Apartment CANADIAN
VOLUME 17 / NUMBER 4 / JULY/AUGUST 2020
REINVENTING MULTI-UNIT HOUSING COVID USHERS IN THE DAWN OF A NEW ERA plus
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Yes, we can! Since MetCap Living established itself as a leader in property management, we have routinely been asked one, simple question; “Can you help us run our property more effectively?” And, for well over thirty years, the answer has remained — Yes, we can! Our managers are seasoned professionals, experienced in every detail of the day to day operations and maintenance of multi-unit rental properties. From marketing, leasing, finance and accounting, to actual physical, on-site management, we oversee everything. We concentrate on revenue growth, controlling expenses, and strategic capital investment in your property to maximize your profitability over the long term — when you’re ready to discuss a better option; we’ll be there. You can count on it. Kazi Shahnewaz Director, Business Development Office: 416.340.1600 x504 C. 647.887.5676 k.m.shahnewaz@metcap.com
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EDITOR’S NOTE>>
Apartment CANADIAN
HEALTH & WELLNESS BEGINS AT HOME If the coronavirus has taught us anything, it’s that people need a healthy space to live, eat, sleep and exercise, with ample natural sunlight and access to fresh air. Flexibility in terms of design and structure are essential to delivering these outcomes. As Canada continues to grapple with the threat of COVID-19, experts in all sectors are reimagining the future by quickly learning from the past. It’s the dawn of a new era. Dev Mehta, Senior Associate at Quadrangle, is one of these experts, and you can read his valuable thoughts on housing density and the pursuit of healthier dwellings in our cover feature on page 16. Air ventilation, being key to health and wellness, is another topic we delve into. On page 12, Kevin Smith, General Manager of Panasonic Canada’s Life & Device Solutions Division, shares important insights into how to achieve the best indoor air quality for your tenants. Also in this issue, we recap some of the latest news and market info from province to province. Q2 was not a stellar quarter in terms of apartment sales, but good things appear to be on the horizon. In Ontario, Bill 184 continues to cause upheaval as both landlords and tenants fight for their rights, and the Ford government holds firm on its ruling. Evictions are no longer banned across the province, and landlords want their losses recovered for months of shouldering missed payments. Tenant groups, meanwhile, fearing mass evictions are demanding the government amend the new law. This is a rapidly changing story. For timely updates, please visit www.REMInetwork.com. Warm regards,
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President Kevin Brown Group Publisher Sean Foley Copyright 2020 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 1712-140X Circulation 416-516-8186 ext. 234 circulation@mediaedge.ca Subscription Rates: Canada: 1 year, $50*, 2 years, $90*, US $75 International $100, Single Copy Sales: Canada: $12* * Plus applicable taxes Requests for permission to reprint any portion of this magazine should be sent to Erin Ruddy. Authors: Canadian Apartment Magazine accepts unsolicited query letters and article suggestions. Manufacturers: Those wishing to have their products reviewed should contact the publisher or send information to the attention of the editor. The opinions expressed are those of the authors of articles and do not necessarily reflect the views of Canadian Apartment Magazine. This information is general and is not a substitute for legal advice. Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Apartment Magazine makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused. Printed in Canada.
rent trends
BUILDING FEATURES THAT DEFINE THE FUTURE Amenities concierge
Touchless technology Flexible spaces Private balconies
Urban gardens Work from home capabilities
Sustainable design
Natural sunlight
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Our Business is to Make Yours Shine! Whiterose is an Industry Leader with a long list of condos in the downtown and surrounding areas Whiterose Janitorial Services Ltd. believes in servicing its customers with professionalism, communication and appreciation. The Key to our success is service, quality and value. We clean beyond the surface! Quality management begins behind the scenes prior to commencing a job all employees are evaluated and or training to the whiterose standard given special attention to health and safety policies. Whiterose Janitorial Services is a full service company and a member of ACMO and CCI. Specializing in cleaning and live in & live out Superintendents for the past 30 years. Spectrum of Cleaning Services: • Facility assessment • House keeping and general cleaning services • Customized cleaning service plan • Customized cleaning schedules • Window cleaning (Exterior high rise) • Garage cleaning • Marble restoration & Polishing • Carpet cleaning
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Apartment CANADIAN
VOLUME 17 / NUMBER 4 / JULY AUGUST 2020
FEATURE 12 The Air We Breathe Ventilation is key to a healthy building by Kevin Smith
20 From Hotel to Affordable Rental Housing Experts say now’s the time to consider converting your asset by Erin Ruddy
COLUMNS 8 Transactions Q2 Apartment Sales 10 CMHC Report on Rental Demand by Graeme Huycke 22 Newsworthy Industry Hot Topics 24 Insurance What’s Impacting Rates? by Andy Schwartze 25 Property Management Skyline’s Tenant Assistance Program
COVER STORY
DEPARTMENTS
16 Building Better Density Dev Mehta, Senior Associate at Quadrangle, explains what’s driving multi-unit building design in a post-pandemic world by Erin Ruddy
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ON THE COVER:
VOLUME 17 / NUMBER 4 / JULY/AUGUST 2020
Sun rising over Vancouver apartments
Editor’s Note REINVENTING MULTI-UNIT HOUSING COVID USHERS IN THE DAWN OF A NEW ERA
28 Smart Ideas
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diversified construction 24 hour emergency service 416.524.3000 Email: estimating@forestgroup.ca
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Q2 Transactions Down Significantly Still, outlook remains positive for the apartment sector
After a record-breaking 2019 and Q1-2020, the GTA multifamily investment market has felt the effects of COVID-19 with Q2 transactions plummeting to just 23 in total. According to JLL Real Estate Services, this represents the second lowest sales volume in the past five years, dropping 66 per cent year-over-year to $262,428,000.
Highlighting the troubled quarter was the Flagship PropertyTimbercreek portfolio with nine apartments for a combined price of $143,360,000. This was the largest of the Q2 transactions accounting for 55 per cent of the total Q2 sales volume. The median price per suite increased 10 per cent to
$265,000 and cap rates continued to compress to 3.14 per cent, down 25 basis points. “Tenants will for the first time in a long time enjoy a slight increase in availability and modest downward pressure on rents,” observes Morguard’s Director of Research, Keith
RECENT Transactions: Address
City
#of Units
Sale Price (Millions)
Sale Price/Unit
Purchaser
Toronto
509
$143.4
$281,670
Timbercreek
Vancouver
35
$16.4
$469,714
Starlight
1.
Flagship Property Ventures Portfolio
2.
Sea Place Apartments
3.
2313 Islington Ave
Toronto
80
$22.4
$280,000
Golden Equity
4.
Le Courant III
Montreal
102
$29.8
$291,667
Cons Properties 12
5.
25 Villa Rd, 90, 92 James St.
Toronto
102
$26.5
$259,804
Starlight
8 | Canadian Apartment | Part of the REMI Network |
TRANSACTIONS >>
“As Canadians get back to work and schools reopen in September, conditions will improve and we will go back to a market with limited supply and high rents.”
Reading. “Previously, rents were expensive and vacant units were in very short supply across much of the country. As Canadians get back to work and schools reopen in September, conditions will improve and we will go back to a market with limited supply and high rents.” Despite the current climate of uncertainty, Reading says we can expect investors to jump back into a market that has a “strong track record of performance” once conditions stabilize and the outlook improves. COVID’s effects on GTA rents The pandemic has continued to put downward pressure on the GTA rental sector with job loss, economic uncertainty, and fear of moving for health reasons having severely reduced demand. “The rental market in the GTA continues to soften, but the average rent for rental apartments increased month over month,” says Ben Myers, president of Bullpen Research & Consulting. “This isn’t likely due to owners raising rent, but shows that landlords are standing firm on their asking rent, convinced that demand will return in the late summer as every region enters Stage 3 of the reopening.” In June, rentals.ca reported that average monthly rents were down for the 7th consecutive month with North York, Markham, Mississauga and the City of Toronto all experiencing double digit yearover-year declines. Rents were up 10 per cent annually in North St. James Town, but the area was boosted by an increase in the number of listings on TorontoRentals.com at the new high-end purpose-built rental apartment called The Selby. The biggest decline was seen in the Moss Park area, which was down 14 per cent.
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Brock-King Portfolio Kingston/Brockville, ON 1,390 Suites - $102,878 Per Suite SOLD FOR $143,000,000
GTA Portfolio Toronto, ON 430 Suites - $310,797 Per Suite SOLD FOR $135,000,000
Parkwood Place Guelph, ON 161 Suites - $327,329 Per Suite SOLD FOR $52,700,000
452 – 560 Arlington Boulevard Burlington, ON 55 Suites - $338,182 Per Suite SOLD FOR $18,600,000
CBRE Limited, Real Estate Brokerage National Apartment Group – Toronto DAVID MONTRESSOR* | Executive Vice President
Please visit our website: www.cbre.ca/nag-canada
(416) 815-2332 | david.montressor@cbre.com * SALES REPRESENTATIVE
| www.REMInetwork.com | July/August 2020 | 9
CMHC REPORT >>
COVID’s Impact on RENTAL DEMAND Insights from the summer 2020 Housing Market Outlook Report Measures to limit the spread of COVID-19 and protect Canadians’ health are contributing to a significant interruption in economic activity. Despite the swift response by federal and provincial governments to limit this economic fallout, adverse impacts on many aspects of the housing system risk being large.
“C
OVID-19 has had unprecedented impacts on Canada’s urban centres,” said Aled ab Iorwerth, CMHC’s Deputy Chief Economist. “Shortterm uncertainty will lead to severe declines in sales activity and in new construction. As the virus is overcome, cities will bounce back but there is significant uncertainty with respect to the path and timing of the recovery.” In terms of the rental sector, it’s difficult to predict exactly what will happen; however, it is expected that falling
10 | Canadian Apartment | Part of the REMI Network |
immigration will curtail demand and fewer short-term rentals could make more units available for longer-term use. Vancouver: Rental demand is more directly impacted than ownership demand To some degree, the Vancouver ownership markets are less exposed to the impacts of rising unemployment and a closed border, while the rental market is more sensitive to the shock. Real estate buyers tend to be older than renters, therefore they are
less likely to have lost their employment as a result of the economic shutdown. The brunt of job losses has so far been borne by younger employees who are less likely to have the accumulated savings necessary to buy. The same is true of population growth in the Vancouver CMA, which is largely driven by the influx of young migrants, most of whom are immigrants to Canada. The immediate decline in migration to Vancouver is expected to reduce rental demand directly. A rising vacancy rate
from historical lows is a possibility in the near term, since with recent elevated purpose-built rental starts, there will be an increased supply of rental units coinciding with a fall in demand. Calgary: Migration patterns will determine the path of the vacancy rate Net migration, from all sources, has historically been a key driver of population growth and rental demand in the Calgary CMA. Near-term immigration and interprovincial migration will be negatively impacted by the pandemic. This will result in significantly reduced rental demand. At the same time, a large number of new rental units are anticipated to complete and be brought to market over the next few years, while some existing units previously used as shortterm rentals may also add to the supply of long-term rental units in the nearterm. The combined effect of a decline in demand and increase in supply could be a higher vacancy rate in the Calgary CMA over the next two years. Edmonton: Increased rental supply with softening demand will result in an increase in the vacancy rate The demand for rental units is likely to decline in Edmonton because of the slower than expected growth in key demographics such as the population of young adults (aged 2534 years) and international migrants. The imposition of travel restrictions is projected to affect international and interprovincial migration, which will restrain the demand for rental units in Edmonton. On the supply side, there will be more rental units entering the market in both the purpose-built and condominium segments as the elevated number of units currently under construction complete over the next two years. The projected increases in supply with few or no additions to demand are likely to lead to increases in vacancy rates in Edmonton in 2020 and 2021.
Toronto: Vacancy rate and rent growth to ease Anticipated increases in supply, in terms of higher completions in primary rental units and more rental condominium apartments entering the secondary market should ease rent growth and vacancy rates in a historically tight rental market. Short-term job losses, which will likely persist mainly in the service and hospitality industries, are more likely to affect renters. An uncertain job market will likely affect millennials that are looking to enter the job market. As a result, they may now delay their entry into the rental market and stay at home with parents and/or choose cosharing living arrangements, thus reducing demand for rental units. Prolonged effects of the pandemic, such as border and airport closures, will reduce net migration inflows – particularly immigration which has been a key driver of rental demand in the GTA. Ottawa: Rental market conditions to see little change Prior to the pandemic, steady population growth fueled by rising net migration levels, an aging population and students (domestic and international) continued to support demand for rentals while supply was rising at a slower pace. These conditions held the purpose-built vacancy rate below two per cent since 2017. Over the course of 2020, demand for rental accommodation could be tempered by universities offering online courses (including to international students), lower net migration, and some elderly reluctant to move in the current restrictive environment. However, as normalcy slowly resumes over the forecast horizon, demand for rental housing should remain robust given the uncertain repercussions of job and income losses, which may delay the transition into homeownership for some households. On the supply side, year-to-date to April, there were 2,481 purpose-built rental apartments under construction to be
completed roughly by the end of 2022 easing some of the supply pressures that existed before the onset of the pandemic. A reprieve on the supply side could also come from some short-term rental units being added back into the long-term rental universe. On balance, rental market conditions could see little change over the forecast horizon from pre-pandemic with some potential upward pressure on the already low vacancy rate. Montréal: Vacancy rate to be highly dependent on migration Approximately 10,000 new rental units will arrive on the market in 2020, a record not seen in many years. Some short-term rental units could also move into the long-term supply, thereby adding to the number of new apartments. This growth in supply will ease pressure on the rental market. As well, demand for rental housing will be supported by a slowdown in homeownership, but overall, this demand will continue to be heavily dependent on net migration. If net migration declines dramatically, the rental market is expected to ease. Otherwise, the Montréal vacancy rate should remain under 2 per cent. Final thoughts Necessary actions to prevent the spread of COVID-19 have had severe short-term impacts on economic conditions in Canada’s major urban centres. Sales and construction have dropped. House prices will likely fall because of uncertainty over the economy’s path. Lower immigration and less mobility within Canada coupled with an overhang of buildings under construction could lead to vacancy rates increasing in the rental market. Any such spike is likely to be short-lived as demand for rental continues to grow in the medium term. The precise timing and speed of the recovery in major markets is highly uncertain and will vary considerably.
For more information, visit www.cmhc.ca | www.REMInetwork.com | July/August 2020 | 11
FEATURE >>
The Air We Breathe Ventilation is key to a healthy building by Kevin Smith As multi-residential and condominium buildings are made to be more energy efficient and “leak proof” they are also making the air we breathe less healthy. Airtight buildings that keep heat and cool air inside may lower energy bills, but they also keep out fresh air.
T
his is where ventilation plays an important role. Much like a set of healthy lungs, the goal of properly ventilating dwellings is to keep the good stuff (cool, clean air) in, and move the bad stuff (heat, moisture, indoor air pollution) out. Without that air exchange, moisture can breed mould and mildew, allow dust mites to flourish and can even lead to a greater risk of health issues. As explained by Canadian environmental doctor Dr. John Molot and author of 12,000 Canaries Can’t be Wrong (2013), “The air that we breathe is the largest source of pollutant assaults that our bodies have to deal with. What may come as a surprise is that indoor air is more contaminated than outdoor air and the tighter the building is, the more responsibility the ventilation has for ‘breathing for us’. It must bring in the oxygen and exhaust
12 | Canadian Apartment | Part of the REMI Network |
the carbon dioxide. If the ventilation is inadequate, the carbon dioxide levels indoors will increase.” Depending on various factors and rates of exposure, indoor biological pollutants can affect the wellbeing of occupants. In a less than ideal environment, VOCs, CO2, moulds, allergens and other pollutants can accumulate, creating the potential for serious health issues to manifest. Certain biological pollutants that are not properly filtered out of indoor air have been linked to the onset of asthma, headaches and concentration problems. Furthermore, healthy indoor air quality will allow occupants to breathe better and sleep sounder. Ventilation systems decoded Presently, there is no recommended response for multi-residential
FEATURE >>
“Certain biological pollutants that are not properly filtered out of indoor air have been linked to the onset of asthma, headaches and concentration problems.�
buildings to change building ventilation in response to the COVID-19 pandemic. However, as the role of aerosol transmission is not yet understood, it is important that building systems are functioning as intended to prevent potential ventilation problems that could worsen airborne transmission. To better understand how we can create healthier homes for current times and the future, we first need to understand the three types of ventilation systems that can be used separately or together. Each system has its own unique benefits towards the goal of obtaining healthy indoor air quality that are important to recognize and use. Natural Ventilation Natural ventilation, as the name implies, is the natural movement of air currents and flows through a home uninfluenced by human technology. Natural ventilation is located wherever openings in the home’s building envelope are located. Wind ventilation is commonly used in homes and is nothing more than opening windows and doors to allow unfiltered outside air to circulate
through the rooms of your home. It can also take place through a process called infiltration, where fresh air sneaks in through leaks and cracks in the home itself. The trend towards airtight construction for newer buildings has all but eliminated this source of wind ventilation. Furthermore, in multi-residential apartment buildings this type of ventilation may not always be possible due to the unit layout. Apartments or condo units that rely on this type of ventilation system limit air exchange to occur only when openings are present, or windows are open. Spot Ventilation A spot ventilation system uses technology to provide ventilation to very specific spots throughout the home. Most often, these forms of ventilation are located in basements, attics, and other moisture-prone areas of a home. In multi-residential apartment buildings, spot ventilation is most likely to be found in the form of exhaust fans, often found in kitchens and bathrooms, as they quickly remove polluted air from their isolated location. | www.REMInetwork.com | July/August 2020 | 13
FEATURE >>
“The importance of indoor air quality on overall wellbeing can’t be underscored enough.” Individual room fans are another example of spot ventilation commonly found in multi-residential apartment buildings and come in a variety of configurations. Portable models can be placed on the floor or on a table, and mountable units can be permanently installed on a wall or ceiling to circulate the air in a particular spot or room. Spot ventilation, while effective, is rarely the sole form of ventilation in a dwelling and is best used as a supplement to additional ventilation systems that will filter the air. Whole-Home Ventilation Whole-home ventilation systems are the most common form of ventilation found in modern housing that uses a series of exhaust ducts and vents throughout the home to provide man-made, deliberate ventilation and circulated air flow. These ventilation systems boast the ability to be managed, controlled, and modified entirely by the homeowner, building manager, tenant, or a licensed contractor. Types of whole-home ventilation include exhaust, supply, balanced, Heat Recovery Ventilation (HRV) and Energy Recovery Ventilation (ERV). In recent years, HRVs and ERVs have become more popular, especially in new builds and renovations, allowing for proper ventilation without sacrificing efficiency. HRVs recover heat as they ventilate the air. Their primary purpose is to save energy through tempering the air being returned back into the home by using the heat extracted from the air that is exhausted. Ideal for some dwellings, an HRV system does not
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recover energy in the cooling season, and also extracts but does not recover moisture, therefore drying the air and requiring a humidifier to replace the lost moisture in addition to a condensate drain, and in some cases, a condensate pump. Because of this, HRV systems are often not the best option for multi-residential buildings which would benefit more from an ERV solution. ERVs recover both heat and cooling energy, tempering with heat in the winter and cold in the summer while also capturing moisture and helping to maintain comfortable relative humidity in the units. ERVs are a year-round stand-alone solution and comfort enhancer ideal for MURBs. With proper ventilation in and out of the home, you can expect the indoor air quality to improve and residents will be able to breathe and feel better. ERVs and HRVs can also be uniquely beneficial to the geography of the dwelling. For example, Panasonic’s Intelli-Balance ERV is specially engineered for use in any North American and cold climate zone, providing a tempered air supply, humidity control, and a balanced amount of exhaust to help maintain balanced, positive or negative pressure throughout the home. The importance of indoor air quality on overall wellbeing can’t be underscored enough. The quality of the air inside our homes often gets overlooked – you can’t see the problem so why look into a solution? However, the benefits of ensuring a home has the best indoor air quality can vastly improve the health of the inhabitants and stop potential side-affects associated with poor air quality. With technological advancements in the ventilation space, we’re able to change the standard of indoor air quality for future generations to build healthy home environments regardless of budget or dwelling type.
Kevin Smith is the general manager of Panasonic Canada’s Life & Device Solutions Division. For more information, visit: https:// n a .p a n a s o n i c .c o m/c a/h o m e - b u i l d i n g solutions/ventilation-indoor-air-quality/.
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Costa advised that he no longer wished to occupy his role as president. The emergency meeting took place at the defendant’s (MTCC 1292’s) premises. At the emergency meeting, the plaintiff and Mr. Da Costa entered into a heated argument, which led Mr. Da Costa to “lose it” and strike the plaintiff on the head with a chair. Mr. Da Costa was charged by the police and received a conditional discharge for assault with a weapon. iff commen The plaintiff commenced a civil action against Mr. Da Costa fo for his use of force as well as MTCC TCC 1292 for fo failing to ensure her safety and nd failing to employ security meet measures at board meetings. MTCC 1292 brought a motion summary judgment otion for su to dismiss the plaintiff’s plaintiff’ claim against it nly opposed by Mr. Da Costa which was only given his crossclaim MTCC 1292 ossclaim against ag on and indemnity. inde for contribution
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In Omotayo v. Da Costa, 2018, the defendant occupier, Metro Toronto Condominium Corporation 1292 (MTCC 1292), was successful in dismissing the plaintiff’s claim and the assailant’s crossclaim when a member in attendance at a condominium board meeting struck another meeting attendee with a chair. Justice Nishikawa found that the duty the condominium corporation owed to the plaintiff did not include preventing an assault that occurred during their condominium board meeting. Facts of the case T he plaintif f, J ac queline O mot ayo, was a resident and former chair of the condominium corporation. The defendant, Jose Da Costa, was also a resident and former president of the condominium corporation. An emergency board meeting was held on Oct. 4, 2011, to discuss the future organization of the board as Ms. Omotayo had recently been removed from her position as chair and Mr. Da
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Let’s face it, we all want our businesses to be social media rock stars, and we know it ain’t easy. It’s becoming more prevalent that some of the most popular social media platforms have been infiltrated by those who game the system. This includes those that buy fake followers and “likes” in order to create the illusion that their social media profile is more popular than it is. These fake followers are predominantly bots – accounts run by software designed to look and act like real people.
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New services are also popping up that allow authentic social media accounts to become part of the bot game. By signing up for the service, the user authorizes their account to automatically like, follow and randomly comment on other users’ posts, and in turn they trade that fake engagement with other users. Sound harmless enough? The thing is you have no say in in the message your account is spreading or where it ends up.
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Summary judgment motion udgment m positi MTCC took the position that its duty w is confined confine to the physical under the law condition of the premises premise and foreseeable e unforese risks, not the unforeseeable conduct of individuals in attendan attendance. Meanwhile, Mr. Da Costa that MTCC 1292’s a argued th s to having rules of conduct duty extends s, policies re for meetings, relating to abusive l an gu a g e, thre at s aan d intimid atin g d a duty to h behavior, and hire and supervise competent professional professionals to oversee its luding, if appropriate, ap business (including, security Cos further argued personnel). Mr. Da Costa ult was foreseeable fore that the assault given the M quarrelsome nature of MTCC 1292’s board nd a prior unrelated u meetings and incident involving the plaintiff and another member of MTCC 1292 wherein the police was 292 wherei called. ng her dec In reaching decision, Justice Nishikawa looked Coleiro v. Premier ooked to C s where summary sum Fitness Clubs judgment d in favour of the defendant was granted
MALL GERMS: TOP FIVE HOT SPOTS
Ask yourself this: What’s more important, having 50,000 cosmetic followers, or having
500 followers who are in your target market REMEDYING FOUR that actually want to hear from you? COMMON CARPET As a consumer, it’s even simpler, as PROBLEMS deceptive tactics are easy to spot. If you’re using underhanded methods to promote your business, this can be viewed as a reflection of your product or service. Your integrity is at stake. This is one of the more complex topics that can’t be fully covered in this space. As always, I invite you to stay social and continue the conversation on Twitter at @Chestergosocial where I’ll share a link to the full article.
SCENT OF
SUCCESS Steven Chester is the Digital Media Director of MediaEdge Communications. With 15 years’ experience in cross-platform communications, Steven helps companies expand their reach through social media and other digital initiatives. To contact him directly, email gosocial@mediaedge.ca.
www.REMInetwork.com | June 2018 15
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COVER STORY >>
BUILDING BETTER DENS Dev Mehta, Senior Associate at Quadrangle, on what’s driving residential building design
COVER STORY >>
SITY
By Erin Ruddy
Multi-residential buildings have been the subject of considerable discord since coronavirus restrictions forced millions to stay at home. How tenants would survive months of arduous lockdown in dense congregate living settings seemed unimaginable—especially for those confined to units without access to the outdoors. Now, as restrictions lift and the country resumes to a comparative state of normalcy, designers and developers are looking at the future through a new, albeit, slightly blurry lens.
| www.REMInetwork.com | July/August 2020 | 17
COVER STORY >>
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s city builders, we have a tremendous opportunity to learn from this experience and make positive changes to the way we design our residential buildings that extend beyond limiting the spread of infectious disease,” says Dev Mehta, Senior Associate at Quadrangle. “It has taught us that there are several aspects to the way we have been designing and constructing residential buildings that can be optimized to create healthier spaces.” Like many, Mehta believes the pandemic has accelerated several trends that will continue to disrupt the way we consider uses in our built environment—namely, our enhanced appetite for online consumption and our newly distributed work force. These, among others, have further emphasized the need for buildings that better support a “live, work and play at home” existence. But that doesn’t necessarily mean the appeal of the downtown core will diminish. “Though some are predicting there will be a reaction for many to consider moving away from denser urban centres and adopt a suburban lifestyle, it is unlikely that this will happen to a significant extent,” Mehta says. “The desire to live in dense, diverse and transitoriented cities will very likely continue to increase in momentum in the long term, given the many benefits that these kinds of spaces offer.” Pointing to current data, Mehta conjectures that density is not the major culprit for the spread of COVID-19, rather it is human behaviour and clarity around government messaging and policy decisions. “Because demand in many of our sought-after urban centres will likely continue to rise and surpass the available supply, affordability will continue to be an issue,” he says. “So, simply lowering the density of new developments and increasing the size of units will not be an option for the majority of private-sector funded developments. What we will instead need to consider is “better density.”
Renderings provided by Quadrangle
What is “better density”? Better density, according to Mehta, means optimizing the spaces we build to promote certain outcomes. Those are: mental and physical health and wellbeing; flexibility and adaptability; sustainability and resilience; and affordability and inclusivity. “We will need to think more creatively and less prescriptively about how we define spaces in our residential buildings and units,” he says.
18 | Canadian Apartment | Part of the REMI Network |
“Unit layouts will have to consider adjustable partition elements that allow users to define and change their space in a way that is more fluid throughout the day. A bedroom is not always a bedroom and a dining space is not always a dining space. We have already overcome this psychological barrier of delineating and rigidly programming our spaces, and architecture will have to catch up to and embrace this.” Looking at the structural systems, a return to using columns instead of the shear walls will allow for easier conversions, as shear walls limits the potential for future interior alterations and adaptive re-use solutions. Also, access to sunlight will emerge as a priority, with sun rooms, balconies and terraces becoming valuable extensions of units. Adding operable facades will provide more meaningful connections to outdoor spaces, blurring inside and outside, while also building in opportunities for urban agriculture and gardening. And should a new deadly virus come along in the not-so-distant future, Mehta’s answer to closing amenities is to introduce a concierge whose duties will include overseeing bookings (and subsequent cleanings) of these essential spaces. “Access to the outdoors is absolutely crucial to both mental and physical health and wellbeing,” he says. “Similarly, interior amenity and common gathering spaces will need to remain
COVER STORY >>
flexible so that programming can vary over time and respond to whatever the current situation is. Distributed amenity spaces will allow this to happen more fluidly.” While smaller “pocket” amenity spaces distributed across all floors could allow smaller groups and families to gather, Mehta envisions flexible, grade-related amenities to support building residents and engage the local community. “Equipped with robust communication and hard infrastructure, these spaces could serve a dual purpose,” he says. “They could be used for everyday social programming and for support programming during climate-related emergencies and pandemics. Services could include a continuous clean water supply, air conditioning and filtration system to enhance air quality, surplus package storage and refrigeration for grocery deliveries and other essential supplies. A curator or concierge could help with the safe storage and distribution of these packages and grocery deliveries within the building.” Even some of the more functional common spaces, such as corridors, exit stairs and lobbies, could benefit from access to daylight and fresh air—making them more suitable for social interaction and exercise, beyond their main circulation function. Retrofitting older buildings With so many existing multi-unit buildings in dire need of upgrades, it’s not just new builds that are being reimagined. In fact, Mehta sees the retrofitting of older properties as the most pressing need impacting the sector in the near future. “Upgrading the plumbing and HVAC systems, as well as the building envelopes in older apartment buildings would deliver significant benefits,” he says. “This would provide opportunities to improve air circulation, natural ventilation and access to daylight, which all lead to the improved wellness of occupants and lower chances of airborne infection transmission.” He also recommends touchless devices and automatic door operators activated by card or fob readers for handsfree roaming within common areas and service spaces, like garbage chutes, as well as improvements to elevator technology for smarter vertical travel. But more than anything, flexibility is of key importance. “Technological upgrades will help us flow through our spaces with more ease,” he says, “ but building better density will rely on some fundamental decisions in how we design and layout our future buildings.” With more importance being placed on private outdoor space to allow access to fresh air and sunlight, we may see solutions to provide larger structural cantilevers for more significant private outdoor spaces. With home comfort increasing in importance we may start to see a wider adoption of thermally broken details for balconies to improve thermal comfort and the performance of our buildings. We may also see increased investment in quality insulated building envelopes and glazing systems.
Will striving for better density impact affordability? Potentially yes—but in a good way. “There will likely be more interest in modular and prefabricated construction to reduce costs and construction timelines,” says Mehta. “We are already seeing the City of Toronto fast track modular housing solutions for our homeless population. It is only a matter of time before the private sector embraces this more meaningfully.” | www.REMInetwork.com | July/August 2020 | 19
FEATURE >>
From hotel to affordable rental housing Experts say now’s the time to consider converting your asset by Erin Ruddy While demand for multifamily housing remains relatively robust, COVID-19 continues to devastate Canada’s hotel sector with Altus Group reporting a 90 per cent drop in revenue since the state of emergency was declared in March. Given the uncertainty of the travel and tourism industry and Canada’s pressing need for affordable housing, could converting hotels into multifamily rental apartments serve as an effective solution?
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aiser Mian, Senior Director, Hospitality and Senior Housing at Altus Group, is one of many experts who believes that it could. “Although the long-term prospects for the Canadian hotel sector remain positive, COVID-19 has impacted the industry severely with fewer than 50 per cent of hotels now open during the peak travel summer months,” he reveals. “In the absence of this crucial summer revenue, combined with the possibility of a prolonged recovery period and increased operating costs, hoteliers, like many small business owners, must make the assessment as to the long-term viability of their operations.” 20 | Canadian Apartment | Part of the REMI Network |
And the novel coronavirus isn’t the only force creating waves throughout the sector. Videoconferencing and virtual meeting apps intended as interim solutions during the lockdown period have potentially reduced the need for business travel. Furthermore, fears surrounding exposure to illness and the aggravation of adhering to strict isolation rules are keeping most leisure travellers from venturing too far abroad, at least until a vaccine is in the picture. By contrast, the pandemic has shone a spotlight on housing need, with most jurisdictions in Canada continuing to search for affordable solutions. As Mian points out, converting hotels into
FEATURE >> To determine the right fit, a “highest and best use” analysis and a feasibility study are recommended. These steps will help owners quantify the level of demand and supply for optional uses of their buildings within specific markets, while projecting which options will likely add value and generate long-term returns. They’ll answer key questions, like: • What is the macroeconomic environment of the area? • Current and future market demand? • Sector profitability? • Competitive landscape? • Industry cost structure? • Regulatory controls? • The community’s position on potential redevelopment? Other key factors with potential financial ramifications: • Condition of the building – envelope, HVAC, electrical, lighting and fire systems, technology infrastructure and finishes; • Tenant space – floor plate size and shape, usable square footage, common area factors; • Legal/regulatory – building codes, insurance requirements, government regulations. Already, as lenders review their hotel portfolios and are forced to make tough decisions about which operators to support at the expense of others, properties with no cash flow and burgeoning carrying costs are most at risk of closure. Visit altusgroup.com to find out more. multifamily apartments can help meet this demand by enabling owners and investors to quickly move supply into the market— with real benefits to the owner if the conversion is done right. “Due to their design, hotels can be adapted into apartment use relatively easily compared to other real estate,” he says. “When the stability of cash-flow, access to broader sources of capital, and lower capitalization rates relative to hotels are taken into consideration, some owners would be well advised to consider the possibility of a conversion. The key is to determine whether the property is well positioned to thrive in an emerging marketplace, or if the asset is better suited for something else.” Likely, smaller, older, owner-operated hotels in secondary and tertiary markets will find it harder to rebound from the crisis—which is why Mian advises owners of these assets to carefully evaluate their options. A thorough “SWOT” (strengthsweaknesses-opportunities-threats) analysis looking at everything from pre-pandemic market conditions to building size, floor plate, location and zoning, will help inform a decision. But it all starts with an ability to “get out of your comfort zone and undertake an objective assessment of your competitive position,” he says. “Most hurdles can be mitigated through careful planning, entering strategic partnerships and engaging the right advisors.” Evaluating the options If a conversion does look preferable to staying the course as a hotel, the next step is to evaluate the options. According to Mian, affordable, market rental, seniors and student housing all represent potentially profitable conversions for hotels with complementary footprints and infrastructure.
VISIT US AT
CONTACT Michael Gnat Phone: 416-635-4835 Email: mgnat@midnorthern.com
| www.REMInetwork.com | July/August 2020 | 21
NEWSWORTHY >>
Industry Hot Topics Ontario passes controversial Bill 184
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n late July, the Ontario government announced it had approved Bill 184 despite heated protests from tenant advocacy groups. Since the state of emergency in Ontario began, landlords have been banned from evicting nonpaying tenants. The new law will require tenants owing money to pay back their landlords in a scheduled repayment plan. “We know tenants and landlords have struggled during COVID-19, and some households may be facing eviction due to unpaid rent during this crisis,” said Steve Clark, Minister of Municipal Affairs and Housing. “By making these changes we are trying to keep people in their homes, and at the same time, helping landlords receive payment through a mutual repayment agreement. It’s a better approach, especially during these difficult times.” Other changes to the legislation include: requiring tenant compensation of one month’s rent for “no fault” evictions; allowing the Landlord and Tenant Board to order up to 12 months’ rent in compensation for eviction notices issued in bad faith or where the landlord does not allow the tenant to move back in after renovations or repairs; and doubling the maximum fine amounts
for offences under the Act to $50,000 for an individual and $250,000 for a corporation. The new bill will also “modernize and streamline” the dispute resolution processes at the Landlord and Tenant Board and encourage the use of alternatives to formal hearings to resolve certain issues and encourage negotiated settlements. In addition, amendments to the Housing Services Act of 2011 were made, giving
housing providers with expiring operating agreements and mortgages ways to remain in the community housing system through a new service agreement with service managers. Despite what the government is calling fair and balanced treatment, the new law continues to be met with heated opposition in early August. Up-to-date news on the ongoing matter can be found at www.reminetwork.com.
More adult Canadians are moving back home
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new survey by Finder.com found that a significant number of adult Canadians are moving back home with their parents due to the financial pressures of COVID-19. While approximately 1.5 million Canadians have already completed the move, another 1 million (4 per cent) said they are considering it. “Between the high cost of rent in Canada’s big cities and a recession with record levels of unemployment, young people trying to launch or grow careers while paying the bills are now faced with challenges that may seem insurmountable, making returning home to their parents the most attractive option for many of Canada’s young adults,” said Scott Birke, Publisher at Finder.com. “Our data reveals about a million Canadians who haven’t yet moved home with their parents are still seriously 22 | Canadian Apartment | Part of the REMI Network |
considering it, which tells us this trend is not just confined to the pandemic and could be a longer-term setback when it comes to young Canadian adults building wealth and establishing their careers.” The provinces hardest hit by COVID-19—Ontario, B.C. and Quebec— saw the most moves among young adults, with Finder.com calling Ontario the epicentre of Canada’s ‘Generation Boomerang’. But the reverse scenario is also quite common: 278,532 older Canadians have moved in with their adult children and another 455,780 are seriously considering it. “It is safe to assume that many of the parents who moved in with their adult children are also grandparents who are helping to provide childcare for exhausted working parents of young children, who have limited or no childcare options until school begins,” Birke said.
NEWSWORTHY >>
Vancouver approves new plans for Birch Street rental tower
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he City of Vancouver has approved plans for the controversial Birch Street rental tower, a 28-storey development located at the corner of West Broadway. While the height of the new building had many residents in opposition, ultimately the need for more affordable rental housing won the City Council’s vote. When complete, the 280-foot tower by Jameson Development Corp. will deliver 200 market rental homes and 58 units geared to households earning between $30,000 and $80,000 per year. Mayor Kennedy Stewart described the vote as a necessary step toward achieving Vancouver’s 10-year goal of approving 72,000 new homes for construction by 2027. The unit mix is comprised of 30 studios, 121 one-bedroom, 70 two-bedroom, and 27 three-bedroom units. Rents for the 58 moderate-income units will be between $950 per month for a studio and $2,000 for a three-bedroom unit — roughly half of the market rental rates. Within the first two levels, there will also be roughly 30,000 sq. ft. of retail and office space. All units will be pet-friendly. The Birch Street rental tower project falls under the city’s Moderate Income Rental Housing Pilot Program (MIRP), which was designed to provide homes for households that are not eligible for or do not want to live in social housing, but cannot afford a market rental home. Though the majority was in favour of the project moving forward given the city’s need for more rental housing, those opposed expressed concerns about the tower’s height, shadowing, and the impact on neighbourhood character. A previous design, approved in January 2018, had the tower rising just 17 storeys, but the plans were since revised.
B.C. announces rent repayment framework
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ith the ban on evictions poised to lift September 1, 2020, the B.C. government announced several planned residential tenancy changes, including a rent repayment framework for tenants owing money due to COVID-related income loss. At a press conference on July 17th, B.C. Minister of Municipal Affairs and Housing Selina Robinson said the framework gives renters advance notice to plan ahead for upcoming payments so they may continue to live in their current housing after the moratorium lifts. All back-payments are to be paid to landlords in structured installments by July 2021, while the ban on rent increases will continue until December.
LandlordBC, a member-driven association and BC’s top resource for owners and managers of rental housing, supports the new plan, calling the repayment framework a workable solution. “It is our view that the Province has navigated the COVID-19 crisis extremely well under very challenging circumstances,” said David Hutniak, CEO. “Renters are being provided a very fair and reasonable process to amortize the repayment of their unpaid balances, without any fees or interest being applied. Our approach has always been to work with government to find balanced solutions, and we feel that this repayment framework achieves this.” That said, not all B.C. landlords are on side with the government’s pandemic measures to date, but fortunately, numerous surveys show that most renters paid all or a significant portion of their rent throughout the state of emergency. “As a sector, we understood that we were in the midst of an unprecedented health crisis,” Hutniak said. “We
immediately encouraged our members to work collaboratively with their tenants to accommodate them as much as possible and to demonstrate appropriate sensitivity and compassion during the crisis. We are pleased to say that they answered the call.” B.C. renters and landlords impacted by COVID-19 can anticipate the following changes to residential tenancies as Phase 3 of the reopening continues: • Renters will need to pay their monthly rent in full beginning September 2020 • A landlord whose tenant has unpaid rent or utilities during the emergency period would be required to enter into a repayment plan for those arrears • A landlord would not be able to issue a Notice to End Tenancy for unpaid rent or utilities during this period unless the tenant has defaulted on their repayment plan • A landlord would be able to issue a Notice of Rent Increase, but it will not come into effect until December 1, 2020 | www.REMInetwork.com | July/August 2020 | 23
NEWSWORTHY >>
Galleria on the Park breaks ground
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n early August, a socially-distanced groundbreaking ceremony took place for Galleria on the Park—the mixed-use community that will rise on a 20-acre site at Dufferin and Dupont streets in Toronto’s west end. The plan includes eight mixed-use buildings, 300,000 square feet of retail and the new 95,000 square-foot Wallace Emerson Community Centre. Representatives from ELAD Canada joined Councillor Ana Bailao and staff from the City’s affordable housing division, as well as project team members from CORE Architects, PSR Brokerage and Clark Construction Management, to commemorate the occasion on-site. “We are extremely proud to deliver such a significant project to the City of Toronto,” said Rafael Lazer, CEO of ELAD Canada. “We have always deeply believed in the West End – its rich
industrial past, its strong sense of community, and its vibrant arts and culture scene.” As part of the first phase of the development, Galleria on the Park will include mixed-use towers Galleria 01 and 02, 150 affordable rental units, retail, the community centre and Phase 1 of the expanded eight-acre park. Galleria 01 and 02 are now more than 95 per cent sold of released units. The towers—a CORE Architects’ design—are clad with dark and rich metals, paying homage to the industrial character of the neighbourhood. The amenities and suites, by design firm U31, feature modern interiors that take cues from the neighbourhood. Family-friendly amenities include an expansive co-working space that doubles as an event space opening out to a wrap-around outdoor terrace, an outdoor pool and a state-ofthe-art fitness centre.
Newmarket welcomes new purpose-built rental development
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he federal government announced it is financing $79 million to help construct 216 residential units located at 195 Deerfield Road in Newmarket. This project by The Rose Corporation is receiving financing through the Rental Construction Financing initiative (RCFi), a National Housing Strategy program delivered through CMHC. The program encourages the construction of a stable supply of rental housing for middle-class families in expensive housing markets and those families working hard to join them. “Current events remind us that nothing is more important than a home. Canada’s middle-class and those working hard to join them will benefit from the construction of new rental housing,” said the Honourable Ahmed Hussen, Minister of Families, Children and Social Development and the Minister responsible for CMHC. “Through new investments, we are taking action to increase the supply of new rental developments, providing housing options that are closer to jobs, services and amenities families need.” With 195 Deerfield, The Rose Corporation will be building on the success it delivered with 212 Davis Apartments, the first new privately funded purpose-built rental apartment tower Newmarket has welcomed 24 | Canadian Apartment | Part of the REMI Network |
since the mid-1980s. Part of the company’s mission is to provide diverse and attainable housing options. “As city builders, we have a corporate social responsibility to help create more attainable rental and ownership housing alternatives within the communities in which we build,” said Daniel Berholz, President, The Rose Corporation. “We firmly believe that a healthy community is an essential tool in building a thriving corridor. By embracing public-private partnerships, The Rose Corporation’s collaboration with all levels of government – York Region, the Town of Newmarket and the federal government (CMHC) has allowed us to successfully help fill a desperate need for more affordable housing options in Newmarket.”
The new development involves the construction of a 15-storey building with 216 residential units, ranging from 1-bedroom units to 3-bedroom ground-oriented and tower units. This will be the initial phase of a 4.4-acre master-planned community consisting of three towers rising above a landscaped courtyard. Construction commenced in March 2020, and substantial completion is expected in early 2023. Amenity spaces will include a communal 20,000 square foot park with a playground, a kids’ zone, fitness centre and yoga studio. The development has easy access to the VIVA bus rapid transit, bicycle parking for all residents and direct access to biking and walking trails Designed to meet LEED Silver requirements, the building has also invested significantly into electric vehicle charging stations. At least 30 units will meet the municipal accessibility requirements, and will include units with universal and adaptable design. About 20 per cent of Newmarket residents rely on the rental market for housing. This development represents a new supply of purpose-built rental housing in Newmarket, where the vacancy rate was 2.0 per cent as of Oct. 2019, a decrease from 2.4 per cent in Oct. 2018.
PROPERTY MANAGEMENT >>
Helping Residents R.I.S.E Above Skyline’s unique tenant assistance program by Erin Ruddy With more than 200 properties across eight provinces, Skyline Living has welcomed tenants from all walks of life and been privy to the countless circumstances that can lead to financial distress. From sudden illness, to divorce, to the current global pandemic, times of misfortune are inevitable.
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or this reason, the company launched a unique tenant assistance program in 2018, now called R.I.S.E. (Reach, Impact, Support, Elevate), which uses mediation and financial aid to assist those affected by income loss through no fault of their own. In its first year of operation, the program helped more than 150 struggling tenants skirt eviction and remain in their homes. “We have a responsibility to help our tenants, especially when they fall on hard times,” says R. Jason Ashdown, Co-Founder and Chief Sustainability Officer, Skyline Group of Companies. “Without our tenants—our customers—we wouldn’t be in business.” On June 25, 2020, the firm was named Rental Housing Provider of the Year by the Canadian Federation of Apartment Associations (CFAA) for the ongoing assistance it provides to hundreds of tenants. In 2019, Skyline effectively reduced its total evictions by 25 per cent and saved $400,000 in lost rent, vacancy, legal fees, and eviction costs. “The math doesn’t lie. We are saving homes, and the investment is paid back tenfold,” Ashdown says. Among the tenants who’ve benefitted from the R.I.S.E program are a man who suffered a
heart attack; a woman recovering from a car accident; a cancer patient; a mother fleeing an abusive relationship; and many more. And now, as COVID-19 continues to disrupt the lives of all Canadians, Ashdown says the program has seen a significant rise in applicants. “We launched our program in late 2018 from the simple standpoint that it is the right thing to do,” he remarks. “We were offering tenant assistance and saving homes long before COVID-19, and we’re thankful the program was already in place when the pandemic happened, and we were able to hit the ground running.” Ashdown urges other landlords to consider implementing their own similar programs— particularly as Bill 184 continues to stir up controversy in Ontario, with many tenant groups fearing a surge in evictions is headed our way. “Skyline Living has always believed in finding solutions that promote conversation, mediation, and relationship building between tenants and their rental housing providers,” says Ashdown. “In part, Bill 184 will improve the landlord-tenant mediation and resolution process. Our internal Tenant Support Team [which facilitates the R.I.S.E. program] was
built several years ago for that exact purpose; the team is empowered to assist our tenants in finding any number of resources they may need should they fall upon difficult times. In our years of experience as a rental housing provider, we understand that we and our tenants want the exact same things – well run, well maintained, safe and enjoyable buildings to live in.” How the program works: R.I.S.E. is open to any of Skyline’s 50,000+ tenants across Canada who have fallen on hard times and are in need of support— whether it’s financial relief, patience or direction. Steps include: • Working with the tenant to assess their specific needs; • Putting together a Community Resources Package to direct the tenant to any external resources that may provide financial relief or support; • If outside resources do not provide sufficient support, Skyline helps the tenant complete a Relief Fund application; • If the R.I.S.E Committee approves the application, that tenant is provided a predetermined relief funding package. | www.REMInetwork.com | July/August 2020 | 25
What’s impacting insurance rates? It’s not all about COVID-19 by Andy Schwartze
With all of the attention paid to COVID-related issues, we tend to get distracted from the fact that “other things” are happening. Nasty weather events, for instance, are beginning to wreak havoc across the continent. On June 13, there was a serious hail, rain and wind storm that impacted central Alberta. It didn’t make much of a headline in the east, but expert predictions now estimate that insurer bank accounts will be lightened by some $1,300,000,000 in claims payments. It doesn’t take much to give the property/casualty insurance club a 10 figure headache.
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eanwhile in the U.S., we already saw a high altitude sand storm emanate from the Sahara Desert and head all the way to the Gulf Coast. Who would have known? And just as hurricane arrived, elevated levels of political unrest have resulted in unexpectedly high inner city insurance claims from the destruction caused by violent protesters. With some copycat Canadians entering also that arena, all of this has had an impact on insurance rates. As for COVID developments, the action here in Canada is just beginning. According to the Insurance Institute, law firms Koskie
26 | Canadian Apartment | Part of the REMI Network |
Minsky and Merchant Law are starting their class actions against insurers. Details are still somewhat vague but we all knew it was coming—and now we can only wait and see what form the onslaught will take. In the U.S., by mid-July, some 500 class action lawsuits had already begun—many initiated, no doubt, with the backing of eager investors, rubbing their hands with glee in anticipation of either big wins or insurers rolling over with volunteer settlements just to “make the problem go away.” Insurance companies are not often welcomed in court
INSURANCE>>
“If your building is over 25 years old, there is a good chance that the age of the roof, plumbing, electrical, heating and window systems may be questioned.” and do what they can to stay out. That’s how things roll in a legal system whose even keel has become somewhat wobbly. Insurance renewals Many apartment owners have already experienced the unpleasantness of an insurance renewal negotiation. It is worth explaining how the insurance world circles the wagons in order to protect its balance sheets. Let’s take an example of a typical high-rise apartment building and the historical evolution of its insurance costs. We often have to remind our clients that, back in the 1980s, a typical high-rise apartment building insurance rate was about 5 cents per $100 of coverage. So, using replacement cost as a guide, a building insured for $2,000,000 would pay a building insurance premium of $1,000. Every year, as the cost of labour and materials quietly rose a bit, the insurance amount would be adjusted, perhaps in this case by 2.5%. The premium would also rise by that 2.5% so that the “insurance pool” could keep up with slowly rising repair costs. But two important things have happened since the 5 cent rate became so entrenched. Interest rates have plummeted, thereby robbing insurers of the interest income that big pools of premium once used to generate. Typically, a premium dollar sits in an interest bearing account for about three years. Having $100 earn $7 a year ($21 over 3) makes a huge difference to an insurer’s bottom line. In the current interest rate environment that $21 “bonus” is probably not much more than about $4.50. The impact is significant. The second important thing that has happened is the quietly expanding coverages provided by the more modern policy wordings. We can certainly blame insurance brokers for having played a significant role in the expansion of coverages as they continue to jockey for the approval of their clients. To some extent insurance consultants who have worked for commercial lenders have been involved, but it has been primarily the insurance brokers. This broadening of coverages has resulted in a significant widening of the safety net provided by an insurance contract. Readers need only to look at their own residential polices to quickly realize how these have changed over the years. So, while the increasing of coverage amounts every year has kept premiums growing along with the rising cost of labour and materials, the widening of the coverage net, once handily subsidized by juicy interest rates, now has to be funded by the policy holder. The 5 cent rate has become a dinosaur, after decades of survival, and rates are now being raised to deal with this reality. Add in the impact of weather, fraud, COVID and any number of other factors, including global events that impact us all, and it becomes obvious that premiums will certainly not be going down. In fact, they are rising sharply as reinsurers grapple with these many changes. Insurers who realize that rates need to change will tacitly avoid quoting one another’s business. Suddenly competition vanishes as each carrier reviews and reprices its portfolio, free from the fear of having its portfolio raided.
One possible area in which we might expect some relief is tort reform. Regrettably, that initiative comes with a large dose of politics. We have not yet seen the political courage to reform auto insurance in horribly expensive jurisdictions like Ontario— one can scarcely imagine the legal community’s outrage should any attempt be made to put reasonably designed parameters in place to keep litigation from, at least, exploding even more. One should not be too hopeful. In this very defensive underwriting world, the advice to owners of apartment buildings is very straight forward. If your building is over 25 years old, there is a good chance that the age of the roof, plumbing, electrical, heating and window systems may be questioned. Wisdom dictates that you focus on upgrades, as buildings that went up in the 60s are now over a half century old. If your building is a low rise of frame construction, you are in the “least attractive” category. Physical damage losses to frame structures cost more to repair/ replace for numerous reasons. Consult with your insurance broker/ risk manager and understand that the insurance world, at least for now, is in a sour mood.
MOBILE FRIENDLY
| www.REMInetwork.com | July/August 2020 | 27
Smart Ideas
TECH TO ENTICE GEN Z RENTERS
Hassle-free solutions that sell With technology at the forefront of Gen Z renters’ needs—and the coronavirus continuing to keep a firm grip on our freedom—here are four things tomorrow’s tenants won’t be able to live without:
1. Digital rent processing options This is hardly a new trend, but a reminder for those that have yet to jump on board: you must offer a digital rent payment option if you want to lease to anyone under the age of 50. Cheques...does anyone even know what those are anymore? 2. Tech-driven self-service amenities From smart package lockers to keyless locks on gyms, pools, and other amenities, self-service is the name of the game. Today’s renters want the ability to work out, collect their online purchases, or take care of other tasks whenever it is convenient for them, and not on anyone else’s schedule.
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3. Tech-enabled communications Hassle-free interactions are the way of the future, with phones and in-person contact fading back into the woodwork. Younger tenants are going to want quick, no-fuss service without any back and forth that only creates confusion. Cell phone notifications are the only kind of confirmation this cohort wants. 4. Virtual touring and leasing processes No one values lengthy conversations anymore, and nor do they want to wrangle with paperwork; hence why the leasing process needs to be designed with virtual interactions in mind—from textbased conversations to video tours, to application processing and lease execution, it all should be managed remotely. Happy, paying tenants make happy landlords, right?
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As a sister company to ACE Painting, Cranfield General Contracting was formed in 2004 to further meet the remodeling demands of all our clients. Delivering superior quality and cutting edge solutions Cranfield provides major renovation services to include interior, exterior, in suite and common area upgrades.
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