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RBC reports Q3 profits

TORONTO _ Royal Bank of Canada set the tone for the latest round of big bank earnings with a dividend hike and profits and revenues in the latest quarter, helped by higher interest rates and mortgage growth.

Canada’s biggest bank by market capitalization delivered a record $3.1 billion in net income for its fiscal third quarter, up 11 per cent from a year ago.

The bank’s results, which beat analyst expectations, were driven by earnings growth in its wealth management, capital markets and personal and commercial banking divisions.

RBC delivered record earnings against a “strong economic backdrop,” said Royal Bank chief executive Dave McKay.

“We’ve been investing to grow organically on our key markets and our investments are paying off,” he said on a conference call with analysts on Wednesday. “All of our large businesses saw strong earnings growth in the third quarter and we had market share gains in our core franchises.”

As well, the bank said it will now pay a quarterly dividend of 98 cents per share, up from 94 cents per share.

The Toronto-based lender’s diluted earnings per share for the three-month period ended July 31 was $2.10, up 14 per cent from $1.85 per diluted share a year ago.

On an adjusted basis, RBC’s diluted cash earnings per share for its third quarter was $2.14, compared with the $2.11 earnings per share on average expected by analysts, according to Thomson Reuters Eikon.

Royal Bank was the first of Canada’s six biggest banks to report its third-quarter financial results this year. The Canadian Imperial Bank of Commerce reports its results for the period on Thursday, followed by the other banks next week.

“Royal kicked off earnings season with higher than forecast earnings and a dividend increase that was twice as much as expected,” said John Aiken, an analyst with Barclays in Toronto.

The bank demonstrated strong cost containment, and “impressive” results in both domestic retail and U.S. wealth management, including a strong contribution from Los Angeles-based City National, Aiken said in a note to clients. RBC acquired City National in 2015.

RBC’s personal and commercial banking arm earned $1.51 billion in the quarter, up $111 million or eight per cent from the previous year, “mainly reflecting improved deposit spreads resulting from higher Canadian interest rates.”

The division also saw average volume growth of five per cent, “primarily driven by solid growth in our leading Canadian residential mortgages, commercial lending and deposit products,” the bank said.

The bank’s residential lending portfolio was $279 billion at the end of the quarter, up from $268.7 billion a year ago, despite lingering concerns over the impact of tighter lending rules for uninsured mortgages introduced on Jan. 1.

Under the revised rules, homebuyers with a more than 20 per cent down payment must prove they can service their mortgage if interest rates rise, an additional hurdle which the country’s real estate association says has been weighing on the housing market.

Still, RBC saw mortgage growth of nearly six per cent and increased renewals of nearly 92 per cent in the latest quarter, said Rod Bolger, the bank’s chief financial officer.

“We’ve seen a healthy normalization in Canadian housing and our mortgage portfolio continues to grow,” he said on the conference call.

Under the revised mortgage underwriting rules introduced this year, homeowners looking to renew their uninsured mortgage are not subject to the new stress test if they stick with their existing provider, hobbling their ability to seek out a more competitive rate.

As well, the bank’s net interest margins _ or the profit made on loans _ at its domestic arm rose by 13 basis points on the back of four increases to the Bank of Canada’s trend-setting interest rate this year.

Net interest margins are the difference between the money banks earn on the loans they make and the interest they pay out to savers.

And while higher interest rates potentially put pressure on Canadian households’ ability to manage debt loads, consumers are “adjusting proactively,” said Neil McLaughlin, RBC’s group head of personal and commercial banking.

“We were expecting to see customers be a little bit caught off guard and our frontline sales advisers really aren’t sharing that,” he said on the conference call. “The customers are thinking about either extending … if they need to manage the payments on mortgages, they’re thinking about frankly just buying less expensive homes and actually moving down.”

Meanwhile, the bank’s wealth management division saw a 19 per cent bump in net income to $578 million, while its capital markets division saw a 14 per cent lift to net income of $698 million.

The bank’s insurance and investor and treasury services divisions, however, saw net income decrease by two per cent and 13 per cent, respectively, to $158 million and $155 million. The bank cited factors including increased costs to support growth for the drop in net income.

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Supreme Court hands down ruling in TREB v Competition Bureau

The Supreme Court of Canada has refused to hear an appeal from the Toronto Real Estate Board that would have prevented the numbers from being posted on password-protected webpages.

Greater Toronto Area realtors can now publish home sales data on their websites after the top court ruled against the real estate board, a case that could have sweeping implications for consumer access to real estate data across the country.

TREB’s appeal stems from a seven-year court battle that began in 2011 when the Competition Bureau challenged its policy preventing the publication of such information, arguing it impedes competition and digital innovation.

Canada’s largest real estate board, which represents more than 50,000 Ontario agents, argued at the Competition Tribunal and later the Federal Court of Appeal that posting the data would violate consumer privacy and copyright.

Both judicial bodies sided with the bureau, prompting TREB to take the fight to the Supreme Court of Canada.

Since the court won’t hear the case, lawyers say there is likely nothing TREB can to do to keep its legal battle going and the data from being posted.

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Innovative mortgage product promises to stabilize cash flow

Investing in real estate can be tricky in a rising rate environment, but interest-only mortgages with term are helping stabilize cash flow.

“It’s the most innovative product that has come through the mortgage market for the last seven years,” said Jacques du Preez, principal broker and owner of Mortgage Allies. “Because of the new rental laws, you can’t just increase the rent on tenants, but at the same time you want to make sure your costs are stable. What turns a lot of people off is having a line of credit on a rental property because as time goes on, payments go up, so cash flow gets pressurized.”

du Preez likened the fixed-term rates on interest-only mortgages to variable rates, but without the risk of rising primes. He secured a 4.3% interest-only mortgage for a real estate investor client who locked it in for five years.

“They have a low payment, and that is fixed for five years,” he said. “If at any time they want to lock that in, they can lock it into a P&I [Principal and interest]. Variables are not good for rentals because it can impact the cash flow over time as the prime increases, but here the cash flow is sure for the next five years.”

Borrowers can also break the mortgage whenever they like with very little penalties.

“The client is king here,” said du Preez. “After two years, if the client decides to do something else, they can cancel the mortgage with very little penalties. They really are king.”

The interest-only flex mortgage has been on offer at Merix Financial for the past couple of months, and its reception has been resoundingly positive, according to the lender.

“The interest-only flex is all about providing clients lower monthly payments that allow them to free up cash flow for other purposes,” said Jill Paish, Merix’s executive vice president of broker experience. “We felt there was a real need for that type of mortgage for a variety of reasons. With the tightening rules and the way real estate prices are going, a lot of times clients can’t afford the monthly carrying costs, and the monthly costs are higher than they’d like to live in a desired marketplace.”

Merix has noticed many borrowers who have opted to take the interest-only mortgage are investing in real estate.

“We’re finding it’s being used by people who want to invest,” said Paish. “They’re taking a lower interest rate on their mortgage and using cash flow from that investment for a savings nest. We’re also finding that it’s popular with people who have various lifestyles, like cyclical income or a lot of overtime, and just want to make lower payments. When they have more money, they’ll pay a lump sum towards their mortgage.”

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Good news for Toronto landlords, bad news for renters

A new report from reveals that, in the one-bedroom category, Toronto rents have surpassed Vancouver’s, but the latter’s two-bedroom units are still Canada’s most expensive.

“Toronto has been a hot market,” said Matt Danison,  “The prices keep going up and up and up. Toronto and Vancouver are always battling for the top rents in the country; it’s always neck and neck. Toronto overtook Vancouver for the month July.”

The average one-bedroom in Toronto costs $1,862 to rent, while in Vancouver it’s a hair lower at $1,833. A two-bedroom unit in Vancouver rents for an average of $2,583 a month, and for $2,193 Toronto.

That Toronto and Vancouver jokey for the unceremonious title of most expensive rental city in Canada is a consequence of supply shortages in both cities. Danison has a solution that could offer some relief, albeit in a limited capacity.

“New rental buildings have to have a different approach in that, like Manhattan, the square footage has to be a lot smaller than it is. That way, you can include more rental units in a building by cutting the square footage. Instead of living in a 900 square foot apartment with super high rent, you can cut the rent by reducing the square footage to 650.”

Danison concedes tight quarters aren’t ideal, but then again, neither are escalating rents. Plus, buildings with smaller units tend to offer better amenities.

Moreover, because his idea is not unprecedented, he believes that Toronto and Vancouver should take a page out of Montreal’s playbook.

Tobias Smulders, a sales representative REMAX Escarpment Realty Inc., not only believes smaller units are ideal for single people, they will help cities like Toronto fulfill their intensification mandates.

“You could do more by increasing overall intensification,” he said. “All these buildings they’re constructing should not be limited in height as much as they are. An issue we have here in Hamilton is they don’t want to allow developers to build what they propose. If they apply for 40 storeys, they’ll get approved for something like 20 storeys.”

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These are Toronto’s most appreciated and depreciated neighbourhoods

The Fair Housing Plan and B-20 have conspired to put downward pressure on valuations throughout Toronto, however, some neighbourhoods have been impervious.

The six steepest year-over-year drops between July 2017 and this year are Don Mills, Parkwoods-Donalda and Victoria Village, where prices depreciated 19%. Bridle Path-Sunnybrook-York Mills and St. Andrew-Windfields saw an 18% decline, as did L’Amoreaux, Steeeles, and Tam O’Shanter-Sullivan.

Newtonbrook East and Willdowdale East saw 17% drops, and Bayview Village, Bayview Woods-Steeles, Don Valley Village, Henry Farm, Hillcrest Village and Pleasant View depreciated 13%, as have Bathurst Manor and Clanton Park.

“January is when it started dropping and now it’s coming to the point where it’s stabilizing,” said Freda Lau, Fivewalls Realty’s director of operations. “We don’t see any reason for prices to go up really fast simply because with the users who come through, their budgets are getting tighter. It’s taking a while for the impact of some of these rules to come in place.”

Fivewalls compiled the data and also notes there were areas that appreciated despite the government’s intervention. High Park-Swansea, Roncesvalles and South Parkdale in Toronto’s West End saw 15% appreciations, while Cabbagetown-South, St. James Town, Church-Yonge Corridor, Moss Park, North St. James Town, Regent Park, and the Waterfrotn Communities had 12% hikes. Alderwood, Long Branch, Mimico and New Toronto bore witness to 10% appreciations.

The reason for appreciation in those neighbourhoods, says Lau, is they have a high number of condo sales. She also cautions that those price increases will eventually stabilize.

“We’re noticing that it’s especially the first-timers, whether in their early 30s and looking for first home or moving in with their significant other, they’re looking for condos and townhomes because detached homes are unaffordable for them, and an interesting stat we’ve seen is the number of inquiries for detached homes have decreased 10-15% this year compared to last year.”

Prices in the luxury market likely won’t rebound because demand has significantly tapered.

“I don’t see appreciation going back up in the luxury market because with the mortgage rules and Fair Housing Plan, the psychology of prices going up has pretty much stopped, and it’s very hard for luxury market to rebound in the $2mln-plus homes,” said Lau. “We’re seeing that it’s almost like getting a discount when you see a price depreciation of 18% in those neighbourhoods, whereas with condos and townhomes for first-timers, where those are the product that’s most available to them, those will keep going up a bit, but with the increase in interest rates that looks like it’s stabilizing because there’s only so much people can afford.”

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Canadian housing market is bouncing back says TD Economics

Things are starting to improve in Canada’s housing markets according to a report from TD Economics.

Deputy chief economist Derek Burleton and economist Rishi Sondhi say that recent data has confirmed TD’s view that there would be some traction gained after initial sharp impact to tighter lending restrictions at the start of the year.

“Past experience has shown that markets begin to stabilize after about 4-6 months following the implementation of major changes to housing policy. True to form, sales activity and average prices have come off a floor in most major markets since May,” the economists’ report says.

The report notes recent stabilization in the GTA with increasing resales for both single-family (20% estimated) and condos (10% estimated) and prices climbing.

However, the TD Economics team say that Vancouver is not yet seeing the same rebound as the market’s low affordability. The economists say that the market has yet to find a bottom as provincial cooling measures are also in play alongside the tighter mortgage lending rules.

While the signs of stabilization and even a comeback are evident, the report warns of uneven conditions across Canada’s markets and the spectre of economic conditions, interest rate rises, and trade tensions impacting job markets.

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Existing home sales slip south of the border

A combination of factors continue to impact affordability of homes in the US and sales are suffering.

With prices rising due to low inventory, cost of materials for new homes and renovations, and increasing mortgage rates, affordability is a key barrier to first-time buyers and those wishing to trade up.

Existing home sales in July slipped 0.7% to a seasonally adjusted annual rate of 5.34 million, from 5.38m in June. It was the fourth consecutive month of decline.

National Association of Realtors chief economist Lawrence Yun says price rises have weakened demand.

“Led by a notable decrease in closings in the Northeast, existing home sales trailed off again last month, sliding to their slowest pace since February 2016 at 5.21 million,” he said. “Too many would-be buyers are either being priced out, or are deciding to postpone their search until more homes in their price range come onto the market.”

The median existing-home price for all housing types in July was $269,600, up 4.5% from July 2017 ($258,100). July’s price increase marks the 77th straight month of year-over-year gains.

Inventory declined by 0.5% to 1.92 million existing homes, 4.3 months of supply.

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Interest rates, mortgage rules leading to Ontario slowdown

Ontario’s medium-sized cities are heading for a slowdown according to the latest assessment from the Conference Board of Canada, with home financing among the key reasons.

It says that apart from Greater Sudbury and St. Catharines-Niagara there will be moderation in the economic growth of the province’s medium-sized cities.

The 16-city report shows that Oshawa (2.6%) and Guelph (2.3%) will be the fastest-growing cities covered by the forecast.

“In most Ontario metropolitan areas, economic growth is slowing in line with the national economy. Rising interest rates, newly implemented tariffs on Canadian exports, and stricter mortgage rules are limiting growth across a number of sectors,” said Alan Arcand, Associate Director, Centre for Municipal Studies, The Conference Board of Canada. “In fact, most Ontario cities covered in this report can expect to see their economies expand by less than 2% this year.”

Notably, Windsor will see growth in GDP slashed to 1.9% in 2018 having been 3.0% in 2017.

However, there is better news for London, with real GDP set to grow 1.9% this year; and Kitchener-Cambridge-Waterloo’s economy is poised to expand by 1.6% in 2018.

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RBC posts record net income, setting tone for Big Six

The big banks are reporting their quarterly earnings and the season has started well with record net income for Royal Bank of Canada.

RBC reported record net income of $3,109 million for the third quarter ended July 31, 2018, up $313 million or 11% from the prior year with double-digit diluted EPS(1) growth of 14%. Quarter-over-quarter growth was 2%.

Personal and business banking, wealth management, and capital markets all did well while insurance and investor & treasury services saw lower results.

Among the personal banking business, RBC highlights solid growth in Canadian residential mortgages.

“We delivered record earnings of $3.1 billion this quarter with strong results in our largest businesses. In addition, I am pleased to announce a 4% increase to our quarterly dividend,” said Dave McKay, RBC President and Chief Executive Officer. “Our results demonstrate our continued focus on deepening existing client relationships by providing more value, and our commitment to delivering on the objectives we introduced at our Investor Day. We maintained our focus on risk management and expense control; at the same time, we continue to invest in long-term sustainable growth, including in the United States.”

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Slower sales, steady prices for GTA new builds

Sales of newly built homes continued to fall in July as condo sales slumped and single-family sales remained subdued despite a jump.

A report from the Building Industry and Land Development Association (BILD) shows that combined sales were down 44% year-over-year and were 55% below the 10-year average.

Data from the Altus Group reveals sales of new condominium apartments in low, medium and high-rise buildings, stacked townhouses and loft units were down 52% from July 2017 to 855 units, 40% below the 10-year average.

Meanwhile, sales of new single-family homes, including detached, linked and semi-detached houses and townhouses (excluding stacked townhouses) were up 85% year-over-year. However, the 2017 figure was the lowest for decades (117) and July 2018’s total was still 77% below the 10-year average.

“New home sales in the GTA typically take a breather in the summer months compared to the spring,” explained Patricia Arsenault, Altus Group’s Executive Vice-President, Data Solutions. “This July was no exception, although minimal new project launches in July, along with declining affordability of new condominium apartments due to recent price escalation, amplified the June-to-July decline in sales somewhat this year.”

Prices remain steady amid tight supply
Despite weaker sales, prices of new homes in the GTA were steady in July as inventory remained tight.

The benchmark price of new condominium apartments was $774,759, up 16.5% from last July, but virtually unchanged from June. The benchmark price of new single-family homes was $1,142,574, down 13.2% year-over-year and just 0.85 per cent above June 2018.

Total remaining new home inventory decreased to 14,784 units, comprised of 9,931 condo apartment units and 4,853 single-family units.

“We are still seeing a shortfall in condo apartment inventory,” said David Wilkes, BILD President & CEO. “Given the current pace of sales, we should have nine to twelve months’ worth of inventory, but we only have five. We expect that more condo apartment product will become available in the fall.”

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Seven Signs Your Local Real Estate Marketing Is Starting To Heat Up

Understanding what a real-estate market is trending toward is vital, as it can help sellers establish what price they want to aim for, while buyers can better determine exactly how much they should spend on a property, especially if the market is looking to be getting hot.

So what kinds of signs should you look for, especially when it comes to a local market? Is it better to focus on how many offers are being made on a property, or should you look at the scale of construction — as well as what types of buildings are being made.

To help, seven members of Forbes Real Estate Council, below, share the key signs they look for to tell whether or not a real estate market is heating up. Here’s what they recommend you watch for:

1. Days On Market

If the pace of days on market increases in certain zip codes or submarkets, it typically is a leading indicator that prices will follow, as investors and buyers feel they have to make quicker decisions for fear of someone else acquiring the property. – B.J. Turner, Dunleer

2. Overpriced Properties

When properties sell at such a premium without logically comparing to prior sales transactions and average household income affordability in that market, that is sign of market heating. The new pricing suggests demographic shifts (i.e. higher incomes) and economic drivers (i.e. urban revitalization or job growth) are at work to push property prices. – Babak Ziai, BrandView Capital Partners

3. Supply And Selling Speed

We watch for two key indicators when evaluating the health of a local housing market. The first indicator is the supply of inventory in the marketplace. When a market starts to heat up, the supply of well-located and appropriately priced homes vanishes. This leads directly into the second key indicator, which is when a listing goes under contract within days of hitting the MLS. Both indicators are valued tools in allowing us to evaluate how fast we must make thoughtful and strategic purchasing decisions. – Matt Pettinelli, CapGrow Partners LLC

4. Number Of Offers

A clear sign is the number of offers in for comparable projects in the respective submarket you are tracking. This simple barometer illustrates the depth of the buyer pool and demand within that neighborhood. High demand usually leads to increased seller pricing power. – Owen Fileti, L.A. Realty Partners

5. Inventory Size

Inventory is the strongest local indicator, in my opinion. That, crunched against the number of properties going pending each week, will give you a clear idea if the supply side of the equation is headed down or up. And that is massively correlative to the market direction. Secondarily, I also look at local job creation numbers. That is the demand side of the equation, and can also impact the market. – Keith Robinson, NextHome

6. Property Development Pace

This is mostly applicable for commercial real estate markets, but when development of skyscrapers is booming, that’s usually the beginning of the end. Most development funding is approved when times are good. By the time all the projects are completed, the market typically softens. This new glut of vacant space causes landlords to slash rents. So begins the inevitable commercial real estate downcycle. Then, when all the cranes have gone back into hibernation, is precisely the time to go shopping for office, warehouse and retail properties.  – Brad Johnson, Evergreen

7. Sold Units Versus New Listings

I always look at the sold units versus new listings ratio. As soon as the trend goes toward an increase in units being sold and/or decrease in new units coming on the market, I know the market is heating up. This is one of the best early indicators and crucial signs of a local market taking off. It’s the good old proven law of supply and demand. – John Reza Parsiani,

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ATB Financial reports higher loans, deposits

The financial year has started well for provincial lender ATB Financial with growth in loans and deposits delivering first quarter net income of $57.3 million.

Although that figure is down from $63.1 million a year ago, this was largely due to larger higher loan loss provision.

Loans were up 8.3 per cent over the same period last year ($45.1 billion from $41.7 billion). Deposits totalled $34.5 billion, up from $33.7 billion the year before.

“The numbers show we are continuing to make banking work for Albertans. They are turning to us to help start or grow their businesses, and they are trusting us as a place to put their hard-earned money,” said ATB’s President & CEO Curtis Stange. “Many Alberta businesses and entrepreneurs have survived turbulent times, and there are still headwinds we face, but together, we’re finding a way to thrive.”

The bank marked a milestone in the quarter ended June 30, 2018, with its 100,000th business customer.

Net interest income was $296.8 million, an increase of $9.3 million (3.2%) and $32.1 million (12.1%) over the last quarter and the same time last year.

“Our growing balance sheet is the main contributor for both increases as business loans and residential mortgage loans outgrew our increasing reliance on wholesale and collateralized borrowings,” ATB’s report states.

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Interest rate hike likely in October says TD economist

The cost of living was higher in July as energy prices and interest rates added to household expenditure.

Data from Statistics Canada show that the Consumer Price Index was up 3% on an annual basis following June’s 2.5% increase.

The largest influence on the CPI was the continued rise in energy costs, up 14.7% year-over-year, with gasoline up 25.4% and fuel oil and other fuels rising more than 28%.

The mortgage interest index was up 5.2% in the 12 months to July on the impact of the BoC’s interest rate rises.

There were also notable increases in the cost of transportation, air travel, and travel tours; and telephone services.

In all provinces, prices rose more in July on a year-over-year basis compared with the previous month.

The Bank of Canada’s preferred measures of core inflation remained stable in July.

“The relative stability of core inflation measures may give the Bank of Canada some solace,” commented TD Economics’ senior economist James Marple. “Still, with an economy beating expectations and a range of indicators pointing to limited excess capacity, maintaining stable inflation is likely to require further rate hikes by the central bank with the next one likely coming in October.”

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This Canadian city ranks in the global top 10 for innovation

The US has dominated an annual ranking of the Top 500 most innovative cities in the world but one Canadian city has made the highly-competitive top 10.

Tokyo tops the list, compiled annually since 2007 by Australian consultancy 2thinknow and based on 162 indicators. London, UK takes the second place.

Then comes the first wave of US cities to make the Top 500: San Francisco-San Jose moved down to number three, followed by New York, and Los Angeles.

Toronto (8) is the only Canadian city to make the top 10, sitting below Singapore and Boston. It ranks fifth in the Americas.

“This year innovation is likely to come from large cities as usual, but we found on a population-adjusted basis many small cities are punching above their weight. It’s the year of big cities with physical networks and small cities with digital networks, going global,” said Christopher Hire, director of commercial data provider 2thinknow, which publishes the annual Innovation Cities Index.

The other innovative Canadian cities
While Toronto has secured a top 10 place, several other Canadian cities also rank among the top 500.

Larger Canadian cities continued their top rankings with few changes including Vancouver (25) and Québec City (58). Lower business costs and improved innovation policies lead Ottawa (126), Halifax (202) and Hamilton (205) to achieve above average positions relative to their smaller populations with potential to improve in future years.

The full list of Canadian cities in the top 500 is: Toronto (8), Montreal (22), Vancouver (25), Quebec (58), Calgary (86), Edmonton (125), Ottawa (126), Halifax (202), Hamilton (205), Winnipeg (223), London (278), Kitchener (288), Fredericton – St John (314), and Moncton (342).

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RBC: “Little risk that prices will accelerate much further”

Home resales in Canada were driven by the Greater Toronto Area in July with a 7.7% gain compared to 1.9% nationally.

The GTA also saw a flattening of price growth which has been declining in recent months. RBC’s senior economist Robert Hogue says that the national benchmark price appreciated at a faster rate (2.1% y/y) for the first time in 15 months.

In a monthly housing report, Hogue says that, with a few exceptions, price acceleration is unlikely to be a major factor in the Canadian housing market in the coming months.

“We see little risk that prices will accelerate much further in the near term. Except in a few areas (including Ottawa and Montreal where sellers have a slight upper hand), demand-supply conditions are balanced in the majority of markets in Canada, which does not support rapid price growth. Vancouver prices are in fact decelerating at present,” he writes in his report.

He added that he and his colleagues believe that the market is adapting to the impact of the mortgage stress test and while some sellers may still be reluctant to list their homes, RBC Economics forecasts a recovery of the resales market across most areas through the second half of 2018.

Supply boost for GTA, constraint nationally
The GTA saw more homes on the market in July but new listings were down 1.2% nationally.

There was a notable drop in new listings in Vancouver, Calgary and Edmonton, and to a lesser extent in Ottawa and Montreal.

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Promenade Mall Redevelopment Plan Submitted to Vaughan

In the 32 years since Promenade Mall opened on Bathurst Street in Vaughan, north of Toronto’s city limit, both the retail landscape and demand for suburban land has changed. The 2017 departure of bankrupt anchor tenant Sears, which occupied almost 20% of the mall’s space, was a further blow to the mall’s already declining traffic. Now, a redevelopment proposal looks to create an architectural centrepiece, while making the mall both less auto-centric and more transit and pedestrian-oriented, and introducing significant new residential density steps from the revitalized shopping centre.

Shortly before Sears’ bankruptcy filing, the property was acquired by Liberty Development, who are now advancing redevelopment plans. The Phase 1 Plan that was just submitted to the City of Vaughan contemplates modernization and expansion of the existing mall, physical improvements for existing retail tenants, and an increase in the number of potential shoppers. While some of this intensification is proposed through alterations to the existing mall, the bulk of the changes would involve building out of the sea of surface parking that currently encircles the property.

 

Designed by WZMH Architects, the first phase of the plan includes three residential apartment towers with heights of 28, 30, and 35 storeys, as well as a 28-storey, mixed-use building containing offices and a hotel, with a combined gross floor area of 144,613 square metres. The first phase would involve the demolition of 18,756 square metres of existing 89,479 square metres of space space in the south and east portions of the mall, while adding 15,773 square metres of new retail space.

The three proposed residential towers would contain a total of 1,066 units. The first two would respectively rise 35 and 30 storeys from a shared six-storey podium occupying the current footprint of the former Sears space. Their proposed total unit count is 748, including 363 one-bedroom units, 337 two-bedroom units, and 48 three-bedroom units. To the north of the existing mall entrance, the third residential tower is proposed to rise 28 storeys and contain 318 residential units, including 265 one-bedroom units and 53 two-bedroom units. The combined hotel and office building, would house 24,392 square metres of office uses and 15,203 square metres of hotel space, spread across 156 suites.

Significant public realm improvements are also on tap for the site. Landscape architects Schollen & Company have devised a plan that creates a pedestrian-friendly gateway plaza to the site’s Bathurst Street frontage, an outdoor amphitheatre at the west end of the property, and a pedestrianized north-south High Street fronted by commercial uses. Phase 1 is dashed in red below.

 

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Disney announces massive $6.5-billion Disneyland Resort for Toronto Islands

The Walt Disney Company is bringing its magic north of the border to call Toronto its newest theme park home.

A proposal to transform Toronto Islands into a global entertainment destination was announced this morning during a press conference held at Metro Toronto Convention Centre.

The $6.5-billion attraction, known as “Toronto Disney Resort,” centres on the construction of Canada’s very own Disneyland theme park – Toronto Disneyland – on the site of Billy Bishop Toronto City Airport.

Other public spaces on the islands beyond the airport site will be maintained as accessible park space and improved through a new parks lands management partnership with Disney.

“Here in Toronto at this spectacular location, we are dreaming of something truly magical that not only showcases the best of Disney’s storytelling but also creates a one-of-a-kind destination that will delight and entertain people for generations to come,” said Bob Iger, chairman and CEO of the Walt Disney Corporation.

“Everything we have learned from our six decades of exceeding expectations, along with our relentless innovation and famous creativity, will create a new destination that signals a new era for Disney theme parks.”

Disney will have a minority stake of 48% while the remaining majority stake of 52% will be owned by the Hiawatha Development Corporation, a new public-private consortium that will lead the undertaking of the project.

Hiawatha’s ownership is comprised of federal crown corporation Canada Lands Company (20%), Toronto-based commercial developer Oxford Properties (39%), Toronto-based investment firm Kilmer Van Norstrand Co. Ltd (16%), Toronto-based InstarAGF Asset Management Inc. (15%), and the City of Toronto (10%).


The Toronto Port Authority, the federal agency that currently owns and operates the airport, will be dissolved, and its portfolio over the airport’s lands and assets will become a purview of Canada Lands Company, which also owns and operates Downsview Park, the CN Tower, and the Old Port of Montreal.

“We are incredibly excited about today’s announcement,” said Michael Rensie, the president and CEO of Hiawatha. “Disney theme parks are known throughout the world for extraordinary rides, shows, and unique experiences that are enjoyed by the entire family. We are proud to be a part of the growing family of Disney parks and resorts worldwide.”

Hiawatha’s contribution is $250 million from the federal and municipal partners and $2.88 billion cash from Oxford Properties, Kilmer Van Norstrand, and Instar AGF. The remainder of its share in the investment comes from the provided land value.

Disney will provide $3.36 billion cash and have full creative control.

 

“This partnership is a celebration of creativity, collaboration, commitment, and innovation, and a testament to Toronto’s growing place in the world,” Toronto Mayor John Tory said. “Disney’s choice of Toronto for the location of its next international theme park is certainly a vote of confidence in our city and our future by the world’s most prestigious and renowned entertainment company.”

“Toronto Disney Resort will be an extraordinary destination that will provide Toronto with its largest year-round tourism engine and create self-funded improvements to Toronto Islands’ attractions and resilience to flooding,” continued Tory.

Upon opening, Toronto Disneyland will have a capacity for up to 45,000 guests – just over half of Magic Kingdom and Disneyland Anaheim. Theme park operations will employ about 8,000 people, and an additional 3,500 people will be employed in other areas such as hotel and transportation operations.

Following a four-year consultation and detailed design period, and subject to various final approvals, construction could begin in 2022 for an opening by summer 2028.

 

Planners estimate Toronto Disneyland will attract six million visitors in its first year of operations and grow to 12 million visitors per year after 20 years. Comparatively, Canada’s Wonderland already sees over 3.7 million visitors per year within its six-month-long seasonal operations period.

Toronto Disney Resort is expected to boost Toronto’s economy by $48.5 billion over the first 30 years, with 15,000 jobs created during the construction phase and generate a total of 40,000 direct and indirect jobs once open.

With airport operations at Billy Bishop ceasing to exist, there will be a greater focus on expanding Toronto Pearson International Airport as a mega regional hub.

Here are the preliminary plans for Toronto Disney Resort:

Toronto Disneyland

A media backgrounder on the scope of Toronto Disneyland, with preliminary conceptual renderings, show a new concept, all-season theme park that will be substantially different than the destinations in California and Florida.

The 350-acre theme park will occupy the 200-acre airport lands and require an additional 150 acres of infill to accommodate both the attractions, back-of-house facilities, hotels, public spaces, and other infrastructure.

The park will be designed with Toronto’s harsh winter climate in mind, while also taking advantage of it.

Like other Disney parks, there will be daily parades and a nightly fireworks show.

Some of the early concepts show an initial seven themed lands upon opening:

Mickey Avenue, Canada

Similar to Main Street, USA, and borrowing the concept of Shanghai Disneyland’s Mickey Avenue, this welcoming avenue – inspired by the colourful personalities of Mickey Mouse and his friends – with shops and restaurants will provide the first main entry into the theme park.

Fantasy Land

A 16-storey castle with a unique design will be located at the heart of the park, within Fantasy Land. Expect familiar rides such as Peter Pan’s Flight over London, an indoor Seven Dwarfs Mine Train, Little Mermaid’s Ariel Undersea Adventure, and the Hundred Acre Wood with Winnie the Pooh.

Frozen Land

One of the lands will be based on the world of Frozen, including the Arendelle castle, rides and live shows based on the hit film, and uniquely themed dining and shopping.

Star Wars: The Ice Planet

A ‘mountain range’ with three mountains reaching 13-storeys high will provide the setting for the ice planets in the Star Wars universe. Expect giant replicas of the attacking imperial forces’ AT-ATs outside, and a cavernous indoor environment inside the mountain for the rebel base, with the Millennium Falcon doubling as a restaurant and various indoor rides such as Star Tours and a ‘dark roller coaster’.

Marvel Universe

Explore the base of The Avengers and the hidden, super-modern nation of Wakanda from Black Panther, with unique indoor rides, dining, and shopping.

The Gardens

Similar to Epcot, a 10-acre land will be exhibition space to host special seasonal events and festivities throughout the year.

During the cold winter and early-spring months, it will feature one of the world’s largest ice and snow festivals. Imagine dozens of giant ice and snow sculptures of Star Wars characters, Mickey Mouse and his friends, and more, which all illuminate with colours at night.

As for the summer and early fall months, the gardens could be used for festivals celebrating flowers, food, and wine.

Future expansion

Approximately 60 acres, accomplished through lake infill, will be reserved for the future addition of two or three lands.

 

Disney takeover of Toronto Islands’ park space and attractions

Under the agreement, Disney will improve, manage, and operate Toronto Islands’ existing green spaces and attractions – a takeover of the responsibilities currently under the City of Toronto’s Parks, Forestry and Recreation Division.

 

Disney is anticipated to invest $475 million towards improvements over a five-year timeline. This includes:

  • $65 million for landscaping and other public realm improvements.
  • $250 million for flood prevention and mitigation projects on the islands, including new perimeter flood dikes that blend in with the natural landscape, elevating vulnerable areas by up to two metres, and new water pumps. Toronto Islands will be able to withstand a 1 in 1,000-year flood event following these improvements.
  • $50 million for new and improved outdoor recreational facilities, including $20 million to improve waterways and facilities for rowing, canoe, and kayak sports.
  • $10 million for new pay-to-use recreational facilities and equipment, such as bike rentals, beach chairs,
  • Most of Centreville Amusement Park will close for its conversion into a $100-million dining hub with five new restaurants and a live entertainment area. Only the vintage carousel, antique windmill ferris wheel, Far Enough Farm petting zoo, and the newly built aerial gondola will remain.

Overall, after further phases of expansion with additional attractions, Toronto Islands could resemble a resort attraction model similar to Sentosa, a popular island resort next to downtown Singapore, with Universal Studios Singapore as one of the island’s anchor attractions.

 

 

Two Disney-themed hotels

Two hotels adjacent to the Disneyland park are proposed.

The upscale Toronto Disneyland Hotel on the eastern side of the airport property, next to the park’s exterior entrance and ticketing plaza, will have 350 rooms. The hotel will boast some of the best views of the downtown Toronto skyline.

On the western side of the theme park, immediately south of Hanlan’s Point Beach, will be Disney’s Port Toronto Hotel – a mid-scale, ship-themed hotel property with 700 rooms. The existing clothing optional beach area will be relocated to Ward’s Island Beach on the easternmost end of Toronto Islands.

Both hotels will have the Disney resort’s flagship restaurants.

 

New transportation links

To support the ingress and egress of large crowds and ‘cast members’ (the term Disney uses to describe its staff and employees) to Toronto Disneyland, the hotels, and other Toronto Disney Resort areas on Toronto Islands, there will be a multi-modal approach to improving transportation connections while maintaining a car-free environment on the islands.

Western Channel Bridges

Two bridges will be built over the Western Channel between the existing airport passenger pick-up and drop-off facility in downtown Toronto’s Bathurst neighbourhood and the islands, with one 50-metre wide bridge for pedestrians only and a second 15-metre wide bridge on the far western end for the movement of goods, supplies, and materials.

The pedestrian-only bridge will directly lead to the main entrance and ticketing plaza of Toronto Disneyland.

To support the crowds, this will also necessitate the closure of Eireann Quay Road south of Queens Quay West into a pedestrian-only road.

Disney Transport

Disney Transport, the Disney Parks & Resorts division that operates the public transit system at Walt Disney World in Florida, will takeover the operation of the Toronto Island ferries from the City of Toronto’s Parks, Forestry, and Recreation division.

 

This includes the acquisition of additional large vessels, particularly for the main route to Toronto Disneyland’s entrance and ticketing plaza, and other improvements to existing ferry terminals elsewhere on the islands.

Additionally, Disney Transport will take over the construction and operations of the new Jack Layton Ferry Terminal. There will be some modifications to the chosen 2016 terminal redesign to adjust to the needs of Disney’s anticipated crowd volumes.

 

Parkades

While there will be an emphasis on public transportation services, including the Disney Transport ferries, several new multi-storey parking facilities will be constructed for Toronto Disney Resort guests:

  • 1,000 car parking lot at Stadium Road Lot at 12-34 Little Norway Crescent
  • A new six-storey underground parking lot with 4,000 stalls at the current site of Little Norway Park, with new green spaces and playing fields built above the park.
  • A new five-storey parking lot at Lot A (Gore Lot) of Exhibition Place with 6,000 stalls.
  • Cast member-only parking facilities will be built elsewhere at yet-to-be determined locations, with cast members shuttled to the pedestrian tunnel.

Airport Pedestrian Tunnel

Billy Bishop Toronto City Airport’s existing airport pedestrian tunnel will be re-purposed into a tunnel for the entrance and exit passage for cast members to use. This will ensure cast members arrive to their workplace out of sight in secret in order to maintain the Disney magic for guests.

 

Potential future transportation

Future transportation connections include built-in provisions for a subway station near Toronto Disneyland’s main entrance and ticketing plaza, should a decision be made to extend the subway to Toronto Islands.

Other options potentially even include a people mover rail line between Union Station and the main entrance via Bathurst.

Hanlan’s Point’s origins as an amusement park

If the Disney resort plan proceeds, it will represent a “full circle” journey for Toronto Islands’ use as a theme park/amusement park destination for the region.

“There is no question Toronto Islands is returning to its roots as an amusement destination for our world-class city,” said Tory.

Hanlan’s Point, which is on the proposed footprint of Toronto Disneyland, was once the home of Hanlan’s Point Amusement Park. This amusement park operated from the 1880s to the 1920s with numerous rides and attractions such as a roller coaster, scenic railway, carousel, carnival games, a theatre, dance pavilion, and grandstand for larger live entertainment shows.

The Hanlan family also built a hotel on the western edge of the islands – right next to the amusement park at the approximate location of the existing nude beach, near the location of the proposed Disney’s Port Toronto Hotel.

Then in 1910, Hanlan’s Point Stadium was constructed next to the amusement park. The 18,000-seat stadium was the home of the Toronto Maple Leafs baseball club and is known as the home of Babe Ruth’s first professional home run.

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Commercial activity gains in GTA amid strong economy

The future is looking positive for the commercial real estate market in the Greater Toronto Area.

Members of the Toronto Real Estate Board’s Commercial Network reported a 3.6% rise in leasing in July, with approximately 2.1 million square feet of industrial, commercial/retail and office space leased through the MLS.

Offices saw transactions rise by more than a third and the amount of office space leased has almost doubled from July 2017 levels. Industrial accounted for more than two thirds of leased space but saw a 41% decline in transactions year-over-year.

The average industrial lease rate was down from $7.49 in July 2017 to $7.25 in July 2018. The average commercial/retail lease rate was also down from $27.74 in July 2017 to $20.12 in July 2018. The average office lease rate was up from $12.43 in July 2017 to $14.85 in July 2018.

“The economy of the Greater Toronto Area continues to be strong. We have low unemployment, with job creation in many sectors of the economy. The latest GDP figures for Canada were also positive. With this in mind, it is not surprising that the amount of space leased this past July was up compared to the same time last year,” said TREB president Garry Bhaura.

Sales ease but prices rise
Sales in the sector (where prices were disclosed) were lower in July compared to a year earlier.

Industrial sales totalled 8, down from 19 in July 2017; there were 10 office sales (12 in July 2017); and commercial eased from 19 to 18.

Prices increased though for commercial (up 26% to $356.32 psf) and industrial (up 13.4% to $213.56 psf). For offices, prices declined 16.3% to $216.13 psf.

Optimistic for future
Mr Bhaura says that the long-term future of the GTA market remains positive.

“I am optimistic that the GTA will remain a destination for new companies and new households over the long-term, despite the potential for short-term economic volatility due to trade concerns,” he said.

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Strong growth for Colliers International

Colliers International Group has reported strong gains across its global real estate business for the second quarter 2018.

The Toronto-headquartered firm’s revenue was up 14% year-over-year in the quarter ended June 30, 2018, to U$667.4 million with GAAP operating earnings of $45.6 million, up from $41.2 million a year earlier.

In North America, revenue was up 12% to $388.6 million with internal growth for the quarter driven by Lease Brokerage, particularly on the US West Coast and in Canada.

“Once again, Colliers generated strong results in the second quarter, through a combination of acquisitions and solid internal growth. Based on results to date, current business pipelines and acquisitions completed subsequent to the quarter end, we remain optimistic about our growth prospects for the balance of the year,” said Jay S. Hennick, Chairman and CEO of Colliers International.

Three acquisitions helped drive growth
Mr Hennick noted the three key services business acquisitions in North America completed by the firm in the second quarter of 2018.

Its investment in Harrison Street Real Estate Capital will form Colliers’ new Investment Management platform alongside its existing European investment business. The new division will have assets under management of more than $20 billion.

With this important new platform for growth now in place, an investment-grade balance sheet, disciplined growth strategy and a proven track record of success, we are well positioned to continue creating value for shareholders in 2018 and beyond,” he concluded.

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Condo sales continue to post strong growth in Ottawa

Ottawa’s home sales market remains strong with condo class properties the clear leader.

Sales through the region’s MLS in July totalled 1,614, up 5.9% from the 1,524 a year earlier. Both years have exceeded the 5-year average of 1,501.

Of July’s sales, 1,238 were residential class with 376 in the condo class. The year-over-year increase was 3.6% for residential class and 14.3% for condo class.

“Ottawa’s condo market continues to positively impact overall residential sales trends with year-to-date condo unit sales up 16.5% from this time last year,” states Ralph Shaw, Ottawa Real Estate Board President. “As well, our overall inventory levels in both the residential and condo market are improving which will help ease pressure on prices. Units available are currently down 16% down from July 2017 rather than the 24% we were down at the beginning of the year.”

Average sales prices were up 5% for residential class and 5.3% for condo class homes to $441,206 and $280,526 respectively.

Rural neighbourhoods show gains
“We are noticing a surge in unit sales in the rural areas, particularly the west end,” notes Shaw. “This is not only driven by availability but likely includes other attractive aspects in these well-established communities such as reasonable commute times, convenient shopping options, and great schools and recreational facilities which aren’t overtaxed.”

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