Building February March 2017 by IQ Business Media

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How big a deal is big data ? PM#43096012

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Tech Jobs City Branding Land Transfer Tax Reforms 2017-02-14 4:59 PM

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LIFE AFTER THE BACK COVER…

what’s on BUILDING.ca

READ > Passive House Building Boom The Pembina Institute explains how a low carbon future may be closer than we think.

67 01

CONTENTS

FEATURES

15 > Smart Data, Smart Cities /

The city of the future “looks very different from the one that has been the cornerstone of society for the past centuries.” Building design professionals should and will have a huge role to play in this monumental transition. By Paul Barker

READ > Beyond the Election Dodge Data & Analytics discusses how Donald Trump is likely to be a plus for the U.S. construction industry

20 > Tech Talks /

Toronto and Vancouver are Canada’s top tech talent markets, but tech jobs are growing quickest in smaller and cheaper markets. By Shannon Moore

26 > Expressing the Ephemeral /

Branding is a vital tool — if used correctly. This is as true for cities as it is for any other product in any other marketplace. A strategist discusses how branding can tell a unifying story about the value of a city. By David Allison

EXPLORE > HOOP Dance Indigenous Gathering Place Brook McIlroy Architects creates a new outdoor learning and gathering space on the Mohawk College Campus.

IN EVERY ISSUE

6 > Editor’s Notes 8 > Developments 10 > Market Watch 12 > Legal 30 > Viewpoint

ABOVE IMAGE:

Opened in September 2015, Telus Garden is the Vancouver headquarters of the telecommunications giant, and includes a 53-floor residential tower and a 24-floor office tower, with nine floors dedicated to Telus. (Photo by Ed White)

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Go Big

Volume 67

Intelligent buildings have been around for decades, but we are being told that the real advantages are when they are connected to smart infrastructure, utilizing analytics, sensors and big data. But how big a deal is big data, anyway, you ask? Well, industry analysts estimate that globally 2.5 exabytes of data is created each day (one exabyte equals one million terabytes), which is why the real estate industry continues to spend billions of dollars updating its hard assets with sensor-based, data-collecting technology through building automation systems and smart building technologies. So is the industry taking advantage of this wealth of market, property and business data to better streamline their operations and generate critical information required to drive investment performance? Not really, says the latest Altus Group report , titled Harnessing the Power of Data in Commercial Real Estate. The sheer volume of unrefined data being created, as well as a lack of data structure, makes it difficult for companies to take raw, crude data and turn it into something useful. “What’s referred to as a data chasm in commercial real estate exists because the ability to refine data and put it to strategic or operational use lags the amount of data that is being produced,” says Peter O’Brien, the director of the national valuation advisory team at JLL United Kingdom. “The ability to refine data and utilize it is not just a matter of tools and systems and skillsets for CRE; it is also a matter of the data itself. Specifically, data is neither produced nor organized in ways that allow it to be easily refined and consumed for business purposes.” According to Altus, the lack of refined data in CRE has left a gaping hole in the industry’s ability to benchmark. As an industry vying for global investment, the transparency provided by benchmarking is needed if CRE is to truly compete for capital against other well-established investor asset classes, which by comparison all utilize well-established benchmark indices and capabilities. CRE firms need to prioritize technology and processes to improve their data visibility and comparative metrics or they could risk losing their competitive position. Investing in tools to process valuable data is vital, but it is only one piece of the data and analytics puzzle. The other important piece is having the right people in the organization with a solid understanding of data collection, normalization and management. “The financial side of real estate and real estate lending is data rich, and [there is] a critical opportunity to capture and utilize available information comprehensively, creating much better insight into the commercial real estate marketplace,” said David Tobin, founder of Mission Capital Advisors, speaking at a Real Estate Forum in September, 2016. “Essentially... having the ability to examine all loans, borrowers and tenants and the associated trends simultaneously. This will bring real estate further into the institutional-investment arena and allow for more informed decisions.” There is an industry-wide gap between having data and making use of it. But very soon, big data will become a necessary asset for every real estate sector, as it turns data into insight: imagine a future where energy consumption in a hospital or business premises is predicted and managed according to the weather or a day of the week or time of day. “There is going to be a future where there is very detailed predictive modeling of what’s going on in districts and neighbourhoods that will feed into analyses of individual properties and their value,” says Meighan Phillips, portfolio manager at Principal Real Estate Investors. “The future is about the level of detail you can bring into analyzing a property’s value.”

Peter Sobchak Editor We welcome your feedback. Send your questions and comments to psobchak@building.ca FEBRUARY MARCH 2017

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01 Number Editor / Peter Sobchak Art Director / Roy Gaiot Assistant Editor / Shannon Moore Legal Editor / Jeffrey W. Lem Contributors /

David Allison, Paul Barker, Daniel Davies, Richard Joy, Megan J. Lem

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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MENTS

DEVELOP-

News RAIC expresses strong support for Bill C-323. OTTAWA | The Royal Architectural Institute of Canada (RAIC) has expressed strong support for Bill C-323, which would create a 20 per cent federal tax credit for rehabilitation of recognized historic places. Conservative critic for Canadian Heritage and National Historic Sites Peter Van Loan introduced the Private Member’s Bill, which was seconded by Peter Kent, the Member of Parliament for Thornhill, Ont. Bill C-323 would seek to limit the destruction of Canada’s heritage buildings, and instead encourage the rehabilitation of these culturally significant buildings. The tax credit would be available to properties that appear on the National Register of Historic Places. The Bill would also allow owners to write-off spending on heritage restoration at a faster rate. The RAIC believes there is an important federal role for leadership in heritage conservation. Policies that promote preservation and reuse of historic properties have demonstrated huge economic returns on investment through job retention and creation, tourism, and enhanced property values. Policies such as tax incentives not only help protect cultural resources and the history represented by heritage places, they promote respectful redevelopment in our communities. In addition, conservation, repair, and adaptation fight climate change by producing less carbon than new construction. FEBRUARY MARCH 2017

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Pan-Canadian Framework demonstrates clear commitment to innovation in building sector: CaGBC. OTTAWA | The Canada Green Building Council (CaGBC) commends the Pan-Can-

adian Framework for its recognition of the building sector as an area critical to the reduction of emissions; as an aid in providing climate change resiliency; and as a means to driving innovation. The Framework’s recommended actions for buildings include: making buildings more energy efficient; setting net zero targets; requiring building labelling; retrofitting existing buildings; and requiring federal government leadership in greening their own buildings. These actions were also key recommendations in the CaGBC’s recent Building Solutions to Climate Change report, submitted to the Vancouver Declaration Working Group for Specific Mitigation Opportunities on behalf of the Canadian green building industry in September 2016. By outlining a plan to make new buildings more energy efficient and setting net zero energy goals while also pledging federal investment in research, development and demonstration, along with industry cooperation, the Framework demonstrates a clear commitment to innovation that is necessary to making these actions a reality. The guidelines are in step with advances in the green building industry as shown with the CaGBC’s recent launch of Canada’s first Zero Carbon Initiative. This initiative is providing the market with a state-of -the-art guideline and, soon, the thirdparty verification and support required to make net zero carbon buildings readily achievable even before the 2030 guidelines in the Pan-Canadian Framework. The Pan-Canadian Framework’s guidelines to retrofit and measure existing buildings’ energy use are also critical to reaching the maximum emissions reductions possible from the building sector, and to strengthening climate change resiliency. Existing buildings represent over 80 per cent of Canada’s building stock which will still be standing in 2030. These buildings present a greater emissions reduction opportunity than any new construction activity from now to 2030. CaGBC research demonstrates that Canada can achieve a 44 per cent reduction in emissions with a combination of recommissioning, deep retrofitting, adding renewable energy, and fuel switching in existing buildings over 25,000 square feet by 2030. Existing buildings are not only critical to achieving the targeted GHG emissions reductions, but present a massive economic opportunity. Large-scale upgrades to existing buildings will create jobs, drive the creation of new technologies and could contribute $32.5 billion in total GDP impacts by 2030 and reduce 19.4 million tonnes of GHG emissions.

New Projects Design unveiled for new CBC/Radio-Canada in Montréal. MONTRÉAL | The CBC/Radio-Canada Board of Directors has approved

a proposal for the building of the new Maison Radio-Canada broadcasting facilities in Montréal. Real estate developer and builder Broccolini will lead a consortium consisting of Béïque Legault Thuot Architectes (BLTA), a Montréal-based firm with experience in commercial real estate and high-rise residential projects, as well as Quadrangle, a Toronto-based firm who will contribute their extensive experience with large-scale projects for clients in the telecommunications and media industries. Other consortium members are mechanical and electrical engineers Dupras Ledoux Inc. and structural engineers NCK Inc. building.ca

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Maison Radio-Canada

Reflecting Radio-Canada’s mandate to be more open and accessible, key features of the new proposal include clear and simple wayfinding, interconnected spaces with the public and ample natural light on all floors. Creators and programmers will work within modern and versatile spaces which will support the collaborative workplace strategy of the digital, multi-platform public broadcaster. Construction is set to begin in September, 2017 and the project is slated for completion in January, 2020.

Transport hub at Vaughan Metropolitan Centre underway. TORONTO | A $32.1 million inter-regional transit terminal has broken ground at Vaughan Metropolitan Centre that will play a key role in supporting the largest urban mixed-use community development in Canada. Designed by Toronto-based Diamond Schmitt Architects, the transit terminal will serve York Region Rapid Transit’s extensive bus network and have pedestrian connection to the Viva Bus Rapid Transit as well as the new terminus of the Toronto Transit Commission’s (TTC) extension of the Spadina subway line. Both the bus terminal and subway are slated to open at the end of 2017. “The conventional hierarchy of the bus terminal was inverted here, with pedestrians playing the central role in defining circulation and the spaces around the terminal,” said Mike Szabo, principal at Diamond Schmitt Architects. The woodlined SmartCentres Place Bus Terminal is located within a pedestrian plaza and has a large, 43,000-sq.-ft. horseshoe-shaped roof over two open platforms and an approximately 10,000-sq.-ft. glazed pavilion. The pavilion houses the main waiting area, staff and service areas, and access to the underground connection to the adjacent TTC subway station. The terminal will have nine bus bays with a central island enhanced by drought-tolerant landscaping and a decorative screen over the relief shaft from the subway track below.

People in the News Welcome aboard, Steve! TORONTO | iQ Business Media, publisher of Building, as well as Canadian Architect and Canadian Interiors magazines, has announced the appointment of Steve Wilson as Vice President and Senior Publisher. In addition to assuming the new position of Vice President of iQ, Wilson replaces Tom Arkell, who left Canadian Architect magazine in December, after 17 years of service. Wilson brings a wealth of publishing and leadership experience to his role. He was previously Senior Publisher of the Canadian Underwriter magazine Insurance Group, which produces publications and digital communications products that serve Canada’s property and casualty insurance and risk management industries. Canadian Underwriter is owned by Newcom Business Media Inc. b

VMC transit terminal

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MARKE T Deal flow shrinks amid greater diversity

Spotlight: P3s

All four deals received funding from the PPP Canada Fund, taking the number of grantors to have procured projects in 2016 to nine. Of the 10 transactions to have closed in 2016, seven were financed through a bank-bond hybrid. Penticton Hospital and the Defense Construction Canada’s data center were financed through just the capital markets. One DBF transaction, the Seneca College P3 project, was financed solely through bank debt.

Financing Structures TD Securities was the most active bond underwriter/ arranger in 2016, with four deals totaling $585 million. Scotiabank and RBC arranged $322 million and $191 million in 2016. There were also three public rated credit issuances in 2016: the Edmonton LRT; the Mackenzie Vaughan Hospital; and the Southwest Calgary Ring Road. Canada Life, Manulife, SunLife were the most active private placement investors. Edmonton LRT and Southwest Calgary repreThe Canadian P3 market saw fewer sented the largest issuances of the year at $403 million and deals reach financial close in 2016 $380 million, respectively. Total bond financing in the primary market for the year totalled $1.51 billion, compared to than in its 2015 banner year, while $3.52 billion in 2015. the 2017 pipeline promises a number On the bank debt side, SMBC, ATB and TD Bank were the of new projects. most active lenders having worked on four transactions each in 2016. Total bank debt was $1.03 billion in 2016 compared By Daniel Davies to $2.77 billion in 2015. Davies Ward Phillips and Vineberg were the top legal advisor in 2016, working on six deals with a combined capex of $3.12 billion. Blakes, Cassels & Graydon advised on five deals, Fasken Martineau, Torys and McThe Canadian P3 market saw 10 deals spanning the counCarthy Tetrault all advised on four. Deloitte were the top fitry from New Brunswick to British Columbia reach financial nancial advisor working on six deals. Scotiabank and KPMG close in 2016. The transactions have an aggregate value of advised on two deals in 2016. At a technical advisory level, $4.25 billion (all figures CAD) and include four transport, four Altus and BTY topped the tables on four deals each. social, one environment and one telecommunication projects. The Province of Ontario was again the leading market by deal count, as it has been every year since 2006. The province in 2016 saw four deals valued at $1.36 billion reach financial close. However, Alberta had the largest deal value at $2.21 billion. The amount covers three deals: the Edmonton LRT; the Calgary CNG P3; and the Southwest Calgary Ringroad. Transactions in British Columbia, Manitoba and New Brunswick take the number of provinces with active P3 procurements to five in 2016. Notably, there were seven active provinces in 2015. British Columbia’s sole deal to have reached financial close, the $200 million Penticton Hospital P3, represents the province’s lowest deal count since 2012. No projects in Saskatchewan reached financial close in 2016, though the province saw five deals make it over the line in 2016 and four in 2014. The year also saw four municipally procured deals close in Winnipeg, the City of Saint John, Calgary and Edmonton. Calgary had closed P3 transactions prior to September’s CNG Transit Bus Garage project, but 2016 was the first year the three other municipalities closed P3 transactions. The largest of the four, and also of 2016, was the $1.3-billion Edmonton LRT project which had been won by a Fengate, Bombardier, EllisDon and Bechtel consortium. In New Brunswick, the Saint John Water deal represents the first water deal to close since Regina Wastewater Treatment Plant in July 2014.

FEBRUARY MARCH 2017

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Equity Trends Nine of the 10 deals to close this year had equity components, which takes the total amount of invested equity to $237 million across 18 investors. The total equity commitment is down compared to 2015’s $371 million figure. Developers and funds accounted for $157 million compared to $80 million for constructor and operator equity, a 66:33 ratio. The largest equity check by an investor was Fengate Capital’s $41 million investment in the Edmonton LRT project. Plenary Group was the top aggregate equity investor in greenfield deals this year with $48 million split across three deals. Plenary also won the $1-billion Mackenzie Vaughan project as well as the Winnipeg BRT and Stoney CNG projects. EllisDon in 2016 also won three deals totaling $22 million. The company also made two equity investments in the Penticton Hospital and the Edmonton LRT. Notably, OPB joined EllisDon in the equity box on Penticton. Bombardier and Bechtel completed the Edmonton LRT consortium. The project was Bechtel’s first North American P3. Axium and DIF IV were the equity participants on Ontario’s Etobicoke General Hospital procurement. The project was DIF’s first greenfield P3 win in Canada. A Meri-

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Hamilton Biosolids projects. Other projects at the shortlisting phase include the New Toronto Courthouse; Brockville Hospital Redevelopment; Mount Sinai; Niagara Falls Entertainment Centre; and Stouffville Corridor Station. The assumption that these advanced projects will reach financial close in 2017 puts the estimated project capex at slightly less than $10 billion. In November 2016, Infrastructure Ontario (IO) provided a pipeline update that revealed the extent of their collaboration with Metrolinx to deliver Regional Express Rail (RER). The “big volume” program is set to see a number of projects valued at $100$500 million roll out on a monthly schedule in 2017. The pipeline indicates that 12 DBF or BF projects in the RER program will be at some stage of procurement in 2017. The total capex will fall between $2.3 billion and $5 billion, according to Infrastructure Ontario. Other large civil projects at a less advanced procurement stage include the Hurontario LRT project in Ontario. The procurement of Roberts Bank Terminal 2 has been pushed to summer 2017, but market sources say they are positive about large civil projects such as Broadway Subway Line Extension, Surrey LRT and Pattullo Bridge to coming to market in 2017. One source noted that the Pattullo Bridge could be a project for the Canadian Infrastructure Bank (CIB). Further clarity on the procurement strategy for IO and Metrolinx’s RER electrification program is also expected in 2017. The debate is over whether to segregate the electrification or integrate it with signalling and track expansion on a smaller project-by-project basis. Other large civil projects that could go down the P3 route include Calgary Green Line; Waterloo LRT Stage 2; and Ottawa LRT stage 2; while in Toronto the George Daniel Davies is Street Revitalization project has gained Co-Head of Research at momentum with the approval of advisInfraDeals. www. ors in early December. b infraamericas.com

diam Infrastructure North America II, Kiewit, CC&L and Ledcor consortium in 2016 provided just over $50 million for the Southwest Calgary Ring Road P3. Notably, Kiewit’s $17 million equity cheque was the largest single investment of the year by a constructor. Brookfield and Acciona made equity commitments on the Saint John Water project. A Balfour Beatty and Forum Equity Partners consortium committed equity for Defense Construction Canada’s Ontario data centre. Brownfield P3 activity There were a total four P3 brownfield deals in 2016, as well as a P3 portfolio sale. In April, an AquilaFiera JV acquired five assets from Forum Equity Partners for a total understood to be around $75 million. The assets include: the Billy Bishop Pedestrian Tunnel; the Quinte Courthouse; the Southwest Detention Centre; the Surrey Pretrial Services Centre; and the Vancouver SRO project. Concert Infrastructure further expanded its P3 portfolio with the acquisition of a 50 per cent stake in Alberta Schools Wave 3 from HOCHTIEF Solutions and a 50 per cent stake in Toronto Forensic Services and Coroner’s Complex from Carillion. Fengate Capital completed a 40 per cent acquisition of Oakville Hospital from Carillion taking their stake to 90 per cent, and ACS in December sold a 25 per cent stake in the South Fraser Perimeter Road in B.C. to CC&L. Robust pipeline for 2017 and beyond Moving into 2017, the market has a number of large civil projects at shortlisting phase including: the Gordie Howe Bridge; the George Massey Tunnel Replacement; the Finch LRT and Highway 427. Additionally, Plenary Group is understood to be first ranking proponent on the CAMH healthcare project in Ontario. Proposals have also been returned on Groves Memorial Hospital, Lions Gate Wastewater and

Canada greenfield P3 activity 14.03

Total deal value ($CAD bn)

7.31 5.65

4.88 3.59

3.68

3.14

4.24

4.41

AB 3 deals / $2.21 bn

Infrastructure 5 deals / $1.56 bn

MB 1 deal / $320 mil

Environment 1 deal / $153 mil

2005 2006 2007 2008 2009

ON 4 deals / $1.35 bn NB 1 deal / $153 mil

1.42 7

Transport 4 deals / $2.53 bn

9.92

# of deals

$4.07

BC 1 deal / $200 mil

2010

2011

2012

2013

2014

2015

2016

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LEGAL rest by categorically rejecting the B.C. Foreign Buyer Tax, announcing:

Made-In-Ontario Land Transfer Tax Reforms

Ontario says “NO” to a foreign buyer tax, but “YES” to the land transfer tax on über-high end residential and on almost all commercial real estate. By Megan J. Lem

Ontario seems to have rejected a cloning of the 15 per cent foreign owner land transfer tax that came into effect in British Columbia on August 2, 2016 (the “B.C. Foreign Buyer Tax”), which imposed a whopping additional tax — to the tune of $300,000 on a typical $2-million Vancouver area home! Although the BC Foreign Buyer Tax did not explicitly target buyers from the People’s Republic of China, it was no secret that Chinese buyers had driven the Vancouver real estate market to dizzying heights in recent years, and the BC Foreign Buyer Tax was, for all intents and purposes, squarely aimed at those Chinese buyers. The B.C. Foreign Buyer Tax is a politician’s dream. If it ultimately works in driving down housing prices in the Greater Vancouver Area, then Premier Christy Clark and her Finance Minister can take credit for restoring (or at least hastening the decline of ) housing affordability in British Columbia’s Lower A store on WestOn the other hand, if the B.C. Foreign Buyer Tax has little, if any, Mainland. Street in Goderich, long-term Ont.’s historic effect on housing demand in Greater Vancouver, well, at least the downtown before tried the government and, incidentally, B.C.’s coffers will benefit from a sizeable tornado hit (above), land transfer tax windfall, all funded out of the pockets of foreigners no less. the damage (right), is this2013 political win-win characteristic of the B.C. Foreign Buyer Tax that and It in August (below)Ontarians after the town’s had worried about a corresponding made-in-Ontario foreign owner rebuilding efforts. land transfer tax. Ontario follows British Columbia as a destination for much of the foreign capital that fuels Vancouver real estate markets, and there is a sizeable Chinese influence in many Ontario real estate markets, especially around the Greater Toronto Area. Ontario Finance Minister Charles Sousa, in a news conference held immediately after the B.C. Foreign Buyer Tax was announced, noted that he was examining the B.C. Foreign Buyer Tax “very closely” and concluded by saying that “we’re certainly looking at whatever options can be made available.” These remarkably friendly words in support of the B.C. Foreign Buyer Tax fueled lots of speculation that Ontario might soon follow suit. Alas, fears of a made-in-Ontario version of the B.C. Foreign Buyer Tax have proven greatly exaggerated. In October, 2016 Premier Wynne put such speculation to FEBRUARY MARCH 2017

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We’re not going to go down the road that British Columbia has gone down...I’m not interested in doing something that would have an unintended consequence in Ontario – something that was designed for a totally different market. Shortly thereafter, in November, 2016, Ontario announced that it was indeed going down a different land transfer tax reform path, effective January 1, 2017. Ontario would also amend its land transfer tax regime, but not by penalizing foreign buyers with a megatax. Instead, Ontario would add an additional 0.5 per cent surcharge to two categories of real estate, regardless of the buyer: (i) über high-end residential real estate (i.e. homes over $2 million); and (ii) commercial properties over $400,000. The maximum marginal land transfer tax rate payable on a residential house used to be two per cent, but after January 1, 2017, houses above $2 million now pay a marginal rate of 2.5 per cent in land transfer tax. Less conspicuous was what Ontario did to commercial properties. The maximum marginal land transfer tax rate payable on a commercial property used to be 1.5 per cent, but after January 1, 2017, all commercial properties above $400,000 will pay a new marginal rate of 2.0 per cent in land transfer tax. This is not to say that Ontario did not penalize foreign buyers, at least a bit. At the same time that Ontario raised land transfer tax rates, it also softened the blow on first-time homebuyers by increasing the land transfer tax refund available to first-time homebuyers from $2,000 to $4,000, but only for Canadian citizens and permanent residents. In other words, foreign buyers, even if first-time buyers, would not get any refund at all. Not surprisingly, the mainstream press has latched on to the first-time buyer refund, with little if any focus

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on the increased marginal tax rate that applies to commercial properties. Although a relatively small increase (one half of one per cent), in the existing land transfer tax line item the new surtax will apply to almost every commercial transaction in the province given its relatively low threshold of only $400,000. Although the term “commercial” has been used throughout as a convenient descriptor, the legislation defines this category as any property that does not have one or two existing single family residences. As a result, and of particular relevance to Building readers, almost all raw lands or development sites purchased from here on in will attract the new, higher marginal tax rate (the legislation does have some grandfathering for agreements of purchase and sale entered into before the legislation was announced but closing after January 1, 2017). Of course, the irony of the situation is not entirely lost. If land acquisition costs are going to go up, even marginally, so too eventually will the cost of housing, even for those who qualify for the first-time homebuyers’ refund — ironic in light of the policy goal of increasing housing affordability. Well, nothing is certain, except death and taxes, and, so long as there are taxes, there will be periodic tax reforms. b

Megan J. Lem is a corporate lawyer in the Toronto Office of Oslers LLP. This article reflects the personal views of the author alone.

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0101101010110110101101010101011010111110111 0101000010100001110101110111011101110111011 0111011101101101111111101111100000011010110 0000011100000110101011101101101101010110101 1111011101011011011101101101110100000101101 0110101010101111101010001101101110111000011 0101101011011101010001010010100011101101010 1011101110110111011110110111100001111011111 0110101110110101011010101000011010110101000 1010101101001010110111011011010101111011101 1110101010101110101101101111101101101011011 1010000110101010011100001110101001011101101 1010101010101111101111000001100101010101101 1101011011001011110001010110010001110110100 0001110110100110 010110101011011010110101010 1011010111110111010100001010000111010111011 1011101110111011011101110110110111111110111 1100000011010110000001110000011010101110110 By Paul Barker 1101101010110101111101110101101101110110110 1110100000101101011011011010101101010100001 The city of the future 1010110101000101010110100101011011101101101 â&#x20AC;&#x153;looks very different from 0101111011101111010101010111010110110111110 the one that has been the cornerstone of society for the 1101101011011101000011010101001110000111010 past centuries.â&#x20AC;? Building 1001011101101101010101010111110111100000110 design professionals 0101010101101110101101100101111000101011001 should and will have 0001110110000011101101001100101010111110101 a huge role to play in this monumental transition. 0001101101110111000011010110101101110101000 1010010100011101101010101110111011011101111 0110111100001111011111011010110101000111010 1011101011011000100010101010100010100010101 0111011101101101101010000110101110101000011 1101010101010100101010101010100011101010101 15

Data,

Cities building.ca

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0101101010110110101101010101011010111110111 0101000010100001110101110111011101110111011 0111011101101101111111101111100000011010110 0000011100000110101011101101101101010110101 1111011101011011011101101101110100000101101 0110101010101111101010001101101110111000011 0101101011011101010001010010100011101101010 1011101110110111011110110111100001111011111 0110101110110101011010101000011010110101000 1010101101001010110111011011010101111011101 1110101010101110101101101111101101101011011 1010000110101010011100001110101001011101101 1010101010101111101111000001100101010101101 Investments 1101011011001011110001010110010001110110100 in hard assets vs. 0001110110100110 010110101011011010110101010 IT systems 1011010111110111010100001010000111010111011 and 1011101110111011011101110110110111111110111 software 1100000011010110000001110000011010101110110 1101101010110101111101110101101101110110110 1110100000101101011011011010101101010100001 1010110101000101010110100101011011101101101 0101111011101111010101010111010110110111110 1101101011011101000011010101001110000111010 1001011101101101010101010111110111100000110 0101010101101110101101100101111000101011001 A Slow-Adoption Industry 0001110110000011101101001100101010111110101 0001101101110111000011010110101101110101000 1010010100011101101010101110111011011101111 13.1 11.1 5.9 0110111100001111011111011010110101000111010 1011101011011000100010101010100010100010101 0111011101101101101010000110101110101000011 1101010101010100101010101010100011101010101 Kurtis McBride, CEO and co-founder of Waterloo, Ont.based Miovision, is in a unique position when it comes to analyzing and commenting on the merits of the smart city. The company he and two fellow University of Waterloo students started in 2005 developed technology that is currently used by 650 customers in 50 countries to gain insights into their transportation networks. Miovision has created an intelligent transportation system called Spectrum, which is installed in a traffic cabinet and can provide valuable data that can change how a city operates. The firm is in expansion mode and because of that, McBride is not only a technologist with a firm grip on how best to create a smart city, but he has also immersed himself in the building design process as a result of a project called CataFEBRUARY MARCH 2017

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1 Source: Commercial Building Automation Systems, Navigant Research, Q4 2015 and Q3 2016 2 Source: Global Smart Building Technology Spending 2015-2019 Forecast, IDC Energy Insights, March 2015 3 Source: IDC Market and Industry Estimates, 2015 and 2016 (IT systems includes licensed software, enterprise applications, and hardware)

$59.3 B

$67.1 B

$6.3 B

$7 B

$5.8 B

$6.1 B

AUTOMATION

SMART

IT SYSTEMS

SYSTEMS

BUILDING

AND

TECHNOLOGY

SOFTWARE

Source: Altus Group CRE Innovation Report

eter Sondergaard, a senior vice president with information research firm Gartner, once likened data to being the oil of the 21st century. He quantified that prediction by stating that “oil is just useless thick goop until you refine it into oil. And it’s this fuel — proprietary algorithms that solve specific problems that translate into actions — that will be the secret sauce of successful organizations in the future.” Sondergaard added that the “next digital gold rush will be focused on how you do something with data, not just what you do with it. This is the promise of the algorithm economy.” He wrote those words 18 months ago and since then much has transpired. The Internet of Things (IoT) revolution is happening at warp speed, with upwards of 20 billion devices working their way into everything from building automation systems to the smart city and real progress is actually taking place for utilities, municipalities and organizations that embark on this burgeoning digital journey. Advances are happening so quickly that society today is inexorably composed of those that “get it” and those that don’t, and if you are part of the latter, a forced career change is on the horizon. Nowhere is this more evident than in the building industry and it appears there are some who need to crawl before they walk when it comes to understanding the importance of a smart building being connected to smart infrastructure. Peter Ronson, vice president of Markham District Energy, % increase in spending (US$) says that “the whole big data thing is probably over-utilized, from 2015 to 2016 over-marketed and with hype around that. A lot of buildings have building management systems, but a lot of it comes down to, ‘OK, are we actually using this stuff.’ I was in a building in our system that will go unnamed a few years ago and they had a problem. I asked the building manager ‘where is your BMS?’ and he replied, ‘we actually have one?’ Literally, he didn’t know where it was. He had never touched it. “My point is let’s use what we have before we get to the fancier stuff. If we can get past the basics, yes, there is promise of being able to harness and being able to use collectively the devices and the buildings to manage their loads in concert with the rest of the buildings on a system.”

building.ca

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Photos courtesy of Knightsbridge

Renderings courtesy of Catalyst 137

lyst 137, first announced in June 2016 and described at the time as a “shared vision” between himself and Frank Voisin, founder of Toronto-based Voisin Capital. Once it is completed this summer, plans call for Voisin to manage the real estate side of the initiative and Miovision as the lead tenant to “handle the technology ecosystem, turning the building and its surrounding area into a sensor-packed tech-friendly space.” For McBride, who says the goal is to make Catalyst 137 a “one-stop shop for hardware companies to build their products, access the support services they need and then showcase the new technology” right there, the building design stage has certainly been interesting. “One of my mentors told me once that being naïve was an asset,” he says. “I am involved in the Catalyst 137 project and it is my first development project. I am a technology guy and don’t know the first thing about building buildings, but got involved in this project through happenstance. “What strikes me about the design process when it comes to building is this: the people I am working with – the architects and consultants – have done this a thousand times and done it a certain way all the time. Things like HVAC systems; they are stuck in the 1980s. You sit down with the structural guys and they talk about snow load and how that is a big problem, but when you talk to the HVAC guys they talk about how they made the unit lighter, which actually means nothing to the structural experts because snow weighs 10 times more than the actual unit.” McBride says there is an opportunity inside the building envelope to rethink all sorts of things, whether talking about lighting, motion sensors, and the intelligence behind how HVAC systems get deployed. Security is another prime example — it is, he adds, still all based on key fobs and keypads as opposed to biometrics. “Even if the technology is available today to make buildings smarter, the structure of how the industry comes

TOP & ABOVE:

A 475,000-sq.- ft. warehouse in Waterloo, Ont. will become home to Catalyst137, providing centralized funding, consulting, engineering and other services for the area’s maker community. The result of a shared vision between Miovision and Voisin Capital, Catalyst137 is being co-developed by Torontobased real estate firm Osmington Inc.

up with design is not willing to take risk because it is so price-sensitive and risk adverse that I don’t know how new concepts would ever find themselves into buildings. I don’t know how you are going to overcome that, but it is probably the biggest problem that the industry has. It is structurally set up to avoid innovating.” “I don’t know the first thing about building a building, but I surround myself with people who do and use the power of ignorance to drive them to places where they are not usually comfortable going. My experience is that if you measure something you never measured before, it generally improves by 25 per cent over a short period of time. That is the order of building.ca

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Data is the new oil.

magnitude in terms of the opportunity to improve energy consumption, traffic efficiency and even things like insulation envelopes in buildings. It could have a massive impact.”

But It’s All Possible

improve that building’s efficiency and sustainability over the course of its lifetime, then you are really talking about substantial change.” If the building itself helps to impact behaviours and change those behaviours then you are really taking it one step further, says Mabberley. She also points out that there is no slowing down the smart building and smart city movement. “It is the future of development and certainly as we see cities become more and more concerned with their energy use it is becoming much more prevalent in our day-today conversations and our political conversations. Everything is moving in that direction. You see cities with more aggressive emission targets and they only make those targets by either retrofitting older buildings and ensuring all new buildings are built to more stringent standards. In terms of energy use, building automation is one of the biggest items that allow you to track that data.”

Ronson, meanwhile, sums up the current situation this way: it’s all possible and really all it takes is the motivated building manager or the motivated aggregator to pull it all together. “When you start to aggregate systems together there are economies of scale and you can do interesting things, but if we have segregated devices, segregated buildings, segregated energy loads you don’t have the opportunity until you can pull it all together. We have lots of — Peter Sondergaard, features right now, but we are not seeSenior Vice President, ing a lot of benefits.” Gartner Research The so-called smart city will be nurtured by the smart building and a prime example of that is Telus Garden in Vancouver, designed by Henriquez Partners Architects and developed by Westbank Projects. Sustainability features include a rainwater recycling system for grey water and irrigation, solar panels that capture solar energy to power exterior lighting, triple-glazed windows to help maintain a consistent temperFrom Building to City ature, sun tracking system that automatically adjusts inThere are also numerous examples of what a so-called terior blinds, and a raised floor with a displacement smart city can accomplish. In April 2015, Bloomberg Philventilation system that allows for a 100 per cent fresh air anthropies launched What Works Cities, a national initiasupply rather than recycled air. According to a Telus fact tive it described as a “way to help 100 mid-size American sheet, sustainability features “will reduce CO2 emissions municipalities enhance their use of data” in order to imby more than one million kilograms annually, the equivaprove services, inform local decision-making and engage lent of planting 25,000 trees every year.” residents. Since the launch, the program has produced 130 Rhiannon Mabberley, a development manager with resources that cities around the world “are using to improve Westbank, says that while there are 22,000 set points in their communities and drive better outcomes for residents.” existence and the building is extremely sophisticated in that Meanwhile, also in 2015, a Strategic Summit entitled Ensense, they are only valuable if you have a team that (a) cares abling Economies for the Future took place at Harvard Uniabout it and (b) knows how to manage the data. “We can versity with one goal in mind: embark on a critical discusspend millions of dollars to build the most energy-efficient sion “about what cities need to do, how to do it, and how to and sustainable building in this world, but if every person prepare for the rapidly-approaching future.” there leaves the lights on, the taps running, refuses to comSponsored by Dell Computer and hosted by the Technolpost and does not car pool, doing all these individual behavogy and Entrepreneurship Centre at Harvard (TECH), Prof. iours will impact the performance of the building,” she says. David Ricketts, chair of the summit, wrote a white paper out“It undermines how efficient the building is if the people lining summit discussions that the city of the future “looks using it don’t care about those values. very different from the one that has been the cornerstone “Obviously we have to start with the infrastructure beof society for the past centuries. No longer are cities merely cause if you build an energy hog right off the bat, you are gofunctioning as sources of infrastructure — and as common, ing to be so far down the spectrum on energy savings you are centralized locations for brick-and-mortar companies. They not going to be able to catch up with individual use. But if you are now becoming hubs of social cohesion. Citizens choose to can start with that capital infrastructure and then layer on live in them based on the availability of amenities and social the individual behaviors to make it worthwhile and further and economic opportunities.” FEBRUARY MARCH 2017

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Photos by Ema Peter / Andrew Latreille

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Photos by Ema Peter / Andrew Latreille

ABOVE & RIGHT:

Findings from the summit and research conducted by economic data forecasting and analytics firm IHS Economics resulted in Dell last April recognizing 50 cities around the world for “embracing technology and thriving in an everchanging and globalized future.” While Toronto ranked eleventh on its list, of note is that no other Canadian city made the grade. Cities in order of ranking above Toronto were San Jose, San Francisco, Singapore, London, Washington, Boston, Austin, Raleigh, Stockholm and Sydney. “Backed by insights from experts in the public sector, technology firms, the start-up community and higher education, we developed a methodology to evaluate the degree to which city economics are Future-Ready,” says James Diffley, senior director at IHS Economics. “These ratings will

Telus collaborated with Westbank to transform an entire city block of prime downtown Vancouver real estate into an one-million-square foot, $750-million national headquarters. The base building has two glass-clad boxes cantilevering over the street (Sky Gardens), with two smaller wood-clad boxes (Skyboxes), floating inside the Sky Gardens, hosting meeting rooms.

enable cities to take actions that will position them to capitalize on opportunities for the future.” There were similar sentiments contained in the Smart City Playbook, commissioned by Finnish networking vendor Nokia and released in November 2016 that identifies best practices from 22 smart cities around the world. Developed by Machina Research, the study “uncovered significant diversity in the smart cities strategies of different cities, but identified three distinct routes that cities are taking to make themselves smarter.” These include the anchor route that involves a city deploying a single application to address a pressing problem such as traffic congestion; the platform route that involves building the underlying infrastructure needed to support a wide variety of applications and services; and the beta route, which involves municipalities testing multiple applications as pilots to see how they perform before making a long term-deployment. “No one said becoming a smart city would be easy,” said Jeremy Green, principal analyst at Machina Research and author of the report. “There are lots of choices to be made. The technology and business models are evolving rapidly, so there are many degrees of uncertainty. Standards are emerging, but are by no means finalized. There is no ‘royal road’ to smartness, but there is a right way to travel — with your eyes open, with realistic expectations and with a willingness to learn from others.” b

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Source: CBRE Research (Office Market), Q2 2016

FEBRUARY MARCH 2017

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By Shannon Moore

Toronto and Vancouver are Canada’s top tech talent markets, but tech jobs are growing quickest in smaller and cheaper markets.

“Technological evolution continually influences the way we live and how we work.” This thought process guides a new research project by CBRE Limited that explores the growth of the tech industry, including its impact on real estate and prominence in different cities across Canada. Titled the 2016 Scoring Tech Talent Report, the document focuses on established companies with more than 1,500 employees, analyzing labour market conditions for highly-skilled tech workers and ranking 10 Canadian cities “according to their competitive advantages and appeal to tech talent workers and tech employees.” Ultimately, the report aims to provide insight into the industry, helping tech-savvy Canadians pinpoint the most desirable cities to set up shop. “The number of tech jobs has soared in Canada in the past five years, with nine out the 10 top Canadian markets recording growth. Of those nine, eight recorded double digit growth rates. The tech sector is becoming ever more critical by the day to the Canadian office market, with technology firms accounting for 16.1 per cent of all major office lease deals in Canada last year. This percentage increases markedly in our larger urban areas, for example tech accounted for 43 per cent of all leases in Ottawa last year, and it’s a trend we only see growing in the years to come,” says Raymond Wong, head of research at CBRE Canada. Defining Talent

Source: CBRE Research (Office Market), Q2 2016

TECH % OF TOTAL SIGNIFICANT LEASE ACTIVITY (2015) Tech % of Total Ottawa, ON 47.4% Vancouver, BC 28.5% Waterloo Region, ON 21.9% Montréal, QC 20.8% Toronto, ON 12.3% Halifax, NS 11.3% London, ON 6.1% Calgary, AB 1.8% Edmonton, AB 0.0% Winnipeg, ON 0.0% Canada 16.1%

According to Statistics Canada, the term “tech talent” refers to highly-skilled, sought-after employees working in tech nological fields. As of 2016, “more than 715,000 tech inno vators at established companies across Canada are working on technological advances” — 28.7 per cent are computer programmers, software engineers and web developers, while 21.7 per cent are information systems analysts and consultants. Other talented techs include user support technicians (12.1 per cent); electrical and electronics engineers (10.2 per cent); computer network technicians (9.7 per cent); computer and information systems managers (8.5 per cent); database analysts and data administrators (4.1 per cent); mechanical engineering technologists and technicians (2.9 per cent); and information systems testing technicians (2.1 per cent). These tech talent workers account for 4.7 per cent of the country’s total workforce; and although these employees are concentrated in the high-tech industry, they are considered to be a driving force of innovation in a variety of companies across the economy itself. Measuring Markets In its report, CBRE states that “the rise in technology enabled mobility and the

need to pursue talent wherever it is located has encouraged technology companies to spread to markets across Canada.” Indeed, tech occupations are growing building.ca

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26 22 28

tremendously and developing rapidly in numerous cities: but some are more advanced than others. Using 13 metrics to pinpoint four indicators of success — Employment; Education; Tech Industry Outlook; and Real Estate — CBRE determined the Top 10 most desirable cities for tech workers and companies based on their competitive advantages. The result lists Toronto as the top tech talent market with a score of 83.94 out of 100, followed by Vancouver (67.25); Ottawa (61.26); Montréal (58.80); Calgary (50.37); Halifax (34.19); Edmonton (34.06); Waterloo (32.52); Winnipeg (16.88); and London (12.99) . Here’s why.

Atop the Complexe de Gaspé in the Mile End neighbourhood sits Ubisoft Montréal’s newest workspace. The video game developer’s worldwide brand logo is rendered as a set of four illuminated geometric archways over each of the two interior staircases. BOTTOM: Twinwall polycarbonate partitions brighten private meeting rooms with filtered coloured light. BELOW:

AUGUST SEPTEMBER FEBRUARY MARCH 2017 2013

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Source: CBRE Research Q2 2016; CMHC 2015

large cities like Toronto and Vancouver, the economy can accommodate a deep pool of talent. From 2010 to 2015, Toronto saw a 35.6 per cent growth in its tech occupations alone, compared to 50.1 per cent in Vancouver. Clearly, companies and employees see opportunities in these cities and are drawn to them as a result. However, smaller markets are just as capable of attracting talent. In fact, both Waterloo and Winnipeg beat out the big cities from 2010 to 2015, reporting 74.4 per cent and 58.5 per cent growth in tech occupations, respectively. The affordable business and living costs in these smaller cities make them desirable in comparison, and has led to competitive advantages in the long run. Tech Industry Outlook Though employment in tech occupations is growing In terms of outlook for the continued growth of the tech ineverywhere, CBRE notes that highly-skilled tech talent dustry, CBRE looks to millennials and start-up cities as a workers seem to be concentrated in Toronto, Montréal and guide. Millennials are increasingly attracted to tech-cenOttawa alone. More specifically, “Toronto’s tech employtered jobs, and have “exhibited a preference for living in cities rather than suburbs,” two factors which have contributment base contains 25 per cent of Canada’s tech talent,” foled significantly to the labour pool of talent in the Top 10 lowed by Montréal with 16 per cent concentration, and Otcities nationwide. Many tech companies tend to cluster tawa with nine. Reasons for concentration are varied and around universities, ensuring a consistent flow of talent, relative to competitive advantages (including real estate especially in cities with a high educational attainment rate. costs and wages, as described below). However, it is clear According to CBRE, “tech companies use these clusters to that these cities contain “a sizeable concentration of highly-skilled workers,” resulting in prosperous tech environcollaborate and compete with one another, thereby accelerments “conducive to innovation.” ating the innovation process in the market.” Start-up cities are similarly good indicators of the future of the industry. CBRE claims that “while there is much Education Similar to employment, education affects the concentration of tech talent in Canadian cities and helps to determine ranking in the tech talent report. According to CBRE, high OFFICE ASKING RENT BY MARKET (Q2 2016) educational attainment — defined by the achievement of a minimum university degree — is a visible aspect in the top Annual Gross Direct Vacancy Asking Rent Per SF Rate tech talent markets. Specifically, “all 10 of the largest markets have an educational attainment rate above the CanVancouver, BC $39.78 11.2% adian average of 28 per cent.” Simply put, highly educated Calgary, AB $35.70 21.6% individuals are desirable in all fields, and in Canada’s tech Toronto, ON $33.96 9.4% markets, “demand for these skilled employees is very Edmonton, AB $33.24 13.4% strong.” Thus, educational attainment rates contribute to Ottawa, ON $32.44 10.7% the overall ranking of cities in CBRE’s report. Montréal, QC $31.77 13.3% Of the Top 10 cities, Ottawa leads with more than 40 per Halifax, NS $27.42 14.9% cent of the working population having received a university deLondon, ON $23.63 17.1% gree. Following behind, Toronto, Halifax, Vancouver, Calgary Winnipeg, MB $23.54 9.8% and Montréal have all reported attainment above 30 per cent. Waterloo Region, ON $21.87 13.5%

Source: CBRE Research Q2 2016

Employment CBRE notes that “demand for tech talent across all industries is growing,” and in

to be gained from analyzing larger tech-companies, as they have the ability to move markets and provide a representative sample of what tech tenants require, it is also important to recognize the next generation of tech talent.” Simply put, vibrant startup companies have a strong ability to attract talent, and can easily grow to become tomorrow’s tech giants.

Source: CBRE Research Q2 2016; CMHC 2015

Source: CBRE Research Q2 2016

Photos by Frank Desgagnes

Real Estate

As mentioned above, tech talent accounts for only 4.7 per cent of the country’s total workforce; yet, this small group greatly affects commercial real estate in Canada. “Employment growth in tech occupations has a multiplier effect that positively impacts economic growth, which has an immense impact on commercial real estate in that market,” says the report. High-tech companies accounted for 16.1 per cent of all significant office leases in 2015 — equivalent to two million square feet of space — resulting from the addition of almost 140,000 new tech jobs over the past five years. Ultimately, rising rents and declining vacancies are reported across the board.

Of the 10 cities reviewed, Vancouver has the most expensive office rents on average, followed closely by Calgary and Toronto. Yet competition is strong is all cities, as companies continue to cluster and seek unique spaces to transform into creative hubs. Tech talent has also proved influential on the residential real estate market. CBRE notes that “these highly skilled and educated workers command on average 45 per cent more than non-tech salaries in Canada”; and thus, tech employees can afford to live in five of the 10 cities that contain costs of living above the national average. Employee wages are the greatest cost to tech companies, followed closely by real estate costs themselves.

Comparing Costs CBRE’s final scorecard concludes that Toronto is the market

leader in terms of industry outlook and tech talent, and thus places it in the number one spot of Top 10 cities. However, the report uses the salary of 500 employees and a fictional 75,000-sq.-ft. office lease to shine light on the realistic cost of operations across the board. “What’s interesting to note is that the markets with the highest rates of tech jobs growth, Waterloo, Winnipeg and Halifax are all in the bottom half of our rankings of overall cost to operate. It’s clear that firms are targeting cities which provide a cheaper access to labour, but also provide educational attainment levels which are markedly higher than the national basis,” says Wong. Employee wages are by far the greatest cost within tech talent markets. Calgary, surprisingly, came out as the most expensive tech market for employers. This was driven by higher wages, at an average of $83,000 for tech workers, as salaries remain elevated following a strong energy market performance. This was approximately $3,500 higher than the next expensive market, Ottawa. With increasing office vacancy and further energy market job losses, the overall cost in Calgary is expected to decline in the coming years. CBRE concludes that cities like Toronto and Vancouver, though highest on the desirability scale, sit somewhere in between smaller markets like Ottawa and London in terms of overall cost. “Despite the higher cost of real estate in Toronto and Vancouver, this is dwarfed by the cost of wages. So lower salaries than other Canadian cities still make these large tech centres an affordable option for many companies. When you add that in these APARTMENT RENT-TO-TECH WAGE RATIO two cities over a third of the labour pool is university educated, and they already Annualized 2015 Average Rent-to-Tech Apartment Rent Annual Tech Wage Wage Ratio provide established tech networks and communities, it’s little wonder that Vancouver, BC $15,214 $72,356 21.0% many international firms are looking to Toronto, ON $14,514 $74,165 19.6% set up shop there. Compared to the top Edmonton, AB $13,641 $75,376 18.1% Halifax, NS $11,721 $65,445 17.9% 50 most expensive North American Winnipeg, MB $11,103 $64,294 17.3% tech markets, Toronto and Vancouver Calgary, AB $13,920 $83,303 16.7% are 49th and 50th in the rankings, assisted by a low Canadian dollar. This Ottawa, ON $13,011 $79,726 16.3% makes these two cities a relative barWaterloo Region, ON $11,115 $72,097 15.4% gain for U.S. tech firms looking to exLondon, ON $10,329 $70,399 14.7% pand further north,” says Wong. b Montréal, QC $8,859 $68,244 13.0% building.ca

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special feature

TRANSIT OPERATIONS LIGHT UP ENERGY SAVINGS IN BRAMPTON

By The Communications Bridge

Photos by Frank Desgagnes

he City of Brampton, Ont. recently developed an Energy Conservation and Demand Management Plan with specific targets to be met by 2019. This is a strategic plan that aims to improve energy efficiency and reduce greenhouse gas emissions of City-owned facilities, to foster a culture of conservation within the corporation and community, and to demonstrate leadership in sustainable operations. With this objective in mind, Brampton’s Facility Support Services initiated a lighting retrofit of Brampton Transit’s 150,000-sq.-ft. Clark Facility that would substantially increase energy efficiency. The project was led by Saleh Daei, whose 12 years of energy conservation experience paved the way for a successful installation. Daei commented that, “the successful completion of this project was a direct result of the strong support and cooperation of both the City’s Transit and Finance divisions. The buy-in and assistance of their staff was critically important.” The Clark Facility serves as both a storage area and maintenance facility for the city’s fleet of buses. It was determined that replacing the 220 HID lamps with new lighting technology would dramatically reduce energy costs as a result of decreased energy use.

The new installation provides savings of 500,000 kWh of energy annually, a savings of $65,000 per year.

Reduced maintenance cost was another significant factor because the old lamps had to be replaced and disposed of every two years while the new fixtures have a rated lifespan of at least 10 years. The Solution With these factors as the focus, the department then conducted an open tender process. After a thorough review of the proposals and testing of several samples, it was determined that GE’s Albeo LED high-bay luminaires provided the best solution. The lighting quality and cost savings provided by this product met all the stringent requirements specified by the City. Once GE Lighting was chosen for the project, the City provided a floor plan of the facility and asked GE to create a design for the reconstruction of the lighting system. It was imperative in the design that no additional fixtures or locations be added in order to meet the energy savings requirement. One additional challenge that had to be faced was, as Peter Bellingshausen, Senior Fixture Area Manager, GE Lighting explained, “Clark is a 24/7 operations facility, all the retrofit work had to be done without any ‘shutdown’ opportunity. We were able to accommodate this and complete work without any disruption to ongoing operations, and do so within project timelines.” The Result “The installation of the new LED systems has provided the energy and maintenance savings that we were looking for. In addition, the quality of lighting is far superior to what we had previously and has contributed to increased operator safety and maintenance technician efficiency as well as enhancing our security,” notes Daei. building.ca

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EXPRESSING the

EPHEMERAL

Branding is a vital tool — if used correctly. This is as true for cities as it is for any other product in any other marketplace. A strategist discusses how branding can communicate a unifying story about the value of a city.

FEBRUARY MARCH 2017

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By David Allison

ype in “definition of the word ‘brand’” on Google and you won’t find one. You’ll find millions. In any discussion about branding this is the first problem: a multitude of strident experts who are convinced they have finally defined branding in the best way possible. Clearly it would be better if everyone used the same definition,

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but unfortunately there is nothing more open to interpretation than the touchyfeely subject of branding. Except, perhaps, the subject of cities: planning them; zoning them; building them; and yes, branding them. The most useful definition of a brand that I have ever encountered, and the one we use with our clients in industries as broad-ranging as real estate development, universities, aboriginal nations and private equity funds, is this: your brand is everything that everyone says about you after you leave the room. Think about all the things you feel about someone who has just left the room. Everyone will have an opinion. The best you can hope for is that people remember you as friendly or bright, accomplished or approachable and that these attributes are impactful enough to outweigh any slight imperfections. Now try to apply this definition to a city. Obviously this is next to impossible to capture. Even to get a loose hold on a general answer is like chasing mercury with your fingertip across a Grade 9 chemistry lab desktop. It has a mind of its own, and changes direction unexpectedly. It can be overwhelmingly positive and grand, and then ruined by a tiny detail or single story. You can be Toronto, thriving and booming and sexy, until an obese sweaty mayor gets filmed smoking crack in a basement with a posse of drug dealers. Suddenly your city is famous around the world, for all the wrong reasons. Attempts to brand a city can seem insurmountable and futile. How can it ever be defined or shaped? When something as quotidian as a tube of toothpaste has teams of dedicated brand managers and highly-paid consultants working to impact the way the toothpaste makes consumers feel, how can a taxpayer-funded construct like a city even get in the game? And how do you cope with the unthinkable and unavoidable: the errant crack-pipe-toting mayor, or the rude waiter, or the garbage strike that lasts for a month?

First – or lasting? – impressions An interesting mental exercise while exploring this topic is to reflect on all the places I have been recently, and chart what I think the story of each city is — the brand that holds most true, at least for me, at least at this moment in time: Victoria

British tourists run amok;

Kelowna

Booming and cute on a lake;

Prince George Calgary Edmonton Toronto New York Seattle Phoenix Paris London Berlin Rotterdam Chicago

Resource sector labour playground; Cowboys, literally and figuratively; Oil mixed with bureaucrats, on ice; Grossly underappreciated, if you ask them; Bloated, self-satisfied and always surprising; Earnest flannel and invisible waterfront; Vast unrealized potential, and guns; Beautifully confusing and unconcerned;

Wishes it were Paris; Somehow artfully messy yet still dull; Architecturally aggressive, and proud of it; Cluttered and striving;

Indianapolis

Bland and fine with it;

Winnipeg

Bland and unsure what to do about it;

Los Angeles

All surface, no depth, with bonus earthquakes.

All of these brand associations are highly personal. Anybody reading this will almost invariably have different reactions to these cities. And I guess that’s the point. This neat little construct we have come up with in the marketing business, this thing called branding, isn’t as useful as it could be or should be when it comes to a seemingly undefinable, ever-changing, very personal institution like a city. So, how to do this better? Is there a solution? I think there is: it has to do with letting go of our need for everything to be quantifiable, measurable, and scientific. It may help to think about a city as a business, despite the inevitable uproar that such a narrow definition will create. The business of a city is to attract investment, compel companies who will create jobs to locate there, encourage people to choose the city as their home, and make it appealing to tourists who will drop a few thousand dollars on a visit. I’d argue that another primary objective is to make people proud to live there. Using very broad strokes to paint this picture, the next step should be to figure out a baseline. We all have our suspicions about how our city is perceived at the moment, but is it accurate? Best ask the people you are building the brand for. In this hypothetical case, you need to hear from the current and potential citizenry, business owners from other nearby municipalities who could conceivably be lured to relocate, and potential tourists. Arguments about research methodology to get an accurate read on the current state of the brand could fill volumes. But in my humble opinion this doesn’t need to be complicated. It is not about science. It’s about science in the service of art. Get as much of a read on the current situation as you can, of course. But don’t spend the time or money or political capital required to have statistically supportable data that could stand up to rigorous academic scrutiny. Precision is not the point. What is the point? The point is to sift through the data, discard most of it, and find the themes that consistently appear. Spotting them can be frustrating, and requires experience. But it’s worth the trouble and time to find them. Because the truth is in there. What happens next is a judgement call. Remember, this is art, not science. If the key themes you have excavated are sparkling gems that simply need to be building.ca

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widely exhibited, then you have the raw materials you need to start building a brand for the stakeholders you’ve defined. If, however, the storylines you find are not diamonds, but merely ugly misshapen lumps of coal, you have another path to follow. You must compress, polish, recombine, dig around some more, and find workable themes. You excavate ready-made diamonds, or you make cubic zirconia on your own. It’s exceedingly simple and yet very hard to make your own themes from scratch. And I can’t even begin to explain all the methods you might use in this space. But there is one terribly important rule to remember: they must be true. You can’t, if you are a small town in eastern Idaho, decide that you are the world capital of magic-bean production, when in fact beans don’t grow in your town at all, let alone enough of the magic kind to be significant on a global scale. If you choose to propagate a brand based on something other than truth, be prepared for the fallout. The social media-fuelled democratization of finger pointing means you will certainly be shrieked at for making stuff up. And unless your brand ambition is to be known as the town that lies a lot, you won’t be happy. Once you have your truthful themes in hand it’s time to do something with them. The most powerful thing you can do is write a simple story. Writing a brand story for anything is the moment when science gets tossed out the passenger window and art takes the wheel of the car. Stories are peculiar things: the best ones last a very long FEBRUARY MARCH 2017

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time, sometimes forever, and are most often the simplest and most human. The stories that are forgettable are the ones that try to make everyone happy, and end up making no one feel anything. You have to be willing to let things go, to boil down your brand to the most important, most memorable wisps. At least at first. Once you have caught someone’s attention by using a simple and engaging story as a wedge, you can insert specific details to placate even the most skittish politician, savvy career bureaucrat, or easily peeved community activist. After your story has created that receptive opening of attention, you can jam in all the labour statistics and cost-of-living indexes and most-livable-city rankings you want. Perhaps the best way to illustrate my point is with a comparative example of my own work. Let’s start with the brand story of Vancouver, as it appears on the official civic website (I did not write this — it’s buried a few pages under the homepage): OUR CITY With its scenic views, mild climate, and friendly people, Vancouver is known around the world as both a popular tourist attraction and one of the best places to live. Vancouver is also one of the most ethnically and linguistically diverse cities in Canada with 52 percent of the population speaking a first language other than English. Vancouver has hosted many international conferences and events, including the 2010 Winter Olympics and 2010 Winter Paralympics. ABOUT VANCOUVER’S FIRST PEOPLE’S An aboriginal settlement called Xwméthkwyiem (“Musqueam,” from masqui, “an edible grass that grows in the sea”), near the mouth of the Fraser River, was present here at least 3,000 years ago. At the time of first European contact in the late 18th century, the Musqueam and Squamish peoples had villages around present-day Vancouver, along with the Tsleil-Waututh, ancestors of today’s Burrard Band in North Vancouver. They were all Coast Salish First Nations, sharing cultural and language traits with people in the Fraser Valley and Northern Washington. OUR 125th ANNIVERSARY 2011 was Vancouver’s 125th anniversary and year as Cultural Capital of Canada. Vancouver 125 was a year-long program of anniversary initiatives and events. As part of our 125 celebrations, a digital media project, Vancouver Stories, was completed to gather and record neighbourhood stories in communities across the city.

And here is an excerpt from the brand story of Vancouver I wrote, commissioned by a client. It is based on extensive quantifiable research, but I hope you can’t tell. Anyone who lives in Vancouver knows how good it feels to come home. It doesn’t matter if you have just been to Paris or New York, a tiny ski town in Colorado or a sandy-island off the coast of Peru. There is something about coming home to Vancouver, all fresh and green and human-scaled, that makes your heart skip a beat. You may travel far-and-wide and explore the globe, but coming home to our city of glass, nestled between the mountains and the sea, always makes you feel great.

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Another thing: have you noticed that when you are away, and someone asks you where you are from, it’s a very good moment in your day? It’s because there’s a brief second or two of anticipatory pleasure that comes from knowing you have the best possible answer. “Me? I live in Vancouver,” you say. And you are quietly thrilled to be asked. Saying “I’m from Vancouver” will almost always be met with an expression of envy, or a story about a memorable vacation at some time in the past. It may even elicit a wistful confession that while Vancouver is high on the bucket list, it just hasn’t happened yet. “Someday soon,” your new acquaintance will say, she “hopes to make it there,” because she’s heard “It’s beautiful.” Why is that? What is it about Vancouver? There is great beauty here. At first glance we are a bustling cosmopolitan city, surrounded by towering alpine peaks that slope down to ancient rainforests which eventually give way to spray-splashed beaches and wave-polished driftwood, and that one small seashell you found in a tidal pool on your walk, earBut there is more. Behind the scenic splendour Vancouver feels like no other city on earth because of the endless collision of opposing factors. Vancouver is created fresh daily when nature and culture, tradition and innovation, technology and craftsmanship move forward together. Vancouver is continuously bustling and relaxed, global and local, competitive and caring.

Since 1985, David has advised brands such as General Motors, Telus, Toyota, Westin Hotels, and Sotheby’s International Realty. He’s helped daily newspapers, symphony orchestras, art foundations, government agencies, professional service firms, restaurant groups, retailers and more. His work as an author, journalist, conference speaker, university lecturer and award-winning writer influences the brand strategies and stories he develops across industry sectors. www. davidallisoninc.com

10 key principles Brands without substance are meaningless. In public-private relationships, the private sector organization’s brand is just as important as the city’s. W hen building brands, cities must take advantage of local culture and history in order to differentiate themselves from others. Authenticity is valuable.

ly this morning.

Even though those few paragraphs are just an excerpt from the full story, the contrast is obvious, and it has a chance of staying with you. I hope at some point in the future, if asked about Vancouver, you might even repeat some part of it in your own words. If a city brand can do even that, I think it is doing a very good job indeed. Limited space on these pages meant I’ve had to simplify or outright omit pedantry terms throughout. These terms, curiously enough, tend to multiply exponentially in direct proportion to the amount of money paid to a brand consultant. How many angels can dance on the head of a pin? Ask a highly-paid brand consultant and you will get a giant three-ring binder report. It will be delivered with great pomp and ceremony, and no one will ever read it. It’s infuriating. This doesn’t have to be rocket science. Simply figure out who you are, and then consistently tell your story in a memorable way. That’s it. b

Increasing citizen pride, engagement, and a sense of identity are essential components of any city brand. In some cases, especially in smaller cities, redevelopment must come before re-branding.

Different brands attract different organizations. Because developers often share investment with several companies, it is important that a city’s brand appeals to a variety of groups. Cities should use what resources they already have. “Throwing a lifebelt to an abandoned brand is better than trying to launch a new one.” P reparing for the longterm is essential. The cycle of return on branding investments is much longer than any political cycle. T he process is about more than just branding. It’s about perceptions, pride and identity. A city must believe in their brand in order to make it work.

Source: City Branding and Urban Investment: A ULI Urban Investment Network Report, July 2011.

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V I E W Walk With Joy ULI Toronto’s Executive Director suspects the Province of Ontario is actually killing the city with kindness through its reaction to road tolls and gas taxes. By Richard Joy

The dream that Canada’s largest urban hub municipalities—the engines of the national economy — will someday control the levers necessary for the advancement of their economic and social well-being is dying. For the second time in 18 months a provincial government has thwarted the initiative of a major Canadian city to advance its clear and unequivocal interests. The Province of Ontario’s denial of Toronto’s road toll plan follows British Columbia’s imposition of a no-hope plebiscite on the Vancouver region, crushing the bold leadership of almost all its mayors to fund transit expansion. While the Province of Ontario maintains that it is simply replacing hoped-for city toll revenue with provincial gas tax sharing, such measures serve to stunt the maturation of Canada’s largest global city. Twenty years ago, a national urban movement emerged called C5, led by philanthropist Alan Broadbent, urban-guru Jane Jacobs, and the mayors of Canada’s five largest cities. It exposed a complex set of challenges facing Canada’s big cities, but none more fundamental than the “inefficient and circuitous permissions and grants from provincial governments and sporadic acts of largesse from the federal government to get necessary money to the cities,” said Jacobs. In the same era, other progressive developments combined to stoke a sense that Canada — a country constitutionally molded to an agrarian sensibility — was on the brink of an urban renaissance. The Supreme Court of Canada agreed that a suburban municipality of Montréal had the right to impose a pesticide ban despite not having clear legislative authority to do so, ruling that such a ban advanced a clear municipal interest. It was a legal breakthrough that turned on its head the idea that municipalities were nothing more than the narrow authority of powers prescribed by their provincial governments. FEBRUARY MARCH 2017

In the spirit of this constitutional ruling, two successive Ontario governments strengthened municipal authority by transitioning toward municipal acts that advanced broad spheres of power to allow greater interpretation of the municipal interest. Most significant of these reforms was the City of Toronto Act (2006) which further removed legislative boundaries to maximize public policy innovation and revenue generating opportunities. These reforms did not address another serious challenge relating to the lack of regional governance coordination of the GTHA’s 30-odd municipalities. But they clearly responded to the overwhelming consensus from the spectrum of business, social, and civil society organizations that for the region’s hub city to thrive it required access to taxing and policy powers available to other global cities. And while Toronto has been curiously timid in adopting such powers (something I touched on in the January 2016 issue of Building), the decision of City Council to pursue road tolls represented a coming of age moment for Canada’s major global city (another topic discussed in the December 2016 issue of Building). To be fair, the Ontario government has undertaken a range of fiscal initiatives of its own that have benefitted Toronto immensely, including the uploading of social services and historic investments into transit infrastructure. The city has more than recovered from the dire financial straits of provincial downloading from the 1990s. But when our public housing stock is Richard Joy is Executive crumbling, critical public transit projDirector of ULI Toronto. ects are unfunded, and transit riderPreviously, he served as ship is on the decline, what matter does Vice-president, Policy and bean counting make? Government Relations at Taken in isolation, Premier Wynne’s the Toronto Board of replacement of locally levied road toll Trade, and was the revenues with increased provincial gas Director of Municipal tax dividends appears to be a deft politiAffairs and Ontario cal maneuver. A political “triple toe(Provincial Affairs) at loop,” as one observer called it. But unGlobal Public Affairs. derstood in the context of what the Follow him on Twitter leadership of the Kathleen Wynne gov@RichardJoyTO or email ernment knows is a necessary condiat Richard.Joy@uli.org tion for the GTHA and its hub city to prosper — greater fiscal autonomy — the late-January announcement was a serious blow. Well intended as it may be, such acts of largess are just killing the city with kindness. b

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