local companies look to grow at a fast pace and expand operations.
City Aiming to Release More Industrial Product
With the market’s availability expected to hover around 2.0% in 2020, the City will begin to explore options aimed at solving issues around the current scarcity of developable land and lack of industrial product. This will include completing feasibility studies targeting lands near the airport, as well as evaluating and earmarking existing industrial parks for potential redevelopment.
Future Tramway System to Boost Market Appeal
Funded by all levels of government, the $3.3 billion restructured transport network is expected to be operational by 2026. Expanding on the existing bus route, the new system will connect the city through a new 23-kilometre tramway line and 15-kilometre ‘trambus’ route. The system will increase the workforce’s mobility, support immigration and boost the city’s appeal to employees, tenants and landlords alike.

Tech Talent
Halifax ranked #11 in CBRE’s 2019 Tech Talent report, with the city scoring well in quality of tech labour, number of tech and tech-related degrees as well as educational attainment. Through tech initiatives and incubators such as the $300.0 million Ocean Supercluster and the Creative Destruction Lab Atlantic, significant capital and resources are being deployed to stimulate growth in the technology sector.

Halifax’s Dated Downtown Office Stock
Halifax faces the ongoing challenge of an aging downtown office inventory. In the central business district, 82.8% of office inventory was built prior to 1990. Also, Halifax’s Class B product accounts for 55.2% of downtown office stock, the second highest amongst major Canadian markets. Landlords and developers are actively re-assessing the highest and best use for aging office assets in the core which will impact office demand in the coming years.

Tight Industrial Market
The industrial market continues to tighten at an impressive rate, recording three consecutive years of over 200,000 sq. ft. of positive net absorption. Since Q4 2016, the availability rate has dropped from 11.6% to 6.7% in Q4 2019, despite adding over 400,000 sq. ft. of new inventory over the same period. With a lack of new supply, it is expected that rental rates will continue to increase.

Multifamily Vacancy at an All-Time Low
Multifamily vacancy rates reached a historic low of 1.0% in 2019. Developers are taking advantage of market fundamentals as the rental market continues to gain momentum. CAPREIT recently announced that they have purchased 1,503 apartment units in eight multifamily properties for $391.0 million from QuadReal, marking the largest real estate transaction in Halifax’s history.

 

 

 

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A first-time homebuyer’s guide to condo boards

If you’re the type of person who loves vaping indoors and engulfing your apartment balcony in festive lights, condo living might give you a culture shock.

With the price of detached homes so incredibly high, condominiums are an attractive prospect for first-time buyers. Sure, there’s reduced square footage and maybe a little less privacy, but for a lower price point and fewer maintenance responsibilities, condos are a great option for wannabe urban dwellers. That is, unless, you’re not comfortable living with a few house rules.

Single-family homes and condos are very different when it comes to ownership. When you buy a home, you solely own the property and are responsible for all of its expenses and maintenance. With condos, however, you only own the interior of your unit, and maybe a parking space.

The rest of the building — the pool, the concierge desk, the hallways — are shared collectively. To govern how these places are used, and to set the ground rules for the building community, is the condo board. Every board is unique, and every building and its rules are unique too, so when hunting for a condo, buyers need to carefully consider if a building and its standards are right for them.

“People need to think about what they want to do in their unit, and then look to the documents to see if there’s any restrictions, for general noise and nuisance,” says Denise Lash, founder of Lash Condo Law.

Here, Lash breaks down what you should know about condo boards and the kind of rules you can expect to encounter.

The who’s who in condos
In the makeup of a condo community, there are a few key players — the condo board of directors, the condo management and the owners.

Condo boards are responsible for the general operations of the building on behalf of the owners, and make the big decisions in regards to the building rules, bylaws, maintenance and finances. Condo boards must also enforce compliance with provincial legislation, such as Ontario’s Condominium Act. The condo board is made up of volunteers, usually owners in the building, who are elected into power by fellow condo owners.

To ensure that the building operates smoothly on a day-to-day basis, the board will enlist the services of a professional management company, that will look after repairs, fee collection and respond to complaints, among other duties. In the case where a board does not hire a management company, they self-manage, but it’s not commonplace.

“These days, because of the potential liability, and all of the requirements of the [Ontario] Condo Act, few are self-managed condos,” explains Lash.

From occupancy bylaws, to the place where your dog uses the toilet, condo boards have the most power when it comes to setting rules, though it isn’t a total dictatorship. While owners can’t break condo rules without penalization, they can choose to vote against new rules and bylaws in owners meetings, or try to remove the current directors if they’re unhappy with their practices.

“The board, ultimately, they’re the decision makers, and if they pass rules, there’s an opportunity for the owners to vote against it,” says Lash. “But other than that, if they really continue to be unhappy with the way the board is conducting itself, there’s a process for removing the board members, and that is called a requisition.”

Pulling off a successful requisition is hard to do compared to voting against rules. For cautionary pre-purchase measures, you should always review a snapshot of the building prior to buying with the help of property documents like the Status Certificate and the condo’s declaration. The declaration will offer details about common expenses, amenities, pet allowances and shared spaces, known as common elements. The status certificate also touches on rules, but primarily provides a summary of the financial health of the building, including the reserve fund and fee increases.

“That’s the document that says whether the board, the corporation, is contemplating any increases in the budget,” says Lash. “So you’re buying and you go, ‘Oh my gosh, the roof has to be repaired and there’s no money in the reserve fund.’ That’s really important from a purchaser’s perspective, to see if there are potential increases.”

All documents, Lash stresses, are important to review with your lawyer before buying.

There are house rules, plus balconies
Every condo community has a different set of regulations, and these laws are always evolving. Policy changes that take place outside of the condo influence the kind of rules you’ll encounter as an owner, from new local zoning rules up to federal legislation.

When cannabis was legalized, for example, Lash explains that condo boards had to decide how they would manage the consumption and growth of plants in their buildings, which in some cases prompted condos to go completely smoke-free. From a purchaser’s perspective, it’s important to recognize these rules prior to purchase so lifestyle and bylaws don’t collide.

“If you want to be a casual cannabis smoker, you have to review the declaration, but more importantly, the rules, that’s where it usually is,” says Lash. “And when it says, ‘No smoking cannabis in the unit,’ and you really want to smoke, then this is not the building for you.”

Other rules that commonly trip up new condo owners are common elements. In the declaration, there are specifications as to what these shared spaces are, and not all of them are obvious. A balcony, for instance, is considered a common element with exclusive use, meaning that while only the owner has access to it, the balcony must still comply with common element rules.

“There’s reasons why you want people to remove Christmas decorations after a certain date — because of the appearance,” says Lash. “If somebody is selling their unit, what does it look like with all of these Christmas lights out in April or May? They want to control the appearance from the outside and also [for] liability reasons.”

Your puppy can’t live here
No one possesses magical foresight into the future, but when buying a condo, Lash explains that it’s important to consider your plans and lifestyle for the space.

Are you a young couple hoping to start a family one day? Some condos have a two-people-per-bedroom bylaw. Dreaming of renovating the kitchen? Watch out for building regulations. Even if you plan to get a pet one day, make sure the condo will allow them to stay under breed and size restrictions, especially when your furry friend grows up — it’s not unheard of for puppies to one day outgrow weight bylaws.

“You’re in love with your puppy, [then] six months later, you’re getting a board letter — a legal letter — saying remove in two weeks,” says Lash.

Rules are put in place for the safety, comfort and security of everyone in the building, and while it’s nearly impossible to achieve perfect coexistence between everyone, bylaws strive to achieve that balance.

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7 historic Toronto sites that are being reimagined as condos

Across downtown Toronto and beyond, there are remnants of history all throughout. Whether it’s a warehouse converted into lofts, or an old building torn down and replaced, the old makes way for the new one way or another.

Some historic buildings see the wrecking ball, and others are preserved in a new design. Here are a few notable sites with historic value that are expected to be envisioned as future condos. All of these projects are currently preconstruction and in the building approval process.

1. 250 University Avenue Condos

Fronting Toronto’s bustling University Avenue, this eight-storey building was originally constructed in 1958 for The Bank of Canada to store gold and cash reserves. The BoC’s offices have since moved across the street to Sun Life Financial Tower. Northam Realty Advisors and IBI Group are proposing to use the half-century-old building as a podium for a highrise, which will feature 495 units across 54 stories.

2. Designers Walk Condos

BBB Architects has a unique vision for the Designer’s Walk community along Davenport Road. The well-known strip of brick-clad showrooms in the Annex and Yorkville neighbourhoods has been attracting design professionals since its inception in the 1980s. Now, a build proposal reimagines the area as a 92-unit mixed-use highrise with trees budding from the balconies and an expanded commercial centre.

3. Bloor & Dufferin Condos

Established in 1925, Bloor Collegiate Institute has seen many students come through its doors at Bloor and Dufferin Street. In 2016, the land that the high school shares with Kent Public School was sold to developers Capital Developments and Metropia, who plan to convert the area into a master-planned community with public spaces and over 2,000 residential units.

4. 335 Yonge Street Condos

Located just off the Ryerson University campus, this little rectangle of land has a historical past. Until 1855, a bakery and grocery store operated on the site in a two-storey building, owned by Williams Reynolds. It was later converted into a hotel, known as the Edison Hotel, which would stay open through various owners and rebrands until the 1970s.

In 1974, 335 Yonge Street was added to the City of Toronto’s heritage property list, prior to being used for a number of commercial purposes, from a Salad King location to various retail spaces. A portion of the 19th-century commercial building collapsed in 2010, before it was KO’d by fire and eventual demolition in 2011. Now the area serves as a food market for feeding hungry students and bypassers. The Lalani Group has proposed to revise the lot into a 165-unit condo tower.

5. 2500 Yonge Street Condos

When Capitol Theatre first opened its doors in 1918 at Yonge Street and Castlefield Avenue, it was the go-to local spot for vaudeville shows and silent films. In 1933, the 1,300-patron theatre was renovated to exclusively cater films, before further renovations and the addition of a concession stand were made throughout the decades. After closing down in 1998, a $2 million renovation revitalized the theatre into a special event venue, renamed the Capitol Event Theatre, and retaining most of its 1910s charm.

After the block sold in 2015, a proposal was put forward to re-establish the site as a 14-storey condo development. Judging by the renderings, the old facade of the theatre is kept intact.

6. Mode Condos

Lining the east side of Church Street between Shuter and Dundas Street, are four Georgian-style row houses. According to Toronto Architecture: A City Guide, published by journalist Patricia McHugh and architecture critic Alex Bozikovic, the row houses were built in 1852 before being reconstructed after a fire a few years later. Number 195 in the row was demolished and rebuilt in the early 1980s. The site is currently on the city’s heritage register.

CentreCourt has plans to top the rowhouses with a more modern concept — a 37-story condo development with 464 units.

7. 2440 Yonge Street Condos

At the intersection of Roselawn Avenue and Yonge Street, just north of Yonge and Eglinton, there once stood a 110-year-old Bank of Montreal building. In January 2017, the two-storey brick building, constructed in 1907, was suddenly torn down.

On the site, developer Main + Main hopes to build a mixed-use development with 2.1 acres of commercial and residential space, including 687 condo units.

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Investor demand for new Toronto condos spiked in 2019: Urbanation

It was a great, though not quite record-breaking year for the GTA new condo market.

There were 25,097 new condo units sold across the region in 2019, the third highest annual total on record, according to data released this week by housing data consultants Urbanation. This total represents growth of 27 percent over the previous year, with a pronounced spike in the final months of the year that nearly broke a new condo sales record for the fourth quarter (it was off by about 700 sales).

One of the most impressive figures released by Urbanation was the surge in units sold in newly launched condo projects in 2019. There were 18,232 units sold in developments that launched last year, a 17 percent increase over newly launched units sold in 2018.

In a media release, Urbanation President Shaun Hildebrand noted that this is a “good indicator of growth in demand from investors, who tend to be most prevalent within newly launched projects.”

Hildebrand also observed that end-user demand also rose dramatically in 2019, with the strength evident in the number of units sold in projects that had launched in years prior but were still on the market. There were 6,865 units in projects launched before 2019 sold last year, a spike of 70 percent when compared to the previous year.

Unsold new condo inventory in the GTA declined year-over-year to 13,373 in 2019, which according to Urbanation, is below the 10-year average for the region. The firm also noted that new condo inventory fell to 6.4 months of supply, well below the 10-month level which is considered “balanced.” With inventory consistently not meeting buyer demand, prices for available units rose to a record high of $1,073 per square foot. Hildebrand wrote that this means new condo prices have effectively doubled over the last 10 years.

When it comes to trends to watch for 2020, the key data point is how a potentially record-breaking number of condo unit completions will impact the market in the months ahead.

The approximately 29,500 new condo units scheduled for completion in 2020 is twice the number of units completed in 2018, according to Hildebrand. The current record-holder is 2014 with 21,000 completions, so 2020 is expected to top that figure by a considerable margin.

Why are all of these completions hitting at once? Hildebrand wrote that years of low condo unit completions and high construction starts meant that by the end of 2019, there was a record of 78,112 units at various stages of construction across the GTA. Many are set to be completed in 2020.

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Toronto home prices just posted biggest annual increase since October 2017

The Toronto region housing market is getting tighter as homebuyer demand ramps up and supply continues to slip.

These conditions, which emerged last year following a months-long slump, have kept up into the new year and are now pushing prices up at the fastest rate in over two years.

The recently rebranded Toronto Region Real Estate Board (TRREB) announced today that the benchmark price of a home in the region was up 8.7 percent in January, the highest annual growth rate seen since October 2017. The condo resale market led the way in price growth, but all property types saw strong growth above 7 percent when compared to year-ago levels.

TRREB’s market analysis team’s commentary can be summed up in one statement: What a difference a year makes.

“It is clear that many buyers who were on the sidelines due to the OSFI stress test are moving back into the market, driving very strong year-over-year sales growth in the detached segment. Strong sales up against a constrained supply continues to result in an accelerating rate of price growth,” said Jason Mercer, TRREB’s Director of Market Analysis and Service Channels, in a media release.

Beyond homebuyers adjusting to the stricter mortgage stress tests, TRREB’s team chalked up the strong showing to solid market fundamentals, including low unemployment, population growth and favourable mortgage rates.

The Toronto region’s 4,581 home sales in January were up over 15 percent compared to a year ago. Sales last month also rose 4.8 percent over December 2019’s total.

We can anticipate more of the same for 2020, with interest rates remaining steady (or potentially dropping) and the federal government expected to introduce more financial support for first-time homebuyers.

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Canadian home prices continue to climb but buyers and sellers sit on the sidelines in January

Fewer homes were sold in January compared to December as prices climbed higher and new supply remained tight, according to a new survey.

National home sales fell by 2.9 per cent in January, month-on-month, with the steepest decline of 18 per cent seen British Columbia’s Vancouver area — Canada’s most expensive housing market, according to a report by the Canadian Real Estate Association.

At the same time, CREA’s home price index rose 0.8 per cent compared to December, and 4.7 per cent year-on-year — its eighth consecutive monthly gain.

“It is now up 5.5 per cent from last year’s lowest point in May and has set new records in each of the past six months,” CREA said.

The number of new listings on the market was relatively flat, rising just 0.2 per cent, and near a decade-low amid dearth of new supply across much of the country, although it was up 11.5 per cent year-over-year, marking the best January in home sales since 2008.

The real estate association suggested that both sales and listings might pick up again in the spring.

“Looking at local market trends across the country, one thing that stands out in markets with historically tight supply is a larger than normal drop in new listings at this time of the year,” said Shaun Cathcart, CREA’s senior economist.

Deferred listings mean deferred sales, which could explain some of January’s decline in activity

“The logic being that if you are a seller, you’re not just choosing when to list but effectively when to sell, so why not hold off until the spring when the weather is better, and more buyers are looking,” Cathcart said. “Deferred listings mean deferred sales, which could explain some of January’s decline in activity. “

The report said that prices are on the rise again in British Columbia, as well as the Golden Horseshoe region of Ontario.

“Further east, price growth in Ottawa, Montreal and Moncton continues as it has for some time now, with Montreal and particularly Ottawa having strengthened noticeably in recent months,” CREA said in its report.

Meanwhile, home prices in the Prairie provinces and Newfoundland and Labrador continue to fall, the report said.

Source: Financial Post

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GO ridership from Kitchener jumps 40 per cent, Metrolinx report says

The number of people boarding GO trains and buses in Kitchener has jumped 40 per cent between April and December of 2019, a new report from Metrolinx says.

In a blog post, Metrolinx says there has been record-breaking ridership numbers for GO Transit. A full report is expected to be presented at the Metrolinx board meeting on Thursday.

In Kitchener, the average daily ridership is 328 people. Between April and December 2019, there were more than 64,000 riders.

As well, Guelph saw an increase of 20 per cent of riders during the same time period while Acton, the next stop on the line, saw a 15 per cent jump.

Metrolinx said the increase of ridership is due largely to increased offerings both during rush hour and at other times of the day. In September 2019, Metrolinx added 84 more weekly trips to the line.

Metrolinx CEO Phil Verster says he’s not surprised by the increase.

“I’ve always said very publicly it’s one of my three or four top objectives to increase GO services along the Kitchener corridor because that corridor is so economically important for the region,” he said. “There’s huge demand.”

Need for trains ‘can’t be denied’
Waterloo Mayor Dave Jaworsky says he hopes these numbers will encourage Metrolinx to invest more on the Kitchener GO line.

“I think the need for all-day, two-way GO train service to Kitchener-Waterloo can’t be denied,” he said. “I think that these growth numbers certainly show that if you build it, they will come.”

The increase in ridership, plus news from Statistics Canada that shows the census metropolitan area of Kitchener-Waterloo-Cambridge is the fastest-growing in the country, shows just how much need there is for the service, he said.

Jaworsky says he believes the numbers also reflect the economic benefits of investing in the line and that having two-way, all-day GO trains will benefit both Toronto and Waterloo region.

The numbers show “if you build it, they will come,” he said.

“The more that they build, the quicker that they can get it done, the sooner we can all see even more benefits.”

An email from Metrolinx media relations to CBC Kitchener-Waterloo said that Metrolinx “continues to target 2025 as the start date for two-way, all-day service.” A new timeline for two-way, all-day GO was also approved by the Metrolinx board in November and it says the goal is to have service by 2025.

But Vesper would not confirm that date and said they are not publicly giving a date for the start of service.

He said they can’t give a date because there are contracts that need to be approved and awarded to do work along the corridor.

“There’s no way we can confirm a date at this stage but rest assured we’re targeting a date as soon as possible,” he said.

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Canada’s population growth is concentrated to just three cities

The lion’s share of Canadian population growth last year was just in three markets: Toronto, Montreal, and Vancouver.

Recent data from Statistics Canada showed that the total urban population increase nationwide was 463,424. Toronto had the largest urban increase with 127,575 new residents in 2019. This pushed the city’s total population up to 6,471,850.

On a regional basis, the Kitchener-Cambridge-Waterloo area saw the strongest upward movement with its 2.82% annual gain, reaching a total of 584,259 people last year.

Ontario’s strength is further fuelled by the fact that nearly half of all immigrants to Canada in the year ending September 30, 2019 went to the province, StatsCan said. This amounted to approximately 209,200 newcomers, compared to the 89,400 that went to Quebec and the 65,000 that chose British Columbia.

Montreal posted the second strongest urban increase with 65,205 new residents, pushing up the total to 4,318,505. Vancouver had 39,045 people added to its population last year, reaching 2,691,351 residents.

Population growth impelled by intensified inbound immigration to Canada is driving an unprecedented housing boom, according to a recent analysis by Dominion Lending Centres chief economist Sherry Cooper.

This demand for more housing is also stimulating a greater need for professionals like construction workers and electricians – industries that are seeing an increasing proportion of immigrants, Cooper added.

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Canadian home sales and prices rise 11 per cent compared with a year earlier

OTTAWA – The Canadian Real Estate Association says home sales rose 11.5 per cent in January compared with a year earlier to reach the highest sales figures for the month in 12 years, even as new listings remain constrained.

The association says seasonally-adjusted sales fell 2.9 per cent in January from a month earlier, dragged down by a roughly 18 per cent drop in sales in the Lower Mainland of British Columbia.

The actual average price for homes sold in January was about $504,350, up 11.2 per cent from the same month a year earlier for the largest increase since mid-2016.

Removing the Greater Vancouver Area and Greater Toronto Area from the picture, the national average price falls to around $395,000.

Home prices declined slightly in Greater Vancouver and in Prairie cities, while Montreal and cities in Ontario saw strong gains.

Prices rose as new listings remain near decade lows, though they edged up 0.2 per cent in January from December.

This report by The Canadian Press was first published Feb. 14, 2020.

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GTA Rental Market Overview

Higher rent growth in primary rental market
Rent growth, GTA

Above Average Rent Growth in KCW, Ottawa, Windsor & Northern Ontario
Common Sample 2-bed apt rent – % chg.

Turnover rates lower in most markets
Turnover rate (%)

Vacant unit rents are on average 25% higher
Toronto CMA average rents ($)

Rental supply is increasing
Rental apartment completions as a share of condominium apartment completions

Newer primary rental units charge similar rents as condos
City of Toronto (Zone 1-4)

 

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Cadillac Fairview Purchases East Harbour Project from First Gulf

TORONTO, Sept. 13, 2019 /CNW/ – Cadillac Fairview and First Gulf are pleased to announce that Cadillac Fairview has entered into an unconditional purchase agreement with First Gulf and its partners to acquire 100 per cent ownership of Toronto’s East Harbour project, a 38-acre site three kilometers from the city’s downtown core, with the objective of completing the plan to create a vibrant destination and new eastern commercial core. This transaction is expected to close on September 25, 2019.

The vision for this ambitious master-planned commercial hub was conceived by First Gulf and its partners, Cowie Capital Partners Inc. and Northglen Investments. In 2018, Toronto City Council approved the East Harbour Master Plan, which provides for 10 million square feet of commercial development, including office, hotel, retail, institutional, entertainment and cultural space. With the capacity to accommodate over 70,000 employees, future growth potential for the site is supported by a planned multi-modal transit hub incorporating GO Train/SmartTrack services, TTC light rail transit and the future Ontario Line subway.

“CF is thrilled to assume stewardship of the East Harbour project and all of the tremendous potential that it represents,” said John Sullivan, President and CEO, Cadillac Fairview. “Our commitment now is to sustain the momentum toward realizing the vision of a vibrant new employment and entertainment destination for Torontonians.”

First Gulf CEO David Gerofsky stated “On behalf of First Gulf and our partners, I am extremely proud of how we brought this project to life and established support for it. The shared vision, developed in collaboration with community and government stakeholders, establishes East Harbour as a key driver of economic growth and competitiveness for Toronto. We know the project is in good hands with Cadillac Fairview and we look forward to seeing our collective work realized.”

CF has been successful in acquiring and developing lands adjacent to a city’s traditional financial core, seeding investment in high-potential districts. The company has deployed this core-shifting strategy in downtown Toronto by initiating the development of the South Core with a combined five-tower scheme, including Maple Leaf Square, ICE condominiums and the last building, the 16 York Street office building currently under construction. This strategy has been successfully employed in Montreal with the creation of Quad Windsor, CF’s $2 billion development plan, which includes the revitalization of Windsor Station, five residential towers (featuring Tours des Canadiens 1, 2 and 3), and two office towers including Tour Deloitte, which opened in 2015.

Mr. Sullivan points out that CF’s role in stimulating economic activity in those hubs is based on a solid understanding of market fundamentals and the need for smart, sustainable development: “The City of Toronto has forecast the need for some 45 million square feet of additional commercial space to accommodate 300,000 employees by the year 2041,” he said. “There are very few development sites in the traditional downtown to absorb this kind of growth and East Harbour is a perfect means to extend the city core.”

CF Executive Vice President of Development, Wayne Barwise, sees the project as representing an exciting integration of transit connectivity, smart urban planning, advanced building technologies and environmental sustainability.

“Establishing East Harbour as an employment destination with multiple uses and amenities will be based on infrastructure that is well-integrated with its surroundings, well-connected with a range of transport options, resilient to long-term changes in the economy and our climate, and responsive to innovations in building systems technologies,” said Mr. Barwise, who is predicting the development program to span in excess of 10 years.

The first phase of the development is the adaptive reuse of the existing Soap Factory building, which is a defining element of the overall plan. Cadillac Fairview is currently in discussions with prospective tenants who have expressed interest in this unique opportunity.

As one of largest office complexes in the country, East Harbour’s transit infrastructure will connect to the Lakeshore and Markham/Stouffville GO Train lines that currently travel past the site as well as to the future Ontario Line subway, SmartTrack services and TTC light rail transit. The hub will have the capacity to serve an estimated 32,000 GO patrons per hour and help alleviate bottlenecks at Union Station by providing the potential to meet growing demand.

With sustainable innovation and the needs of a knowledge-based workforce guiding the project’s design parameters, CF will create space for an affordable employment incubator for the City of Toronto and provide an estimated 30,000 square feet of space for a non-profit community use.

East Harbour also integrates close to nine acres of green space with a network of streets, plazas, sidewalks and open spaces to create an environment where people can relax comfortably and move efficiently. Development plans are based on the latest principles of sustainability and well-being, creating a walkable, bikeable network of paths, bridges and connectivity to public transit.

Intelligent building design with smart building strategies will enhance long-term operational efficiency, with LEED and WELL certifications targeted throughout East Harbour. The project will also implement part of the Don Mouth Naturalization project to provide permanent flood protection for the area.

About Cadillac Fairview

Cadillac Fairview is one of the largest owners, operators and developers of best-in-class office, retail and mixed-use properties in North America. The Cadillac Fairview portfolio is owned by the Ontario Teachers’ Pension Plan, a diversified global investor which administers the pensions of more than 327,000 active and retired school teachers. The real estate portfolio also includes investments in retail, mixed-use and industrial real estate in Brazil, Colombia and Mexico.

Valued at around $31 billion, the Canadian portfolio includes over 37 million square feet of leasable space at 68 properties in Canada, including landmark developments, such as Toronto-Dominion Centre, CF Toronto Eaton Centre, CF Pacific Centre, CF Chinook Centre, Tour Deloitte and CF Carrefour Laval.

About First Gulf

First Gulf is an award-winning leader in the development of office, industrial, mixed-use and retail properties with developed assets of over $4 billion completed since the company’s inception in 1987. First Gulf is a fully integrated development company and is involved in all aspects of real estate development, from land acquisition and planning approvals to design-build, construction, leasing, financing and property management. To date, First Gulf has developed and constructed over 30 million sf of office, retail, and industrial real estate. First Gulf is part of the Great Gulf Group, one of North America’s premier real estate organizations. Established in 1975, with major projects in Canada and the United States, the Group’s fully-integrated activities span the entire real estate spectrum.

SOURCE Cadillac Fairview Corporation Limited

 

A proven market leader with more than $4 billion in developed assets

  •  Completed development and construction of more than 5 million square feet of premier LEED®
    certified office space, with another 2 million square feet currently under construction
  •  Over 6 million square feet of industrial constructed with over 6 million square feet of space
    currently in the pipeline
  •  Awarded 2018 NAIOP “Office Development of the Year” for the Globe and Mail Centre and the
    2016 NAIOP Colorado Office Development of the Year for 1401 Lawrence in Denver, Colorado
  • Affiliate of Great Gulf, winner of 2018 Home Builder of the Year award from the Ontario Home
    Builders’ Association (OHBA) and the 2018 Mid/High-Rise Builder of the Year award from the
    Building Industry and Land Development Association (BILD)

 

A Bold New Place Where Toronto Works.

As the largest planned commercial development in Canada, East Harbour will include over 10 million square feet of commercial space concentrated around a new transit hub – the busiest in Canada after Union Station.

East Harbour sits within one of the most dynamic, diverse and changing areas of the city.

At least 80% of the commercial space will be dedicated to office, institutional and hotel uses and up to 20% will be dedicated to retail, food and culture & entertainment.
East Harbour will create space for more than 70,000 jobs within a new dynamic, integrated, comfortable and connected neighbourhood committed to the pedestrian experience.

AMENITIES

Tenants and visitors will have direct access to the new East Harbour Transit Hub, the Don Valley Trail and new pedestrian and bicycle connections throughout.
A mix of indoor, weather-protected and street oriented retail will create an all-season environment, and highly programmed exhibits and events will offer an active and vibrant community. East Harbour will offer the newest mix of eateries, food markets and restaurants, supporting local and international food culture.

PLANNED INFRASTRUCTURE IMPROVEMENTS

East Harbour sits on the eastern edge of the City’s downtown among major infrastructure investments enabling future economic growth in the area.

FLOOD PROTECTION

The Don Mouth Naturalization project will provide permanent flood protection, removing East Harbour from the floodplain and allowing for development, in addition to protecting approximately 700 acres in the Port Lands.
All three levels of government have committed a total of $1.25 billion in funding and construction is now underway and flood protection will be in place by 2022.

SUSTAINABILITY

The team is focused on creating an innovative, cutting-edge sustainable development. East Harbour is a registered EcoDistrict, addressing equity, resilience and climate protection.
A Community Energy Plan will establish a low carbon footprint across the project which includes a District Energy System. LEED v4 Platinum or Gold as well as WELL Certifications will be targeted across the development.

ZONING AND APPROVALS

In June 2018, Toronto City Council unanimously approved a Secondary Plan that calls for the 62-acre East Harbour lands to be redeveloped. In July 2018, Toronto City Council unanimously approved a rezoning that permits 10 million square feet of commercial development.

In support of the municipal applications, a Master Plan was developed through a highly iterative and collaborative process to guide the revitalization.

 

CHARACTER PLAN

Building on the Master Plan, a Character Plan has evolved to support the advancement of a more detailed design concept.
A primary focus of this ongoing design work is to further define the character of the district and ensure that a new development supports the creation of a superior pedestrian experience and public realm.

SOAP FACTORY

East Harbour’s First Office Building, Breaking Ground in 2019.

A 600,000 square-foot office building with 45,000 square feet of retail space, the Soap Factory will be built as an adaptive re-use of the existing beloved industrial building. Occupancy is expected in 2021, coinciding with the delivery of the East Harbour Transit Hub.

 

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