Canadian Real Estate Forum Magazine - Fall Issue 2012 by Real Estate Forums

CANADA’S LEADING

FALL 2012

Real Estate Forum THE GOLD STANDARD FOR REAL ESTATE INTELLIGENCE

OTTAWA: Titanesque transit scheme to transform downtown Ottawa

CALGARY: Needs more AA & A space in the core, the Beltline is only three blocks away and growing

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CANADA’S LEADING

THE REAL ESTATE FORUM CONFERENCE TEAM: Nataliya Antonenko Roberta Brown Hailey Chan Maria Encarnacion Lucy Leng Jessica Petrucci Jean Pickering Katherine Radziszewski Sarah Segal Shruti Suppiah Gillian Wright

Informa Canada inc Steven Levy President Informa plc Will Morris CEO, Exhibitions About Informa BRINGING KNOWLEDGE TO LIFE Businesses, professionals and academics worldwide turn to Informa for unparalleled knowledge, up-tothe minute information and highly specialist skills and services. Our ability to deliver high quality knowledge and services through multiple channels, in dynamic and rapidly changing environments, makes our offer unique and extremely valuable to individuals and organisations.

Real Estate Forum THE GOLD STANDARD FOR REAL ESTATE INTELLIGENCE

OTTAWA

14 The power of the external forces 16 Titanesque transit scheme to transform downtown Ottawa 18 Is the Ottawa’s zoning producing paradoxical results? 20 Is Ottawa market, awash in liquidity, moving westward? 22 The commercial real estate market in Ottawa has revealed its annual impact is over $2,000,000,000

The retail market in Ottawa is on fire and it’s not being put out any time soon

26 28 30 32

Seeking Creative Types and Entrepreneurs Savvy choices spell opportunity, despite tight Ottawa market Suburban opposites: Ottawa’s East and West poles Views of the past, present and future: From Ottawa’s secondgeneration family real estate executives

www.informacanada.com REAL ESTATE FORUM MAGAZINE The magazine is published three times a year to coincide with the following conferences: SPRING Edmonton/Montreal/Vancouver FALL Calgary/Ottawa WINTER Toronto EDITOR Michel Rémy Michel Rémy is the editor of TheSquareFoot.ca, a commercial real estate publication that specializes in timely market information, news and networking. DESIGN gbc-design.com ©2012 Informa Canada Inc. Disclaimer: The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of Informa Canada.

TO ADVERTISE, CONTACT Frank Scalisi Director of Sponsorship and Advertising Sales Phone: 416-512-3815 Email: frank.scalisi@informacanada.com See our ad on page 56 CONFERENCES For more information on the Conferences, visit our website at

www.realestateforums.com

CALGARY

36 Downtown versus the Suburbs: Calgary’s Future Remains Bright 38 Confidence and Creativity Change Real Estate Possibilities (Build it and they will come)

42 44 44

Searing market turns Calgary property into “commodities”

Luxury, Small Spaces and Mixed-use Trending in RapidlyExpanding Retail Market

48 50 51 52 54 55

Calgary Risks Becoming Too Expensive

4 6

Mixed-Use Developments Require Cooperation and Synergy The Available and the Scarce: Issues concerning Calgary developers

The two major forces impacting our world right now Calgary office development spreads beyond downtown Canada’s short-term, long-term energy prospects remain strong What’s up and who’s in Legendary Success

Slow, steady Ottawa stuck in growth cellar through 2016 and Calgary’s robust growth seems to be a never-ending story

Editorial: It’s all about growth & change

The Altus Report: Going Global Impacting Calgary and Ottawa Very Differently

Getting our Act(s) Together – The Modernizing of Provincial Real Estate Acts

Commercial Real Estate Sector’s Significance Finally Quantified Canadian Real Estate Forum / FALL 2012

CANADA’S LEADING

Real Estate Forum THE GOLD STANDARD FOR REAL ESTATE INTELLIGENCE

It’s all about growth & change When we look at the changing face of our provincial and global markets, determining the direction of commercial real estate in this country is more about following the road signs than gazing blankly into a crystal ball.

orums such as these not only equip us with insight from expert navigators, but also afford us the opportunity to focus on the signs that are the most important. Through its annual conferences in Ottawa and Calgary, the Canadian Real Estate Forum has been mapping these guideposts for years and this year, all roads point to change, and the forums in these two cities are testament to these new inroads. In the past year, new ways of viewing how we live, work and play have spearheaded Ottawa’s revitalized downtown core. Its light-rail transit project is fuelling urban living and opening up doors to new real estate investment opportunities, while its commercial market’s impact on the economy continues to grow and evolve. Likewise, the reinvention of what constitutes commercial and investment properties in Calgary has spawned developments such as Quarry Park, The Bow and CrossIron Mills, architectural innovation has given the city a new skyline and the creation of a shopping experience beyond the city’s limits have changed how we view a day at the mall.

Canadian Real Estate Forum / FALL 2012

Change has also come to the Real Estate Forums. At the start of this new season, the forums underwent new branding through an extraordinary platform called Informa Canada. As part of the Informa Exhibitions division, Informa Canada produces and manages more than 55 events throughout the country. Despite these changes, our team and devotion to delivering quality and valuable events remains the same. But with new tools, we will be at the forefront of the latest trends for networking and conferencing. We thank all the contributors, including the Chairs and Speakers at the Calgary and Ottawa forums, for lending their expertise to enriching the real estate industry with their insights and global views.

George Przybylowski

Mark Stephenson

Vice President Informa Canada george.przybylowski @informacanada.com

Vice President Informa Canada mark.stephenson @informacanada.com

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THE ALTUS REPORT

Going Global

Sandy McNair

IMPACTING CALGARY AND OTTAWA VERY DIFFERENTLY On the global stage Canada has become a player well above of our weight class. Banking system governance, fiscal accountability and discipline and freer trade are but three areas where Canada’s voice is being heard by countries and economies much larger than ours. By Sandy McNair

his increased activity on the global stage is impacting the behavior of Canada’s federal government at home, particularly in Ottawa where meaningful and specific action is being taken to rebalance the budget by reducing Federal spending and headcount. In Ottawa, where the Federal government owns or leases at total of 63% of the entire office inventory, this shift from a multidecade growing presence, headcount and footprint to one of real reductions, not just a reduction in the rate of growth, the impact is profound and will accelerate through to 2016.

Flight to Quality As the federal government selectively vacates Ottawa office buildings that no longer comply with their criteria, these buildings become candidates for redevelopment, repositioning, conversion to retail, residential and other uses and/or demolition. The silver lining for all the stakeholders in Ottawa’s downtown is this is a rare opportunity to reposition, reinvent, revitalize and even rebuilt meaningful portions of downtown Ottawa.

In parallel with reducing overall headcount, the federal government is also committed to competing for talent (an accelerating effort to retain and recruit excellent people) with the result that they are now biased not only towards better buildings but better managed buildings as well. Increased use of technology, increased occupant density and access to amenities and public transit are key concerns for almost all office occupants, especially the federal government. These objectives are being implemented and, as a result, six significant new office buildings totaling 5.1 million square feet of office area are being built, acquired or leased by the federal government. In anticipation of the overall shift to better quality, several more office buildings are under construction in Ottawa. Historically one of Canada’s most stable and predictable office markets, Ottawa is going to bifurcate into a stable higher quality segment with the other segment one that will require significant attention, innovation and likely investment. Continued on page 8

Ottawa Under Construction Office Area Pre-Leased Area Target Completion Date

Canadian Real Estate Forum / FALL 2012

90 Elgin St. 585,000 585,000 2014

22 Eddy St. 477,406 477,406 2013

30 Victoria St. 451,587 451,587 2013

455 Carriere Blvd. 350,936 350,936 2013

Ottawa Under Construction Office Area Pre-Leased Area Target Completion Date

Bona McArthur Ave 350,000 0 2013

150 Elgin Street 348,149 141,966 2014

395 Terminal Avenue 239,802 239,802 2013

1331 Baseline Road 80,000 60,000 2013

Access to Capital Supports Growth in Calgary Going global in Calgary has been a very different experience. Calgary’s energy expertise is receiving global attention and on a still accelerating basis, increasing investment from corporations and other governments’ investment vehicles including China, Kuwait, Singapore, Norway and many others. This ongoing vote of confidence and access to capital has supported significant new office supply with more underway.

Over the past ten years Calgary is Canada’s fastest growing office market with more than 15 million square feet of growth to a current total of 63 million square feet. The overall market continues to be very tight and several new towers are underway to meet current and anticipated demand.

Calgary Under Construction Eight Ave Place W. Office Area 841,064 Pre-Leased Area 841,064 Target Completion Date 2014

Calgary City Centre 706,800 136,800 2016

Centron 10 335,000 150,145 2013

11th Avenue Place 190,000 100,000 2014

2020 4th Street SW 110,640 0 2013

Parkside @ Quarry Pk 101,151 101,151 2013

Britannia Crossing 53,272 53,272 2013

West 85 32,900 32,900 2013

826 85th St. SW 32,899 32,899 2013

32 Royal Vista Dr. 30,000 30,000 2013

5010 Richard Rd. SW 26,420 26,420 2013

Calgary Under Construction Biscuit Block Office Area 56,930 Pre-Leased Area 56,930 Target Completion Date 2013

US Retailers Drive Growth in Retail Canada’s Retail Market has been going global, too. American, European and other retailers have made or announced commitments to invest in Canada. Lowes, Target, Nordstrom and many others are driving changes within existing retail projects as well as driving the construction of many new projects. Both Calgary and Ottawa are active participants in this heightened level of retail repositioning, redevelopment and new supply. Canada’s first Nordstrom will be in Calgary with the second one in Ottawa. Perhaps, uniquely, retail can generate big winners and big losers at the same moment in the same markets.

Canadian Real Estate Forum / FALL 2012

As with all change there are opportunities and risks. With increased attention comes increased accountability and the risk that capital and enthusiasm will swing toward and away from specific markets and opportunities. So as the old saw goes – anticipate the best and prepare for the worst… ■ Sandy McNair is the President of Altus InSite, a division of the Altus Group. Altus and Altus InSite brings to their clients extensive experience, market information and perspective in Canada’s Commercial Real Estate Investment, Development and Leasing Markets. www.altusinsite.com

The sky isn’t falling

Slow, steady Ottawa stuck in growth cellar through 2016 and Calgary’s robust growth seems to be a never-ending story

“It’s not going to be the catastrophe that some people might think it will be,” Lefebvre reassured. “I wouldn’t want to compare the current federal government restructuring to the one it went through during the 1990s, when the Ottawa economy posted zero-tonegative growth.” He stressed that the capital’s economy is still growing, albeit extremely slowly. “One and a half per cent last year, one per cent in 2012 and 1.4 per cent in 2013,” he said. “So it gives you an average of about 1.25 per cent over three years.” “Given current government restructuring and the fact that infrastructure programs are coming to a close, this certainly is not as negative as some people portray it.” Lefebvre underscored that Ottawa wasn’t hit as hard as other cities by the 2008-2009 recession, and cautioned that casual comparisons with other Canadian cities could prove misleading. “We like to call Ottawa the steady-as-she-goes city,” he said. “It hasn’t seen the 6-7% tumble that places like Hamilton and Windsor went through when the manufacturing sector was struggling mightily.”

As Canada prepares to trim more civil service jobs and slash government expenditure, the Conference Board of Canada predicts that the growth of Ottawa’s economy – though positive – will rank among the slowest of the country’s largest cities.

Robust growth: Calgary’s never-ending story

“W

hen you look at the prospects for Canada’s thirteen largest census metropolitan areas, the cities occupying the last few spots all feature a strong presence by governments that need to tighten their belts,” said Mario Lefebvre, Director of the Conference Board of Canada’s Centre for Municipal Studies. “So Victoria, Quebec City and Ottawa-Gatineau – where the federal government still accounts for about 20% of the economy – will trail the economic growth rankings during the next five years.”

Mario Lefebvre

Ottawa vs. West REAL GDP AVERAGE ANNUAL GROWTH, 2014-16 0.0

1.0

2.0

Calgary Edmonton Saskatoon Vancouver Regina Winnipeg Victoria Ottawa-Gatineau Source: The Conference Board of Canada.

Canadian Real Estate Forum / FALL 2012

3.0

4.0

Despite potential perils lurking just over the horizon, there is no sign that the party will end soon in Calgary. “There’s still incredible activity going on in the Alberta energy sector,” declared Lefebvre. “While Calgary has diversified over the years, it is still very much linked to the fate of the energy sector – and since that sector’s prospects remain quite rosy, there is no room to call for anything less than robust economic growth in Calgary.” Calgary’s economy continues to confound experts, who had expected the longstanding rise in the city’s fortunes to plateau some time ago. “We thought that housing prices which were increasing much more rapidly in Calgary than the rest of the country would deter people from moving to Alberta from other provinces in Canada,” Lefebvre admitted. “We figured that eventually the house price differential would become so great that no one could afford to move there,” he said. “But it’s not happening – at least not yet.” “You still have very positive interprovincial migration – 20,000 people arrive in Calgary from other provinces every year,” he continued. “Housing experts say that, on average, 2.5 people reside in each home, so that’s a solid 8,000 housing starts right there – on top of the natural increase in Calgary population through births.” ■ Robert Frank – The Square Foot

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CHAIRMAN’S WORD

Cal Kirkpatrick

By Michel Rémy TheSquareFoot.ca

Canadian Real Estate Forum / FALL 2012

The Ottawa real estate forum chair Cal Kirkpatrick has noticed a consistent conversational trend. Instead of focusing on market conditions and vacancy rates, the dialogue he hears has much more to do with the impact of other, external forces.

“I

think the LRT is going to have a bigger impact on our industry than perhaps some people realize - not only in downtown, but also the final routes as it works its way to the suburbs.” Kirkpatrick believes the new transit system will lead to a great deal of new density development along its routes, not unlike what has occurred with larger cities like Toronto or Montreal. “Let’s not forget, one of the great attributes of the city of Ottawa’s real estate markets is its stability and its relative calmness,” he says. Despite recent downsizing by the federal government, Kirkpatrick says

the market will remain steady. This is because, for 2013, he foresees even more diversification in Ottawa real estate. “One of the messages coming out of our industry is that we have to be prepared for not so much life without the federal government, but life with less federal government and the safety net that it provides. We saw the peaks and valleys with the high tech community and what they had done to Kanata and the City of Ottawa, and we just thought that we had to be able to find some kind of economic sustainability beyond the federal government.” ■ Canadian Real Estate Forum / SPRING 2012

Titanesque transit scheme to transform downtown Ottawa

• • • • • • • • • • • • •

Tunney’s Pasture

Bayview

LeBreton Downtown Downtown West East

Rideau

Campus

Lees

Hurdman

Train

St. Laurent

Cyrville

Blair

Underground trains, people-friendly streets will drive dramatic downtown densification.

Nelson Edwards

Ron Clarke

ublic investment to transform the capital city’s public transportation network is about open swathes of the downtown core to new development, promising to dramatically enrich Ottawa’s quality of life and enliven commercial real estate opportunities. A long-overdue light rail transit (LRT) will put an end to the fumes, noise and pounding that currently makes Ottawa street life so unpleasant that developers have turned their properties inward. “Ottawa is undergoing a really tough transition from a being a big little city into a little big city,” city urban designer Nelson Edwards said. “The move from buses to LRT will change how buildings relate to the street.” “You can literally have a wall of buses on Slater and Albert,” he complained. “They’re like circus elephants walking nose-to-tail, the length of the street.” Developers reacted to the incessant pounding by turning downtown Ottawa into a clutch of inwardfacing buildings, interior malls and indoor walkways. Edwards aims to reverse that. He is spearheading a project called Downtown Moves, which is looking at how best to integrate new LRT trains that will take some 2,600 buses out of the city core. He explained that because of Ottawa’s uniquely narrow sidewalks and very narrow rights-of-way, the LRT will be built underground. “We have to stratify the city vertically, because there’s such a demand for surface space,” he explained. Edwards plans to seize that opportunity, and make Ottawa’s unusually compact downtown so people-friendly that it will attract many times its current 100,000 inner-city workers, “not to mention the surrounding population, fast approaching the

Canadian Real Estate Forum / FALL 2012

million mark and increasing hordes of tourists and convention-goers.” Pedestrian-friendliness will permit densification of currently woefully underbuilt Ottawa sites, many of them blighted by parking lots.

Streets prospective residents desire Ron Clarke, Senior Principal and Manager of planning at Declan, agrees that the revitalized streetscape will multiply the number of commuters entering the city core. “The quick and comfortable ride downtown will make downtown more desirable, opening up more development opportunity that will continue to grow,” he anticipates. He also expects that making downtown more pleasant will have another multiplier effect: increasing the number of people who want to live – not just work – in the heart of the city. To accomplish this, he advocates making streets accessible to anyone aged eight to eighty, “whether they’re on a tricycle or a wheelchair.” “They need streets that are safe to cross and easy to use,” he emphasized, “wider sidewalks to accommodate more pedestrians and facilities for cyclists.” Clarke cautioned that project could take two decades to complete. “Street renewals will include partnerships with gas, hydro and telecom utilities as well as water, sewage and groundwater line reconstruction.” “Construction might take a little bit longer,” he said, “but residents and businesses want their street torn up only once and then have a 20-30-year break from reconstruction.” ■ Robert Frank – The Square Foot

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Is Ottawa’s zoning producing paradoxical results? Michael Polowin doesn’t mince words. The commercial real estate lawyer suggests municipal officials are perpetuating the myth that Ottawa can indefinitely preserve its zoning status quo.

“C Michael Polowin

Margaret Knowles

ities are living entities that evolve and change over time,” he emphasized. “Politicians and senior planners need to recognize that they cannot control this evolution. Instead, they need to respond to it realistically.” “Accommodation has to go up or go out,” he asserted. “The reality is that the Ottawa population is continuing to grow, rental accommodation is not being built and you’ve got to put people somewhere.” Polowin clearly favours up. “Out is perceived as environmentally insensitive,” he said of the urban sprawl alternative. He added that Ottawa’s most successful developers have understood the challenges facing the city, consulted the public and proposed projects which balance responsiveness to the community with development potential. “What the public typically wants are not block buildings but point towers,” he observed. Instead, he contends that knee-jerk, height-isalways-bad zoning dogma risks producing bunkerlike developments that the Ottawa public doesn’t really want. “Height limits in the downtown core are probably out-of-date,” Polowin suggested. “You have situations where a large piece of land can theoretically be built to a given height with a very large mass,” he explained, “when instead a narrower tower that goes higher would more sensitively preserve views, green space and the surrounding pedestrian community.”

Canadian Real Estate Forum / FALL 2012

Follow the transit Morguard’s Senior Vice President, Development Margaret Knowles cited Morguard’s successful St. Laurent shopping mall as a model for communityfriendly development. “That was intensification very close to a residential community,” she said. “We added uses like bicycle paths, pedestrian linkages and so on that enhance a community and integrate [the development] better.” “We connected with the community and listened up close to what they really wanted,” she recalled. “We needed few public meetings, we had a councilor engage the community, make sure that we did all the right things, and we earned great community support.” Knowles hailed Ottawa’s pending commuter train transit initiative as a means to get the best out of intensifying the urban core. “I think that municipalities that are ahead of their time target transit and areas around transit hubs for densification and intensification of uses, as well as increased heights,” she said. “From a planning perspective, it makes a world of sense.” “You have to look where transit is going and follow the transit.” “Educating people as to why height and intensification are needed – and a willingness to negotiate – are really important, and get you where you need to go.” Polowin pointed out that the city’s own planning documents encourage development along proposed commuter train lines. Continued on page 25

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Is the Ottawa market, awash in liquidity, moving westward? Ottawa remains a very good real estate market from an investment perspective, according to John O’Bryan, the end of the era of unbridled federal spending.

“T John O’Bryan

Blair McCreadie

here is no category of [Ottawa] real estate that does not have almost complete liquidity at the moment,” enthused the Vice Chairman of CBRE. “Anything that you have for sale, by and large, is snapped up very quickly with multiple bids.” “We’re starting to see a shift from government to private sector,” he observed. “Inevitably, we’ll have a repercussion in space, so the private sector needs to take up some of that slack.” “It’s being done in a very measured fashion,” assured O’Bryan. “There isn’t a sudden withdrawal. This is a big ship turning around slowly, not a quick spin on a dime by the government.” The federal governments still wants younger real estate, O’Bryan noted, and wants greener, barrier free buildings. He predicted that high-yield real estate such as eldercare facilities and hotels – which have an operating base as well as an investment base – will continue to perform particularly well in 2013.

Prudence perpetuates growth

Ugo Bizzarri

“Ottawa is a good market from an investment perspective,” O’Bryan asserted. “The biggest impediment to trading is that you don’t have enough vendors.” “There is now an inbuilt conservatism to our real estate cycle that we didn’t have in previous recessions,” he said. He describes this careful new attitude as “a virtuous circle”, which will help to sustain growth. “No one wants to disrupt the market by overbuilding. We have great visibility in our economy and most people are doing the right thing.”

Feds shift westward “Ottawa is a good, solid marketplace,” agreed Blair McCreadie. “The market is known for its investment prod-

Canadian Real Estate Forum / FALL 2012

ucts and owning some of the best is good for a fund like ours,” the Head of Standard Life Investments’ real estate practice affirmed. He said that the wild card is whether the federal government – the capital’s largest tenant, by far – expands in the downtown core, or continues to shift westward, to build upon the heavy investments that it has already made in Kanata. “Those are signs that they might be moving out of the core,” he observed, “but they might change their mind. They’re pretty unpredictable.” “Ottawa has long had one of the tightest occupancy levels in Canada,” McCreadie said. “Some shocks are likely in the B class office market because of the feds move into Kanata.” In the meantime, he expects the tight market to continue to drive down cap rates. “There is still a lot of investor demand,” McCreadie reported. “Cap rates can compress some more and will continue to compress until we see an increase in interest rates.” The problem is that the current market is liquid but not fluid. “It’s very tough to get the amount of product that you want,” lamented Ugo Bizzarri of Timbercreek Asset Management. “If I could double our Ottawa assets I would.” He reported that the capital’s capital ratios range from 4-6 per cent. “That’s a big range, depending on the quality of the building,” Bizzarri explained. “The problem is not necessarily cap rates. It’s getting people to sell.” “Do I think that cap rates will probably go up? Yes.” “It’s probably a good time to sell,” he concluded, “but a lot of people don’t know what the next investment horizon is. So it’s very hard for people to sell.” ■ Robert Frank – The Square Foot

$2,000,000,000

The commercial real estate market in Ottawa has revealed its annual impact is over

A recently completed study by Deloitte of the commercial real estate market in Ottawa has revealed its annual impact is over two billion dollars, say industry experts.

“I

f you think about the two billion [dollar] annual impact for office, retail and industrial, and what that means over, say, a 10 year horizon… if you're making investments in the commercial real estate market in Ottawa or pick anywhere else in the country, it’s very significant from a capital perspective,” explains Sheila Botting, Senior Practice Partner at Deloitte Real Estate. According to the report, Ottawa’s office market is considered one of the major Canadian markets with approximately 37 million square feet, accommodating an estimated 300,000 office sector employees. Ottawa’s office market is dominated by the presence of the federal government, which is Ottawa’s largest employer with more than 110,000 employees in the National Capital Region and 143,000 including Ottawa-Gatineau. Ottawa is also home to a significant technology centre, employing approximately 80,000 people. In 2011, the development, construction, fit-out, operations and transactions of Ottawa’s office properties generated an estimated $1.6 billion in total economic output impacts from spending, approximately total fulltime employment of 9,500, and total income impacts of $470 million.

Canadian Real Estate Forum / FALL 2012

Sheila Botting

In the retail property market, Ottawa has approximately 20 million square feet of retail space which accommodates an estimated 100,000 employees within Ottawa’s retail based sectors. The retail sales per capita is approximately $13,100, which is about nine per cent higher than Ontario’s average of $12,000 per capita, and slightly lower than Canada’s average of $13,200 per capita. What is notable about these figures is that Ottawa is able to realize such high levels of retail sales despite having less retail space per capita (16 square feet) than the Canadian average (18 square feet). The development, construction, fit-out, operations and transactions of Ottawa’s retail properties in 2011 generated an estimated $660 million in total economic output impacts, approximate total fulltime employment of 4,900, and total income impacts of nearly $250 million. During the entire life-cycle of the property development process, professionals from all walks of life are hired, engaged and working with local governments. This kind of economic activity at the development, operational and transaction stages supports numerous local businesses and generates economic impacts for the broader economy, from local economic output and employment to income and property tax generation. “The monies that have been spent in both development charges and on property taxes are a major contributor to keeping the municipality in a positive place for its own operations, which is substantive,” says Botting. “I think the real opportunity is to have a conversation among the partners that are involved in the activity, from the commercial real estate industry through to the local levels of government to talk about what's in the best interest of the local economy and how they develop a partnership together for the strategic future of that local economy. And I think that's a great conversation to be had, certainly in Ottawa and in other commercial real estate markets across Canada.” ■ Barbara Balfour – The Square Foot

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The retail market in Ottawa is on fire and it’s not being put out any time soon Our nation’s capital has become a hotbed for American giants like Target, Nordstrom, Whole Foods, and the North-Carolinabased Tanger Factory Outlet Centres, all set to open their doors within the next two years.

E Cindy VanBuskirk

Barry Nabatian

truck along in slow steady growth. So I think we’re xisting shopping malls and boutique shopping perceived as a very solid area in which to invest,” says areas of the city are undergoing expansion and VanBuskirk. renovation, while the transformation of Compared to its southern neighbour, Canada is Landsdowne Park promises a world-class shopping underrepresented in the amount of and entertainment village. “We continue to square feet of retail per citizen. With Cindy VanBuskirk, General Manager of Ottawa’s downtown shopping centre, truck along in slow five healthy regional shopping centres, numerous redevelopment projects in Rideau Centre, calls the amount of retail steady growth. the works, and a light rail transit project investment and development currently set to launch in 2013, Ottawa holds happening in Ottawa as unprecedented So I think we’re tremendous opportunity for potential in her 20 years in the business. The quesperceived as a landlords. tion people are asking, says VanBuskirk, Barry Nabatian, Director, Market is, “Why Ottawa and why now?” very solid area in Research Division, Shore-Tanner & Some contributing factors include which to invest” Associates, notes the steady population a stable economy compared to other of growth in Ottawa of at least 10,000 a metropolitan centres and high Cindy VanBuskirk, year. That increase alone leads to a need performance in retail, tourism and General Manager, for 300,000 to 400,000 square feet of high tech sectors. Rideau Centre retail, he says. “The industry standard is “Although we’re not a super star 30 to 40 square feet per person. In Ottawa, we are just and we don’t have the dramatic highs of the Calgary under 30 square feet per person,” he says. [market] for example, we seem to be able to avoid A mostly middle or upper middle class – with those valleys when they come along. We continue to

Canadian Real Estate Forum / FALL 2012

Ottawa’s inflexible zoning producing paradoxical results Continued from page 18

“In two or three years, they will be ready for the Ottawa market and Ottawa will be ready for them.” Cindy Van Buskirk, General Manager, Rideau Centre

steady incomes from government, tourism and technology sectors – leads to higher retail sales. “It’s about $480 per square foot whereas in most other places, it’s under $400 per square foot,” says Nabatian. Almost two-thirds of Ottawa households consist of only one or two persons; this fuels the market for small condominiums. “When you buy new, it is a demand for furniture, for carpets, for dishwashers and this and that. That is another reason why the retail industry in Ottawa is doing generally quite well.” Typically retailers that have made the leap across the border in Toronto will look at Vancouver and Calgary markets as their next stop. “In two or three years, they will be ready for the Ottawa market and Ottawa will be ready for them,” says VanBuskirk. “We will have the space to accommodate them.” ■ Barbara Balfour – The Square Foot

“Heights are going to go up along the light rail transit (LRT) line on Parkdale near Tunney’s pasture, and there have been increases in height along the train line near Carling avenue,” he noted. “These are all good things.” He expects that such development will produce a virtuous circle, where one good thing leads to another. “More people will use the LRT system,” he concluded. “The more successful it is, the more we will see those buildings go up adjacent to those transit lines, because success breeds success. And the more successful those developments are, the greater the likelihood that the LRT system will expand accordingly.” “I think that it will be very progressive if the city can formalize that, implement a process for it and recognize reward it by virtue of increased height and increased density,” added Knowles. “Land has become a rarer and rarer commodity where you want it. Everyone is talking about urban intensification but the reality is that there is not a great “Accommodation supply of services planned.” has to go up or “Integrating mixed-use needs to be analyzed and looked go out, and out at,” she continued. “It’s obviis perceived as ously more challenging than Greenfield development, but I environmentally firmly believe that mixed-use insensitive.” enhances pro forma, if done properly – primarily retail at the Michael Polowin base, with either office or residential above.” “Every municipality across the country is talking mixeduse right now,” she emphasized, “and it will probably help you get your approval.” According to Polowin, young people who would rather own than rent and older homeowners who want to downsize are the two main drivers in the market for downtown housing. “The federal government wants to redesign Tunney’s Pasture – the western LRT terminus – for residential and possibly retail use, and the Anglican Church has engaged Windmill in a joint condominium and office development in the west end of downtown, close to an LRT station.” He anticipates that property prices will rise adjacent to LRT lines, as Ottawa natives increasingly gravitate to residences where getting to work is easier. “Once the route of the eastern and western extensions are announced, we’ll fully understand the impact that the LRT will have on development,” he anticipated. “Ottawa was one of the last major cities in Canada to accept condominiums,” Polowin recalled, contrasting how different the capital’s housing market is today. “The sea change during the past 10-15 years has been nothing short of astounding,” he enthused, “even going so far as to accept ground lease limitations on tenure. It’s really quite remarkable.” ■ Robert Frank – The Square Foot Canadian Real Estate Forum / FALL 2012

Seeking Creative Types and Entrepreneurs Bruce Lazenby’s Role is to Make Ottawa a World Centre for the Knowledge Economy

W Bruce Lazenby

hile communities across Canada can building,” says Lazenby. “We've got about 90 chairs count on manufacturing, mining, oil or here in our 40,000 square foot facility designated for other diverse industries as part of their entrepreneurs and they can actually come in here, economies, Ottawa has one major export: knowledge. start and grow their companies.” “Our exports are the results of 1,922 knowledgeAfter companies get larger, the firm provides based companies that call Ottawa home,” said Bruce them with assistance to negotiate export rules, Lazenby, President and CEO of Invest Ottawa. “Some expand their offices or begin building relationships of them are headquartered here. with large trade nations, like China Others have major offices here. And and Brazil. “Our exports are then we have a very large start up On the creative side, the organicommunity. In fact, I've been able to the results of 1,922 knowl- zation is working to attract film, teleconfirm that we're the only city in edge-based companies vision and digital media production North America that has got all of the to Ottawa. Lazenby sits on a Creative economic levers for that space under that call Ottawa home.” Industry working group and the film one roof.” commissioner works for him. Bruce Lazenby, President and As the leader of the non-profit They’re helping get a “best-in-class” CEO of Invest Ottawa. organization that aims to create film sound stage built in the city. more knowledge-based economy They also promote the Ottawa film jobs in Canada’s capital city, Lazenby’s work is funded festival and they’re considering setting up a 24-hour by governments at the federal, provincial and municgaming event that would attract the world’s best ipal levels, as well as by several private sector partners. gamers. “Our job, our mission, is to make sure that we create “We know that the City with the best talent in good, sustainable jobs in the knowledge-based the future will win big,” says Lazenby. “And we know mostly-export-oriented economies.” that talent is mobile and the best talent wants to go To do that, the organization has created what places where they can have a great life, enjoy things Lazenby calls an “incubation acceleration centre” to and participating in creative programs for these festimentor and guide people trying to get new businesses vals in a cool culture that they can participate in.” ■ off the ground. “They can actually move into our Tracey Arial – The Square Foot

Canadian Real Estate Forum / FALL 2012

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Savvy choices spell opportunity, despite tight Ottawa market Wait-and-see is not an option in the Ottawa commercial real estate market according to Michael Church, despite demand that has leveled off in 2012.

“E Michael Church

Bob Perkins

veryone says ‘the sky is falling,’ but it’s not,” said Avison Young’s Managing Director. Despite stagnant rents, he sees opportunity for developers to vie for tenants who want to upgrade. “Those who are well-positioned to offer quality accommodation are going to find a willing federal government tenant,” he predicted. Church expects that private landlords will have to grapple with profound strategic decisions. “Owners are asking: ‘Do I re-skin? Do I upgrade, or do I recognize that the building is an older product that needs to be rolled over – or do I take it down and create a parking lot for the moment and wait?’” He dismissed concerns that pending federal government cutbacks will deflate the market. “Ottawa is not as big a government town as it used to be,” he observed. “The big elephant in the tent is Public Works’ plan to empty the Bank of Canada building.” The building has reached the end of its life cycle and the government is believed to want to rent up to 300,000 square feet of top quality space for five years, while it executes its renewal plan for the venerable 35-year old Wellington Street structure.

Green is growth “Ottawa is still very healthy,” agrees Bob Perkins. He contrasted previous federal belt-tightening with today’s austerity measures. “Before it was the threat of departments downsizing,” recalled the Taggart Realty Management Senior Vice President. Now, he said, “they’re cutting people, but the programs don’t seem to be cut.”

Canadian Real Estate Forum / FALL 2012

“That’s significant for Ottawa, because the industries that support those departments and make up the A and B tenancy haven’t really been affected.” Perkins stressed that federal government opportunities remain for developers who can provide environment-friendly facilities. “Greening buildings is very interesting,” he emphasized. “There will be some movement by government to grow, relocate out of an older building or retrofit.” Consequently, he said, “landlords, especially institutional ones, are looking at different ways to achieve green certification.”

Trains unlock west end’s potential Perkins is skeptical about suggestions that proposed commuter trains will revitalize the real estate market in Ottawa’s central business district, because the existing system already works very well. “The trains will alleviate some traffic issues but I don’t know whether they will improve the core substantially,” he concluded. “I don’t think that it will be a windfall for downtown building owners.” However, Church is optimistic that improved mass-transit will instead create opportunity in the west end of the city. “The reconstruction of the Nortel campus for National Defense is going to move that whole process along,” Church expects. “Once the government gets its act together and we get rapid transit to the western employment nodes, things will pick up.” ■ Robert Frank – The Square Foot

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Suburban opposites: Ottawa’s East and West poles It is hard to find suburban real estate markets that contrast as starkly as Ottawa’s East and West. The East mirrors the Ottawa downtown core, with its tight market – and proliferation of stable government tenants.

“T Daniel Gray

he East is Ottawa’s dominant market right now,” said Daniel Gray. “It offers what government wants: bilingual employees as well as proximity and easy access to downtown and Quebec, plus a lot of amenities.” “The current vacancy rate in the East is currently 4.6%and has been as low as 2.5% – versus 13% in Kanata,” recounted Bentall Kennedy’s Leasing Vice President. He expects that CSIS’ new premises will stimulate further activity at Ottawa’s East pole. “They’ve just built an 800,000 square foot building kitty-corner to our site. That can only help the area,” Gray enthused. “It’s promises to bring more traffic and activity, be it local retail, amenities or consultants who want to do business with the federal government.”

DND move revives West Martin Vanderwouw

Kanata, at the West pole, couldn’t be more different. It is dominated by firms that feel the dizzying momentum of the economic rollercoaster.

Canadian Real Estate Forum / FALL 2012

“Its 100% private sector,” said Martin Vanderwouw, “and most companies are struggling right now.” The KRP Development President remains optimistic that Kanata’s fortunes will revive, once National Defense Headquarters moves from downtown to the former Nortel campus. “The exodus from the Nortel campus has sparked a revival,” he observed. “Those tenants have sucked up available space, stabilizing or lowering the vacancy rate in Kanata when their leases kick in.” “You’re going to see a great deal of residential development during the next 5-10 years,” he anticipated, pointing out that developers are already laying the groundwork for a population boom in the West. “Retail continues to explode out here. They have built a Walmart in the middle of an open field,” noted Vanderwouw. “Within a year, there will be houses all around it,” he predicted. ■ Robert Frank – The Square Foot

Views of the past, present and future: FROM OTTAWA’S SECOND-GENERATION FAMILY REAL ESTATE EXECUTIVES Since Ottawa’s original real estate family companies built the capital city, the market has changed almost unrecognizably. Fortunately these companies have evolved with the times, and their savvy successors are thriving.

Cal Kirkpatrick

Arnie Vered

Steve Kaminski

the federal government and look for diversification he most significant change over the years has of our economic base,” Kirkpatrick states. been increased competition from corporations Colonnade Group of Companies has diversified – or in the words of Cal Kirkpatrick, President, beyond real estate into asset management, property Colonnade Development, and Chairman of the management and realty in the agriculture sector. Ottawa Forum “adapting so that you can work within They are also moving into the environmental sector, the concept of institutionally owned real estate.” soon to open one of the largest retail Even so, family companies have a unique advantage that can “I am quite proud, very ‘green’ stores in North America. Business-friendliness, Kaminski says, only be gained by longevity. “We proud of what my is essential to Ottawa’s growth. have a lot of connections,” says “The city has got to be able to Steve Kaminski, President of family has been able to maintain a high level of interest Colonnade Management. ”Our give to the community. from the business sector,” he says. capital can move very quickly, which gives us an advantage Not just in real estate, “If it takes six months to get a building permit, that is just not getting in on the ground floor.” Arnie Vered, President of but in regards to philan- particularly friendly to new business Arnon Corporation and Ron thropy and in helping to coming in that needs to react quickly.” Engineering & Construction, is build this great city.” These Ottawa developers are proud of his family’s contributions also braced for, and optimistic to the community in construction, Arnie Vered, President of about, game-changing initiatives real estate and philanthropy. His Arnon Corporation and parents started the construction Ron Engineering & Construction such as Ottawa’s proposed light rail transit system. “I think we’re going component of their business in to see a lot of new density develop1958, and then branched out into ment in the suburbs,” Kirkpatrick says, “a maturadevelopment and real estate. Over time they became tion of the city.” a third party service provider of retail design, build Because growth is natural and inevitable, Vered projects and property management. says, Ottawa must shift away from its small-town With the experience of their fathers behind mindset: “We need a city council that realizes we’re them, these executives share their thoughts on the a big city with some very major projects around the future of real estate and what’s needed in Ottawa: corner.” ■ diversification, for one. “Our industry must be Michel Rémy – The Square Foot prepared to have less of the safety net provided by

Canadian Real Estate Forum / FALL 2012

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CHAIRMAN’S WORD

Don Fairgrieve-Park

By Michel Rémy TheSquareFoot.ca

Canadian Real Estate Forum / FALL 2012

bviously that decision is a big game changer in Calgary, given that Imperial Oil currently leases almost a million feet in two towers at Fifth Avenue Place (the old Esso Plaza) and more space at BP Centre across the street. Those buildings could begin to empty out next year and the leases all end by 2016. We now have new possibilities for growth in the downtown core, which has very little Class A vacancy.

Photo: © Opatije | Dreamstime.com

As this issue went to press, we had just heard Imperial Oil would move the 2,000 people who work at their head office in the downtown core to the suburban site Quarry Park.

A number of projects – Eau Claire, Eighth Avenue Place, Brookfield Office Properties, Oxford Properties – are slated to come out of the ground, and that's going to be good for the marketplace. I don't believe we're going to get into a situation of any oversupply in the near term. Alberta is fairly immune to the world economic woes and we have such tremendous opportunity here. The commercial

real estate sector just needs to focus on building the facilities that are going to meet the industry's needs in the next 10 to 15 years. We're just growing like gangbusters, so I think there's a ton of opportunity. ■ Don Fairgrieve-Park, The Forum’s chair is Senior Vice President of Bentall Kennedy (Canada) LP. Canadian Real Estate Forum / SPRING 2012

Cody Clayton

Sean Walters

Confidence and Creativity Change Real Estate Possibilities (BUILD IT AND THEY WILL COME) Looking at the developments now, it’s hard to believe the high level of trust that early business owners needed to lease space in Quarry Park and CrossIron Mills.

“J

acobs bought into a vision of Quarry Park as you see it today, back when it looked like the surface of the moon,” said Remington Developments’ President, Cody Clayton. “There wasn’t a blade of grass or a tree on the site and now you come through here and you wouldn't imagine it looking any different than it does today.” Remington bought the former 385-acre Lafarge gravel pit in 2005 and began pitching a vision for a high-end residential village with commercial office and retailers within walking distance. After Jacobs Engineering agreed to relocate, others signed on, driven in part by a hot office market, says Clayton. The area now attracts Fortune 100 to 500 Canadian head offices and strong retailers who already have enough business to support their operations. Single family homes in the development will be sold out by next year.

Canadian Real Estate Forum / FALL 2012

“Right now we have about 1.4 million square feet of office space that is built and being occupied,” said Clayton. “It's about 98.5% leased. We have another 300,000 square feet under construction that we're building on spec that will be delivered in 2015. The major tenant names in the park are Jacobs, AMEC, Alberta Health Services, Emerson, Telvent, Stantec, Bayer, Aker Solutions and soon Imperial Oil. They're all very, very big companies. And they get comfort in locating around one another.”

It’s all in the mix That’s exactly the kind of thinking that Ivanhoé Cambridge used when they decided to develop CrossIron Mills, the largest single level shopping centre in Alberta. The “superhybrid centre” contains a million square feet of enclosed

“There wasn’t an enclosed shopping centre built in Calgary in twenty years.’’

CrossIron Mills, Calgary

Sean Walters, Vice President, National & Mills Leasing, Ivanhoé Cambridge

Canadian Real Estate Forum / FALL 2012

Imperial Oil Campus

“Jacobs bought into a vision of Quarry Park as you see it today, back when it looked like the surface of the moon.” Cody Clayton, President, Remington Developments

Quarry Park site plan

Canadian Real Estate Forum / FALL 2012

retail, 18 anchor stores, 100 outlets, restaurants and entertainment in the north end of Calgary. The mix of brands includes Calvin Klein and a Hugo Boss outlet as of this fall, Coach and Coach Men’s factory stores, True Religion outlets, Michael Kors outlets and a Banana Republic factory store. “Our trade area today is approximately two million people but that’s actually expected to grow by about another 140,000 people between now and 2016,” said Sean Walters, the company’s Vice President of National & Mills Leasing. “There wasn’t an enclosed shopping centre built in Calgary in twenty years. So we were the first landlord to do so, and we’ve created a really compelling proposition for the customer. The momentum that the centre has – with sales and traffic of 8.25 million, which is up double digits, and having hit a pretty impressive milestone of five hundred dollars a foot in less than three years – suggests that it has hit its stride and is being well received by the market. The Mills centres within our entire Ivanhoé Cambridge portfolio show the strongest average expenditures per visit, and in fact CrossIron is the highest in our portfolio of about 30 centres in Canada.” The company plans to open a third Mills in Metro Vancouver in 2015. ■ Michel Rémy – The Square Foot

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Moving with confidence.

John O’Bryan

Gary Beres

Bruce Traversy

Hannes Kovac

Searing market turns Calgary property into “commodities” Cheap money, buoyant oil prices and an institutional investors influx are ratcheting Calgary’s already-hot commercial real estate market even higher.

ccording to John O’Bryan the speed and vigor Great investment market of Calgary’s resurgence astounded even the Gary Beres expects it will be some time before most upbeat of real estate investors. Calgary experiences such a reversal, though. He “The turnaround in Calgary was quite anticipates that a natural gas boom during the next dramatic,” remarked CBRE’s Vice Chairman. “After two to five years will superheat demand in Calgary’s the 2008-2009 liquidity crisis, projects that people already saturated commercial real estate scene. felt would be empty for a long time seemed to fill up “Brokers here are suddenly bullish on natural overnight. New projects are doing gas,” he declared. “It’s a gamethe same.” changer that will stimulate an “When they need it, “Even though gas prices have already-great market when it kicks they need it, but they in.” been depressed, oil has been on a strong tier,” O’Bryan said, “so “It’s a perfect storm for opporcan shed it massive amounts of capital are tunities in Canada right now,” said quite quickly.” being invested in Alberta.” the globetrotting CBRE Senior Vice “That prompted an industrial President. “Investors all over the John O’Bryan, surge and a particularly strong office world are putting Canada at the top Vice Chairman, CBRE surge in Calgary,” he continued. of their list.” “Troubled projects suddenly looked “So we’re in the right country like superstar assets.” and in the right part of the country,” he enthused. Home to more head offices than any other “Alberta leads the West, and Calgary leads the Canadian city bar Toronto, commercial tenants province.” nonetheless recognize that Calgary is predisposed to huge, abrupt swings - and has adapted accordingly. Airtight occupancy turns investors into developers “Users tend to treat their premises much more as Beres observed that the ability to raise any amount of a commodity than elsewhere in Canada,” observed equity or debt – seemingly at will – at the lowest O’Bryan. “When they need it, they need it, but they interest rates in history, has driven down cap rates. can shed it quite quickly.” “We’re already at 2007 capital ratios, and going lower,” he said. “We’ve dipped under six per cent and

Canadian Real Estate Forum / FALL 2012

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“We’re still a real estate investment trust, so it will be a prudent mix.” Bruce Traversy, Principal, Investment, Dundee

“Capital ratios are so low that it doesn’t make any sense for me to buy a finished product trading below six per cent for non-core assets.’’ Hannes Kovac, President, OPUS Corporation

have seen recent trades in the 5.5-5.75 per cent range.” He sees little quality product available in the Calgary market, which has led pension funds and real estate investment trusts to sidle up to developers to build new properties. “We’re one of the largest land developers in Calgary,” affirmed Bruce Traversy, Principal, Investment at Dundee. “We’re still a real estate investment trust, so it will be a prudent mix,” Traversy assured. “We will reposition valueadded development in our portfolio and are currently looking at opportunities in Calgary.” “We capitalize on our advantage in market intelligence to assess availability and pricing,” he explained. “Fine tuning the underwriting for accuracy ensures that we pay the right price.”

OPUS Corporation President Hannes Kovac observed that Calgary is currently crowded with players who are investing other people’s money. He cautioned that an influx of institutions awash in cheap money chasing feeble returns is squeezing returns – and private investors – out of the market. “It’s very, very competitive,” commented Kovac. “Capital ratios are so low that it doesn’t make any sense for me to buy a finished product trading below six per cent for non-core assets. That’s just too aggressive. “It’s better to buy land or existing products,” he concluded. ■ Robert Frank – The Square Foot Canadian Real Estate Forum / FALL 2012

Todd Werre

John Torode

Mixed-Use Developments Require Cooperation and Synergy

Partners need to work through complicated infrastructure plans, marketing strategies and approvals by the city.

THE AVAILABLE AND THE SCARCE:

Greg Brown

Lesley Conway

Issues concerning Calgary developers The city of Calgary has, traditionally, made land available to developers in all sectors. But in the current unsettled market, developers are concerned that the city has reached what it defines as its “limit of available funds” for infrastructure.

Canadian Real Estate Forum / FALL 2012

urthermore, with the aim of balancing development in redevelopment areas and suburban areas, the municipality has chosen not to allow development in certain areas. Exactly where has yet to be determined. “The city of Calgary is trying to reduce the availability of suburban land and increase availability of land within established communities,” says Greg Brown, Principal of Brown & Associates Planning Group. “There will be land winners and losers, and it’s going to be based on the city’s cost and infrastructure financing.” The high price of land, combined with additional costs imposed on the residential land development industry from City Hall, are proving a challenge for

“There are lots of challenges in terms of differentiating between the uses physically and operationally.” John Torode, President, Torode Realty Advisors Inc.

evelopers of mixed-use projects for downtown Calgary say that projects work well as long as partners share a common vision and retail, commercial and residential uses are kept separate. “You have to share the same desire for mixed-use because it is not easy to do,” says Todd Werre, Development Vice President of Westcorp Properties Inc., the firm developing Heritage Station in southwest Calgary. “There are lots of challenges in terms of differentiating between the uses physically and operationally. There is going to be overlap; the challenge is to minimize that and be able to articulate those costs and rationalize them to both sides because nobody wants to pay for somebody else’s stuff. Those challenges also present opportunities, in terms of diversified cash flow stream, a real sense of community and convenience for the people that live in the projects.” John Torode, the visionary behind Hotel Arts and

Ramsay Exchange, agrees that shared visions simplify projects. “A classic project is a hotel with condominiums attached to it,” he said. “It helps the condos sell and the hotel stands on its own merits.” When he bought the former Holiday Inn, for example, he kept the existing management team in place and benefited from their experience in the industry to switch the operation to a boutique hotel. “You really need to understand your market and who is going to live there, why they are living there and what they need to live there comfortably,” says Werre, “If you don’t attract the right retail mix, the retail component of a mixeduse project becomes a hindrance to the project and the businesses will be challenged because it is an environment where everybody has to live together.” ■ Tracey Arial – The Square Foot

“A few developers are still working with lands that were bought for $30,000 to $60,000 over a decade ago. But for those dealing with recently purchased land, it becomes very challenging to make an economic return.” Lesley Conway, President, Hopewell Residential Communities

developers. Lesley Conway, President of Hopewell Residential Communities, says current residential land values are higher than they have ever been in her 20-plus years in the business. “Land in suburban Calgary is selling for over $200,000 per acre,” she says. “A few developers are still working with lands that were bought for $30,000 to $60,000 over a decade ago. But for those dealing with recently purchased land, it becomes very challenging to make an economic return.” To complicate matters, she adds, while the city projects a land supply of approximately 18 to 21 years, the industry sees it as closer to 10 to 12 years, or even less if you consider only those lands with approved land use, which make up about a five-year supply. How to keep books balanced, create harmony between suburban growth and urban redevelopment, while main-

taining a healthy real estate market? As a planner, Brown would like to see the city welcome competition, as long as the increased number of developments being proposed wouldn’t cost the city any more. “The city has to come to terms with the industry on a new funding and financing formula to allow development to happen in the suburban areas,” he says, “while continuing to have a good competitive situation and not create a monopolistic system.” One alternative, for which there have been many proposals, is for infrastructure to be privately funded. Council will have a whole suite of available financing and funding options from which to choose in October, when it decides which option to follow up on with developers. ■ Randy Fenessey – The Square Foot Canadian Real Estate Forum / FALL 2012

LUXURY, SMALL SPACES AND MIXED-USE

Trending in RapidlyExpanding Retail Market New players increase competition in opportunity-rich Calgary

W Darryl Schmidt

Lec Mroczek

choosing new and sexy concepts new to the marketith some fifteen new retailers looking at place. Tenants take a smaller format space and smaller entering the Canadian market through square footage, ultimately they’re paying higher rents Calgary, the competition for good highper square foot to get into those spaces. Both institutraffic locations in populated areas with dependable tional and non institutional landlords seem to be labour is becoming fierce. going in that direction. As a result, we rely on our “The demand is strong both from the United relationships to continue to grow in the market.” States and internationally, and what that does is ultiTim Hortons is also reworking mately adds a ripple effect of strong their traditional concept to attract demand propping up rental rates,” “If you don’t have a current guests. One new upmarket says Darryl Schmidt, Vice President retail platform that is design features softer seats, A for National Leasing with The Cadillac Fairview Corporation international in scope Fireplace, A Flat Screen Television, Free Wifi, a modern redesigned exteLimited. “When we get fresh, new and scale, you’re going rior façade, and expanded coffee to market retailers that customers respond to, it has a positive effect to have a very difficult and food options, like that underway in the Bridlewood on sales productivity levels in the time competing” Community in South West Calgary. top tier shopping centres and that buoys up rental structures within Darryl Schmidt, Vice President, Tim Hortons is also building double drive thru lanes where it can to ease the city… If you don’t have a National Leasing, The Cadillac traffic congestion and to help retail platform that is international Fairview Corporation Limited decrease order times. in scope and scale, you’re going That move to smaller or more to have a very difficult time luxurious offerings is typical of successful moves in competing.” the market, says Schmidt. Established players have to prove that they can “You’re really seeing the middle market being continually attract discerning consumers faced with squeezed out with retail concepts going to one or more options for their time, while facing bigger two extremes. They’re either going to a value propoconstraints from landlords. sition and lower price points, in which case they “To be competitive in the urban landscape in need larger box formats to deliver the number of downtown Calgary, we might have to go a little bit SKUs in the experience, or you’re getting a swing to smaller and we might have to get creative and sacria higher price point, almost aspirational luxury in fice on back of house, storage or even seats,” said Lec more boutique-y formats.” ■ Mroczek, Manager, Real Estate & Development for Tracey Arial – The Square Foot Tim Hortons. “We have landlords out there that are

Canadian Real Estate Forum / FALL 2012

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T Rollin Stanley

Canadian Real Estate Forum / FALL 2012

he greatest challenge in growing cities is finding a way to increase population and improve infrastructure without becoming so costly that people can’t afford to live close to where they work, says Rollin Stanley, Calgary’s new Chief Planner. That means doing things differently than what has happened in other places. “I'm going to be focusing on nodes and corridors to try and show that the potential to grow in places where we've already serviced can lower the cost to bring product to market and lower the city costs,” said Stanley. “And hopefully provide more diversity in the product that we have in terms of style and affordability.” When Stanley talks about “nodes,” he means mixed residential, commercial and industrial sectors, which are served by transportation, sewage, power and other services in corridors.

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“I'm going to be focusing on nodes and corridors to try and show that the potential to grow in places where we've already serviced can lower the cost to bring product to market and lower the city costs. And hopefully provide more diversity in the product that we have in terms of style and affordability.” Rollin Stanley, Chief Planner, City of Calgary

Developing using nodes and corridors “means higher densities around the transit stations – most people know this – and using that to help offset the costs of lower density development. It’s also about thinking about product that's closer into the jobs in the downtown, for example, or using our land near our office parks, and using the corridors that lead to these places to start bringing in new uses so that people can live closer to where they work.” Stanley’s ideas about sustainable urban planning come from a wide range of experiences. He spent the past four years as planning director for Montgomery County, Maryland, a suburban community surrounding Washington, DC. Prior to that, he spent six years as planning director for Canadian Real Estate Forum / FALL 2012

“One of the great things about Alberta right now is that Calgary and Edmonton are looking at creating city charters and asking the province for authority to do certain things.” Rollin Stanley, Chief Planner, City of Calgary

the City of St. Louis and served the first 21 years of his planning career with the city of Toronto. He also volunteers with the American Planning Association and has visited China to consult about one community’s water use and diversifying another city’s economy away from coal. In the United States, he’s spent time in Atlanta reworking their planning structure and in Louisiana working out ways to rebuild after Hurricane Katrina.

David Allison

The two major forces impacting our world right now Anyone working in the business of real estate today must keep up with two influential forces - demographics and communications technology.

Canadian Real Estate Forum / FALL 2012

His diverse experiences will help him bring new ideas to Calgary and Canada, he says, particularly when it comes to creative options about financing growth. He says that he’s been involved in floating bonds to finance infrastructure, offering tax credits to restore heritage areas or develop unused sectors, and encouraging renovation by maintaining taxes at unimproved levels for specific periods of time. “One of the great things about Alberta right now is that Calgary and Edmonton are looking at creating city charters and asking the province for authority to do certain things,” he said. “As part of that discussion, I'm going to help out by bringing in the kinds of things I did in the States, and using the States as examples of ways of financing infrastructure. The greatest challenge in the United States today is financing infrastructure and it will be here too.” ■ Michel Rémy – The Square Foot

oth unpredictable and powerful, these trends will drastically change the practice and promotion of real estate development and city-building as we know it, says David Allison. “What's of particular interest is the outcomes we can foresee when these two forces are considered in tandem,” says Allison, Director of real estate branding and communications agency Braun/Allison Inc. “We've gone from a world where computers were the size of a house, to a world where computers the size of a fingernail can fly around inside your heart taking pictures of your aortic valves. Where will we be in 20 years? 50 years? “What do we, as an industry, need to be doing to get ready? What happens when the majority of our population is older, retired, and from places far away? What kind of communities do we need to build for aging strangers who are connected globally 24/7 to everyone around the world?” While Allison doesn’t pretend to have all the answers, he does encourage companies to think more carefully about these and other types changes they'll be facing in the mid- to long-term. ■ Tracey Arial – The Square Foot

Calgary office development spreads beyond downtown

Randy Fennessey

The downtown Calgary office market is extremely tight. There is currently four and one half percent vacancy overall in the downtown core or, more importantly, closer to one percent vacancy in the AA sector of the market and two percent in the A-class sector.

n the context of about 5.3 million square feet of absorp“A tenant that is 200,000 square feet or larger doesn't tion occurring in the last two and a half years, a number have many available options downtown today,” he says, of tenants are considering moving their operations “other than making a pre-lease commitment in a new tower outside of Calgary’s downtown core. Imperial Oil’s recent to be built or waiting to see if a major tenant decides to relodecision to move to the suburban office cate to a new building in or outside of the “There is no shortage of downtown core.” market is the perfect example. While office space demand is expected The silver lining for the office market is developable land in the to remain strong in the downtown core, an ample supply of land. “There is no much of Calgary’s office development will beltline, the suburban shortage of developable land in the beltline, occur in the beltline and suburban markets market or downtown, for the suburban market or downtown, for that over the next two to three years according matter,” Fennessey says. “The major chalto Randy Fennessey, President of Colliers in that matter.” lenge for office space development is that Calgary. Until recently the beltline area was most developers require a significant preRandy Fennessey, considered a very distinct and separate lease commitment, in the range of 30% to President, Colliers, Calgary submarket to the downtown, divided by 50% of the project size, prior to proceeding the railroad tracks that run between 9th with a new office development, regardless and 10th Avenue. But, says Fennessey, that borderline will of the project location.” ■ soon become blurred as new office development happens on Michel Rémy – The Square Foot both sides of the tracks. Canadian Real Estate Forum / FALL 2012

Canada’s short-term, long-term energy prospects remain strong Real estate professionals always want to know where Canada’s energy market is headed.

“T Rick George

hey want to prepare for the twist and turns,” said Rick George. The problem, he sympathized, is “nobody actually

knows.” He reiterated that the energy sector – always a bucking bronco – is unlikely to become more predictable in the short- or medium-term. The former Chief Executive Officer, who transformed Suncor from an obscure company into a $50 billion giant by inspiring a 50-year vision for the company, said that the most important lesson that he learned in business is “don’t be afraid to take risks.” “One thing we know about our industry,” he acknowledged, “is that it’s always cyclic and it’s

Canadian Real Estate Forum / FALL 2012

always volatile, and we’re now into a period that is as volatile as any we have seen in decades.” Short-term, George nonetheless sees nothing but strength heaped upon more strength. “During the next two to three years, you are going to see full employment, because of the construction projects that are under way as well as maintenance of the oil sands and other projects,” he predicted. Consequently, he expects that Alberta’s economic growth will continue to outperform Quebec, Ontario and even British Columbia. “We’re going to be bringing in some foreign labour and Alberta will remain Canada’s engine of

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“One thing we know about our industry, is that it’s always cyclic and it’s always volatile, and we’re now into a period that is as volatile as any we have seen in decades.” Rick George, former Chief Executive Officer, Suncor

growth, attracting significant capital investment, both foreign and domestic,” he forecast, “despite the short-term swings in commodity prices.”

Strategic strength While rodeo-like swings in energy prices might make spot traders nervous, Canada sits astride the largest oil basin in the world, is developing oil fields off its east coast and has potential reserves in its far north. George is therefore confident that Canada will remain strategically positioned as a world leader in energy for the long haul. “The good news is that many of the oil sand investments are very long-term,” he stated. “The short-term cycles aren’t necessarily going to be a big issue in terms of how well Alberta does.” “The big players take a very long-term view,” he explained.

“We’ve seen this recently in the foreign interest and investment in the oil sands by the Chinese and Petronas and others. They see this as a very long-term game.” George’s account of Suncor’s ascent is chronicled in a book, Sun Rise, which will be published by Harper Collins, Oct. 13. “It’s basically about leadership,” he said, “but it’s also about how the team turned Suncor into a great Canadian success story.” The book also chronicles how George led the energy industry to grapple with a poor record as a polluter and how he coaxed energy producers to reduce their environmental footprint dramatically. ■ Robert Frank – The Square Foot Canadian Real Estate Forum / FALL 2012

What’s up and who’s in Great Plains Industrial Park is sold out. So is the Eastlake Industrial Centre. After a strong year for Calgary developers thanks to leasing around the city there is still untapped, undeveloped land. Where will be the next big play?

T Ryan Haney

he changing landscape is allowing the south to catch up with the north. While developers in the north had the advantage of early access to the provincial freeway Calgary Ring Road, the Ring Road is now expanding down to the south and will soon change the face of distribution again. Meanwhile, a number of newly built and vacant buildings in and around the city can handle large square footages, a unique opportunity with available space for large distribution users. Companies such as Target and Walmart are rapidly becoming Calgary’s second-largest user after oil and gas, says Ryan Haney, Vice President of Industrial Sales & Leasing at CBRE Limited.

Canadian Real Estate Forum / FALL 2012

Calgary may not be as large a distribution market as Toronto, but Haney believes that over time, the city will see some large distribution requirements. “Those smaller distribution deals could become larger as US retailers increase their market penetration into other markets like Vancouver, Edmonton or Saskatoon,” he says. As for what to build, Haney predicts developers will seize the opportunity to build smaller, Calgary being light on product in the 10,000 to 20,000 square foot range. Expected investment activity in the coming year? “It’s strong,” Haney says. “We’ve had a strong year with good land absorption. We're seeing a good, strong build cycle.” ■ Michel Rémy – The Square Foot

Jon Love

Arthur Lloyd

Legendary Success Experience Helps When Negotiating Trends, Risks and Opportunities in Calgary

hat does it take to build success over time in the Calgary market? “Great real estate investment is all driven by risk assessment,” says Jon Love, Managing Partner with KingSett Capital and former head of Oxford Properties Group. “And risk assessment is an art, not a science.” Love claims that risk assessment was just as crucial to the investment decisions he made with Oxford in the 90s as those he’s making with KingSett 20 years later, even “What’s going on in though the two eras and companies are mirror images. the city is really what While he was building a portdrives the cycles.” folio at Oxford, Calgary’s economy was stagnant with Arthur Lloyd, Executive Vice President, Investments, high vacancy rates for Western North America, commercial space. Now he Ivanhoé Cambridge invests in third-party projects and Calgary has little commercial vacancy. “What’s going on in the city is really what drives the cycles,” says Arthur Lloyd, Executive Vice President, Investments, Western North America, Ivanhoé Cambridge and founding shareholder of Killam Properties. Growth in the energy sector has created a financial and capital market services industry in Alberta. “Most of the Canadian and US significant investment banking firms have offices in Calgary, and that wouldn’t have been the case 20 years ago…I’m starting to see capital markets expertise which used to be something the energy business went to Toronto or New York for and now there’s starting to be a significant pool of talent here in Calgary” concluded Lloyd. ■ Tracey Arial – The Square Foot Canadian Real Estate Forum / FALL 2012

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• The magazine has a strong shelf life by offering high quality articles and analysis on the major themes and topics examined at a conference along with comments and insights from leading experts and well-known practitioners. • There is no other national business magazine that is specifically targeted at all the key Canadian real estate decision-makers who are active in office, industrial, retail and multi-unit residential sectors across the country. This is the unique element that the Canadian Real Estate Forum offers you – an opportunity to reinforce your marketing message to a very exclusive audience at a very affordable rate.

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Ryan Eickmeier

Getting our Act(s) Together â&#x20AC;&#x201C; The Modernizing of Provincial Real Estate Acts By Ryan Eickmeier

The commercial real estate industry, while not explicitly the most regulated industry, finds itself under the directive of a variety of Acts and guidelines. National media outlets, by nature, will surface stories and issues related to more heavily regulated industries, but commercial real estate companies face lesser known regulatory obligations; these fall under the oversight of provincial real estate acts.

esigned to establish means in which standards of conduct could be enforced, real estate acts delve into the world of consumer protection by ensuring industry integrity is maintained and that fraudulent practices are closely policed. Real estate acts grant powers to their administrative bodies (provincial real estate councils, in most cases) to provide services that improves the industry and the business of industry members. And while the intent of the legislation is commendable, REALpac has embarked on a nation-wide review of provincial real estate acts, challenging relevant Ministries and their delegated regulatory bodies to examine their laws and requirements and ensure the acts are in tune with the realities of business.

Canadian Real Estate Forum / FALL 2012

Juggling Multiple Jurisdictions The struggle to reach any form of standardized regulations across Canada materializes because of the varying market sizes in our real estate sector. When engaging provinces in discussions regarding their respective real estate acts, it becomes abundantly clear that problems encountered in one jurisdiction may not be applicable to another, or that simply one jurisdiction has yet to grow to a point where these issues are realized. Thus, each province must be individually assessed, taking into account a number of market factors when establishing recommendations. Although each market possesses its own intricacies, fundamental issues do exist in each provinceâ&#x20AC;&#x2122;s real estate acts.

Separation of Commercial and Residential The intent of the legislation is clearly aimed at protecting consumers, but one of the major issues seemingly missed across the board when these real estate acts were drafted was the need to differentiate between the very dissimilar consumers on the commercial and residential sides of the industry. From a broad comparative standpoint, commercial transactions are inherently different, with larger and more complicated dealings and a multitude of accredited professionals providing oversight on each aspect of the deal. In addition, commercial transactions are almost always between corporations, with both parties represented by Continued on page 62

Carolyn Lane

Commercial Real Estate Sector’s Significance Finally Quantified By Carolyn Lane A major new research report quantifies the value of Canada’s commercial real estate sector, adding bottom-line perspective to its economic contribution – and clout to REALpac’s advocacy activities.

ew would doubt that the commercial real estate sector (CRE sector) is important to Canada’s economy, but now for the first time the numbers exist to prove it. And they are impressive. In 2011 alone, the sector generated $63.3 billion in annual economic activity more than twice that of the province of Newfoundland & Labrador. A groundbreaking new research report published by the Real Property Association of Canada (REALpac) and the NAIOP Research Foundation, quantifies the size, scope and economic contribution of the sector, both nationally and provincially and across sub-sectors. Written by Altus Group Economic Consulting, the comprehensive report, aptly titled The Contribution of the Commercial Real Estate Sector to the Canadian Economy, offers bottom-line perspective, adding greater muscle to REALpac government relations efforts and other initiatives. The power of the industry is driven home by such facts as: in 2011, it was backed by some $21.6 billion in capital investment; about $14.9 billion was spent on new buildings; and $6.7 billion was poured into capital improvements, renovations and the upgrading of existing buildings. “What we get from this report is a clear picture of the sector’s enormous contribution to our economic well-being, and how well it’s performed nationally and in key markets across Canada during this trying global economic cycle. This shows the continuing confidence that sector leaders have in Canada’s long-term economic prospects,” commented Paul Morse, CEO of REALpac. Explained Morse: “Where our members and other industry professionals build and invest in properties, they build and invest in the future of our country. In Canada, we are very prudent about commercial development and so when you see activity, that’s a vote for our future.” Morse said that the research report marks the first time reliable analytics on the industry’s contribution have been made available, which will support development and investment initiatives, and provide “tremendous leverage” for REALpac government relations activities. The association’s advocacy efforts target such federal and provincial issues as property tax, infrastructure development, real estate investment trust (REIT) regulations, sustainable development and real estate acts. “You have to remember,” explained Morse, “across all sub-sectors – office, industrial, retail and multi-family, seniors residential and hotel – the performance of commercial real estate acts as an indicator of our country’s economic health and outlook. And because of vested interests, sector leaders play an active role in creating the conditions that generate economic growth and jobs, so their voices are always worth listening to.” Canadian Real Estate Forum / FALL 2012

In addition to providing high-quality spaces in which millions of Canadians live, work and play, the commercial real estate sector itself is a major employer, another fact highlighted by the report. It shows the provincial breakdown of labour/personal income generated by the sector in 2011, with Ontario in the lead at $7.3 billion, followed by Alberta at $3.8 billion, Quebec at $3.4 billion and British Columbia at $1.8 billion.

“Commercial real estate stands at the centre of our thriving cities – it defines our skylines, much of our environmental footprint, creates jobs, spurs economic growth and helps business find new efficiencies in our rapidly evolving world. This report is another step to ensuring the industry’s tremendous contribution is not underestimated, and in fact encouraged,” added Morse. ■ Carolyn Lane, Vice President, Membership, Marketing & Communications, Real Property Association of Canada, clane@realpac.ca

How Big is Big?

Getting a Grip on the Sector

CRE SECTOR STATS PROVE THE POINT Among other findings, The Contribution of the Commercial Real Estate Sector to the Canadian Economy, developed for REALpac and the NAIOP Research Foundation by Altus Economic Consulting, shows that the sector: • Supports 340,000 jobs, many of which are high-paying professional positions. This is roughly equivalent to the total employment of the entire Canadian agriculture industry; • Generates $18.1 billion in personal income, which is more than twice the amount generated by the Canadian agriculture, forestry and fishing industries combined; • Generates $12.5 billion in corporate profits earned by many small and medium companies, as well as some of the largest pension funds and insurance companies in Canada; • Contributes $7.2 billion in personal and corporate income tax revenues for the federal and provincial governments; • Contributes $32.4 billion annually to Canada’s GDP -- more than the total GDP of New Brunswick; • Generated $3.5 billion in building management fees and almost the same amount for commercial brokerage fees from sales of commercial properties in 2011.

REALpac defines the commercial real estate sector as “building and operating private industrial, office, and retail/entertainment buildings.” Government-owned buildings or institutional facilities are not included. For the REALpac/NAIOP Research report, research was conducted on following asset types: Industrial: A wide range of property types including manufacturing facilities, warehouses and distribution centres. Office: Downtown office towers, suburban offices, corporate campuses and other office buildings owned by the private sector. Retail and Entertainment: Shopping centres, theatres, performance arts and cultural centres, restaurants and bars, and automotive dealerships. As well, companies and professionals in the sector deliver a range of professional services, including: Building Management: Providing services in planning and managing CRE buildings, and ensuring services, such as security, health and safety, and maintenance of the building, meet a satisfactory level. Building managers also collect rents and search new tenants on behalf of building owners. Commercial Brokerage Services: Providing a connection and facilitating a full range of transactions between buyers and sellers, and owners and occupiers of all types of commercial properties on local and global levels.

To download “The Contribution of the Commercial Real Estate Sector to the Canadian Economy”, go to www.realpac.ca. About the Real Property Association of Canada REALpac is Canada’s premier industry association for investment real property leaders. Our mission is to collectively influence public policy, to educate government and the public, and to ensure stable and beneficial real estate capital and property markets in Canada. REALpac members currently own in excess of $180 Billion CAD in real estate assets located in the major centres across Canada. Members include real estate investment trusts, publicly traded and large private companies, banks, brokerages, crown corporations, investment dealers, life companies, lenders, and pension funds. For more information, please visit us at www.realpac.ca. About NAIOP and the NAIOP Research Foundation NAIOP represents commercial real estate developers, owners and investors of office, industrial, retail and mixed-use properties. It provides strong advocacy, education and business opportunities, and connects its members through a powerful North American network. For more information, visit www.naiop.org. The NAIOP Research Foundation was established in

Canadian Real Estate Forum / FALL 2012

2000 as a 501(c)(3) organization to support the work of individuals and organizations engaged in real estate development, investment and operations. The Foundation’s core purpose is to provide these individuals and organizations with the highest level of research information on how real properties, especially office, industrial and mixed-use properties, impact and benefit communities throughout North America. The initial funding for the Research Foundation was underwritten by NAIOP and its Founding Governors with an endowment fund established to fund future research. For more information, visit www.naioprf.org. About Altus Group Limited Altus leads the global real estate industry in offering professional real estate advisory services, data solutions and intelligence about an organization’s assets, generating a wealth of knowledge and insight. With a staff of over 1,700, Altus has a network of over 60 offices in 14 countries worldwide, including Canada, the United Kingdom, Australia, Asia and the United States. We operate five interrelated Business Units, bringing years of experience and a broad range of expertise together

into one comprehensive platform: Research, Valuation and Advisory; Cost Consulting and Project Management; Realty Tax Consulting, Geomatics and ARGUS Software. Altus clients include banks, financial institutions, governments, pension funds, asset and fund managers, developers and landlords and companies engaged in the oil and gas industry. Visit us at www.altusgroup.com. About Altus Group Economic Consulting Altus Group Economic Consulting was formed in February 2007 when Clayton Research Associates Limited (est. in 1972) joined in Altus Group. Altus Group Economic Consulting is a group of urban and real estate economists and provides strategic advice and information to both private and public sector clients across Canada. The division specializes in real estate market analysis, land use planning issues, property investment and financing, and building products and technology analysis. Altus Group Economic Consulting has gained a reputation for astute and independent advice and analysis, based on extensive in-house expertise, a unique information base, leading edge analytical techniques and extensive contacts throughout Canada

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MONTREAL REAL ESTATE LEASING CONFERENCE March 2013 • Montreal February 14, 2013 • Hyatt Regency Montreal

Montreal Real Estate forum April 4, 2013 • Fairmont The Queen Elizabeth

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Saskatchewan REal Estate Forum April 30, 2013 • Queensbury Centre, Regina

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CALGARY REAL ESTATE LEASING CONFERENCE May 29, 2013 • Calgary TELUS Convention Centre

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April 29, 2014 • Winnipeg Convention Centre

Quebec City Real Estate Forum May 2014 • Fairmont Le Château Frontenac

October 2, 2013 Metro Toronto Convention Centre, North Building

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Getting our Act(s) Together – The Modernizing of Provincial Real Estate Acts Continued from page 58

lawyers, whether it be a commercial lease or purchase and sale transaction. As the acts stand now, blanket regulations across both sides of the industry result in sophisticated, multi-million dollar corporation faced with trying to fit their complex dealings into guidelines intended to protect residential home buyers, an arrangement that does not always function properly. Beyond transaction differences, most delegated regulatory authorities require continuing education credits and when necessary, licence renewals. While most professionals do not take issue with the standalone education requirements, they find themselves dismayed by the realization that required courses do not accurately reflect their daily functions. In fact, most courses, whether it is pre-licence, licence renewal, or continuing education maintain a fairly stark content bias. The greater majority of these courses involve teachings about residential dealings, with a small amount applying to both commercial and residential (standards and ethics), and an even smaller offering focusing specifically on commercial content. Not only does this create an atmosphere of unnecessary courses and repetition for seasoned professionals, it also presents unnecessary time and resource commitments. By the same token, real estate acts and their designated regulatory bodies have yet to recognize the increasingly sophisticated degrees being offered at some of North America’s most highly respected post-secondary institutions as equivalent education and training. Because these advanced degrees dive much deeper in to the commercial real estate sector and at a superior level than that of typical ‘focuses’ of real estate licence courses, provinces should begin to examines ways in which the licensing requirements can evolve to better reflect the sophistication of the industry.

A lack of modernization also extends beyond licensing and transaction differences. From a functional standpoint, real estate companies are often restricted to working with paper regulatory forms and are restricted from using property management software, which would dramatically streamline processes. And while outside observers may see this point as diminutive, it is in fact a perfect example of how current processes have yet to evolve, and how simple changes would significantly improve the speed at which business is done and regulatory requirements adhered to.

Striking the Right Balance REALpac and its members are pleased to see progressive mindsets both in the government and regulatory bodies while engaging provinces across Canada in critical discussions regarding their real estate acts. From the industry standpoint, finding positive commonality across Canada’s provincial jurisdictions will allow cross-border companies to experience smoother transactions and foster a better understanding of local requirements. The key to any form of regulatory changes is to not unfairly benefit or harm a particular industry, and certainly updating practices like the ones outlined in this article would not do so. It is imperative to recognize the sensitivity of any legislative amendment and the externalities such changes may produce, as well as to ensure that they will not negatively impact government oversight. Updating provincial real estate acts would simply create faster, smarter and more streamlined government-to-business services and establish a modern system of regulation. ■ Ryan J. Eickmeier, M.P.P., Manager, Government Relations & Policy Real Property Association of Canada, reickmeier@realpac.ca

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