Building December January 2018 by IQ Business Media

real estate development

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architecture

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LIFE AFTER THE BACK COVER…

what’s on BUILDING.ca

READ > The Energiesprong model comes to B.C. How a new Affordable Housing Renewal pilot project aims to improve homes, lower costs, and reduce pollution.

67 06

CONTENTS

FEATURES

11 > Glass Half-Full or Glass Half-Empty? /

The changing role of women in Canada’s commercial real estate sector. By Rhys Phillips

17 > Creating Possibilities /

Looking forward at 2018 real estate trends, the annual PwC/ULI report concludes that “it’s not a clear blue sky — but there are no storm clouds coming, either.” By Andrew Warren EXPLORE > The Exchange Designed by Harry Guger Studio, this is one of the few new high density office developments in Vancouver’s CBD.

23 > A Bit of Home, Away / How a Canadian owner/developer brings a Canadian feel to a masterplanned luxury resort project in Barbados. By David Lasker

26 > Good Business /

A review of the effectiveness of investments in renewable energy for social and affordable housing. By Leigh St. Hilaire EXPLORE > FunambOule Montréal Architecturama and Latéral collaborate on a self-standing footbridge spanning part of Saint-Catherine Street.

IN EVERY ISSUE

05 > Editor’s Notes 06 > Market Watch 08 > Legal 28> Site Visit 30 > Viewpoint

ABOVE IMAGE:

The Complexe Sportif Saint-Laurent in Montréal by Saucier + Perrotte Architectes/ HCMA creates a visual and physical link between two natural elements in the urban fabric. (Photograph by Olivier Blouin)

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Volume 67

06 Number Editor / Peter Sobchak Art Director / Roy Gaiot Assistant Editor / Stefan Novakovic Legal Editor / Jeffrey W. Lem Contributors /

Richard Joy, David Lasker, Megan J. Lem, Shannon Moore, Rhys Phillips, Leigh St. Hilaire, Andrew Warren

Customer Service / Production Laura Moffatt 416 441 2085 x104 Circulation Manager circulation@building.ca Sales Manager Faria Ahmed 416 441 2085 x106 fahmed@building.ca Vice President & Senior Publisher / Steve Wilson President, iQ Business Media Inc. Alex Papanou Building magazine is published by iQ Business Media Inc. 101 Duncan Mill Road, Suite 302 Toronto, ON M3B 1Z3 (416) 441 2085 x104 • info@building.ca Website: www.building.ca SUBSCRIPTION RATE: Canada: 1 year, $30.95; 2 years, $52.95; 3 years, $64.95 (plus H.S.T.) U.S.: 1 year, $38.95 US, Elsewhere: 1 year, $45.95 US. BACK ISSUES: Back copies are available for $8 for delivery in Canada, $10 US for delivery in U.S.A. and $20 US overseas. Please send prepayment to Building, 101 Duncan Mill Road, Suite 302 Toronto, ON M3B 1Z3. Subscription and back issues inquiries please call (416) 441 2085 x104, e-mail: circulation@building.ca or go to www.building.ca Please send changes of address to Circulation Department, Building magazine or e-mail to addresses@building.ca Building is indexed in the Canadian Magazine Index by Micromedia ProQuest Company, Toronto (www.micromedia.com) and National Archive Publishing Company, Ann Arbor, Michigan (www.napubco.com)

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Future Now

We live in the Age of Distraction. News, politics, world affairs: we now comment to each other the need to just “get through this quarter” or “get through this year.” But ours is not an industry that can work on such short-sightedness. Long-term thinking is needed, now more than ever. The property and construction industry is evolving dramatically as technological disruption, changed building practices and the need to respond to climate change and reduce energy consumption impact the sector. Yet many building owners and investors are locked into more traditional ROI metrics, designing for the short term while ignoring the importance of designing buildings for the longer term. A lack of long-term thinking plagues even the brightest in our industry, illustrated by the story of when starchitect Sir Norman Foster admitted that he got it wrong when he put a massive underground 11,000-cars lot under Apple’s Campus 2, but not allowing for retrofitting into habitable spaces as garages become less important and transportation patterns evolve. The importance of designing for the longer term is an issue we are seeing and hearing more and more, that although we acknowledge an impending (or to many, already happening) “revolution” in the construction and maintenance of future buildings, a corresponding revolution in business mentality is not happening. According to one noteworthy think-piece by global engineering and infrastructure advisory company Aurecon, a short-term focus on start-up and construction costs is denying investors and building owners access to the design innovations that are increasingly key to the successful construction of the future. Aurecon correctly stresses that ROI models are needed that reflect the importance of designing buildings for the long term that look at multiple bottom line benefits of buildings, such as human and environmental, while maintaining design flexibility to plan for a rapidly changing future. “To provide a more accurate ROI analysis on buildings of the future, a three-dimensional approach is needed, one which presents the elements of design as interconnected pieces of a living and dynamic puzzle,” says James Bennett, Aurecon’s Managing Director - Built Environment. Legislation will also create significant disruption for those who don’t invest in the right tools and methodologies from the outset. For example, we have been reporting extensively in Building about the impending impacts climate change will have on the development industry (a topic Carleton University’s Gary Martin and Ruth McKay will be opining about a lot on our website in the coming months), specifically legislation that follows Canada’s post-Paris Agreement commitment to transition to a low-carbon economy while reducing national carbon emissions 30 per cent by 2030 as compared to 2005 levels. Buildings — which contribute up to 35 per cent of Canada’s carbon emissions — were identified as part of both the problem and the solution, by improving energy performance and relying on low carbon energy sources. As such, provinces have been putting carbon emission reduction targets into law, placing limits and prices on carbon pollution, and introduced a number of complimentary plans and policies all aimed at shifting to a clean, low-carbon economy. Like it or not, the buildings industry is changing. The question remains: will you adapt strategically to meet those changes head on, or is your thinking blocking important forward-looking design innovations and significantly damaging the future value of major building investments?

Peter Sobchak Editor We welcome your feedback. Send your questions and comments to psobchak@building.ca building.ca

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MARKE T Spotlight: Property Tax

Tax Rate Trend Divergent in Key Canadian Cities Vancouver, Toronto and Montréal continue to post the highest commercial-to-residential ratios, according to a new report by Altus Group and the Real Property Association of Canada (REALPAC) that takes an in-depth look at property tax rates in 10 major urban centres across Canada and analyzes the ratio of tax rates between commercial and residential properties. Of the municipalities surveyed in the 2017 Canadian Property Tax Rate Benchmark Report, Vancouver is the only city to post a commercial-to-residential tax ratio in excess of 4:1. Vancouver saw the largest bump in its ratio, increasing to 4.87 in 2017 from 4.38 in 2016. Toronto’s ratio decreased very slightly, by less than one per cent, to 3.81. Montréal remained above average but experienced a small reduction from its 2016 ratio due to dropping commercial rates while residential rates remained relatively flat. Governments face the ongoing challenge of funding municipal budgets while trying to manage the perceived fairness of the different property tax rates paid between commercial and residential taxpayers. Both residents and business owners pay property taxes, but the rate they pay varies as taxing authorities set these rates at their discretion. The report reveals that in eight of the 10 cities surveyed, commercial tax rates were at least double those of residential tax rates. This indicates that a commercial property would incur property taxes more than twice the amount of an equally valued residential property. For the tenth consecutive year, Vancouver, Toronto and Montréal posted the highest commercialto-residential ratios in the country. “With the increase in property values, tax rates should trend lower as municipalities are able to collect the same amount of tax revenue given that the higher property values create a larger assessment base,” said Terry Bishop, president of Property Tax Canada at Altus Group. “A lower commercial property tax ratio should help make cities more competitive, promote job growth and can help to generate more stable and sustainable revenue.” DECEMBER 2017 JANUARY 2018

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While both commercial and residential property tax rates in Vancouver saw a decrease in 2017, the ratio between the two increased by over 11 per cent to 4.87, the highest in Canada. Vancouver continues to be the only city to post a commercial-to-residential tax ratio in excess of 4:1, well above the average of 2.85:1. The city’s record-breaking housing market provided a potential opportunity to adjust the residential tax rate and close the gap between residential and commercial tax rates. However, the city of Vancouver elected to decrease its residential property tax rate by almost 20 per cent over the last year while the commercial rate only decreased by 10 per cent, driving the commercial tax ratio up. For a thirteenth year, Toronto’s commercial-to-residential tax ratio declined, decreasing to 3.81. However, despite

“A city’s property tax rate is directly linked to its competitiveness. High commercial property tax rates send business and economic development elsewhere, and work at cross purposes with infrastructure investments, particularly transit. Further efforts should be made in all cities to bring commercial property taxes down to more reasonable levels.” —Michael Brooks, CEO, REALPAC

the multi-year downward trend, this year showed a slight pause with a less than one per cent decline from the previous year. This means commercial rates will need to decrease further if the city is to achieve its goal of improving the business climate and increasing competitiveness with its target ratio of 2.50 by 2023. Meanwhile, Montréal continues to carry the highest commercial property tax rate in Canada. However, it successfully halted a 10-year upward trend by decreasing its commercial-to-residential ratio to 3.77. While representing only a 1.21 per cent decline in its ratio, this is a positive step towards bringing commercial taxes down to a level more in line with the rest of the country. Halifax, Calgary and Ottawa sit just below the average with ratios of 2.77, 2.73 and 2.67, respectively. Edmonton posted a commercial-to-residential tax ratio of 2.44 and Winnipeg of 2.01. Winnipeg’s business tax, which commercial

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owners consider to be a subset of the property tax, would push the cityâ&#x20AC;&#x2122;s ratio closer to the average. Between 2016 and 2017, Regina and Saskatoon saw the largest decrease in commercial ratios of the cities surveyed, dropping 21.61 per cent and 13.50 per cent, respectively. These two cities continue to post the lowest overall commercial-to-residential ratios approximating 1.70 and are the only two cities with ratios below 2:1. This decrease is partially driven by an update in the assessment base for the 2017 tax year to more current values. The report also examines the property tax ratio on multi-residential properties which compares the residen-

tial property tax rate to the multi-residential property tax rate. The findings indicate that Ontario renters are carrying a disproportionate burden of property tax. While renters are being taxed equally to homeowners in most of Canada with an average ratio of 1:1, Ontario cities are showing that apartment buildings built before 1998 carry significantly higher ratios with Ottawa at 1.38 and Toronto leading the pack at 2.21. The higher levels of taxation on older multi-residential buildings can pose a potential challenge for landlords looking to direct funds to needed repairs, maintenance and building infrastructure upgrades b

Year-Over-Year Commercial-to-Residential Tax Ratios CITY

2017

2016

VANCOUVER

4.87 3.81 3.77 2.85 2.77 2.73 2.67 2.44 2.01 1.75 1.72

4.38 3.84 3.82 2.87 2.72 2.58 2.72 2.39 2.05 2.23 1.99

TORONTO MONTRĂ&#x2030;AL AVERAGE HALIFAX CALGARY OTTAWA EDMONTON WINNIPEG REGINA SASKATOON

% Change

11.23% -0.73% -1.21% -2.01% 1.66% 5.76% -1.84% 2.10% -1.95% -21.61% -13.50%

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LEGAL Better Call Saul Law Society imposes strict limits on what lawyers can charge on advertised real estate closings. By Jeffrey W. Lem and Megan J. Lem

The Law Society of Upper Canada, the governing body of the lawyers and paralegals of this province, has cracked down on aggressive lawyer advertising, and this includes special provisions aimed directly at aggressive real estate lawyers. You know the type — large ads, with bold numbers announcing low (almost impossibly low) prices for residential real estate deals. The problem, as it turns out, is that these low prices are rarely the final cost, as undisclosed “disbursements” and “extras” add-up to make the ultimate price borne by the consumer to be considerably higher. The practice is hardly limited to real estate lawyers, but it is a practice that the Law Society of Upper Canada seems intent on stamping-out. Jeffrey W. Lem is Effective immediately, real estate lawyers who adverEditor-in-Chief of the tise a price will be deemed to be advertising an “all-in” price, Real Property Reports with no ability to subsequently tack-on any disbursements and the Director of Titles or extras, except for a very specific number of enumerated for the Province of “permitted disbursements.” Of course, the devil is in the deOntario. The opinions tails and, in this case, the details are in that list of permitexpressed in this article ted disbursements. are personal to the Lawyers who advertise a price are limited to the followauthor and not ing seven permitted disbursements: (1) land transfer tax; attributable or referable (2) government document registration fees; (3) fees charged to the government of by government; (4) Teranet fees; (5) the cost of a condominithe Province of Ontario. um status certificate; (6) payment for letters from creditors’ lawyers regarding similar name executions; and (7) any title insurance premium. Although not listed as a permitted disbursement, the rule also deems the advertised price to be exclusive of HST, so a lawyer can add any applicable HST on top of the advertised price. Furthermore, in the case of a purMegan J. Lem is chase transaction, the advertised price includes the price of a corporate lawyer one transfer, one mortgage, and one discharge of mortgage, in the Toronto office so aggressive lawyers cannot charge a fixed-price for the of Osler, Hoskin transfer, but then consider the mortgage and discharge of & Harcourt LLP. This mortgage to be “extras” on top of the fixed-price. article reflects the One nuance overlooked by many commentators is that opinions of the this rule only applies to “advertising” in the strict sense of author alone. DECEMBER 2017 JANUARY 2018

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the word. Real estate lawyers can still have their own retainer formulas which include more disbursements than can be found on the list of permitted disbursements — so long as they don’t advertise a price. Once there is a number beside a dollar sign on a lawyer’s advertising, the permitted disbursement rules are engaged. So, for instance, many real estate lawyers use conveyancers and title searchers and chargeout hundreds of dollars extra for these conveyancers and title searchers (on top of their price for the other legal work). That’s OK, so long as the lawyers that do so did not initially advertise a price (because once a price is advertised, it is deemed to be “all-inclusive” save and except only for the permitted disbursements) — it’s only the advertising of the price to lure-in clients that attracts the operation of this rule. While these provisions relating to price advertising are new, all lawyers are still governed by the Law Society’s general advertising rules. The general advertising rules restrict lawyers from marketing (which is broader than just “advertising”) unless those marketing activities are: (a) demonstrably true, accurate and verifiable; (b) neither misleading, confusing, or deceptive, nor likely to mislead, confuse or deceive; and (c) in the best interests of the pub-

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Of course, the devil is in the details and, in this case, the details are in that list of permitted disbursements. lic and is consistent with a high standard of professionalism. The last element of the general rule on marketing requiring the lawyer to take into account “the best interests of the public” and be “consistent with a high standard of professionalism” is a (deliberately) broad basket clause which typically applied to curb the tasteless lawyer advertising that we often see and associate with legal advertising in the United States (e.g. how many beautiful people can a lawyer surround himself/herself with in a hot tub?). That said, the sheer breadth of this proscription has seen it applied to some unusual advertising scenarios. Very recently, the Law

Society announced disciplinary measures against a criminal defense lawyer who placed a relatively inoffensive advertisement in an arguably offensive publication (a local community newspaper whose editor and publisher had been charged with willfully promoting hatred against Jews and women). The Law Society determined that, while the advertisement itself was probably acceptable, placing such an advertisement in such a publication under such circumstances was neither in “the best interests of the public” nor “consistent with a high standard of professionalism.” Readers of Building would be forgiven for not immediately appreciating the importance to them of the Law Society’s move to regulate price advertising in real estate transactions. Real estate transaction costs generally are significant, and this includes legal fees. If consumers are routinely disappointed by their legal bills because of misleading “fixed-price” advertising, then that negative buying experience will inevitably reflect on the builder, even though the builder has no relationship with the purchaser’s lawyer. Everything that the Law Society can do to bring transparency to legal billing helps to make the overall buying experience better for the consumer, and this is simply good business for everybody in this industry. b

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7 c

Glass Half-Full

Glass Half-Empty?

The Changing Role of Women in Canada’s Commercial Real Estate Sector

By Rhys Phillips

the early 1980s, I was involved in establishing the Royal Commission on Equality in Employment under Judge (now Justice) Rosalie Abella that resulted in the federal Employment Equity Act (1986) and related Federal Contractors Program (FCP). Subsequently, I spent most of the next 30 years enforcing the Act’s and FCP’s requirements for employers to put in place employment equity plans to ensure women, as well as three other designated groups, were appropriately represented in all areas and levels. Notwithstanding Justin Trudeau’s famous retort, “because its 2016” when asked about gender parity in his first cabinet, events over the last year might suggest those 30 years were not entirely successful. While recent headlines have been dominated by stories of longstanding predatory behaviour against women within entertainment industries, equally disturbing has been the many news stories exposing deeply embedded misogyny within the tech sector. What is unsettling about this latter

industry is both its increasing economic importance and the fact it is controlled largely by men who came of age in the supposed age of gender equality. So what about commercial real estate in Canada, a well-established if increasingly complex legacy sector that has long had a reputation as a man’s world of golf link deals and Cuban cigars? The broad answer is that much has changed with primarily steady improvement in women’s representation in all subsectors of commercial real estate. A more nuanced conclusion suggests first, progress notwithstanding, significant barriers remain, particularly at senior levels; but second, there are increasingly powerful forces in play to ensure greater equality should emerge over time. These conclusions are supported by albeit limited gender research on the sector. Specifically this means the impressive work undertaken by the Commercial Real Estate Women (CREW) Network since 2005. With this in hand, we conducted in-depth interviews with four leading Canadian women executives within the development industry as well as the American CEO of CREW. building.ca

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CRE professionals’ career aspirations by gender

47%

SVP

BROKERS

DEVELOPERS

FINANCE

TOTAL

15%

SENIOR LEVEL

$115,000 $132,500 $100,000 $125,000 $115,000

SELF-EMPLOYED

$141,000 $200,000 $135,000 $150,000 $150,000

40% 39%

C-SUITE SVP

SENIOR LEVEL MID-LEVEL

ASSET MANAGERS

28%

C-SUITE

MID-LEVEL

Median income - CRE professionals

GAP

18.4% 33.8% 25.9% 16.7% 23.3%

10%

SELF-EMPLOYED

Trends in CRE compensation

$57,500 $56,455 ENTRY LEVEL

$97,299 $87,235

MID-LEVEL / ASSOCIATE

COMMERCIAL REAL ESTATE: A DIVERSE AND CHANGING SECTOR Commercial real estate is frequently divided into four subsectors: Asset Management; Brokerage and Sales; Development; and Finance (although Law and Architecture are, like finance, much more than tangential sectors). Increasing complexity frequently brings several of these sectors under a single corporate umbrella. As one interviewee put it, even the old traditional family developer firms are increasingly institutional, often incorporating three or more subsectors within one firm. Land use complexity, intense political oversight and rapidly evolving demand within land-starved urban centres means urban planning, marketing, legal services and strategic planning play increasingly significant roles. The four executives interviewed reflect this complexity. Laurie Payne, VP Development for Special Projects at DiamondCorp, sees herself as a “master developer.” While the company avoids asset management and she eschews the actual construction process, Payne oversees urban planning for large-scale projects. This means, she says, “I manage the legal, the disposition, the construction planning, the financial and I manage the budget…soups to nuts while bringing in the experts we need.” Similarly, Ornella Richichi, executive vice president for Land Development at SmartCentres, as well as co-chair of the Urban Land Institute’s (ULI) Women’s Championship Team, is involved in all four subsectors. Like Payne, she is an urban planner by training but her development teams include not just planners but MBAs, geographers, asset managers and other related backgrounds that fit under Smart Centres developers’ umbrella. Both Robyn Brown and Tara Piurko, however, indicate how commercial real estate encompasses businesses not strictly limited to the sector. Brown, who started out in brokerDECEMBER 2017 JANUARY 2018

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$158,941 $121,199

SENIOR LEVEL

$263,303 $226,655

$291,819 $204,725

SVP / PARTNER

C-SUITE

age before transferring to development, is Senior Land Use Planner and Land Economist with IBI Group’s Infrastructure Group. While the international architecture and engineering firm is not a developer per se, it guides developers on what to build for the market, assesses future opportunities, helps build plans for land purchases and recommends which buildings make sense. “We do the sort of practical product, and then our architects do beautiful buildings,” she says. Piurko is a partner at Blake, Cassels & Graydon LLP, and as of January 1, 2018 she will be the first Canadian president of CREW. A practicing lawyer, she also holds a Masters in Urban and Regional planning as well as an undergraduate degree in Geography. Within the law firm’s Commercial Real Estate Group, she specializes in land development and real property investment, taxation and “all things municipal.” Like Brown, she advises on risk identification and identifying opportunities to “create value.” The planning common denominator is no accident, says Brown, as the complexity of commercial real estate development increasingly requires such expertise as a core requirement. Not incidentally, this trend converges with a key demographic fact: like architecture, women now constitute 50 per cent or more of graduates from university planning programs.

WOMEN’S REPRESENTATION: WHAT THE NUMBERS SHOW The increasing complexity of the commercial real estate sector and the significant penetration of related service sectors like law, architecture and finance make assessing women’s representation difficult. Fortunately CREW has been publishing a related report every five years since 2005. In addition, since the last update in 2015, it has also published two white papers, one on key barriers (2016) and another on

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Trends in CRE positions by gender

C-SUITE

SVP / MANAGING DIRECTOR / PARTNER

CRE professionals very satisfied with levels of career success

SENIOR LEVEL

MID-LEVEL / ASSOCIATE

ENTRY LEVEL

SELF EMPLOYED / INDEPENDENT

35%

30%

27 27 25

25%

59%

2010

53%

58%

2005

59%

61%

27 25

15%

10%

10 8 6 6

research regarding the impact of improving women’s repre sentation at senior, C-suite and Board levels (2017). The 2015 representation data, based on views provided from 2,181 respondents, of which approximately six per cent were from Canada, indicated that overall women’s representation in respondent’s own organizations had increased since 2000 from 32 per cent to 43 per cent, but with no significant increase since 2010. But this conceals significant differences in the subsectors. Asset management rose to 54 per cent while brokerage, impacted by the 2008 recession, was at only 29 per cent, six percentage points below even 2000. At the same time, the development sector showed steady increases from an anemic level of 20 per cent in 2000 to 38 per cent in 2015. While finance also seemed to take a hit following the recession, the 2015 representation of 42 per cent had almost recovered to its historic high of 44 per cent. CRE SUBSECTOR CANADA U.S. ASSET MANAGEMENT

38 %

44 %

BROKERS

29 %

DEVELOPERS

32 %

41 %

FINANCE

34 %

33 %

TOTAL

35 %

37 %

4 4 2

2015

2010

2005

2015

2010

2005

2015

2010

2005

2015

2010

2005

2015

2010

2005

2015

2010

2 2 2005

20%

2015

Despite ups and downs, the report generally concluded progress in representation was acceptable along with improvements in several key metrics. The latter included a broadly-based increase in women’s career satisfaction and sense of success as well as parity with males in the percentage of women with direct reports. Similarly, when asked about the current overall status of women in commercial real estate, all those interviewed expressed optimism. “There is probably

greater awareness because there are women out there who have been trailblazing, who are known in the community and have been given opportunities,” believes Richichi. Citing the 2015 study’s finding that at 76 per cent, women with 20 plus years of experience were more likely than men (72 per cent) to be satisfied with their career success. “We are achieving longer term success and satisfaction in our careers,” says Piurko. Compensation, however, continues to lag even when controlled for education, age, years of experience and position level. All those interviewed agreed that women’s later entry into the sector can only partially explain differences. Compensation differences are most evident at the highest senior levels. Both the 2015 Report and the consensus of those interviewed indicate that while more women fill senior vice president, managing director and partner positions than ever before, representation in the most senior management and the C-suite (as well as on Boards) remains highly problematic. A narrowing promotion pipeline for women is clear, says Wendy Mann, the current CEO of CREW Network. “Objectively when young men and young women enter commercial real estate there is parity; but as they move up the ladder into middle management you see less of that. Once that disparity starts to happen it seems to climb the higher up you go.” According to Richichi, "at the mid-career level and the C-suite the opportunity for females to be represented at that level needs a tremendous amount of work” in order to appropriately utilize the growing talent pool of women. Although Brown admits she still sees too few senior women sitting across the table, she does see signs of attitude change. “Companies are understanding talent makes you successful and having the best and the brightest has caused people to reassess how they approach selecting the best and the brightest,” she says. Interestingly, she adds, public sector commercial building.ca

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real estate may be leading the way, citing Leslie Woo, Chief Planning Officer at Metrolinx, Toni Rossi, president of Real Estate at Infrastructure Ontario and Meg Davis, Chief Development Officer at Waterfront Toronto, as examples. In the 2015 Report, women placed the lack of equitable access to mentorship as the number one barrier. Piurko couples this with the same need for proactive sponsorship of women. “I have had major benefits from mentorship and sponsorship during my commercial real estate career and I think it has been quite helpful.” In addition to the Report, she cites the 2016 white paper as demonstrating that the lack of mentorship/sponsorship is the biggest barrier to success. “Women are 54 per cent less likely than men to have that person banging the table when they are not in the room,” she says.

BUT ONE KEY BARRIER STILL HAS TO BE ADDRESSED Mentorship inequality, however, actually stems in large part from the core barrier identified in the white paper: attitudes. Closing the Gap: Addressing Gender Bias and Other Barriers for Women in Commercial Real Estate focuses on a detailed review of how bias can permeate hiring, mentoring/sponsorship, work assignment, pay and promotion decisions. It ranges across concerns like unconscious bias influencing decision making to subtle discrimination such as exclusion from projects and gender micro-aggressions. “I do not think we can pretend there is no institutional bias, that the people promoting — consciously or unconsciously — are still favouring those that are more like themselves,” says Payne. Micro-aggression includes the common practice of interrupting female colleagues presenting an idea and even subsequently miss-crediting good ideas to a male who later presents the same idea. “You experience a culture of being spoken over at a meeting sometimes,” says Brown. According to Erin Reeves in the 2016 article Why Is Commercial Real Estate Still Tilted Against Women, even the sector’s preference for team-work, at which women usually excel, works against them because teams reward top men while “sidestepping women.” An American ULI study, also in 2015, found that survey respondents placed informal approaches as more important to their career growth than formal structures, that is: were they fully “intertwined with how work gets designed” and were they assigned diverse quality work. Generally those interviewed did not suggest the sector was rife with the type of predatory misogyny infesting the news, although Payne notes generally that “there are few women who have not had to deal with [problematic behaviour] in some way.” Brown also believes the high pressure brokerage subsector may still have significant problems. “I had experiences that I only realized were horrible experiences after I left.” Indeed, several suggested that both asset management and developers have benefitted from women relocating from brokerage. This year, when Bisnow asked 22 women to sumDECEMBER 2017 JANUARY 2018

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marize their experiences in commercial real estate, three described chillingly disturbing behaviours. Not insignificant for commercial real estate, age and ageism pulls in two directions. On the one hand, says the white paper, the fact that only 12 per cent of women commercial real estate professionals were over 60 years old compared to 22 per cent of men suggests “that ageism has a greater impact on women in our industry than it does on men.” Reeves, on the other hand, reports that there is a generational divide at the top with the average age for sector professionals increasing from 51 to 57 over the last decade leading to the entrenchment of a generation of men at the top who grew up in a male dominated sector and are less open to integrating women. Other barriers that play a role in streaming out women disproportionately include recruitment that still relies heavily on personal relationships, whether it’s called word-ofmouth, old boys’ networks or networking (one interviewee admitted taking up golf for business reasons). Credentials may also prove problematic as only 13 per cent of those with a Certified Commercial Investment Member (CCIM) designation are women and, according to Brown, Society of Industrial and Office Realtors (SIOR) certification in Canada is also far from parity. Conversely, the growing requirement to have a planning background may increasingly favour women along with their improving representation in both finance and law, say several of those interviewed. Unfortunately, attitudinal biases have clearly boomeranged back to impact how women view their own goals in the sector. The 2015 Report found that while male professionals generally aspired to the C-suite, female professionals were more likely to set their ultimate target lower. Also, says Brown, women frequently self-select themselves out of contention because they believe they do not meet all of a position’s “requirements”— men do not. For her current job she self-assessed having about 40 per cent of the requirements, not enough she thought. “Then a recruiter contacted me and we talked about it….but I responded that I don’t have all the stuff they are asking for. And the recruiter responded, ‘Men respond with 10 per cent.’”

BARRIERS YES, BUT CONTINUED PROGRESS APPEARS PROBABLE Barriers notwithstanding, a cautious prognosis for further improvement makes sense. Changing demographics in terms of high demand skills auger well, and, as any frequent reader of the Globe and Mail’s Business Section can tell you, diversity as a bottom-line business imperative is rapidly becoming mainstream. Commenting on CREW’s white paper, Diversity: The Business Advantage released in October, Mann says the impact of diversity on business advantage is the tipping point. The 10 companies featured had strong gender equity at the very top and “the CEOs of the organizations are saying, ‘wait a minute, gender diversity is making us a rich company.’”

Source: 2015 Benchmark study report: Women in commercial real estate; CREW Network

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CRE professionals’ top barriers to success 2010

2015

2010

2015

LACK OF PROMOTION OPPORTUNITY

LACK OF COMPANY MENTOR / SPONSOR

LACK OF PROMOTION OPPORTUNITY

LACK OF UNDERGRADUATE DEGREE

LACK OF COMPANY MENTOR / SPONSOR

LACK OF PROMOTION OPPORTUNITY

WRONG / POOR CHOICE OF EMPLOYMENT

YOUR CHOICE TO MAINTAIN WORK AND LIFE BALANCE

GENDER DISCRIMINATION

LACK OF COMPANY MENTOR / SPONSOR

YOUR CHOICE TO MAINTAIN WORK AND LIFE BALANCE

GENDER DISCRIMINATION

YOUR CHOICE TO MAINTAIN WORK AND LIFE BALANCE

LACK OF PROMOTION OPPORTUNITY

CONSTRAINTS RESULTING FROM FAMILY / PARENTING RESPONSIBILITIES

LACK OF UNDERGRADUATE DEGREE

LACK OF COMPANY MENTOR / SPONSOR

CRE professionals’ top contributing factors to future success RELATIONSHIP WITH INTERNAL SENIOR EXECUTIVE MENTOR

RELATIONSHIP WITH INTERNAL SENIOR EXECUTIVE MENTOR

PROFESSIONAL NETWORKING

BUSINESS DEVELOPMENT / REVENUE GENERATION

PROFESSIONAL NETWORKING

BUSINESS DEVELOPMENT / REVENUE GENERATION

PROFESSIONAL NETWORKING

BUSINESS DEVELOPMENT / REVENUE GENERATION

BUSINESS REFERRALS FROM PEERS

RELATIONSHIP WITH INTERNAL SENIOR EXECUTIVE MENTOR

BUSINESS REFERRALS FROM PEERS

RELATIONSHIP WITH INTERNAL SENIOR EXECUTIVE MENTOR

BUSINESS REFERRALS FROM PEERS

EFFECTIVE NEGOTIATION SKILLS

STRONGER COMMUNICATION / PRESENTATION SKILLS

EFFECTIVE NEGOTIATION SKILLS

Perhaps the most important development is the growing size, strength and penetration of women-focused commercial real estate organizations promoting networking, mentoring, education and changes to how the sector operates. CREW was formed in 1986 out of an amalgamation of regional forums, with CREW Toronto forming a decade later. Edmonton, Montréal, Calgary, Vancouver and Saskatoon followed. Now backed by 10,000 senior women commercial real estate professionals across North America and the U.K., the organization combines both extensive research with programming directed at filling gaps. In terms of the former, says Mann, CREW is the only organization benchmarking diversity and by doing so “we have raised the visibility of issues and challenges of women in commercial real estate and created awareness and commitment to gender equity and pay parity as well as promoting an understanding of the business advantages to companies.” While education is crucial, CREW also focuses on tangible results. This includes its own Leadership Certificate

Program that incorporates a mentorship component so that “if you cannot find a mentor within your own company you can have a sounding board and good council from a fellow CREW member,” says Mann. Just being part of CREW, argues Piurko, provides women a chance to build on their skills and knowledge, while networking helps feed the current inequitable pipeline to senior positions. Launched this year is a robust online community that, she says, “is enabling our members to communicate directly with one another on deal making and looking for qualified, experienced folks in other markets.” With diversity increasingly receiving overt attention at the management level, CREW is poised to partner with companies to help create leaders, again helping unblock the pipeline. With still only 31 per cent female membership, ULI Toronto has been since 2012 part of the organization’s worldwide Women’s Leadership Initiative (WLI). In addition to already increasing ULI Toronto female membership by 70 per cent since 2012, WLI has active programming similar to CREW designed to increase the flow of women up the pipeline. Most notably, since 2014 its Championship Team, currently a group of 120 top women commercial real estate professionals, “are leading on every facet of the industry,” says Payne. Their role as industry leaders is “shining a brighter light” on the contributions that women have made in the industry. Ricichi agrees, but points out there are also very practical outcomes in terms of getting names out to companies seeking to hire top talent and, crucially, seeking names for Boards. Starting with the ULI’s own programming, the initiative has successfully fought back against “manels,” the practice of excluding women from industry panels and forums. This year, educating women about how to get on Boards is a priority, she says. A second initiative called She with He is a gender balance program that brings men and women in the industry together to better understand gender parity. A growing mountain of evidence proves that diversity, including women on Boards, impacts positively on corporate bottom lines, creativity and efficiencies. Yet in the commercial real estate sector, like most industrial sectors in Canada, gender equity is still absent. That said, proactive action primarily led by women along with powerful demographic, technological and social changes are pushing the equity imperative, and many major companies already have wellstructured equity programs baked into their corporate mandates. Progress should be steady if the commitment and resources are there. CREW’s projected 2020 Report update will demonstrate whether gender equality in commercial real estate is now unstoppable. b

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960 968 976

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102 1020

1000 1004 17

1008 1018

CREATING POSSIBILITIES 1012

Looking forward at 2018 real estate trends, the annual PwC/ULI report concludes that “it’s not a clear blue sky — but there are no storm clouds coming, either.”

960 968 976

2 98

4 98

8 99

6 By Andrew 0 0 10 Warren

“Having capital is no longer an advantage. Advantage comes from being able to move quickly, deal with more complexity, and leverage strategic partners.”

4 100

As high-quality commercial property grows scarcer and prices continue to rise, some investors are beginning to look elsewhere for opportunities that could offer superior returns. As one interviewee put it, “During each economic cycle, there are opportunities to seize. You must know how to spot them.” The industry’s search for better returns manifests itself in various ways. Major 8 pension 100 funds have largely acquired what the Canadian market has to offer and, consequently, are looking overseas for prime investment opportunities. These large institutional investors have also turned to developing Class A properties in Canada and around the world in response to the lack of availability, which is resulting in increased prices for institutional-grade properties and better returns. “There’s only so much institutional-quality real estate available,” one interviewee said. “So, the industry will either build more institutional-quality real estate than we need, or it will drift into non-institutional-quality real estate. Both are a concern.” building.ca

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VANCOUVER

foreign buyers’ overall influence on housing prices has been greatly overstated. The impact on some Greater Toronto Area (GTA) submarkets may have been greater, but most interviewees think that overseas buyers still see Canada as a safe haven and an attractive place to live, so they will continue to buy in the Canadian market regardless of new taxes. For those in the industry, it is a matter of supply and demand. A common refrain from interviewees is that governments should stop trying to interfere in the market and turn their attention to other more important issues, such as the impact of regulations and processes that are limiting land supplies. This echoes findings from last year’s report, in which many stated their belief that provincial land use policies and local government approvals are factors holding back the supply of available land for development. Building on that, one interviewee stated that government policy “is the largest issue impacting real estate.” For example, many are worried about how proposed changes to the Ontario Municipal Board will give local governments more say when it comes to development decisions. This could restrict supply if residents push back against high-density projects in their neighbourhoods. And in Halifax, some believe that the government’s approach to city planning is limiting development.

Others, especially those lacking the size and scale to go after higher-grade real estate, are getting innovative in their hunt for stronger yields in Canada. For some, this means being more creative when optimizing their portfolios. The trend of recycling capital will likely continue to improve the quality of cash flows and to redeploy capital in intensification and redevelopment opportunities. One interviewee suggested that mid-size players may try to improve their portfolios by selling lower -quality properties to make room for higher-quality ones. REITs are likely to make some strategic adjustments in the year ahead. They generally continue to focus on reducing leverage and payout ratios to more conservative levels; indeed, a number of observers suspect that REITs will have trouble generating the kind of returns needed to guarantee their distributions. This pressure may compel some to sell assets in order to generate funds, and investors are watching closely and are ready to buy when those properties are put up for sale. Others have noted that REITs are shifting away from acquisitions in favor of development and redevelopment opportunities in search of better returns.

Supply, Demand, and the Government’s Role “Government regulations will have a meaningful impact on affordability— they just won’t solve the problems. In fact, they’ll go a long way to creating new problems.”

Industry players are skeptical that recent tax policy regulations by the Ontario government to curtail foreign investment, following last year’s decision by British Columbia, will have a long-term cooling impact on housing affordability in Toronto and Vancouver. “Growth will continue to drive needs,” one interviewee said. “No regulation will stop that.” In August 2016, British Columbia implemented a 15 per cent foreign buyers’ tax on the Vancouver metro-area housing market. In the short term, the Canada Mortgage and Housing Corp. reported that the tax pushed monthly sales from foreign buyers from around 10 per cent of sales to 0.9 per cent, with a marked decrease in average prices. But after a year, prices rebounded to pre–foreign buyers’ tax levels and are now pushing new heights, especially in the condo market. In April 2017, Ontario announced its own 15 per cent tax on foreign buyers and expanded rentcontrol rules to buildings constructed after 1991. Most interviewees feel that DECEMBER 2017 JANUARY 2018

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TORONTO

CANADA

CALGARY

OTTAWA

MONTREAL

A Mind-set Reset “With more single people living in expensive markets, watch the emergence of co-living.”

QUEBEC CITY

While there isn’t much concern about housing affordability in most of Canada, it is driving profound change in the lives of urban Torontonians and Vancouverites — particularly millennials. As it stands, more than one in three young adults in Canada live with at least one parent, a share that has grown since 2001 according to 2016 census data (see chart pg. 21). Younger Canadians in centers like Toronto and Vancouver will need to rethink their living expectations. While many millennial families will move farther away from major urban cores — even to new cities — in search of affordable homes, others will choose to stay and raise their families in condo units (in some cases, larger units in family-oriented buildings). Others will simply opt out of homeownership and embrace a permanent-renter lifestyle. In major centres, we may continue to see a rise in multi-generational and multifamily homes as a means for people to overcome affordability challenges. Census data show that 6.3 per cent of Canada’s population lives in multi-generational households, which have grown the fastest of all household types since 2001. These affordability concerns are, in turn, creating opportunities for real estate developers in Ontario and British Columbia. One Vancouver-based developer has even launched a prize to find a paradigm-shifting technology in the construction of high-density housing. building.ca

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SASKATOON

EDMONTON

HALIFAX

WINNIPEG

Housing affordability

1000 1004 Transit

VANCOUVER

to Transform Cities 19

“Transit is a key link between people and where they work and play. Smart 1008 developers buy around transit nodes—and future transit nodes.”

TORONTO

CANADA

CALGARY

956

OTTAWA

964

MONTREAL

1018

In recent years, Canada’s federal, provincial, and municipal governments have joined forces to invest billions of dollars in transit infrastructure in cities across the country, and this is poised to shape real estate opportunities for years to come. The new transit lines will let more Canadians find homes they can afford while offering a reasonable commute to work in urban cores or intensively developed nodes along the lines. Indeed, investors and developers in Montréal foresee the Réseau électrique métropolitain (REM) network turning Dorval and the South Shore into a sizable employment hub, with opportunities in multi-use developments. In Ottawa, city planners are championing increased density along the new light-rail transit (LRT) lines. In fact, the closer a project is to the LRT, the more favourably it’s viewed in approvals. Similarly, Edmonton’s Valley Line LRT will increase density around the corridor. In Vancouver, TransLink plans to help finance its transit network by 1Q 2017 (SINGLE-FAMILY DETACHED) leasing space at its rapid transit stations to retailers. Toronto is seeing much interest at key transit hubs, such as the Union-Pearson express rail, the Spadina 1Q 2016 (SINGLE-FAMILY DETACHED) subway extension, and the Eglinton Crosstown LRT. As one interviewee observed, 1Q 2015 transit-oriented retail and mixed-use properties offer a stable cash flow, making (STANDARD TWO-STORY) them strong prospects. 1Q 2014 960TWO-STORY) The link between transit infrastructure and real estate development is ex(STANDARD pected to grow stronger in the years to come. Governments and agencies are in2 1Q 2013 7 (STANDARD creasingly looking to emphasize transit projects that can demonstrate wider pub968TWO-STORY) 9 0 lic benefit — such as creating hubs or places where people want to spend time and whether through work, play, or both. And as the sharing economy evolves 98 money, 976 84 ride sharing and autonomous vehicles, transportation planners will need to 9with examine 8 “last mile” travel between transit hubs and commuters’ destinations. 98 proposals that integrate plans for further real estate development are Transit likely to have 92 a stronger case for funding going forward.

1012

QUEBEC CITY

99 of Placemaking The Rise

As new transit lines0prove to be a nearly irresistible magnet for real estate de0 10 the industry is paying more attention to the idea of placevelopers and investors, making. In many ways, it is an evolution of the industry’s recent focus on mixeduse properties and creating communities — fusing residential, commercial, retail, and service properties. What makes 4 placemaking different is that it’s more than a 10of0property. As one interviewee put it, place-based decollection of different types velopment is bigger than the sum of its parts: it’s about creating a unique experience and culture, an engaging environment that provides people with things to do throughout the day and into the night. And now, new transit spending is creating opportunities to establish unique 08 dense, transit-centered developments places along new and future lines. 10Large, in Ontario like Transit City in Vaughan or M City in Mississauga are examples of placemaking in action. They’re also attractive to investors because the appetite for new product is almost insatiable.

SASKATOON

EDMONTON

HALIFAX

WINNIPEG

100

120

Note: The RBC Housing Affordability Measure shows the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities based on the average market price. Source: RBC Economics—Housing Trends and Affordability reports, accessed August 30, 2017

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Real Estate through Technology

17.4 % 20

“This is one of the first times in our history that all of these disruptive technologies will have a significant impact on where and how we live, work, and play.”

-5.8 %

4.9 % 2.8 % VANCOUVER

2.6 % 3.4 % 2.0 % WINNIPEG

4.1%

9562.7%

964

MONTREAL

5.2 %

2.1%

1.8 % OTTAWA

2.3 % 0.4 %

1.5 %

CALGARY

2.6 % 1.9 %

1.3 %

HALIFAX

-0.2 % -1.7% 0.4 % QUEBEC CITY

4.1% 1.5 %

-0.4 % EDMONTON

-1.4 % -2.5 % -3.8 %

SASKATOON

10.6 %

3.0 % -1.6 % CANADA

Source: TD Economics, Canadian Regional Housing Outlook, August 2017

TORONTO

10.2 %

Time and again, interviewees said it’s critical that the industry embrace the use of technology and analytics in order to enhance strategies that will be supported by better, faster decisions. With 2017 projected to have been the best year yet for global real estate tech funding, one interviewee noted, “Technology’s impact is everywhere in real estate — and we can’t ignore it.” Harnessing the power of data and business insights is an imperative for real estate companies. It will play an essential role in helping companies im0 deals and investments, mitigate 96prove risk, better2 understand tenants and 8 needs, 97 and open up new profit96their able possibilities. Real estate industry 0 leaders eager to be able 976 tell 9us8 they’re 84 run analytics on to benchmark 9 and their property portfolios. 8 They want to 98on a far more demake decisions based tailed, nuanced understanding 92 of what drives their business. 9 To achieve this, real estate compan6 99 ies will need to invest in modernizing their IT and data infrastructure, from 0 00 new data management tools and 1 information portals to artificial intelligence, machine learning, and automation systems. They should also make sure they hire people with the skills, knowledge, and expertise needed not only to make sense of the data, but also to make sure that companies ask the right questions. It will also be critical to make sure that data and essential business systems are protected against cyber-attack. The cost of the investment will vary depending on the approach taken, but companies should start planning for it now, if they haven’t already. One interviewee told us that they’re quadrupling their IT budget.

DECEMBER 2017 JANUARY 2018

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300

277 $2,973

250

3,000

$2,698

1008

10.4 %

3.9 %

$3,500

2,500

247

250

1018

186

200

$1,991

2,000

150 1,500

114 $1,159

100

1,000

500

$451

2013

2014

2015

2016

2017 full-year projection

DEALS

1000 1004 Reinventing

2017 2018 FORECAST FORECAST

DISCLOSED FUNDING (US$ MILLION)

2016

Real estate tech global financing history

Source: CB Insights, Real Estate Tech Research Briefing—Funding update through Q1’17.

Housing price change year over year

1012

How Will Emerging Technologies Shape the Market? Autonomous vehicles (AVs) may not be a regular sight on roads yet, but technology and automotive giants are racing to get AVs on streets and highways — and it’s a change that could radically transform cities and future developments. With AVs comes the need for fewer personal cars and surface parking spaces. What does it mean when residential, commercial, and retail properties and projects no longer need the parking spots they once did? It’s likely that many companies will capitalize on their existing assets and redevelop excess space into new properties, generating new value and increasing urban density along the way. What’s more, Canada is looking to take the wheel when it comes to AV development. Edmonton has expressed that it would like to be at the forefront of AV research in Canada, exploring setting up a test track at the University of Alberta. And a major auto manufacturer is establishing a research and development center in Ottawa to work on developing AVs and connected vehicles. It’s not just autonomous vehicles that are making waves in real estate. Drones are slowly but steadily gaining in prom004 within real estate and changing how companies work. 1inence They’re being deployed by developers and owners to inspect construction progress, assess potential damage, and help produce visuals for marketing materials. And with the rise of faster e-commerce delivery efforts across North America, they are1another 008 variable in the retail landscape. Virtual reality also lets real estate professionals showcase properties to clients through 3-D virtual tours, preventing potentially costly missteps on the construction site and allowing home purchasers and tenants to see spaces in 3-D rather than just plans on paper. And the evolution of block-chain is expected to have a significant impact on real estate transactions and the whole industry.

building.ca

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018

1012

1020 (age 20 - 34) Young adults living with parents Source: Statistics Canada; Census of Population, 2016 and Families, Households and Marital Status Highlight Table, 2016 Census.

Source: CB Insights, Real Estate Tech Research Briefing—Funding update through Q1’17.

1024

47.4 % 44.6 %

TORONTO

38.6 38.9 34.8 32.1

VANCOUVER

WINNIPEG

34.7 33.1

CANADA

33.1 29.9 38.0 30.3 28.5 25.2 26.8 27.0 24.7 25.2 23.8 25.3

MONTREAL

OTTAWA

CALGARY

EDMONTON

HALIFAX

QUEBEC CITY

23.0 22.3

SASKATOON

2016 CENSUS

2006 CENSUS

Expected Best Bets for 2018 This year’s Canadian real estate trends are about creating possibility. So, where should developers and investors look for these possibilities in 2018? Our conversations and survey suggest that the following areas may offer the best potential for the coming year.

Building Communities With an increasing focus on a work/ play/live lifestyle, appetite for placemaking remains. And while it’s a major focus in rapidly intensifying cities like Toronto and Vancouver, other regions also have big plans. Edmonton’s ICE District, for example, has brought new energy to the downtown core and is drawing interest from buyers and investors. Developers have moved away from viewing projects as one-offs in favor of planning complete neighbourhoods that include wellness, retail, entertainment, office, and more. Observers say the real estate market also needs to look at providing lifestyle services, including better integrating health and wellness services into the cities’ urban fabric. Fulfillment and Warehousing With online commerce showing no signs of stopping, the demand for warehouses and distribution centers continues to grow. Rents are good, and they’re rising after a long period of flat rates—which is good news, as industrial land prices will continue to rise, especially around major transportation hubs. Large bays with room for plenty of trucks, high ceilings, and computerized rack systems are what are in demand to facilitate logistics, distribution, and fulfillment. Senior Housing An aging population means rising demand for

Tenant Expectations Continue to Evolve Technology has swiftly reshaped what employees expect of 010 their employers and workplaces. In last year’s report, 1 interviewees said a “smart,” connected building that was energy efficient and constructed using sustainable materials was seen as a unique project. Today, that same building is a necessity because tenants and their employees will settle for nothing less. Builders have responded, building the highly connected, green-as-possible offices their tenants want. And they’ve been rewarded: Class A new builds are quickly leased, while older buildings empty out and stand in desperate need of retrofitting and refurbishment. To stay relevant, real estate players must anticipate and meet the needs and expectations of these influential companies and their equally demanding employees. b The preceding is an excerpt from The Emerging Trends in Real Estate 2018, a joint publication between Urban Land Institute and PwC. It can be found at pwc.com

Andrew Warren serves as the Director of Real Estate Research for PwC.

senior housing and high-quality senior living facilities. More than half of all survey interviewees recommended buying into the “age-restricted housing” subsector. The main challenge with this sector is that it typically involves a mix of private and public investment—and a tricky business model. So, developers that can get the right talent with enough experience to navigate the upfront regulatory hurdles and identify strategic locations could put themselves at the forefront of an area poised for growth. Urban Infill With land becoming scarcer in major urban cen-

ters, industry players see opportunity in redeveloping existing, underused space for new mixed-use real estate developments. Multifamily residential in major cities is seen as a promising opportunity, since demand is projected to stay strong thanks to immigration and affordability concerns about single-family housing. Toronto Office Toronto’s office development boom shows no

sign of stopping, and new supply can’t reach the market quickly enough. Toronto’s downtown vacancy rate is the lowest among major Canadian cities—and the rate masks the fact that half of that space is awaiting occupancy. According to some interviewees, demand will exceed supply for the next 24 to 36 months. building.ca

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A BIT OF

HOME,

AWAY

How a Canadian owner/developer brings a Canadian feel to a master-planned luxury resort project in Barbados. By David Lasker

hen you start with the best brand in the business, how do you take it from there? In describing the Crane Resort on the southeast coast of Barbados, one cites superlatives. Dating from 1887, the oldest hotel resort in the Caribbean boasts, among its five gourmet restaurants, Zen, whose “simply awesome” Japanese-Thai cuisine received Zagat’s top score in Barbados for food. The resort’s rooms and five cascading swimming pools overlook pink-sand Crane Beach, which Lifestyles of the Rich and Famous and the Toronto Star named one of the “10 Best Beaches in the World.”

ABOVE:

The Crane

Resort is the oldest hotel resort in the Caribbean. Paul Doyle got his design inspiration for The Private Residences from the resort’s original design, plus Canadian-esque touches.

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28 24

The new Crane Private Residences is a gated residential community within the Crane Resort. This will be built over five phases and will feature two and three-bedroom residences and penthouses ranging from 1,916 to 3,619 square feet, spread over five acres and offering full use of the resort’s amenities and services. The standard, one-bedroom unit is “the size of other resorts’ two-or three-bedroom suites,” said Paul Doyle, owner and managing director of Crane Resorts. Phase One’s 16 residences are complete and Phase Two’s further 20 residences are under construction. A second development, Beach Houses at Skeete’s Bay, St. Philip, overlooking Culpepper Island, will feature 63 freestanding residences with one to four bedrooms. The model home is complete; Phase One is under construction. Further to attract buyers, the Crane can assist in renting an owner’s residence during an owner’s absence by providing marketing and reservation services for a fee of 15 per cent of net revenue of bookings generated by the Crane. “Canadians fit in really well in international destinations more than others, particularly Americans,” Doyle said. “We are respectful of other people’s culture. I felt a responsibility to Barbados to be true to the vernacular.” Design inspiration for the Private Residences derives from the original resort, including replicas of the old coral stone walls and furniture inspired by the original tall-poster mahogany beds, whose barley-twist columns rise from ornamental pineapple bases. Indeed, Doyle related, “A friend of my son’s from university paid me the compliment of saying, ‘It was smart to build a resort around the old village,’ not realizing that we are the village. When the big hotel brands build in Barbados, typically, you can see the same thing in Pittsburgh.” DECEMBER 2017 JANUARY 2018

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ABOVE:

The resort’s

name alludes not to the long-legged bird, but to the derrick that lifted barrels of rum and molasses to and from ships’ holds. “The hotel started in the sailboat days when the area was called the Crane,” says Doyle.

Many of the elements of the resort — while inspired by Barbados colonial history — are nonetheless innately Canadian. Crane Village evokes Main Street, Muskoka, with shops, restaurants and art galleries. While some traditional British resorts on the island, such as Colony Club, remain quite formal, the Crane has a friendly, characteristically Canadian sense of inclusiveness and lack of pretension. “It’s easy to sell luxury real estate to the snobs — ‘You buy this and you’re somebody’ — but I’d rather spend my life not dealing with snobs,” Doyle said. “Our public spaces and pools encourage people to meet. We do a cocktail party every week. Just as important as the architecture is the feeling of the community.” The Crane attracts a Boomer demographic with a predilection for serenity. “During the four-day brainstorming session, when we design a [new phase of the] resort, we design around the activities we see happening in the resort,” Doyle said. “On this side of the island, we don’t have the jet skis. It’s quiet and relaxing. People coming here bring a suitcase of books, chill out and go for walks in the morning.” But not, pre-

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sumably, at noon, when, as the Noel Coward song puts it, only “Mad dogs and Englishmen go out in the midday sun.” Residents can gracefully age in place here, thanks to the prevalence of wide doors and corridors, walk-in (or roll-in) showers and generous clearance around kitchen counters. “We will build units that can accommodate the guest who can never get out of a wheelchair. We have an elevator to the beach with a ramp down; everything is ramped in the resort.” Born and bred in Toronto, where he studied fine arts at York University, Doyle moved to the Caribbean business capital in 1988 and was running a successful insurance business when he heard that the Crane was in receivership and for sale at a price he couldn’t refuse. “It was a tiny little business, a good place to learn; you won’t make huge mistakes with an 18-room hotel.” The learning curve, “gave me time to understand the market and appreciate how important the Crane was to the locals. It’s a pretty small island and the Crane was the place to come to in the Roaring Twenties. We have a pavilion ballroom that was used for dances and fetes, built in 1921. So many people were married here, had their honeymoon here and other big events in their life. During the Big Band era, people from the islands would have come here for Old Year’s Night festivities. That’s what we call New Year’s Eve here.” The downside of an island paradise is the scarcity and cost of local goods and services. “When you are building in a place like Barbados, it can be very expensive, as a developer, to hire professionals and hire a contractor. We’re able to sell to the

TOP AND ABOVE:

The

resort’s five cascading swimming pools overlook pink-sand Crane Beach, which the Toronto Star named one of the “10 Best Beaches in the World.”

public for the same price other developers build: That’s been our goal.” The key to this success is vertical integration. “We do that to save costs, and we pass on the savings to our customers. We build by doing everything ourselves, including growing our own plans.” His in-house team includes five architects and drafts people, a CAD technician, three engineers and a construction crew, all dedicated exclusively to Crane properties. Doyle also pondered the question: “If you’re on an island, how do you train people in terms of international cuisine?” To encourage excellence and morale at the resort’s esteemed restaurants, he invites the chef of Nove Trattoria, his favourite restaurant in Toronto (where Doyle reverse-snowbirds for the summer), down for an all-expenses-paid annual winter vacation in exchange for the chef helping to train the Crane’s staff. As for global warming, Doyle reports that the direst effect he’s noticed occurred three years ago, when higher-than-normal temperatures pushed currents out of whack that normally contain North Atlantic’s Sargasso Sea, causing brown Sargassum seaweed to pile up six feet high on the beach. While several Caribbean islands suffered hurricane devastation this past autumn, the ill winds rarely blow near the Crane. “We’re lucky in Barbados not to be in a hurricane belt; the last to hit occured in 1955. Most hurricane damage is caused by water swells, by the waves coming in. We’re up 60 feet in the air on a cliff, which helps us. Traditional Barbados architecture is extremely solid, more so than in the U.S. or Canada. Everything is built to a hurricane standard, not with flimsy materials [like those] in Florida, being put together with a staple gun. Here, everything is concrete; even closet doors are solid wood. Everything shuts tight and solid. In the old days, they wouldn’t know when a hurricane would come, so they had to build like it was coming tomorrow. We stay true to that.” b

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GOOD BUSINESS A review of the effectiveness of investments in renewable energy for social and affordable housing.

Results from technical, financial, GHG and socio-economic analyses Funding $M

PV SDHW Solar Air Geothermal Wind Totals

Energy generated or saved GWh

Net lifetime benefits for housing providers $M

GHG savings kt CO2e

Full-time equivalent job creation

39.1 255 132 62.2 6.6 411 12.1 80 40 2.4 - 3.3 6.9 128 3.7 17 65 3.9 - 5.2 11.1 39 2.5 9 34 1.3 - 2.3 7.2 26 0.0 1 0 0.0 0.0 0 57.4 362 271 69.8 - 73.0 31.8 604

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# of systems funded

By Leigh St. Hilaire

The Social and Affordable Housing Sector in Ontario represents five per cent of Ontario’s housing supply and 20 per cent of the rental supply: approximately 260,000 units in total. Nearly 100,000 of these units are public housing units under municipal responsibility and 160,000 are owned by non– profit or co-operations. The size and condition of buildings in the sector indicated a potential for retrofits on a massive scale; retrofits can happen quickly through consolidated decisionmaking that is available through the network of service managers and housing providers; and social and affordable housing buildings are owned for longer than buildings in the private sector, allowing for longer-term investments. The overall objective of the evaluation was to document the benefits of the REI investments by analyzing their effectiveness in achieving social, economic and environmental outcomes for social and affordable housing providers and the Province of Ontario, while documenting insights on sector capacity, project implementation, program design and provider experience.

Source: Toronto and Region Conservation Authority

ith the government of Ontario planning to rapidly scale up low carbon investment in the social and affordable housing sector as part of the Climate Change Action Plan, research and analysis is needed to help inform the structure of investment programs to deliver the greatest impact in terms of greenhouse gas ( GHG ) reductions and operating costs savings for housing providers. In order to develop insights on sector capacity for implementing low carbon investments, an evaluation of the effectiveness of the Renewable Energy Initiative (REI) was conducted by Toronto and Region Conservation’s Sustainable Technologies Evaluation Program (STEP) and Ontario Climate Consortium (OCC), in partnership with Evergreen. Launched in 2010 as part of a comprehensive economic stimulus program targeting Ontario’s social and affordable housing sector, the REI disbursed approximately $57 million in provincial and federal funding to 161 different social and affordable housing providers within Ontario for the installation of renewable energy (RE) systems. The program started allocating funding in 2010, with the final projects being completed by the end of 2012. Eligible technologies included solar photovoltaics (PV), solar domestic hot water (SDHW), solar air heating, geothermal and wind turbines.

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REI funding by # of units

67.9%

REI funding by building type

Highlights of Findings: IMPACTS:

>150 units

<50 units

21.5%

25.4%

•O verall housing providers found the experience of the REI as positive; •M any housing providers became even more enthusiastic about energy sustainability; •F or every $1 million provided for RE systems, REI is estimated to have generated $1.22 $1.27 million in lifetime benefits for housing providers (in 2010 dollars) and carbon reductions of 554 tonnes C02e; •T he REI Program was estimated to have generated $62 million GDP and created 604 fulltime equivalent (FTE) jobs.

50-150 units 51.1%

0.1%

The REI was most beneficial to those that had the capacity to participate in the program. Many segments of the sector had lower participation due to a capacity gap; this included Northern, private and small-scale social and affordable housing providers. The retrofit process can be pictured as a journey map, the last stage of which is funding. As a 100 per cent capital cost subsidy, the REI was most effective at helping those already at the last stage. Broader efforts beyond the funding of systems would help promote readiness across the sector and also promote funding disbursement more in line with what would be expected from a fair allocation based on the number of housing units in each service area portfolio. The capability of the housing providers to effectively operate and maintain their RE systems vary across each sector. This was not an issue for PV, the largest component of the REI, because it requires minimal operations and maintenance ( O&M), while notable system issues are normally straightforward to detect. Some level of O&M is required for the other system types and insufficient O&M contributed to sub-optimal performance in some cases. Complete up-front funding of maintenance contracts was not effective. This study identified an opportunity for housing providers to play a greater role in the O&M of their systems and, in the process, help to safeguard the investments made in the sector. O&M guidance and training incorporated into an incentive program could help identify how to include RE system inspections alongside other maintenance inspections, what to look for and how often, and what O&M activities require specialized expertise. Additional measurement and verification (M&V) Leigh St. Hilaire, B.A.Sc. would help to detect system issues and is a Project Manager II, facilitate the program evaluation. b Energy, for the

single

BARRIERS:

To view the full report, visit www.sustainabletechnologies.ca

11.3% semi 0.0%

row

other

2.0% apt

mixed

The REI was estimated to provide more in savings or income to housing providers than was disbursed to fund the systems, while also providing ancillary benefits like job creation and GHG reductions. The financial performance of the program was driven by PV, which could also obtain support under the FIT and microFIT programs. The performance of non-PV technologies depended on the fuel being offset. Financial performance was estimated to be much stronger when offsetting electricity relative to natural gas. However, GHG reductions are much stronger when offsetting natural gas due to the relatively clean Ontario electricity grid. Without more detailed information on which fuels were being offset, the final performance metrics were calculated assuming a ratio 80 per cent/20 per cent for gas/electricity as the primary heating fuel for the housing units, approximately in line with provincial averages.

20.4%

•S ome housing providers outside of major city centres reported difficulties finding Renewable Energy Technology (RET) qualified vendors; • Meeting program timelines were challenging for some housing providers; •S ome housing providers were not aware of renewable energy systems and their potential benefit for smaller buildings.

Sustainable Technologies Evaluation Program (STEP).

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S I T E

MontrĂŠal in Motion

THIS SPREAD The building contains a full-size gymnasium superimposed on top of a recreational pool and 25-metre semi-Olympic swimming pool, located in the white prismatic volume. To complement the sculptural exterior and to draw attention to this multi-use space, the design team opted for an orange staircase and ceiling that connects the pools to the gym. Mathieu Gaudetâ&#x20AC;&#x2122;s seven sculptural pieces at the entrance hint at the orange accents inside.

DECEMBER 2017 JANUARY 2018

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A new sports facility by Saucier + Perrotte and HCMA brings movement and vitality to a Montréal borough.

Photography by Olivier Blouin

By Shannon Moore

Resulting from an architecture competition aimed at promoting healthy lifestyles, Montréal’s new Complexe Sportif Saint-Laurent draws inspiration from its surroundings in mass and form. Designed by Saucier+Perrotte Architectes with HCMA Architecture + Design, the three-storey, 177,600-sq.-ft. building is neutral in character and defined primarily by its sculptural exterior. Here, two angular objects — one prismatic white and the other horizontal black — appear to float on the façade, evoking the dynamic nature of the sports activities occurring inside. “We wanted to design a building that would have a strong sculptural presence in the community,” says Gilles Saucier, design principal at Saucier+Perrotte Architectes. “The idea was simple: to physically represent through the design of the Complexe the energy emitted by the users on site.” Inside, the facility accommodates a variety of physical activities, combining an indoor soccer field with a yoga studio, training room, change rooms, lockers and more. “We focused strongly on simplicity and minerality in the entire design of the Complexe,” says Saucier. “Everything is monochromatic, except for the orange sculptural piece itself. It’s meant to stand out as a warm object in the envelope of the white prismatic cloud.” In addition to mirroring the horizontality of the neighbouring Émile Legault School and Raymond Bourque Arena, the Complexe aims to create a visual and physical link between the Marcel Laurin Park to its north and a projected green band slated to run along Thiemens Boulevard. The design team incorporated a ramp that travels between the two volumes and provides access to the park, while landscape architects Claude Cormier + Associés were mindful to complement and enhance the green space beyond. Artist Mathieu Gaudet also contributed to the dynamic nature of the project with a public artwork titled Les Environs. Composed of seven sculptural pieces that hint at the orange accents inside, the work forms an axis along the walkway leading to the building’s main entrance. Realized with funding assistance from the Canadian and Québec governments, as well as support from the Ville de Montréal and Green Municipal Fund, the LEED Gold project contributes to an inclusive and healthy environment in Montréal’s borough of Saint-Laurent. “People are becoming increasingly interested in architecture and want to be challenged by new forms,” says Saucier. “The goal of this project was therefore to push the envelope and to bring the design to an extreme for the benefit of the city.” b building.ca

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V I E W Walk With Joy ULI Toronto’s Executive Director is calling for an “urban affordability hack-a-thon” in order to leverage growth. By Richard Joy

There is no coincidence that as the fastest growing urban region on the continent, the Toronto region is tracking to become the least affordable metropolitan area on the continent. It’s a worrying fact that every highly successful urban economy in the world has left its poorest residents on the losing side of this prosperity, not to mention its middle class. Must this be the Toronto region’s destiny? Is there a missing piece in our growth equation that can address this universal urban economic failure? Amazing work and leadership is being undertaken by an array of organizations, progressive developers, academics and government to bend this dangerous trajectory. It’s widely recognized that there are no silver bullets, and that solutions are found in myriad actions from inclusionary zoning to community benefit agreements. But are we fully harnessing the full potential of a growth trajectory that will see Toronto’s population swell to larger than Los Angeles’s by mid-century? Do we even have a proper handle on what this potential is? A recent panel at Ryerson University’s City Building Institute featured Vancouver’s renowned former Chief Planner, Larry Beasley. Beasley bragged that his city had the foresight to capture much of the land value increases associated with development. This has enabled Vancouver to build first rate public amenities from libraries to parks, not to mention design excellence. Much of this, he noted, was achieved through the pursuit of co-ventures between the city and the development community. Without a doubt Toronto must learn from Vancouver. Our current approach of development charges, parks and public art levies, and Section 37 extractions is often a confrontational and reluctant dynamic. Rarely are we maximizing the full potential to advance either private or public interests. But is the Vancouver model adequate? Yes, Toronto could have done better co-venturing with the development community, but surely we do not want to follow our western sister down the housing affordability track. DECEMBER 2017 JANUARY 2018

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We can certainly take lessons from Canada’s Pacific Coast jewel, but we need to do much, much better. We need to seize the extraordinarily limited opportunity that we have today before we implement the new provincial regional growth plan and development approval policies introduced in 2017. These reforms require all municipalities to align their official plans to direct massive increase in development and (in theory) require municipalities to implement these policies. Add to this the $35 billion Metrolinx-led transit investments — the most significant in North America — and other major public capital investments. Taken together, we should be on the brink of the largest increase ever of private property value and development rights. What are we seeking in return? I am calling for a macroeconomic hack-a-thon. Let’s quantify the land value uplift that our region will experience over the coming decades, value that is above and beyond that which would be achieved under status quo policies and land rights. Next, let’s imagine a made-inToronto strategy to leverage this growth and maximize public benefit, including both civic amenities and affordability. This exercise must reconcile the development industry’s need for more streamlined, cost effective processes to build housing and commercial projects, while achieving these defined Richard Joy is Executive public benefits. Director of ULI Toronto. There will always be “details” to Previously, he served as fuss over. But if we can prove to ourVice-president, Policy and selves that a win-win scenario exists Government Relations at at the macro level, detailed policy work the Toronto Board of will have a map to follow. We are otherTrade, and was the wise lost in the woods, picking our way Director of Municipal through the trees that have trapped evAffairs and Ontario ery other economically successful city. (Provincial Affairs) at We have proven to ourselves over Global Public Affairs. and over that the development of land Follow him on Twitter is a force that can deliver both econom@RichardJoyTO or email ic vitality and public good. The excitat Richard.Joy@uli.org ing redevelopment of Regent Park and Alexandra Park are two great micro examples. The growing portfolio of Arstcape projects is another. It’s time to take this thinking to scale. b

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