CAM Jan/Feb 2023

VOLUME 20 / NUMBER 1 / JANUARY/FEBRUARY 2023 CANADIAN Apartment

INSIDE “THE PARKER” IN TORONTO

plus RENTAL MARKET NEWS WHAT’S AHEAD IN 2023

CURB APPEAL TRENDS

PART OF THE

STABILITY AND BALANCE AT THE TOP!

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FILLING HOUSING NEED

Finding solutions to improve Canada’s housing supply continues to be a focus of discussion among those invested in the CRE sector. Recently, Canada’s national association representing real estate companies and institutional investors, REALPAC, launched an online campaign highlighting the essential role the rental housing market plays in filling housing need. According to the new campaign, the barriers impeding progress remain considerable. While owners of aging apartment towers are faced with choosing between completing vital repairs and managing increased operating costs, developers trying to pursue healthy new rental projects are contending with inflation, high interest rates, high construction costs, slow development timelines, and high development taxes in addition to stringent government regulations and sustainability mandates.

As Michael Brooks, CEO, REALPAC, put it: “The cost pressures that people feel in Canada are also felt by landlords. Many rental buildings are over 50 years old, and fixing them is both necessary and expensive. Developers and investors are willing and ready to do their part to help rejuvenate the purpose-built rental sector, and we ask all orders of government to work with us to enable the process.”

You can read all about REALPAC’s suggestions for improving housing supply at www.REMInetwork.com.

Also speaking to the complex business of rental housing are five of Canada’s largest REITs, who came together to form ForAffordable.ca last November. See page 14 for a detailed look at the group’s proposed steps to improve housing supply.

In other news, the purpose-built rental sector has been active throughout the past few years. On our cover, we feature a wonderful new rental project designed by the Toronto-based firm, Figure3. Known as “The Parker”, the 40-storey rental tower exemplifies the future of apartments in Canada, and aptly showcases the meaning of “curb appeal” in the modern, post-pandemic era.

Enjoy our first issue of 2023!

Erin Ruddy @cdnapartmentmag

rent trends

Editor Erin Ruddy

Art Director Annette Carlucci

Graphic Designer Thuy Huynh

Production Coordinator Ines Louis

Contributing Writers Andy Schwartze

National Sales Bryan Chong Melissa Valentini

Digital Media Director Steven Chester

Circulation Adrian Holland

For sales information call (416) 512-8186

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Five

by Erin Ruddy

RENTAL MARKET UPDATE

2022 saw benchmark highs in many regions across Canada

Canadian multi-suite residential rental market conditions improved substantially during 2022, driven in large part by strong demand characteristics. Rents continued to rise across the country, with new benchmark highs set in many regions.

“Demographic trends, rising interest rates, job growth and economic uncertainty boosted demand for rental accommodation,” observed Keith Reading, Director of Research at Morguard. “New supply was leased relatively quickly upon completion.”

The national vacancy rate for purpose built rental apartments dropped from 3.1 to 1.9 per cent year-over-year as of October 2022,

according to the Canada Mortgage and Housing Corporation. Over the same time-period, rents continued to climb and reach all time high levels.

The av erage two-bedroom rent increased by 5.6 per cent year-over-year. With a recession looming, renters will generally stay put. As the economic and job market slows, renters will continue to rent. Over the balance of 2023, rental

Recent New & Notable Transactions

Source: Morguard

Investment market

Multi-suite residential rental properties remain a prime target of various investment groups; however, Reading points out that activity levels have slowed sharply as interest rates continue to rise and economic uncertainty remains elevated.

“Vendors continue to command peak pricing while buyers look for pricing adjustments to offset the increased cost of debt,” he added. “As a result, a gap between vendor and purchasing pricing expectations has reduced investment activity significantly.”

Investors, meanwhile, continue to exhibit interest in acquiring rental properties given the sector’s stable and healthy long-term outlook. Reading predicts activity levels will remain muted until vendors and purchasers can agree on price, or interest rates fall back down to levels that are acceptable to buyers.

Skyline reports strong performance in 2022

In a recent update, Guelph-based Skyline Apartment REIT announced it finished the year off in good standing and anticipates further growth opportunities in 2023. Last year, the REIT made several new additions to its rental portfolio, adding more than $360.4 million in land and property assets and bringing its total number of suites to 22,259.

Over the course of the year, the REIT acquired the following properties:

• A seven-property portfolio in Nova Scotia and Ontario

• 176 Vidal Street South & 985 Maxwell Street in Sarnia, Ontario

• 6117 Uplands Drive in Nanaimo, British Columbia

• 230 Forsyth Street North in Sarnia, Ontario

• 411 & 423 Despard Avenue in Parksville, British Columbia

• 455 rue Sicard in Mascouche, Quebec

• 76 Mary Street in Chatham, Ontario

While Skyline Apartment REIT typically maintains a buy-and-hold strategy, in 2022 it disposed of six assets, totaling 582 suites and 81,531 square feet of commercial space for a combined sales price of $182.9 million. The equity from these sales will be used toward accretive property acquisitions. In 2022, it also completed construction on two new Ontario developments in communities with low vacancy rates: Lancaster Park Apartments in Welland and Twamley Manor Apartments in the small community of Listowel.

In B.C., Skyline purchased two new properties adding 108 rental suites to the rental market in Nanaimo and 122 rental suites in Parksville.

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market fundamentals are expected to remain healthy.

Demand Surges for Rental Housing in Canada

Despite a marked increase in rental supply, the national vacancy rate for purpose-built rental apartments fell from 3.1 per cent to 1.9 per cent in 2022

CMHC’s latest Rental Market Report indicates that Canada’s vacancy rate in 2022 reached its lowest level since 2001, reflecting widespread tightening across the country including in the three largest rental markets of Montréal, Vancouver, and Toronto.

The surge in rental housing demand in the country reflected higher net migration and homeownership costs. Higher mortgage rates, which

drove up already-elevated costs of homeownership, made it harder and less attractive for renters to make the transition.

“Lower vacancy rates and rising rents

were a common theme across Canada in 2022. This caused affordability challenges for renters, especially those in the lower income ranges, with very few units in the

market available in their price range,” said Bob Dugan, CMHC’s chief economist. “The current conditions reinforce the urgent need to accelerate housing supply and address supply gaps to improve housing affordability for Canadians, as stated in our report: Housing Shortages in Canada: Solving the Affordability Crisis.”

AVERAGE RENT GROWTH

The overall average rent growth for twobedroom purpose-built apartments common to 2021 and 2022 surveys was 5.6 per cent. This is a new annual high, well above average rent growth recorded between 1990 and 2022. Higher rent growth for two-bedroom purpose-built rents was widespread across Canada. The new data also indicates that the average rent growth for two-bedroom units that turned over to a new tenant was well above rent growth for units without tenant turnover (18.3% vs. 2.9%). This increased affordability challenges faced by renters trying to enter the market or find new housing.

Meanwhile, rental condominiums accounted for 19.3 per cent of the total stock of rental units across major centres. In Vancouver, Calgary and Toronto, more than a third of all rental supply are rental condominiums. While overall rental condo supply increased by 7.2 per cent in 2022, the average vacancy rate for these units remained low at 1.6 per cent (compared to 1.8 per cent in 2021).

Report highlights:

• The primary rental apartment vacancy rate in Toronto fell to 1.7% in 2022, from 4.4% the previous year. Fewer disruptions to economic activity and immigration in 2022 resulted in a surge in rental demand.

• Strong demand in the Montreal rental market pushed the vacancy rate down from 3.7% in 2021 to 2.3% in 2022. Rent increases were also significant, especially for renters who moved.

• In Vancouver, the vacancy rate decreased from 1.2% in 2021 to 0.9% in 2022. Higher homeownership costs and migration to

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the region led rental demand to increase faster than supply.

• With Calgary’s economy growing beyond pre-pandemic levels, the rental market tightened to conditions not seen since Alberta’s last economic boom. Overall vacancy rate dropped to 2.7% (from 5.1% in 2021), the lowest since 2014.

• A strong economic rebound and record migration flows in Edmonton contributed to rental demand outpacing new rental supply in 2022. The purposebuilt rental apartment vacancy rate was 4.3% in October 2022, down from 7.3% in October 2021.

• In Ottawa, strong demographic and economic conditions supported rental demand and as a result, the vacancy rate dropped from 3.4% in 2021 to 2.1% in 2022. The greatest declines occurred in central neighbourhoods, partly because of the return of post-secondary students.

• Record high supply growth has helped alleviate rental market tightness, while rising demand has accelerated rent increases in the Victoria rental market. The

The Rate of New Construction

In Toronto, Montreal, and Vancouver, multi-unit construction led housing starts in 2022, with rental apartments and condominiums accounting for the majority of new housing projects.

CMHC describes housing starts as “an economic indicator” reflecting the number of residential housing projects that have been started over a specific length of time. For the month of December, total housing starts in both urban and rural areas declined five per cent to 248,625 units compared to November 2022. Specifically, multi-unit urban starts decreased four per cent to 182,850 units while singledetached urban starts fell 11 per cent to 44,858 units.

Housing starts in the Toronto Census Metropolitan Area (CMA) reached 45,109 units, which is 7.6 per cent higher than the previous year. In fact, this marked the highest level since 2012 (48,105 units) and the fourth highest number on record. According to CMHC, the growth in Toronto’s housing starts was “entirely attributable to the multi-unit segment” comprised of semi-detached homes, row homes, and apartments. In all, there were 38,780 multi-unit starts across the city in 2022—the largest number on record—with the majority being apartments and condominiums.

In Montreal, activity was in line with pre-pandemic levels with 24,000 overall housing starts, down 25 per cent from the record year experienced in 2021. This decrease was observed across all market types (homes, rentals, and condos), with rental apartments continuing to drive housing starts in the area. In 2022, rental projects in Montreal represented 61 per cent of all housing starts.

Housing starts in the Vancouver CMA totaled 25,983 units in 2022, unchanged overall from 2021 (26,103 units). Builders in the region are continuing to operate near capacity and at an elevated pace, in keeping with the trends seen there over the past five years. As construction of rental apartments surged due to strong demand, condominium starts fell, indicating developers took a more cautious approach to the segment. With higher mortgage interest rates limiting the budgets of homebuyers, CMHC believes some of the demand from ownership in Vancouver has switched to rental.

For more on vacancy rates, housing starts, and other market information, visit www.cmhc-schl.gc.ca

Asset Transformation

vacancy rate rose slightly to reach 1.5 % (from 1 % in 2021), mostly from the expansion of the rental apartment stock.

• In Hamilton, the vacancy rate for purposebuilt rental apartments was the lowest since 2002 at 1.9%. The number of occupied units increased due to more student renters, higher full-time employment and fewer renters transitioning into homeownership.

• The vacancy rate in Halifax did not change in 2022, staying at the record low of 1%. The number of rental apartment units increased by 1,348. This was the lowest number of annual rental completions since 2016.

• In some of Canada’s largest centres, rented condominiums can be a driver of rental markets. Vancouver was the leader (with 42.5% of its rental stock made up of condominiums), followed by Calgary (37.5%) and Toronto (34%). Centres in Quebec generally reported smaller shares, including Montréal at 6.7%.

• The average rent for a 2-bedroom rental condominium apartment saw a significant increase to $1,930 from $1,771, about 9% yearover-year.

For more information, visit www.cmhc-schl.gc.ca

Working together for affordable housing

5 Canadian REITs unite to bring clarity, solutions to housing crisis

by Erin Ruddy

The affordable housing crisis in Canada has been a contentious subject for decades. From policies like inclusionary zoning, to rent caps and tax incentives, bringing more affordable homes to market is a complex endeavour with no single solution. Making matters worse is the general lack of clarity surrounding the business of operating rental apartments. For many landlords, large and small, this lack of understanding has contributed to their portrayal as gauging, heartless entities making windfalls of money at the expense of tenants.

Enter some of Canada’s largest publicly traded residential REITs: Canadian Apartment Properties REIT (CAPREIT), Boardwalk REIT, Killam Apartment REIT, InterRent REIT and Minto Apartment REIT. In late 2022, the five powerhouses banded together to form ForAffordable.ca, an initiative intended to bring clarity to the business of rental housing while detailing viable ways to generate more housing supply where it’s needed.

“Canada is experiencing the worst crisis of housing affordability and supply in a generation,” said Mark Kenney, President and CEO of CAPREIT. “Put simply, there just haven’t been enough new homes built to match the country’s population growth.”

According to Kenney, this is the main reason housing has become less affordable for an increasing number of Canadians. While governments across Canada are focused on finding solutions, he believes some of the productivity has been muddied by misperceptions about how REITs and other housing providers do business.

At ForAffordable.ca, visitors can find key facts and figures pertaining to how large housing providers operate, where and how they invest in their buildings, and how they are taxed compared to other asset classes. The newly launched website also tackles some misperceptions about “renovictions” (no, these REITs don’t do them) and the percentage of affordable units that make up their rental housing portfolios. Surprisingly, half of the group’s 120,000 suites are rented at rates that meet the government’s definition of affordable (i.e., less than 30 per cent of local median renter household income). Also of note is that rents across their collective portfolios have only grown an average of 2 per cent per year over the last ten years; meanwhile they’ve all been committed to bringing more affordable housing supply to in-demand regional markets.

Essentially, the group says achieving the goal of more affordable housing relies heavily on building partnerships and working with other organizations to deliver the spectrum of housing needed. Sam Kolias, Chairman and CEO, Boardwalk REIT, put it this way: “There is an old saying: Alone we go fast, together we go far. We come together to go far in providing Canadians with more affordable

housing. How? Over the last several decades, we have seen how sound public policy like no rent controls produces the most affordable housing. Alberta and Saskatchewan are the best examples where for decades rent control has been absent and are now regions where the most affordable rents are found in Canada. Education is essential for voter and policymakers to be able to make the best policy decisions.”

Expanding on that, Kolias said working with others to ensure the best data and case examples are used to create the best public policy is an integral part of the ForAffordable.ca mission. Specifically, the platform espouses that eliminating price controls, reducing capital costs with capital grants; reducing taxes with higher capital cost allowances; and making rent supports available to those who need them most will help remedy supply issues.

“Studies show how rent supports help keep everyone in housing and is much more economic and beneficial than homelessness,” he said. “Past history of lowering capital costs and taxation have also proven to produce much more quality supply of rental housing, thus lowering rental costs with more competition.”

Proposed tools & solutions

Here, from the perspective of Canada’s five largest residential REITs, are some feasible ways the government might stimulate the creation of new affordable rental housing:

1.

Create supportive financing and a funding program for cooperatives and non-profits to acquire existing market-based affordable housing from REITs and others at market prices and preserve affordability through community land trusts.

“We agree with the Canadian Housing and Renewal Association (CHRA) that this solution should be added to the National Housing Strategy.”

Expand the Canada Housing Benefit to help more families and introduce an emergency support benefit to prevent homelessness.

“We are supportive of expanding the CHB to help more families make ends meet, and of developing emergency supports to help people avoid losing their homes in times of crisis.”

Create a national standard for landuse by aligning land use policies with national housing, infrastructure and immigration goals and investments.

“Canada’s population is growing, but housing isn’t keeping up. We need to dramatically increase housing supply. The federal government should use the Health and Social transfers, infrastructure, and other funding streams to nudge provinces, territories, and municipalities to align landuse policies to create a national standard.”

2. 3. 4.

Maintain the existing tax treatment of REITs, as per a Fall 2022 study by Ernst & Young which demonstrates how changing it could disincentivize needed investment in residential supply, put upward pressure on rents, and have a marginal—or possibly negative—impact on government revenues.

“Just as putting a price on carbon reduces greenhouse gas emissions by making it much more expensive for all consumers, taxes on housing, and affordable housing in particular, discourages construction by making it too expensive for Canadian consumers to afford and builders to build. All governments must align their taxation policies to promote new construction. Historic best-case examples in the 60s, 70s and 80s clearly show how lowering taxes increases the supply of affordable housing.” Visit

“Canada is experiencing the worst crisis of housing affordability and supply in a generation.”

PUTTING CONVENIENCECOMFORT, COMMUNITY FIRST

Purpose-built

rentals have come a long way…

By Erin Ruddy

Canadian design firm Figure3 believes that people and places should be connected. As such, when it sets out to design a new purpose-built rental development, the location and needs of the future residents are woven into a unique vision for that site and that site only. The result? An aesthetically pleasing yet functional living space where residents can relax, play, work, shop, and immerse themselves in the surrounding community.

CONVENIENCECOMFORT, AND FIRST

Take “The Parker” in mid-town Toronto, which opened in late 2021. Inspired by the luxury hotels of Iceland, the interior features pale, silvery-blonde woods paired with concrete and black metal accents. Simple yet elegant, this Nordic motif was chosen strategically by Figure3 for its apt reflection of the Yonge & Eglinton vibe, an area rife with urban professionals known to take their health, and coffee, seriously.

“The idea of street presence and putting the community on display is key for a purpose-built rental building,” said Dominic De Freitas, Principle at Figure3. “So, understanding the values and attributes of the neighbourhood becomes a critical part of the design process. It’s that connection to the streetscape that helps define the brand, and we as designers must harness that energy and translate it into the physical space.”

From its double-height ceiling to its direct access to retail shops, the lobby at the Parker creates an inviting space for residents and passersby alike. Meanwhile, functional furniture groupings help to further define the zones and encourage connection among friends and neighbours.

“People attract people,” said De Freitas. “So, by bringing the social element to the entry experience, the curb appeal is amplified. It also creates social opportunities, which ultimately draw people into the space.”

Of course, that is the job of curb appeal—to draw people in. While traditionally this may have been achievable through fresh paint and potted flowers, purpose-built rental buildings today are pushing the boundaries of what curb appeal entails.

“The idea of street presence and putting the community on display is key for a purpose-built rental building.”

“In contrast to how rental lobbies were laid out in the past (bare and transient), we’re now activating the lobby to act as a community hub, designed for connection and convenience,” De Freitas said. “It’s about finding good tenants who will bring in other good tenants, and creating a brand and community that can, and should, be shared.”

Hence why everything at the Parker was chosen with intent. With its plush seating, rich textiles, and strategic lobby lighting, the communal space was designed to influence desired behaviours and reinforce the idea that “home” isn’t just confined to the suite; it’s the whole building.

The rise of brand collaborations

While apartment buildings used to be approached with a ‘one-size-fits-all’ mentality, times have changed, and more purpose-built rentals are now being marketed for their unique brand identities. Brand collaborations and on-site programming have become popular ‘add-value’ features, and according to De Freitas, this means understanding the needs of the target market and then creating experiences that amplify that lifestyle.

“Renting is no longer just a transitional step towards home ownership,” he said. “As cost continues to rise, creating a long-term resident relationship is key, and developers are leveraging brand recognition and increasing value-adds like never before.”

Liberty House brings upscale rental living to Liberty Village

Toronto’s Liberty Village has gone through a striking metamorphosis over the past few decades. With a history steeped in manufacturing, the neighbourhood has grown into a vibrant hub for young professionals and artists who now occupy the former factories and modern new buildings just north of Lake Ontario.

Liberty House, designed by Figure3, emphasizes the sense of togetherness and social connectivity that is deeply rooted in this energetic community. Located at the eastern edge of Liberty Village, the purpose-built rental development brings an elevated rental experience with an “art-forward, London-inspired” design.

According to Megan Hayward, Senior Team Leader at Figure3, “There is a high level of finishing not typical of a purpose-built rental, with rich materiality and stunning details in the common areas and the suites that makes it feel like home.”

Local art is displayed throughout the common spaces, adding character and points of interest throughout the building—including a custom art panel in the games room, and a unique mixedmedia installation in the fitness centre.

“Liberty House embodies the unique essence of the neighbourhood with eclectic styling and an art-forward approach,” said Hayward.

At the Parker, residents can make use of a rooftop pool and a lofty, two-storey gym known as “The Temple”. (“Fuel your workout with a Greenhouse cold-pressed juice or kombucha,” the Parker website declares. “The Temple’s dedicated Greenhouse vending machine offers organic, non-GMO, plant-based beverages at discounted rates for residents.”)

Other popular amenities include a separate yoga sanctuary and spin studio, an arcade, a billiards room, two bowling alleys, a pet spa, a two-storey sky lounge and a children’s playroom containing a custom tree playhouse. But all these add-ons aside, DeFreitas said Figure3 still approaches its purpose-built rental projects with a classic design to ensure longevity and versatility for residents.

Condo vs. apartment: digging into the differences

Whether it’s a condominium or a rental development, at the end of the day, both asset types serve the same purpose: to provide a safe, comfortable living space for families and individuals. But how they are approached, according to De Freitas, is not the same at all.

“For a purpose-built rental project, this is a long-term investment on behalf of the developer—an asset they could potentially own for decades—whereas a condo developer will ultimately sell the units and transfer ownership relatively quickly.”

This distinction means there are nuances in the floorplans, material selection, and functionality that must be considered at the onset.

“Everything from the design to the marketing approach must be versatile, inclusive and appeal to each of these vastly different groups in a lasting way,” said De Freitas. “The idea that home ownership is the ‘ultimate and only’ option is going by the wayside, as stereotypes of rentals and renters are deconstructed. Renting is now seen as a convenient way to achieve greater flexibility in the long run.”

Additionally, pandemic-life has influenced people’s priorities regarding where and how they work and play. There is an increased demand for outdoor space, adaptable amenities, and convenience as more people opt to remain in one location.

“With remote and hybrid work culture likely here to stay, the importance of multi-functional gathering spaces as well as fully equipped co-working spaces has become even more important,” he said. “There is also a greater demand for compartmentalized zones that allow for private calls or video meetings. People are spending more time in the vertical community. They aren’t leaving the building as often but still may desire a change of scenery with the added comforts of home.”

According to De Freitas, units designed specifically with families in mind will be significant in terms of how rental buildings are designed in the future.

“Currently, these larger units are often cost prohibitive,” he said. “The City of Toronto is looking at ways to incentivize developers and landlords to build family-sized units, and consider amenity spaces, such as on-site daycares and play areas.”

But ultimately what people want today will continue to drive the buildings of tomorrow—purpose-built rentals that put comfort, convenience, and community first.

It’s about time.

“Now more than ever, we must consider multi-generational audiences when designing for the high-rise rental community,” he said. “Renting is no longer just a viable option for young professionals, but also for families straight through to empty nesters, all who are seeking the ease of upkeep and elevated, hotel-like lifestyle.” Find out more by visiting www.figure3.com

“Now more than ever, we must consider multi-generational audiences when designing for the high-rise rental community.”

Industry Hot Topics

Harrison Street breaks ground on Calgary rental property

Chicago-based Harrison Street announced it has broken ground on “Block 15”, a multi-unit property targeting young professionals and students in Calgary’s University District. The 300-unit project is being undertaken with Gracorp Properties, and once complete, will be managed by Campus Living Centres. With this acquisition, Harrison Street now owns the two residential assets nearest the University of Calgary campus, a prestigious research university home to more than 35,000 students.

“We are thrilled to expand our presence at the University of Calgary with this investment in Block 15, a luxury development that will be located across the street from our previously acquired asset, ARIA,” said Jonathan Turnbull, Head of Transactions and Business Development, Canada of Harrison Street. “The University District is one of the premier communities in the entire Calgary market and continues to attract new residents at a fast pace. That growth has been coupled with an increased demand for high-quality housing options close to the University’s campus. We believe Block 15 will serve as an attractive housing option to young professionals and students, who will be able to walk to campus or their job and have easy access to food, entertainment, and outdoor space.”

Equipped with high-end, shared facilities and design features such as a gym, keyless entry, communal rooftop patios, a fire pit/ grill space, in-suite laundry, indoor lounge space and secure bicycle storage, the building is also on track to achieve the Built Green Gold certification and is expected to exceed the current National Energy Code by 20 per cent in energy and emissions savings.

“Block 15 further reinforces the synergistic partnership between Gracorp and Harrison Street,” said Novy Cheema, Vice President Real Estate, Gracorp Properties. “Gracorp’s experience building industry leading projects coupled with Harrison Street’s proven investment management philosophy provides the right partnership to bring another amenity rich, tenant focused multi-family development to the University District.”

CON ERRA CON ERRA RESTORATION LTD.

Parking Structure & Building Repair Specialist

GTA condominium rents rose 17% in 2022

According to the latest data from Urbanation, the annual rate of rent growth in the GTA, as measured through condo lease transactions, averaged 16.9 per cent during 2022 following a 0.5 per cent decrease in 2021 and a 6.8 per cent decrease in 2020. On balance, rent inflation was below normal over the past three years at an average of 3.2 per cent compared to the latest 10-year average of 5.1 per cent.

“After surging throughout most of 2022, rents started to show signs of levelling out towards the end of the year, which should provide some temporary relief for renters,” said Shaun Hildebrand, President of Urbanation. Nonetheless, it’s clear that the negative direction for new construction and positive outlook for demand will continue placing strong upward pressure on rents in the years to come unless more action is taken to boost rental supply.”

For units transacting in Q4-2022, average rents decreased 1.6 per cent quarter-over-quarter, back in line with typical seasonal trends. As Urbanation points out, these growth rates are exclusive to units that turned over into the unregulated market. The vast majority of units do not turn over annually, are built before November 15, 2018, and are subject to the provincial rent increase guideline of 1.2 per cent.

Get the full report at www.urbanation.ca

Student and seniors housing prospects in favour

Amajority of student and seniors housing operators are looking to expand their portfolios in 2023 through acquisitions and new development, and foresee rental rate growth of upwards of 5 per cent this year. Results from CBRE Canada’s recent survey of senior executives in the two sectors finds that most are also expecting increased operating costs due to inflation, asset devaluation due to rising interest rates, and a 25 to 50 basis point (bps) increase in cap rates.

Nevertheless, more than a quarter of student housing operators suggest cap rates will hold steady or compress in 2023. The vast majority (83 per cent) also maintain that market demand has returned to pre-pandemic levels, with the remaining 17 per cent projecting that will occur over the course of this winter. A minority of respondents plan to pull back on acquisitions and development compared to last year, but none intend to completely halt activity.

Looking to the future, 83 per cent of respondents in the student housing sector expect to acquire assets over the next three years. Private investment is generally seen as the primary driver of new purpose-built student accommodations (PBSA) over the next decade — flagged by 58 per cent of respondents. However, 42 per cent foresee the rising influence of public-private partnerships (PPP) as universities increasingly work with private developers.

“Confidence in the sector is driving investors to deploy more capital,” says Ryan Tran, a vice president with CBRE Canada’s alternative assets group. “The near-term outlook is positive, with strong rental rate growth expected.”

Top-ranked markets this year include Toronto, Calgary, Montreal and Kingston.

Seniors housing operators are far less likely to conclude rental demand has returned to pre-pandemic levels. A third of respondents from the sector project that should occur in the second half of 2023, but 43 per cent don’t expect full recovery of demand until 2024. Nearly a quarter intend to halt new development activity this year and 10 per cent have no plans to purchase assets; 72 per cent foresee a 50 to 75 bps increase in cap rates.

Labour shortages are flagged as the most pressing operational challenge for the sector this year, while perceptions of COVID-19 related risks are considered the biggest damper on occupant demand. Just 5 per cent of operators foresee that emerging options for seniors to stay longer in their own homes could diminish demand, and 95 per cent expect to buy assets over the next three years.

“Senior living is poised for transformational demand-supply imbalance over the next five to 15 years as surging Baby Boomer demand meets a tapered supply chain — the result being oversized rental rate growth and investment yields,” predicts Matthew Burnett, a senior vice president and head of the health care group with CBRE.

For 2023, preferred investment markets include Toronto, Vancouver, and Calgary, as well as Montreal and Edmonton to a lesser degree.

CANADA’S LEADING ULC FIRE MONITORING CENTRAL STATION

Study compares cost of renting vs. owning a home

Arecent analysis looking at the cost of renting vs. owning a home reveals that Canadian homeowners spend 24 per cent (or almost $300) more than renters on monthly shelter costs. Conducted by Point2, the study includes breakdowns of the top Canadian cities with the cheapest and most expensive housing. Findings show that 85 per cent of owned households spend less than 30 per cent of income on monthly shelter costs compared to almost 67 per cent of renter households. However, in cities like Kelowna, BC, Kingston, ON, and Richmond, BC, renters and owners spend almost the same on housing costs.

Record-high rates of inflation have also impacted monthly housing costs, putting more pressure on most Canadian household budgets. Whether it’s costs specific to renting or owning, Canadians have it cheaper depending on where they live.

Specific findings:

• On average, Canadian homeowners spend 24% (or almost $300) more than renters on monthly shelter costs.

• Major Ontario cities boast the most expensive housing costs: homeowners in 9 cities (including Toronto, Brampton and Markham) pay more than $2,000 a month.

• Oakville, Vaughan and Milton, ON, are the only cities where all residents (renters, as well as owners) spend more than $2,000 on shelter costs.

• Renters in 9 Québec cities (including Montréal and Québec City) pay less than $1,000 on housing costs; Trois-Rivières enjoys the cheapest housing costs for both homeowners ($956) and renters ($676).

• Renters and homeowners in Kelowna, BC, spend almost the same on housing, while owners in Brampton, ON, pay $676 more than renters.

• 79% of Canadian households spend less than 30% of their monthly income on housing costs. In Lévis and Saguenay, QC, about 88% do so.

• Renters who want to take on a mortgage to become homeowners in Canada need to spend almost 71% (or $857) more per month, but it’s cheaper to do so in metros like Winnipeg or Québec City.

Nova Scotia amends Residential Tenancies Program One-window guide for EV charger grants opens

Effective February 3, 2023, landlords in Nova Scotia can raise rents on any day of the year and not just on the anniversary of the day the lease began. Additionally, they cannot raise rent more than once in a 12-month period and must continue to give at least four months notice before rent can be raised.

On the privacy front, Nova Scotia landlords are now required to give a tenant 24 hours notice before entering the unit, even if the tenant has given notice to end the lease. Landlords can only enter a unit without notice if there is an emergency.

“We listened to feedback from tenants and landlords and are making changes to the program that will provide flexibility and more clarity to processes,” said Colton LeBlanc, Minister of Service Nova Scotia and Internal Services. “With any change, we consider the needs of both tenants and landlords – and we continue to look for ways to help them know and understand their rights and responsibilities.”

Other changes include:

• landlords cannot charge tenants different amounts for different rental terms. For example, they can’t charge different amounts for a year-to-year, month-to-month or fixed-term lease.

• a lease can be terminated if a tenant sublets a unit without the landlord’s permission.

More information on Nova Scotia residential tenancy laws, rights, responsibilities, and other information can be found at: https:// beta.novascotia.ca/programs-and-services/ residential-tenancies-program.

Prospective investors in electric vehicle (EV) charging equipment can now look to a one-window guide of the grants available through various Canadian government programs. The new online reference hub has been designed to steer businesses, not-forprofit groups and municipalities to applicable options coordinated by Natural Resources Canada (NRCan), Canada Infrastructure Bank (CIB) or designated delivery agents of the zeroemission vehicle infrastructure program (ZEVIP).

Current programs are targeted to a range of potential proponents from landlords seeking to install EV charging stations in commercial or multifamily buildings to developers of commercial-scale EV charging operations to municipalities investing in zero-emission transit fleets. The new reference hub includes a basic questionnaire to help identify the best fit for funding candidates’ needs, and provides a gateway to details and application processes for each program.

“Investments in infrastructure that accelerate Canada’s transition toward net-zero are a key element of the CIB’s mandate,” affirms Ehren Cory, chief executive officer of Canada Infrastructure Bank, which collaborated with NRCan in the development of the online guide.

The site also features a portal for recruiting organizations potentially positioned to coordinate and deliver ZEVIP funding in their communities or regions. For EV drivers, it offers a locator app to identify EV charging and alternative fuelling stations throughout Canada and the United States.

PREVENTING

WINTER SLIP

AND FALLS

Best practices to help landlords reduce their risk and keep tenants safe

Residential landlords are responsible for preventing “slip and fall” accidents on their properties, especially in the winter when surfaces can turn from icy one moment to slick the next. Failing to take the necessary precautions in terms of snow removal, floorcare, and proactive, preventative maintenance, can lead to costly litigation while marring the reputation of a building and its management.

According to the National Flooring Safety Institute, some eight million people visit hospital emergency rooms each year after a fall, with 12 per cent of those incidents resulting from a slippery surface. When a fall occurs in an apartment lobby, parking lot, walkway, or high-traffic communal area, the injured party may opt to pursue a claim against the owner or manager if negligence can be proven.

“Landlords are easy targets for slip and fall claims because they carry good insurance policies and are not always on the property to investigate the site in a timely way when it happens,” said Joe Hoffer, Partner, Cohen Highly LLP Lawyers. “If the landlord has adequate documentation of inspections, snow removal protocols, and video monitoring, these things can go a long way to mitigating questionable claims by opportunistic people.”

Whether it’s a single-family home, a townhouse complex, or a multi-residential apartment building, the property owner is ultimately responsible to ensure all communal areas are hazard-free. That said, occupiers (i.e., the tenants) also have an obligation to keep their entries clear. Those unable to address a potential risk from, say, a heavy snowfall or a spillage, should promptly notify the owner or manager who will be held responsible if an incident were to ensue.

Hoffer’s advice? “Stay vigilant and document everything because the onus will be on you.”

Outdoor best practices

In the past, many building managers have relied on de-icing salts such as rock salt or sodium chloride to lower their risk of outdoor accidents, but recent studies have exposed this method for its negative environmental impacts.

Effective as de-icing chemicals are, their extensive use can lead to the salinization of freshwaters, which degrades habitats for aquatic organisms and impacts drinking water for humans. Commercial property owners today are encouraged to seek out sustainable alternatives while also prioritizing safety.

To help achieve this goal—and to get ahead of government regulations that are expected to come in the near future—a new set of best practices were developed in response to a twoyear Harvard study that looked at the drivers and variables influencing road salt application. Known as “SWiM” the strategy helps building operators better manage snow and ice, save money, and reduce their environmental impacts. The SWiM audit guidelines include more than 100 criteria that must be met to earn a SWiM certification, but facilities can also access the standards for their own informational purposes.

Anti-slip coatings

While frequent inspections and proactive maintenance will help minimize the risk of a

tenant slipping on slick, weather-exposed surfaces, there are anti-slip coatings available to improve safety in high-traffic, high-risk areas.

According to one New York-based contractor, Roger Williams, the best antislip coatings are “safe and durable” while also delivering on their promise to minimize the potential for slip and fall accidents. Having recently explored several options for a project at a residential complex, Williams discovered that not all coatings were created equal, and that while some solutions can only be applied to a specific substrate, others may be applied to a wider range of surfaces.

“One product, which was very expensive, claimed it made wet surfaces ‘non-slip,’ but it did not work well on the steps that were known to get slick when wet,” he said.

Furthermore, to use the product, it meant several coats of concrete sealer needed to be stripped prior to application—a costly, messy, and timeconsuming ordeal. Instead, Williams opted for a “true epoxy binder” with embedded aggregate that not only improved the traction of the steps, but also maintained the aesthetics of the Chattahoochee stone.

In conclusion, Williams advises those in the market for an anti-slip coating to do their research and choose one that will “resist shrinking, retain aggregate to improve traction and endure many years of wear.”

“Landlords are easy targets for slip and fall claims because they carry good insurance policies and are not always on the property to investigate the site in a timely way when it happens.”

2022: A YEAR OF CATASROPHES

Expect your insurance rates to reflect it

by Andy Schwartze

As we head into another year wondering what insurance pricing models will look like, all signs thus far indicate that reinsurance companies will continue to dominate pricing. This means we will have an inverted pricing curve that points to higher average rates for properties that require a lot of dollar coverage. While smaller buildings use less reinsurance capacity, larger ones use a whole lot more. If a typical insurer retains, for example, $2,000,000 of building coverage as a potential exposure to its own balance sheet and only needs another $3,000,000 to issue a $5M policy, then the reinsurance requirement is considerably less than if a much higher amount were needed. The insurer issuing the policy stays with its $2M exposure and must “buy up” additional reinsurance to provide the coverage level needed. We still see very large sites paying rates that are higher than what the small ones are paying. This has turned the entire concept of “buy more and the rate goes down” on its head.

Part of this is related to the Insurance Bureau of Canada’s recent report stating that severe weather claims in Canada in 2022 resulted in $3.1 billion in claims being paid out by the property casualty insurance industry. These claims are heavily reinsured because a huge part of the reinsurance world deals with the burden of protecting insurance companies worldwide from big money catastrophe exposures. This inevitably remains the cause for continually rising reinsurance costs being loaded on to the policies that insurance companies issue to you and I. One senior insurance company manager told us recently that, in some cases, reinsurance costs are up an enormous 25 per cent. It’s almost hard to believe. Reinsurance costs are not shown on insurance contracts, they are built into our premiums. This is a transparency that I have often suggested should show on an insurance contract. It hasn’t happened yet, and I am not holding out any hope as doing so would be complicated.

It turns out that 2022 had the 3rd most natural catastrophe claims in Canadian history. Taking top spot was the year 2016 when Fort McMurray burned. We also need to remember that the reinsurance system is a worldwide one—and in some small measure we also all contribute to what is happening outside of our borders. As additional information trickles out into the public domain we will get a more reliable picture of what the reinsurance cost impact will be this year.

Car theft on the rise

As an interesting sidenote, car theft is rising in Ontario and Quebec in what can only be described as an epidemic. In fact, a few weeks ago my own Acura sedan was lifted from our driveway in the middle of the night, and as of today, it has not been recovered.

There’s a reason this is happening: shipping stolen cars out of the country in containers via the port of Montreal appears to be an easy way to get them overseas to numerous African destinations. Apparently security is rather lax there. If interested, here’s a link to a video on YouTube that delves into the matter: www.youtube.com/ watch?v=gshyozP-GY8. Afterwards, you may want to research “the Club” or other options to secure your car at night.

It is hard to say how many vehicles are being stolen in Ontario and Quebec every day. One hears numerous statistics, but the numbers are certainly high. According to a recent report, the Peel Region alone was seeing 40 cars disappearing from streets and driveways per day. Recently, I went online and looked for used cars

in Ghana. There are, of course, numerous used-car sites that one can view, but I found it interesting that many cars for sale were labelled as either “Ghana Used” or (to a much greater extent) “Foreign Used.” You may draw your own conclusion about that.

Clearly, this problem will not be solved overnight. It takes dedicated and tenacious law enforcement to shut this

criminal activity down. For now, one gets the impression that there is not a lot of commitment to deal with it. Insurance does, of course, pay the owner or leasing company for the stolen car. But no reminder necessary; car theft does have two effects. It increases car sales for the manufacturers, and their dealers, and it also increases car insurance rates.

For questions regarding multi-residential housing insurance, please visit: www.takecover.ca

WASTE NOT, WANT NOT

Assessing utility usage and wastage through Live Energy Metering

In an age of rising inflation, keeping track of expenses is more vital than ever. Property managers today are well-aware of the importance of assessing usage versus wastage when it comes to utilities like electricity and gas. Meanwhile, climate change and increasing environmental responsibility are helping drive the movement towards more efficient building systems, whether it is a new build or a retrofit.

“It has been a generation since we have seen inflation like we are experiencing today, and as a result, building and property managers are seeking every avenue to aggressively lower their operating costs,” said Kevin Lisso, Chief Executive Officer and co-founder of EnerSavings, a leading energy solutions provider in Canada. “When cutting costs is the goal, controlling energy use is a good place to start. It has been estimated that older buildings without LED lighting and modern HVAC systems can waste 30 per cent of the energy they consume.”

According to Lisso, building managers often take on these expenses without the peace of mind that their improvements are actually making a difference. What’s more, they may be missing other opportunities for further savings by identifying how energy in their facility is actually being used. EnerSavings’ Live Energy Metering Tool and Program monitors and reports on a building’s energy use in real time. The tool provides a highly scalable, low-cost platform that gathers granular energy-consumption data to measure where energy is being used and verify whether it is energy that needs to be expended, or is being wasted.

“Property managers and facility executives cannot afford to guess when it comes to energy savings,” he said. “Live energy metering takes out the guesswork, simplifies the process and demystifies a building’s exorbitant energy use.”

For more information, please visit enersavings.com