Canadian Apartment Magazine

Apartment CANADIAN

VOLUME 14 / NUMBER 1 / MARCH 2017

ROOM WITH A VIEW A SNAPSHOT OF CANADA’S PURPOSE-BUILT RENTAL SCENE

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EDITOR’S NOTE>>

Apartment CANADIAN

THE RENTAL INDUSTRY TODAY

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What an exciting time to be in the apartment industry. For the first time in decades the market is actually drawing real estate developers away from other opportunities because purpose-built rental units are in such high demand. All across Canada we’re seeing beautiful new rental towers rising up to meet the growing demand for rental accommodations in high density, urban areas. Most of these new builds are catering to young professionals and aging boomers who want to live where they work and play. In other words, they are modern, state-of-the-art properties that look and feel like condos. We’ve gathered a few examples of both new and proposed apartment developments in our cover story on page 20.

Of course, high-end properties like these aren’t doing much to help with the affordability crisis—which is why, in Toronto, the contentious topic of rent control is back (see page 32 for details). Then there’s the escalating cost of operating an apartment building. From taxes to utilities, in this issue we offer up some energy-efficiency options to try to help offset those oppressive additional expenses.

On the maintenance side, now is the time to review your fire safety strategies and explore preventative ways to keep your property critterproof. With spring around the corner, an Integrated Pest Management (IPM) program is a must, and if you haven’t got one, please read our feature article on page 37.

Finally, we hope you enjoy our brand new look! Please email us, or reach out on social media to share your thoughts on Canadian Apartment’s fresh, new design.

Mitchell Saltzman

Senior Designer

Annette Carlucci

Designer

Jennifer Carter

Production Manager

Paula Miyake

Contributing Writers

aula Gasparro P Peter Mills Jason Reid Alice Sinia Andy Schwartze

National Sales

Sean Foley Stephanie Philbin Melissa Valentini

Aashish Sharma For sales information call (416) 512-8186

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Apartment CANADIAN

VOLUME 14 / NUMBER 1 / MARCH 2017

FEATURES 14 FRPO Welcomes New President and CEO

By Erin Ruddy 26 Fire Safety Steps for High-Rise Building Owners

By Jason Reid

29 Tax Feature

By Barbara Carss 37 Preventative Maintenance for Pest Control

By Alice Sinia COLUMNS 10 Transactions The Canadian Multi-suite Rental Market

By Erin Ruddy 12 CMHC Water-Efficient Technologies

By Paula Gasparro 32 Newsworthy Apartment Industry Hot Topics 34 Marketing The Cost of Rent in Canada 30 Management Managing In-suite Utility Consumption

By Peter Mills 32 Insurance When Rain Turns to Flood

By Andy Schwartze

COVER STORY

DEPARTMENTS

20 Purpose-Built Construction in Canada A look at some of the new rental properties rising in our cities

By Erin Ruddy

4

CANADIAN

Editor’s Note

1

2017-03-03

VOLUME 14 / NUMBER 1 / MARCH 2017

The spectacular view from 101 St.Clair, a new rental building opening this fall in Toronto.

ROOM WITH A VIEW A SNAPSHOT OF CANADA’S PURPOSE-BUILT RENTAL SCENE

18 Ask the Expert

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Small Deals Drive Multifamily Investment Market Insights from CBRE’s Latest Outlook Report

Canada-wide investment in multifamily properties is projected to dip in 2017, but with a few markets recording an upward trend. Analysts from CBRE also preface this forecast with last year’s higher-than-usual investment activity, totalling nearly $5.7 billion.

“Strong multifamily fundamentals and the prospect of a stable income stream propelled national apartment investment volume to near record levels in 2016,” CBRE’s newly released 2017 Real Estate Market Outlook observes. “As multifamily valuations reach new highs, investment discipline will be the main story in 2017, particularly for larger assets.”

Among identified trends, forecasters see pension funds and other institutional investors kicking off a construction boom. This responds to a growing demand for new purpose-built rental and the lack of existing institutional-grade product in the marketplace.

“Smaller and medium-sized deals will emerge as the most attractive segment of the multifamily investment market in 2017,” CBRE hypothesizes. “Montreal, Toronto and Vancouver saw the total proportion of deals above $25 million decrease by a combined 57 percent year-over-year, from $2.3 billion in 2015 to $1 billion in 2016.

This trend is more a function of available product than it is demand.”

The total value of deals registered in those markets also slipped from 2015 levels, but still ranged from $1.1 billion in Vancouver to just above $1.2 billion in Montreal. Vancouver recorded the lowest cap rates, at 3 to 3.5 percent, and they are predicted to slide as low as 2.75 10 | Canadian Apartment | Part of the REMI Network |

percent this year. Both Toronto, with cap rates at 4 to 5 percent, and Montreal, with cap rates in the range of 5 to 5.75 percent, promised better income yields.

Calgary and Halifax figure most noticeably in the markets where an investment uptick is foreseen for 2017, although forecasters also see slight gains in Toronto, where investment is expected to hit $1.2 billion this year. Meanwhile, $200 million in projected deals in Halifax significantly surpasses the $106 million tally in 2016.

Analysts predict more trades across all property sectors in Calgary, perhaps signalling that market’s prolonged hardship is catching up with vendors. Multifamily sales are forecast at $275 million with cap rates in the range of 5 to 5.5 percent.

Vacancy rates are projected to be much higher in Calgary (7.5 percent) and Edmonton (7 percent) than in most other surveyed markets. In Vancouver, the vacancy rate is forecast to remain below 1 percent, while hovering below 2 percent in Toronto.

Victoria, Hamilton and Waterloo Region are also tagged as markets to watch. “Core assets with upside potential, as well as Class A properties in secondary cities near gateway cities will garner most investor attention,” CBRE forecasts.

Substantial capital injections in seniors housing portfolios are foreseen as major players in this market sector sell off Class B product to fuel further investment in Class A holdings. New development with more focus on independent lifestyle elements is expected to attract more and younger residents, pulling down the average age of occupancy from its current level of 83 years.

“The seniors housing market continues to benefit from robust investment demand based on strong and improving fundamentals and the compelling long-term demographic outlook,” CBRE reports. “The seniors housing sector appears to be undergoing a re-rating by investors, who are becoming comfortable in bidding down the historic spread which has existed between seniors housing and apartment investment returns.”

Insights from Morguard’s Keith Reading: Sharing his perspective, Morguard’s Director of Research, Keith Reading predicts that the sector should continue to benefit from higher than normal development activity.

“Investment performance has been stable and healthy, although values in Alberta have edged slightly lower,” he says. “In Vancouver and the GTA, demand for rental accommodation has been healthy, boosted by population growth, international migration and modest job growth in the 18- to 24-age-category. Rising costs of homeownership also continue to impact rental vacancies. “Development activity in most of Canada will continue to increase in the coming year, but a position of oversupply is unlikely.”

Calgary’s apartment vacancy rate 9 8 7

2015

2016

6 5 4 3 2 1 0 Bachelor

1-Bedroom

2-Bedroom

3-Bedroom +

Total

Source: CMHC Rental Market Survey (October)

TOP APARTMENT TRANSACTIONS, Q1 Address

City

#of Units

Sale Price (Millions)

Sale Price/Unit

Purchaser

1.

3311 Bathurst St

Toronto

102

$20.8

$203,922

Starlight Investments

2.

1130 Wilson Ave

Toronto

229

$22.2

$96,943

Private Buyer

3.

Wilston Portfolio

Toronto

157

$19.5

$124,204

Shelborne Capital

4.

Midtown Toronto Porfolio

Toronto

63

$13.2

$209,206

NJS

5.

95 Quebec St

Oshawa

50

$5.9

$117,000

Starlight Investments

| www.REMInetwork.com | March 2017 | 11

CMHC REPORT >>

Water-efficient Technologies Exploring Options for “Greening” the Plumbing Industry in Canada

by Paula Gasparro The Canadian residential sector accounts for approximately 17 percent of total energy consumption and 57 percent of municipal water consumption. While historically Canada has been considered a water-rich nation, regional disparity in water availability, higher energy costs, and increased water rates to reflect the true cost of water supply have led municipalities and individual consumers to consider options for reducing water use in the home.

C

anada’s 44,000 plumbers are key players in consumer acceptance of waterefficient products given their influence on purchasing decisions. Additionally, plumbers are part of the overall construction teams that build and renovate housing. When the project has sustainable objectives, plumbers must not only be able to ensure their systems comply with the overall project goals, they also must be knowledgeable of the green objectives of other contractors to effectively coordinate activities and not work at cross-purposes.

While training on innovative technologies and practices is relatively common for builders and renovators, similar training for their subtrades has been more limited. This has been a common concern among builders who specialize in the construction of sustainable, energy-efficient housing. In their view, subtrades who lack knowledge of sustainable construction and renovation practices can undermine the overall project.

In an effort to promote a greater uptake and acceptance of water-efficient technologies in the residential sector and to support the construction and renovation of sustainable housing in general, CMHC supported a multi-stakeholder-funded study to investigate sustainable or green training options for the plumbing industry.

Phase 1 - Research Program Phase 1 was undertaken to identify potential opportunities in establishing additional training for apprentice and licensed plumbers in the areas of water-use efficiency and environmental sustainability. While the survey found generalized support for sustainability training, it was tempered with the perceived lack of market interest that

12 | Canadian Apartment | Part of the REMI Network |

might be expected from the plumbing industry.

Regardless, many survey participants expressed hope and optimism that demand for dedicated sustainability training for plumbers will grow in the future as consumer awareness of, and demand for, higher-performing plumbing systems, appliances and practices develop.

The survey also identified six international training programs with potential application for the Canadian plumbing market. Within Canada, a plumber of entry level courses on specific topics (such as rainwater harvesting and solar hot water installation) were identified.

However, no overarching program on waterefficient technologies and practices and overall sustainable housing principles for plumbers was found. A final conclusion drawn from this work identified the need for further market research targeted specifically to plumbers.

Phase 2 – Pilot Project Phase 2 activities included the development of a Canadian oriented workshop based on existing water efficiency and plumbing curriculum, as well as targeted market research to determine plumber awareness and attitudes toward water efficiency and conservation. As part of an arrangement with the International Association of Plumbing and Mechanical Officials (IAPMO), a condensed version of the U.S. Green Plumbers® program, adapted for the Canadian regulatory environment, was provided.

The training developed was piloted in three workshops held in Vancouver, Toronto, and Kitchener-Waterloo-Guelph. Overall, 128 plumbers and apprentices attended. After the pilot training, follow-up focus groups on the workshop were conducted with both participants and non-participants.

Results from the focus groups indicated a number of highlights: Plumbers are experts when it comes to water-using appliances, piping, fixtures and fittings. Many of them are personally interested in sustainability and already install highefficiency shower heads, toilets and faucets.

Furthermore, they are keen to learn. Of the 200 randomly elected plumbers interviewed, 47 percent were interested in attending sustainability training.

To be successful, such workshops need to showcase and demonstrate emerging products, technologies and practices.

Content on proper installation procedures and access to manufacturers was also seen to be important. The focus group consultations indicated that if innovations are appropriate and are competitively priced, plumbers will want to know about them.

The focus groups also indicated that fragmented governance of the trade makes it challenging to implement a program of this nature on an ongoing basis. Local governments were found to be supportive of the program, but ultimately represent only their local jurisdictions. Training and accreditation is governed on a provincial basis, which makes integration of a national program into apprenticeship programs a formidable bureaucratic task.

With the proliferation of do-it-yourself TV shows and websites, easy access to low-cost materials through retailers, and the strain on Canadians’ pocketbooks, the plumbers

>>

CMHCREPORT REPORT>> CMHC

consulted indicate that their clients are looking to cut costs wherever possible and this can make the benefits of green plumbing features difficult to articulate and sell. However, the health and safety aspects of designing and implementing innovative water technologies are best met through an informed plumbing industry versed in the latest green plumbing requirements.

Implications for the housing industry While plumbers who participated in the research are interested in water-efficient technologies and practices, there may not be sufficient interest to support a national program at this time. However, it is worth noting that approximately 30 years ago, Natural Resources Canada (NRCan) launched its R-2000 Program under similar conditions and challenges. However, by targeting leading builders, NRCan was able to develop a national cadre of highly trained and knowledgeable builders who demonstrated that highly energy-efficient housing was practical, cost-effective to build and had a place in the market.

A similar approach might prove equally successful within the plumbing sector and serve as a model for the development of similar training for the other trades involved in the delivery of housing in Canada. The deployment of such training would help address a concern of builders working to deliver sustainable housing projects that their subtrades are not sufficiently aware and knowledgeable of innovative products and practices.

For more information about CMHC’s Technical Research Series visit www.cmhc.ca. To take advantage of CMHC’s Mortgage Loan Insurance, contact Paula Gasparro, Principal, Multi-Unit Client Relations at 416-250-2731 or via e-mail at pgasparr@cmhc.ca.

Municipal water use by sector (2011)

Budget 2017 and Canada’s New National Housing Strategy

21% Industrial, commercial, institutionals and other non-residential

43% Residential

18% Unknown

4% Wholesale

13% Losses

Source: Stats Canada

The Federal Budget 2017, released March 22nd, proposes to invest more than $11.2 billion over 11 years in a variety of initiatives designed to build, renew and repair Canada’s stock of affordable housing. These investments will be made as part of the new National Housing Strategy that was developed following extensive consultation with industry experts, stakeholders, provinces, territories, municipalities and Indigenous Peoples. Key elements of the new Strategy include: A renewed partnership between the federal government and provinces/territories to support key housing priorities ($3.2 billion) A new National Housing Fund to address critical housing issues and support vulnerable citizens ($5 billion) Targeted support for northern housing ($300 million) Targeted housing support for Indigenous Peoples not living on-reserve ($225 million) Renewed and expanded federal investments to address homelessness ($2.1 billion) Making more federal lands available for the development of affordable housing.

(202 million) Expanded funding to strengthen CMHC’s housing research activities ($241 million) Budget 2017 proposes to provide $3.2 billion over the next 11 years to provinces and territories in support of key priorities, such as the construction of new affordable housing units; the renovation and repair of existing housing; rent subsidies and other measures to make housing more affordable; and other initiatives to support safe, independent living for Canada’s seniors and persons with disabilities.

The National Housing Fund will be administered by CMHC and will include an expansion of direct lending for new rental housing supply and renewal. This fund is intended to address critical housing issues and prioritize support for vulnerable citizens, including seniors, Indigenous peoples, survivors fleeing situations of domestic violence, persons with disabilities, those dealing with mental health and addiction, and veterans. | www.REMInetwork.com | March 2017 | 13

FEATURE >>

FRPO Welcomes New President and CEO Jim Murphy Leads the Association in 2017

I

n late January 2017, The Federation of Rental Providers of Ontario welcomed Jim Murphy to the role of president and CEO. With a background in housing and a deep familiarity with government relations, Murphy is backed by both a passion for the rental housing industry and the experience needed to move the industry along in a fruitful, forward motion.

His immediate goals include advancing the association’s platform by promoting fair, balanced policies with the government and providing more value to FRPO membership in this era noted for its remarkable change.

“This is an exciting time to be joining FRPO and working on rental housing issues,” Murphy said, noting the emergence of professional owners who have recently entered the playing field alongside the smaller landlords. “Rental housing has evolved considerably in the last couple of decades, and today it serves a key role in the housing market. Residents need to have choice.

As people move through the different phases of their lives—from students to retirees—FRPO members are the ones providing those housing options. I look forward to meeting members and furthering the important role played by rental housing providers across Ontario.”

To date, Murphy has enjoyed a distinguished career in both association management and the public sector. After graduating from university of Waterloo in urban planning and doing graduate work at University of Toronto in public policy, Murphy went on to serve as Director of Government Relations for the Greater Toronto Homebuilders Association (now BILD), and more recently was president and CEO of the Canadian Association of Accredited Mortgage Professionals, and CEO of the Insurance Brokers Association of Ontario. Murphy also served as Chief of Staff to the Honourable Al Palladini at Queen’s Park.

As FPRO’s newly minted president and CEO, Murphy said he was initially drawn to the position for several reasons—the first being his familiarity and interest in housing issues. As for what’s next on the agenda, Murphy said he intends to immerse himself in current industry issues and continue to promote the fair and balanced policies the association has been so effectively seeking.

“For the time being, I’ll continue to conduct outreach with the FRPO Board, volunteers and members in order to better understand what they want to see long-term. Ultimately, I intend to ensure a strong financial association and successfully represent member interests, while continually seeking ways to promote member value,” he said.

On what excites him most about the new position, Murphy said FRPO’s already established reputation as an industry leader and expert was a compelling aspect of the role. “I want to build on that reputation; to be strategic and to ensure our views are heard. I want to make sure renters and the broader public are aware of investments in the industry and the increased professional standards that go with them,” he said.

When not advocating on behalf of Ontario’s rental housing providers, Murphy enjoys reading, travelling, golf, and looks forward to the opportunity to meet and network with members at upcoming industry events.

“As someone who believes in collaboration and change for the better, I look forward to working with members, the executive and the board on key issues and advancing government relations,” he said.

Jim Murphy can be reached at: jmuprhy@frpo.org 14 | Canadian Apartment | Part of the REMI Network |

JIM MURPHY, EXPERIENCE

at-a-glance:

Graduated from University of Waterloo in Urban Planning Conducted graduate work at University of Toronto in Public Policy Worked for the Honourable Al Leach, Minister of Municipal Affairs and Housing, as Municipal Affairs Advisor; was also Chief of Staff to the Honourable Al Palladini Worked for GTHA (now BILD) as Director of Government Relations Became CEO of the mortgage association now called Mortgage Professionals Canada; was also CEO for the insurance brokers A strong background in government relations, housing and not for profit work

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How to Invest for Success in a Hot Rental Market

Featuring Russell Syme, Assistant VP, Commercial Financing at First National Financial LP

“The rise of permanent renters” has ignited a hot market for apartment buildings.

However, investor demand far exceeds supply. There are several things borrowers need to know in order to qualify for financing and prosper in this complex, competitive real estate sector.

“We are seeing prices going up drastically, multiple bids, the whole bit,” says Vancouver-based Russell Syme, assistant vice-president, commercial financing, at First National Financial LP, Canada’s largest non-bank mortgage lender.

He points out three main requirements to qualify for financing: property management experience, equity and liquidity.

If the prospective borrower does not have sufficient experience managing multi-unit income properties, the lender may insist on having third-party property management.

“Syme points out three main requirements to qualify for financing: property management experience, equity and liquidity.”

“During the past 10 or 20 years, people were able to buy rental apartment buildings with relatively little focus on operational

SPONSORED CONTENT

efficiency. They could potentially still do very well financially over time because of the drastic increase in values that we have seen in the marketplace. I don’t think that will be the situation going forward,” Syme says.

“I don’t want to discourage people, but having that experience, or partnering with somebody who does, is a good way to go if you are buying an apartment building.

The values are high, so you need to find other ways − through managing the property − to add value. Buy something that is not operating at its best and improve management of it... that’s how you do well on these kinds of investments.”

The lender wants to know what the borrower intends to do to increase rents over time and what the borrower might do to reduce vacancy rates. “The primary source of repayment for a loan on an apartment building is cash flow, so that’s what we are looking at,” Syme says.

FINANCING CONSIDERATIONS The lender will want to see net-worth statements from all beneficial owners, satisfactory credit reports, resumes outlining the borrower’s real estate experience and details of additional real estate holdings or assets, including current debt.

Required property information includes a current rent roll, an account of annual expenses such as insurance, utilities, property taxes and details of recent improvements.

The lender will require a minimum down payment of 15 per cent of the lending value for an insured mortgage, although the amount may vary depending on location, quality and condition of the building and the potential for rent increases. Typically, the down payment would be substantially higher in a small community highly dependent on one or two industries. “In those communities, you see wide swings in vacancy levels. It might be zero vacancy today, but if one of the industries in those communities has a downturn, the vacancy

rate in that market might be 25 or 35 per cent and you can’t rent out those empty units no matter what you do,” Syme says.

In addition to the down payment, the lender may expect the borrower to have a minimum net worth of 25 per cent of the loan amount. Syme also looks at liquidity – i.e., a borrower’s access to cash to cover unexpected expenses such as repairs to a roof or replacement of a boiler.

First National’s preference is that the borrower not be an absentee landlord.

“It’s tougher to make sure the property is operating well if you can’t visit it regularly,” Syme says. “There is nobody who is going to care as much about your building as you do, so if you know how to operate a building and what to look for, it helps a lot.”

Russell Syme is an Assistant VP, Commercial Financing at First National Financial.

Follow First National on LinkedIn for other great commercial real estate financing content from our specialists.

ASK THE EXPERT >>

Achieving Energy Savings Toronto Hydro’s Mike Mulqueen Shares the Latest Incentives and Opportunities for Older-stock Building Owners

Looking for ways to boost energy efficiency in your older-stock apartment building?

We spoke with Mike Mulqueen, Lead, CDM Business Development (MURB) at Toronto Hydro for insights into the latest incentives and energyefficiency opportunities for the year ahead.

18 | Canadian Apartment | Part of the REMI Network |

What are the biggest energy drains you are still seeing today in older-stock apartment buildings?

When looking for energy drains, lighting is the obvious place to begin as there have been huge advancements in the industry, with an efficient LED solution for almost every application. Beyond lighting, we suggest looking at large pumps and fans, especially those with long run-time hours to determine if there is a right-sizing opportunity and/or the ability to control run-time or how hard the motor is working.

For example, the domestic cold booster pumps are often over-sized for the maximum design condition (i.e. when everyone in the building is having a shower and flushing the toilet at the same time, which never actually happens). Adding a right-sized “variable frequency drive” booster pump system allows it to adapt how hard it is working to meet demand conditions, typically saving 80 to 90% of the energy consumed.

Similarly, garage exhaust fans—which, by law, need to run year round, 24 hours a day—use a tremendous amount of energy unless they are controlled by a CO sensor system. We find that with a CO sensor system installed, the fans will operate as little as 10% of the time while still protecting the safety of residents and meeting fresh air requirements. Other equipment we will look at for efficiency opportunities include main heating and cooling circulation pumps, make up air units and cooling tower fans. If you have central cooling in your building, there may be opportunities to upgrade your chiller to a higher efficiency model, as well as implement low-cost and no-cost measures to optimize the performance of your system (such as, changing set points). Finally, for electric baseboard-heated buildings, we will look at the opportunity for smarter controls

to ensure the equipment is not working harder than it needs to in order to deliver the desired temperature. In all of these projects, we’ve found that we can typically demonstrate a solid business case with a payback anywhere between 2 to 5 years and sustained operating savings—which is a very cost-effective investment to grow your asset value.

Are there any new incentives landlords should be aware of?

In Toronto, we recently rolled out a great new program called PumpSaver (www.torontohydro. ca/pumpsaver), which provides a free variable frequency drive to reduce wasted effort by main heating and cooling circulation pumps. In many buildings, the pumps are working at full capacity against a balancing valve, which is a very inefficient set up. We will install the VFD at no cost to the customer, open up the pressure reducing valve and rebalance the system to maintain the same flow conditions, with the motor working a lot less hard. Typically this will result in 30 to 40% energy savings for free. Similarly, many landlords of smaller buildings may not be aware that they qualify for our small business lighting program through which they can get up to $2,000 worth of free lighting upgrades to highly efficient and long-lasting LED technology (www.torontohydro.ca/smallbusinesslighting).

Otherwise, we are happy to work with landlords on an efficiency project that can save electricity, big or small and will pay up to half the cost, based on the energy savings.

What are the most popular retrofits, at the moment and why?

Lighting still accounts for about 70% of the projects we see in multi-unit residential buildings.

We are seeing increasingly large numbers of CO sensor projects and VFD applications to booster pumps, make-up air and cooling towers. There is also widespread interest in combined heat and power. This is a more complicated project and incentive path with many steps along the way but there is a very attractive business case as well as the additional potential life safety benefits when operating as a back-up system to allow residents to stay in their building during prolonged power outages.

What are some smaller retrofits that can also help achieve long-term savings?

Increasingly we’re starting to look at some of the smaller motors in buildings such as, fan coil replacements. These are fractional horsepower motors but collectively consume a lot of energy.

There are new, highly efficient Electronically Commutated Motors (ECM) in the market now that for a small increase in cost can save between 30-40% of the energy consumed by these units. Similarly, we are also looking at ECM opportunities for some of the smaller circulation pumps within buildings when they are replaced at end of life.

Toronto Hydro’s team of energy experts is available to help you find savings opportunities, as are the experts from your local distribution company if not in Toronto.

We will complete a free building walkthrough to help you identify the opportunities to reduce your operating costs and will assist with measurement and verification and the incentive paperwork and to ensure you get a solid return on your investments.

Contact Mike Mulqueen or visit www.torontohydro.com

>>

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$22,750,000 (105 Suites - $216,667 p/s) 5 Rittenhouse Road Kitchener, ON

David Montressor* | Executive Vice President 416.815.2332 | david.montressor@cbre.com CBRE Limited, Real Estate Brokerage

Please visit our website: www.cbre.ca/nag-toronto

* Sales Representative This disclaimer shall apply to CBRE Limited, Real Estate Brokerage, and to all other divisions of the Corporation; to include all employees and independent contractors (“CBRE”). The information set out herein, including, without limitation, any projections, images, opinions, assumptions and estimates obtained from third parties (the “Information”) has not been verified by CBRE, and CBRE does not represent, warrant or guarantee the accuracy, correctness and completeness of the Information. CBRE does not accept or assume any responsibility or liability, direct or consequential, for the Information or the recipient’s reliance upon the Information. The recipient of the Information should take such steps as the recipient may deem necessary to verify the Information prior to placing any reliance upon the Information. The Information may change and any property described in the Information may be withdrawn from the market at any time without notice or obligation to the recipient from CBRE. CBRE and the CBRE logo are the service marks of CBRE Limited and/or its affiliated or related companies in other countries. All other marks displayed on this document are the property of their respective owners. All Rights Reserved.

| www.REMInetwork.com | March 2017 | 19 vertical-magazine-ad-design - de changes v2.indd 1 Untitled-4 1

2/2/2016 10:38:00 AM 2016-02-08 9:04 AM

COVER STORY >>

PURPOS APART CONSTRU CAN From Montreal’s the StanBrooke to Toronto’s 101 St. Clair West, Everywhere You Look New Rentals are on the Rise

by Erin Ruddy

20 | Canadian Apartment | Part of the REMI Network |

COVER STORY >>

SE-BUILT TMENT UCTION IN NADA Canada is seeing a continued surge in purpose-built apartment activity, with state-ofthe-art rental buildings rising up where condominiums once exclusively reigned. The reasons for this rental renaissance have been widely discussed: interest rates are low, renter demand is high, and for many Canadians home ownership is largely unattainable.

Add to that, the fact that investors are looking for steady, alternate income streams, and the perfect conditions for a thriving purpose-built rental scene are upon us.

South view from 101 St. Clair. For more info, visit www.101stclair.com

| www.REMInetwork.com | March 2017 | 21

COVER STORY >>

According to CMHC’s latest Rental Market Report, apartment units in Vancouver are now accounting for 20 percent of all housing starts. In December 2016, over 2,457 secured market rental housing units were under construction throughout the city with an additional 2,482 units approved for development. In Halifax, though fewer rental units were added in 2016 (just 757 compared to 1,200-plus units in previous three years), the size of those apartment projects increased tremendously.

In Toronto, 2016 saw the construction of 6,000 units—up by more than 40 percent from just one year ago. The number of future projects has also increased exponentially, with developers currently planning to build a record 27,812 new units.

Among those developers is Westbank Corporation with its highly anticipated Mirvish Village. Though still a few years away from completion, plans for the new downtown community include 850 rental units in five mid-rise buildings, half of which will be two- and three-bedroom units geared at families. Westbank Corporation says it anticipates working closely with the City to ensure a portion of units are reserved as affordable or mid-range rental housing as part of the project’s community benefits.

Moreover, the site will include small studio spaces and live/work units to accommodate artists and small business entrepreneurs.

Mirvish Village Toronto, Ontario

On the sustainability front, Mirvish Village aims to meet LEED Platinum Neighbourhood and Toronto Green Standard Tier 2 standards by providing residents with systems that will minimize waste and optimize energy. These will include: an efficient and resilient energy system, sustainable alternatives for a pedestrian and transitoriented development, forward-thinking options promoting reduced car dependency, and urban agriculture initiatives.

101 St. Clair West Toronto, Ontario

With 101 St. Clair West poised to open in early September, the Avenue Road and St. Clair area will no doubt benefit from the addition of the 229 new luxury suites that will soon be part of the award-winning master-planned Imperial Village community.

The high-end rental building, designed with a black vertical metal panel system, forms the east and south edge of the common courtyard it shares with neighbouring Imperial Plaza. According to developer Camrost-Felcorp, the building’s units will range from one-bedroom suites to three-bedroom penthouses, designed with larger, more livable layouts than typically found in downtown apartments.

“The smallest unit in the building is 600 square feet, but on average, our units are 909 square feet,” says Camrost-Felcorp development manager Joseph Feldman.

“We also took great care in making sure the layouts are open and livable, with the bedrooms located on the exterior rather than the interior. I can honestly say, we offer the best views of the city.”

Residents will also have access to the 20,000 square feet of fitness and lifestyle amenities, and what Feldman calls the most appealing amenities of all—the Longos and LCBO, handily located at street level.

“There’s a real market for people looking to live in rental apartments that feel like upscale condominiums,” he says. “They want new, but without the hassle of ownership. Residents can live a more carefree lifestyle without the uncertainty that comes from renting a condo.”

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COVER STORY

The Stanbrooke Montreal, Quebec

Brentwood Village

Calgary, Alberta

In Montreal, construction has kicked off on the 19-storey Stanbrooke apartment residence. Described as a chic, elegant tower with modern features and amenities, the building will include 176 units ranging from bachelor apartments to two-bedroom suites. Designed by Montreal-based Marco Manini Architecte and developed by U.S.-headquartered design consultants Humphreys & Partners Architects, work is scheduled for completion in July 2018.

“The new tower is perfectly located for renters looking for a bustling and diverse neighbourhood in the heart of the city,” says Kheng Ly, president of Brivia Group, in a statement. “StanBrooke will also bring fresh energy to its surroundings by revitalizing a lot and buildings that had not been actively utilized for years.”

Late last fall, RioCan announced it would be partnering with Boardwalk on a new mixed-use development at Brentwood Village Shopping Centre in Calgary.

Consisting of 165 apartment units, the 11-storey residential tower is expected to cost between $60 and $70 million, with construction slated for later this year.

“We are very pleased to partner with Boardwalk on our first rental residential development in the Calgary market,” says Edward Sonshine, Chief Executive Officer of RioCan. “Boardwalk brings a wealth of management expertise to the rental residential segment, particularly within the Alberta market. This rental residential tower will be an excellent addition to this mixed-use shopping centre, and a great example of just one of the many urban intensification projects that RioCan has on hand within its portfolio of high quality urban locations in Canada’s six major markets.”

In total the REIT says it plans to develop upwards of 10,000 rental residential units over the next decade.

In an effort to transform its LeBreton Flats condo development into a “highdensity, complete neighbourhood,” Claridge Homes recently shared plans to expand the community to include shops, cafés, affordable rental housing and beautiful park space along the aqueduct. At the centre of the new development will be five residential towers ranging in height from 25 to 55 storeys.

The new LeBreton Flats plans were unveiled at a public meeting in Ottawa in early January but won’t be possible unless the city rezones the area to allow for the taller buildings. The massive redevelopment of the neighbourhood also envisions a hockey arena, more quality housing, and other urban amenities.

LeBreton Flats

VERSUS

Ottawa, Ontario

Calgary, Alberta

Freshly opened to tenants on the vibrant Calgary beltline is VERSUS, a mixed-use property featuring two residential towers comprised of 444 high-end units. The $102-million development at 917 10 Avenue SW offers studios, one-bedroom and two-bedroom suites, all equipped with modern finishes and the majority, a private terrace or balcony.

“It’s located in the west Beltline neighbourhood of downtown, which is the most vibrant and connected district in Calgary,” said ONE vicepresident of multi-family development Tom Burr in a statement. “In our view, the building is the highest quality purpose-built rental apartment in Calgary. We believe there’s a depth of demand from Calgarians with good incomes who seek a very high-quality product that supports their urban lifestyle.”

Coverage that is setting the standard in the Real Estate Management Industry.

Find daily news and online exclusives on our website

March 2017

Funds in federal budget to close gaps in housing data

More purpose-built rental needed in GTA: CIBC

The 2017 federal budget released last week allocates funds to CMHC and Statistics Canada to shed light on blind spots in national housing data and support expanded research into housing affordability and foreign ownership.

Preventing a full-blown housing-affordability crisis in the Greater Toronto Area will require GTA-specific policies aimed at increasing the supply of purpose-built rental units, finds a new report by CIBC Capital Markets.

How climate change could affect maintenance fees Summer 2016 was one of the hottest on record in the GTA, with experts predicting temperatures could soar to 44 degrees Celsius by 2050. The city’s high-rise buildings are also feeling the heat, with the provincial government tightening up the Ontario Building Code to meet new global imperatives.

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Promise of agefriendly communities rings false

IFMA updates sustainability guide on green cleaning

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FEATURE >>

Fire Safety Steps for High-rise Building Owners How to Heighten Safety During a Planned Fire Alarm System Outage

by Jason Reid

A

recent fire in a Toronto high-rise apartment building has put the spotlight back on fire safety after numerous residents had to be rescued by Toronto Fire Services. Though no injuries were reported, the incident is a reminder that Fire Safety Plans are critical—especially when fire alarm systems are rendered inoperative due to repair and maintenance projects.

As most building owners are aware, when undergoing a fire panel replacement project or general system repair, a building’s fire alarm equipment must be temporarily disabled for a scheduled period of time. Typically this means the building’s smoke detectors, manual pull stations and the audible sound for the fire alarm is shut down while the maintenance work is completed.

But, as the recent incident highlights, these planned fire alarm system outages require extra precautions are taken to ensure occupant safety.

Emergency procedures: implementing a “Fire Watch” program Required by law, building owners are responsible to have an approved building Fire Safety Plan. Fire

26 | Canadian Apartment | Part of the REMI Network |

Safety Plans are designed to provide occupant safety in the event of a fire; to provide effective usage of the building’s fire safety features; and to minimize the possibility of fires. It is this plan that provides emergency procedures, preventative maintenance requirements, and instructions on what to do during a system failure or planned system outage.

Whenever a system is disabled, the building owner is required to ensure that a number of safety steps are implemented. One of those measures is a Fire Watch program. A Fire Watch is the term assigned to an individual (or individuals) dedicated to watching for signs of fire and reporting them. In essence, a physical person or persons must take the place of the detection and alarming equipment during a system outage.

Typically a Fire Watch dictates that the building is patrolled hourly on a 24-hour basis until the fire alarm has been restored to normal operating condition. Patrols are required to be documented in detail at intervals depending on the hazard and impairment. This documentation must be provided to the fire department upon their demand, and remain onsite as evidence of the active Fire Watch.

All common areas, public corridors, stairwells,

mechanical/machinery rooms, electrical rooms, service rooms, parking garages and offices are to be patrolled during the Fire Watch. As the Fire Watch typically does not have access to residential suites, residents must also be notified in advance. Patrols are required to be documented in detail at intervals depending on the hazard and impairment, or at the minimum, follow the direction in the building’s Fire Safety Plan for frequency of patrols.

Resident notification During planned, prolonged outages for repairs and replacements, such as a fire panel upgrade, tenant notification must be posted at all entrances and at every pull station in the building. The notice must clearly state the problem, and expected time of repair—including any special procedures to follow in the event of an incident.

Equipment required for a Fire Watch In order for a physical person (or persons) to take the place of the alarming equipment during planned outages, the Fire Watch patrol must be equipped with tools, such as a blow horn, a working cell

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FEATURE

phone to call 911, a flashlight and rapid access to a fire extinguisher. Your Fire Safety Plan, may or may not contain the above detailed information – but it should. A Fire Safety Plan is also designed to provide building owner and residents, guidance in code and best practices in resident safety.

Fire department notification In order for your Fire Watch to effectively communicate with the fire department in the event that they do find fire, they will need a working cell phone with which to call 911. This cell phone should not be for personal use, but for emergencies only.

It is important to also note that anytime a life safety system is to be shut down for a period over 24 hours, the local fire department must be notified in writing. Fire departments need to know if they are responding to a building with decreased fire protection so that their tactics and level of response may be appropriate. In addition, fire departments may direct special provisions to the building owner, and even request that the fire safety plan be revised prior to any work commencing. This is up to the Authority Having Jurisdiction.

Notification of Persons Requiring Assistance (PRAs) Ontario Fire Code requires building owners to maintain lists of persons who may require assistance during evacuation. This list is provided to arriving fire crews when responding to a fire alarm, and the list of PRAs is required to be included in the building’s Fire Safety Plan.

Persons requiring assistance during a building evacuation may be described as anyone who has reduced mobility, a speech, hearing or visual impairment, or a cognitive limitation. It is vital that these individuals and their families are alerted to the situation and kept informed throughout so that they may make clear decisions in the event of emergency.

Suspension of hazardous processes There are many other areas addressed in a holistic Fire Watch program, including the restriction of ‘hotwork’ during the system outage. This prevents building staff, contractors and service providers from doing any work or repairs that result in a higher fire risk, such as work involving heat or spark.

Recent media coverage of high-rise fires within the Greater Toronto Area have highlighted the lack of resident awareness of building emergency procedures, including procedures for persons requiring assistance during evacuations. Building resident information remains an ongoing issue. In summary, property managers should ask themselves: Have I communicated my building’s “approved” building emergency procedures to my tenants this year? If the answer is no, then you certainly should.

Jason Reid is Senior Advisor; Building Safety for National Life Safety Group, a Canadian Consultancy firm specializing in residential high-rise buildings. Jason is a firm believer in the sharing of best practices for the betterment of the industry and is available directly at www.nationallifesafetygroup.ca

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28 | Canadian Apartment | Part of the REMI Network |

TAX FEATURE >>

Saskatchewan Landlords Lose Key PST Exemptions Property Owners Will Now Pay Higher Rate

S

other capital projects that are more optional, this tax may be a deterrent.”

Critics suggest it could also undermine professional service providers and public safety.

“Saskatchewan already has a massive underground cash economy in the renovation market, a cash economy that undercuts renovators who have elected to hold themselves to high professional (and legal) standards that ultimately protect consumers. With the cost of hiring a professional being raised as a result of the new budget, it has now become even more appealing to consumers to go for a cheaper, illegal cash deal,” a statement from the Saskatoon & Region Home Builders’ Association asserts.

Contractors and property owners alike are now trying to ascertain the status of contracts signed prior to the April 1 start-date for the new rules. In future, the 6 percent tax may help some larger property owners/managers make the business case for in-house maintenance staff over outsourcing.

While new homebuyers will ultimately absorb added construction costs, the rental housing market currently affords little leeway to pass costs through to tenants. “In the multifamily sector, there hasn’t been any significant increase in rental rates in the last 18 to 24 months,” McDougald observes.

Building Envelope Repairs Balcony Modernization Parking Structure Rehabilitation

© DAVROC & ASSOCIATES LTD.

askatchewan landlords experienced a budget double whammy March 22 — receiving the more forceful cost hit from their provincial finance minister. His budget, released almost in sync with his federal counterpart’s announcements, delivered a surprise reinstatement of provincial sales tax (PST) on labour costs associated with renovation, retrofit and maintenance projects and a province-wide increase in education property taxes.

The measures are part of a package of spending restraints and tax realignment as Saskatchewan grapples with a dramatic slump in resource prices that has seen the government’s share of revenue drop from $2.6 billion in 2014-15 to $1.3 billion last year.

“This budget meets the challenge by taking a number of significant measures — including some difficult but necessary measures — on both the revenue and the spending side,” Finance Minister Kevin Doherty told the provincial legislature as he outlined plans to boost the PST to 6 percent, remove some previous PST exemptions, reduce or eliminate some tax credits and cut funding for a range of programs and services.

Property owners will now pay a higher PST rate, up from 5 percent prior to budget day, on the items they’ve traditionally been taxed on, while the elimination of other PST exemptions effectively adds a new 6 percent surcharge to some key operations and labour costs. These include insurance premiums and contracts for “repair, renovation or improvement of real property”, which will apply on many of the skilled trades, such as plumbers, electricians, HVAC and elevator maintenance technicians, that commercial and residential owners/managers typically employ.

“There is standard maintenance that’s scheduled quarterly, seasonally or annually to maintain the integrity of the facility that, as landlords, we still have to execute,” says Jamie McDougald, president of the Saskatchewan Landlord Association and chief operating officer of Regina-based Deveraux Developments. “For

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MANAGEMENT >>

Managing In-Suite Utility Consumption Why Submetering Has Become the Go-to Strategy for Relief from Rising Operating Costs

by Peter Mills

M

ost major Canadian rental markets are experiencing extremely low vacancies, yet under tight rent control policies, and upcoming regulatory changes (i.e. provincial cap and trade systems), owners and operators cannot keep pace with sharply increasing utility costs. As a result submetering has become the go-to strategy for relief from rising operating costs and low cap acquisitions in a rent controlled market.

“Market analysts keep pointing to our submetering program as a positive driver in our stock price,” says Mark Kenney, COO of CAPREIT. “When we convert a suite to ‘plus electricity’ it is equivalent to a five percent rent increase.”

30 | Canadian Apartment | Part of the REMI Network |

Submetering basics: cost control Submeters measure in-suite utility consumption.

Residents are billed individually and pay only for their consumption of any given utility being metered. Electricity is the most commonly metered utility and is the easiest utility to retrofit in an existing building. A growing number of existing buildings also meter for water, especially in markets like Vancouver and Ottawa where the building profile is particularly conducive to this retrofit, and the supply and cost of water has become a hot button topic. New construction projects are including water and gas and sometimes even heating and cooling (BtU) as user pay services. Residents have lower fixed

costs and more control over their cost of living.

With residents paying for their own consumption, the owner is only responsible for common area costs that can be controlled through efficient design and conservation practices.

Submetering in reduced utility consumption Depending on the building configuration roughly 60% of the electricity bill is associated with in-suite use. In addition the positive impact on reducing overall energy use is significant. Typically in-suite consumption drops by 34% to 48% in non-electrically heated buildings, reducing the overall building consumption as much as 32%. When it comes

to reduction in water consumption through submetering a lot depends on the building profile, in-suite versus common area amenities, and pre-existing water efficiency measures. The number is highly variable but on average in-suite water consumption drops by 30%. Reduction of overall utility use is good for the environment and easier on the building infrastructure, reducing wear and tear, operating and maintenance costs.

What’s involved: focus on retrofit The hardware: The rules and regulations around metering for electricity are the most stringent and are the focus here. When it comes to any utility metering project it’s always best to work with a provider that works with multiple meter manufacturers and can tailor a project to your specific building requirements.

Smart meter versus submeter?

The term “submeter” refers to any meter that is installed after the bulk meter to read a specific area (a suite for example) or even a piece of equipment on a property. It can be nothing more than a simple “dial under glass” meter. “Smart meters” incorporate any number of additional capabilities: Automated meter reading, allowing for remote meter reading Interval metering, enabling Time Of Use (TOU) electricity pricing Hourly, daily and monthly online consumption reporting Remote outage tracking and programming updates Whatever the meter type, it’s important to ensure that meters are using non-proprietary software. Using meters with proprietary software means owners end up paying for expensive software updates and meter recertification processes and may limit their choice of service providers down the road.

Cost Submetering providers supply and install the meters at no charge to the building owner under a comprehensive billing agreement.

Other options are available but this is the most popular model. There are a few exceptions, for example in Ontario buildings that had submeters installed prior to 2011 may bill for

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MANAGEMENT

all electricity use, including heating. After this date billing only lights and plug loads are allowed, for now. Some additional work may be required to separate out electric heat. In most other Canadian jurisdictions the full electrical load used by the resident can be metered and billed.

A quality submetering provider will strive to exceed these standards. Accurate, transparent and timely billing and reporting is the most critical component of any submetering program as it directly impacts the resident experience in your property and the owner’s internal accounting processes.

Easy, fast installation Installing meters is a simple exercise when dedicated crews are used. They understand the working environment in a residential building and legislative requirements. There is very little disturbance to the building and the residents. Meter panels are quite compact and are easily installed within existing electrical closets in the building corridor – a critical feature for markets like Vancouver where every square foot counts.

Other than a few minutes to verify the suite is properly connected to the submeter, there is no in-suite work. Disruption to power in-suite is just a few hours. Depending on building configuration the installation of water meters may occur either outside or within the suite itself, with all other associated equipment installed in common areas.

Your customers and ours: the residents In most Canadian jurisdictions building owners may enroll existing residents after their current lease term expires and have been successfully doing so for years. If your buildings are in Ontario, the legislation allows for the enrollment of new tenants to the building only. Your submetering service provider should deliver education, training and ongoing support for your staff so that they can properly enroll tenants and answer some basic questions. In addition submetering providers should have a comprehensive customer service program for your residents.

This should include: Web based access to information on individual consumption in a community context Access to advice and support to encourage and promote conservation Accessible live customer support in multiple languages to answer billing and related questions On site Resident Outreach Programs

The billing process Every provider bills a little differently however all must at a minimum follow the standards in place set by the local jurisdictional authority to maintain their license. The Ontario Energy Board standards are the most rigorous so most submetering companies that operate nationally apply this standard across all jurisdictions. These standards dictate the following: On bill information - for example previous and current meter reads, billing period, consumption and delivery charges Submetering providers must flow through the rates as posted by the LDC for consumption and related charges, i.e. transmission charges, loss adjustment factor etc.

Additional fees such as administration and meter and account set up fees must be posted For a full list of requirements please see the Ontario Unit Submetering Code, 2012

RECAP: submetering benefits Control of utility budgets, reduced exposure to rate hikes and tenant behaviour Improved net operating income, increased building value Monitoring of individual suite consumption, including non-bill payers No responsibility for collections process or bad debt No equipment cost or risk Residents empowered to control their cost of living, easily managed online Tap into government funding through residential subsidies and incentives for conversion to submetering Corporate image as environmentally responsible

The is article was written by Peter Mills, Co-CEO, Wyse Meter Solutions. Contact pmills@wysemeter.com for more information. | www.REMInetwork.com | March 2017 | 31

NEWSWORTHY >>

Industry Hot Topics Push for Revised Rent Control in Ontario

T

he controversial topic of rent control in Ontario is back in the news after two Toronto city councillors voiced concerns about what they are calling “unethical” rent hikes across the GTA. As such, Councillor Josh Matlow and Councillor Ana Bailão announced that they will be holding a special meeting of the Tenants Issues and Affordable Housing committees this April for a review of the Residential Tenancies Act. Currently, rent control in Ontario dictates landlords are limited to rent increases of 1.5 percent, unless the building was constructed after the year 1991. Councillor Matlow asserts that this exemption has led to unfair rent increases—specifically for young people and seniors who are unable to afford the additional funds and are being “forced out of their own communities.”

As Toronto rental housing providers are well aware, the exemption policy was introduced in the 1990s to give developers an incentive to build much-needed new purpose-built rental stock—in other words, to spur investment interest in a critical sector that was lagging. Today, with rental vacancies sitting at record lows, the rental industry at large is concerned that new restrictions could yet again deter developers from building.

“The 1991 exemption is important for rental housing providers because it provides certainty,” comments Jim Murphy, FRPO President and CEO. “At a time of tight housing, changing the rules and enacting more regulation will only act as a disincentive to new rental housing and tenant affordability.”

Though rent control is a well-meaning attempt to help alleviate unfair rental hikes, many naysayers assert that the impact it has on housing quality is largely a negative one. Tighter rent controls can limit building owners’ resources to make necessary investments in repairs and maintenance.

Also, there is some economic evidence that rent control can lead to a

shortage of housing when the price is artificially suppressed, curtailing new supply and stoking demand—an opinion FRPO shares.

According to CMHC data, in some cases, rents in cities with rent control actually went up more than in non-rent controlled cities. From 2008 to 2010, average 2-bedroom rents in cities without rent control (such as St. John’s, Halifax, Regina, Edmonton and Calgary) increased a total of four per cent over the two-year period, whereas in Toronto and Ottawa, the same sized rental units saw rents go up by almost six per cent over the same period.

According to economists worldwide, high rent levels in big cities are driven by the same phenomenon as high house prices — a chronic under-supply of new properties in areas where people want to live.

In that regard, the rent increase increment is often less than for house prices, suggesting that landlords aren’t being greedy, but merely setting rents according to market conditions.

Essentially, it can’t be ignored that real estate investment is a business and landlords are looking to see a return on their investment. Ignoring market rents and going by the guideline year-over-year would limit that return and create less incentive for development.

On the other hand, proponents of rent control in Ontario, like Councillors Josh Matlow and Ana Bailão, assert that landlords often use basic building improvements as a means to justify unfair rent increases—a trend that is effectively turning the downtown core into a “playground for the rich,” Matlow has contended. By putting a cap on what they can charge, tenants will have at least some degree of protection.

Some investor groups, such as The Global Property Guide, maintain that rent control is generally harmful, but it can be benign if it is implemented so that “its market-restraining effects are modest; that it helps to defuse public protest about high rents; and that it assists citizens by providing an agreed framework for contracts.”

Quebec Landlords Wary of Lifelong Tenants

S

ome landlords report they are more reluctant to rent to older apartment seekers since added protection for long-term, lowincome elderly tenants was adopted into Quebec’s civil code last year. After recently surveying members who have potentially lost the ability to claim units in multi-residential buildings for their own use, the province’s largest rental housing association contends the new rules are undermining both landlords’ attitudes toward seniors and the value of smaller properties with two to five apartments.

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“For many owners, the law, which has been in effect since June 10, 2016, represents a severe loss of property rights,” says Hans Brouillette, director of public affairs with CORPIQ (Corporation des propriétaires immobiliers du Québec).

Owners of rental buildings have traditionally had flexibility to repossess an apartment to expand their own living quarters, subdivide the space or house new tenants who are their family members. To do so, landlords have been required to give the affected tenant six months of notice (except in the case of shortterm leases), pay compensation and, if challenged, prove good faith to the provincial Régie du logement.

The new article 1959.1 of the civil code now changes conditions for tenants 70+ years of age.

Leaseholders cannot be evicted if they have lived in the unit for at least 10 years and comply with the Société d’habitation du Québec definition of low-income. Younger leaseholders with low incomes and 10 years of occupancy are also protected if their spouse is 70 or older.

Exceptions apply if the property owner is likewise 70+ years of age and wants to repossess a unit as a personal residence, or if an owner aged 70+ is already a resident of the building and wants to repossess a unit so that a younger family member or caretaker can live nearby.

CORPIQ’s survey of 656 owners of small buildings finds these Quebec landlords wary of lifelong tenants and concerned how such lasting tenures could affect resale demand.

Vancouver’s First Temporary Modular Housing

C

ompletion of Vancouver’s first modular housing development at 220 Terminal Avenue was celebrated in late February. The innovative project helps to address the affordable housing problems in the city, providing interim homes for 40 male and female residents on lowand fixed-incomes.

The 14,875 square foot building features 40 single occupancy suites with self-contained bathrooms and kitchens, individual climate control, and private living space. The central building features include indoor and outdoor amenity space, central laundry, and a number of wheelchair accessible suites on the first floor.

Through use of innovative design ideas and products, the building can be relocated and reconfigured to fit a number of different sites, even the foundation system is reusable. The unique design allows the temporary modular homes to be relocated to future sites.

The project also features two murals on the outside of the building. Braken Hanuse-Corlett, a mural artist and a member of the Wuikinuxv and Klahoose Nations created the work to reflect the history of the area.

Modular housing manufacturer Horizon North started construction of the modular building in September 2016.

The total capital costs for the project were $3 million.

The City of Vancouver donated undeveloped, cityowned land to the Vancouver Affordable Housing Agency (VAHA) for this project. Placing modular housing on vacant and underutilized sites pending redevelopment is a cost-effective way to quickly increase the supply of affordable housing until more permanent housing can be built.

Funding to support VAHA’s temporary modular housing development also comes from the Government of Canada, Vancity and a private donation.

“There’s an immediate need for modular housing to support people on very low incomes who can’t find a place to live as we continue to grapple with a homelessness crisis,” said Mayor Gregor Robertson. “This modular housing development is an innovative, low-cost solution that quickly delivers affordable housing by utilizing vacant city land as we wait for more permanent social housing to be built.”

Six dos and don’ts for your social media execution

By Steven Chester Now that we’ve discussed finding the right platform, audience acquisition and content strategy, it’s finally time to join the party. Here are some dos and don’ts for your social media execution and brand promotion.

• Do join topical groups on LinkedIn, and spread your message across other platforms with hashtags – this is how you expand your reach outside of your followership.

• Don’t automate. If you’re automating your messages, you’re speaking without listening. This has been cleverly referred to as “mannequin marketing” – would you send a mannequin of yourself to a networking event, with a bunch of post-it note messages stuck to its head?

• Do ask your audience questions! This is a perfect opportunity to be engaging by creating that essential two-way conversation. Also take note during this time of what your audience is interested in – more food for your next content post.

• Do share, share, share. Looking to get your posts noticed? Surprise, so is everyone else. Share and credit others for their great work, and they just might one day reciprocate.

• Don’t over market yourself. A decent guideline is the 80-20 rule: Dedicate 20 per cent of your content to your brand, and 80 per cent should be content that truly interests and engages your audience.

• Don’t be afraid to outsource. Social media can be daunting, and a massive time suck. There are great agencies out there that can build a content and execution strategy for you around your business and audience needs.

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 | March 2017 | 33

MARKETING >>

Canada’s red Hot Rental Market With a Record-setting Year Behind us, What Does the Future Hold?

by Chaim Rivlin, RentSeeker.ca

2016 was a monstrous year for Canadian real estate, and it’s hard to imagine what the implications of another recording-breaking year would be. To put things in perspective, the CREA Home Price Index jumped from 184 to 208.9 by the end of last year. The total number of home sales increased by 6.3 percent year-over-year and anyone who tried to buy a home or condo is fully aware of what these figures meant for the price of homes. Not only was 2016 a record-breaking year, but it came on the heels of a record-breaking 2015, further compounding the monstrous increases.

We’ve heard it before, and just like the start of 2015, 2016 and now 2017, experts are calling for anything between a ‘slowing down’ of the trailblazing Canadian real estate market, to a total market crash.

A recent article from MoneySense offers a good representation of most predictions, concluding that we’re likely to see a flattening out of property prices. Naturally, certain areas of the country will be affected by new mortgage rules (Toronto) and government regulations (Vancouver), but overall, we shouldn’t expect to see a complete crash, especially in Toronto. The CREA predicts a 3.3 percent drop in home sales this year compared to last. However, keep in mind that properties are selling for record-setting prices.

If sales do flatten out, then it’s safe to say prices will at least remain what they are now, meaning those who are waiting for the bubble to burst shouldn’t expect to see a drop in rental prices just because the red-hot market cools down.

Tightened mortgage regulations In a recent RentSeeker blog, we discussed some of the new mortgage laws that were introduced in 2016 and the effect they have had on specific markets. Moving forward, it’s important to note that stricter mortgage rules and lending regulations make owning a property more expensive, and in turn, the extra cost is passed along to renters.

The demand to live in Ontario Despite what Canadians across the country think about Ontario, there is skyrocketing demand for rental units in this province. Strong job 34 | Canadian Apartment | Part of the REMI Network |

growth across the country and the desire to live in the GTA has driven up rental prices to new levels. The rent on an average 700 square foot condo broke $2,000 in Toronto for the first time, with renters engaging in bidding wars over in-demand buildings.

Condos are the new houses Average condo rent rose nearly 12 percent in the final quarter of 2016 (when compared to final quarter of 2015). In the GTA, 2016 had nearly 30,000 new condo sales, a huge 34 percent rise in the total number from 2015. Outside the GTA, some regions saw increases of 57 percent (Etobicoke, North York) and the 905 district had an unimaginable 82 percent increase, according to Urbanation.

With many unable to afford houses, condos and apartment units are becoming increasingly accepted as viable alternatives— two major factors increasing the demand for condos and rental apartments, and therefore rent.

More buildings coming to Toronto There are plenty of new construction projects everywhere you look, as buyers are getting forced out of the low-rise market. This, of course, means there is money to be made and demand is high. While it’s logical to think more buildings mean cheaper rates, units in new buildings aren’t on the low end of the affordability scale for renters, and these new builds are being designed to attract renters with money. However, as more new units become available, older units that haven’t been upgraded naturally do have less value in comparison.

American influence Our southern neighbour has always had a huge effect on our economy. As the U.S. continues to increase its interest rate, the effect on Canadians will lead to higher expenses for property owners (higher interest and a downswing for the loonie).

U.S. immigration policies might also have a large effect on the number of new residents Canada accepts if the States continues to create immigration obstacles, again increasing the demand for rental units. Overall these factors could affect the rental market in a negative direction for renters, especially for those looking for a place to live north for the border for the next four years, or possibly less.

Probability theorem At the very least, we had to give one logical reason for a slowdown in the rental market for our readers

>>

MARKETING

who were hoping, or even cheering, for a bubble burst. One of the most reliable rules of probability is normalization over time. If we apply the Law of Large Numbers to the Canadian real estate market, there’s a good chance things are slowing down, at least to some degree. The chances of three consecutive record-breaking years in unlikely to happen, statistically speaking.

If the Canadian economy continues to remain steady, the increase in demand for rental properties in the big markets isn’t going to slow down. We’re growing as country in GDP, population and in worldly reputation (rated

by Lonely Planet as the top country to visit in 2017), all factors contributing to higher demand for rental options. As we approach the 150th birthday of our nation, yes, rent will probably be more expensive, but that’s mostly because we’re succeeding as a country!

Chaim Rivlin is the Founder and CEO of RentSeeker.ca, Canada’s leading real estate search TakeCover_CAM_August_2013_FINAL.pdf 1 13-07-22 2:54 and real estate marketing website. RentSeeker.ca popular reports on Canada’s real estate markets are featured on many of Canada’s largest media outlets.

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INSURANCE >>

When Rain Turns to Flood Water Damage and Your Insurance Policy

by Andy Schwartze

O

n July 8, 2013, an enormous rain storm drenched most of Ontario, leaving the province under a massive amount of water. Roadways were closed, homes and businesses were flooded, and services were interrupted as the deluge was addressed. The storm was so severe, in fact, that it triggered an insurer reaction that many of you have likely seen on the insurance renewals for your residences, cottages and even condo units.

On the following day alone, some 30,000 claims were reported to the property/casualty insurers. A great many of these claims were reported as sewer backup claims—not unexpected, as many older homes in particular have non-functioning check valves due to their limited lifespan. And, let’s face it, replacing them is not exactly on the Top 10 list of maintenance things that homeowners tend to worry about.

Out of sight, out of mind...

Now the property/casualty insurers were faced with a big, and potentially explosive, public relations problem. It was well known that the cause of the water damage claims was “natural flooding” as defined in policies using the simple word “flood” and an exposure, which requires an endorsement and the payment of an additional premium on residential insurance policies. In the commercial property world, flood is already insured and has been for years. But not in the residential insurance space—almost all residential insurance buyers will turn up their noses at the thought of having their residential premium increase by around 10 percent just for flood insurance.

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The insurers faced this dilemma knowing that the denial of thousands of flooding claims would precipitate a huge reaction against the industry, certainly one that would result in some front page bashing by the press. In addition, those residential clients who were angry enough could sue their insurer and force the issue of whether or not the flooding was natural, or the result of their sewer backing up, before a judge. Little enthusiasm was to be found amongst insurance company managers for a public fight over whether or not these claims should be paid. Even less enthusiasm could be found for the inevitable court battles that, in our somewhat soft legal system, might well go against the insurers. Nobody likes to waste money on court fights with a questionable outcome.

The beauty of property/casualty insurance is, of course, that every annual renewal gives insurers and insureds a “re-set” button. What is paid out this year can be clawed back next year. We might not like this, but this reality in the insurance world will not change any time soon.

So, the insurers rallied as many adjusters as could be found, not an easy task when a major event unfolds, and the majority of these claims were settled. Company managers, of course, having paid out millions, were now faced with the challenge of how to get this money back.

Enter the postal code! Over a subsequent

period of time, “flood mapping” became a new underwriting reality. Topographical data was extracted and built into the insurance rating system. In addition, a new endorsement was created and called “overland water.” The option to buy flood insurance became a reality and today every home insurance policy is available with or without this endorsement. In order to qualify for this coverage you must carry sewer backup coverage also (why should we not be surprised by that). The endorsement is not available to anyone not wanting to pay for sewer backup coverage.

The cost of this new flood insurance is not insignificant. Insurers are not only taking back what they paid out after the 2013 flooding, but we have had a couple of less serious rain events since then. Of course, insurers also have to stockpile some money for the next serious rain storm. It all adds up to a pretty expensive endorsement which, given time, may come down some in cost as soon as time and events mitigate the demand for covered claims.

The property casualty insurance industry has the enormous benefit of operating on an annual renewal cycle. This gives the insurers an opportunity to adjust their rate levels to reflect the ongoing demands on their policies. It’s a very short term window, unlike the life insurers who have no such option (except in the employee benefits space) and must get their premiums right and then live with the policies for as long as the agreed premium is paid.

Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He can be reached at andy@takecover.ca.

FEATURE >>

Preventative Maintenance for Pest control Keep Critters out with an Integrated Pest Management Program

by Alice Sinia, Ph.D.

P

reventative maintenance of outdoor amenities is essential for effective pest management. By creating an integrated action plan that continues throughout the year, property managers will have a better chance of keeping unwanted critters out, and happy residents in.

Having a solid Integrated Pest Management (IPM) program in place involves taking proactive steps to help prevent pests before they occur.

Persistent pest activity can drive residents to seek new homes if sightings become a regular occurrence. To help ensure your property is protected, here are some key considerations: Landscaping As the temperatures rise and the snow melts, dormant pools of water will be left behind, providing breeding grounds for mosquitoes, gnats and midges. Leveling the lawn on your property can drastically reduce these breeding grounds.

Also, if the lawn is covered with snow, rodents may burrow beneath it. When the snow melts and those burrows are revealed, inspect the property for any signs of an infestation.

Now is also a good time to review which plant species worked well last year and which need to be reconsidered. For example, if stinging insects, birds and rodents were a nuisance during the summer months, maybe it was because the plants sown in

early spring produced nuts, seeds, flowers or fruits that often attract these pests. Such plants should be avoided or strategically placed in areas that are not congested with residents. Enlist the help of your pest management professional to work with your landscaping team to implement a plan that is both aesthetically pleasing for residents, while still unattractive to pests.

Crawling pests, like ants and rodents, can easily gain access indoors if they are given a bridge from surrounding plants onto the building’s exterior.

Note which tree branches might be touching the roof or sides of buildings and trim them back. On the ground, avoid planting right against the exterior walls and maintain a 36” gravel strip around the exterior. This barrier not only helps keep burrowing rodents and other pests away, but will also help prevent weed growth and make your landscaping look neat and well-maintained throughout the year.

Exterior maintenance Preventative maintenance is a cornerstone to any successful pest management program.

Performing the following maintenance tasks will go a long way in helping to deter pests from gaining entry to your property.

• Install weather stripping around windows and doors to close off any gaps that pests could enter through. Inspect for worn-out door weather strips and sweeps and replace these accordingly.

• Inspect vents and have them properly screened.

• Look for cracks and other damages to exterior wall structures. Make the repairs and seal with weather-resistant sealant.

• Inspect the roof for any cracks or missing shingles.

• Inspect for openings, in building foundation where raccoons and skunks can dig through to nest. Keep them out by sealing off these sites.

• Consider replacing your current exterior security lights with either high or low pressure sodium lights as these will not attract pests.

Finishing touches Starting off the year with an integrated pest management plan will strengthen your defense against pests throughout 2017. But know that an IPM is not a one-time event. To be effective, pest management programs require seasonal considerations and the support of your entire staff.

Alice Sinia, Ph.D. manages the Quality Assurance Laboratory for Orkin Canada and performs analytical entomology as well as provides technical support in pest/insect identification to branch offices and clients. For more information, email Alice Sinia at asinia@orkincanada.com

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Smart Ideas

POLICIES FOR A BETTER TOMORROW

From quality assurance to waste reduction, here are some of the recent strategies affecting the apartment industry today.

Ontario steps up efforts to divert more waste from landfill Ontario is working to create a zero-waste future with the launch of a strategy that will divert more waste from landfills, create jobs and help fight climate change. The province’s Strategy for a Waste-Free Ontario: Building the Circular Economy includes 15 concrete actions to help reduce greenhouse gas emissions from landfills. These include requiring producers to take full responsibility for the environmental and financial management of their products and packaging—including small appliances, electrical tools, batteries, fluorescent bulbs, carpets and furniture. Visit: www.ontario.ca for details.

LandlordsBC launches official registry A registry for landlords designed to professionalize the rental industry throughout the province launched in January, 2017.

The registry, developed by LandlordBC, will allow tenants to screen their potential landlords to ensure they are familiar with the basics of the Residential Tenancy Act, the guideline for rental agreements in BC. “It’s time that landlords start to treat the rental unit they manage like a business,” said David Hutniak, CEO LandlordBC. “This registry gives renters a tool to see if the person they are renting from has credibility and knowledge.”

More than 30 percent of BC uses rental housing, about 550,000 units. Research shows currently that too many landlords don’t treat their rental property like a business leaving them open to having a tenant take legal action against them that costs money and time.

Visit https://www.landlordbc.ca for more information.

Energy and water reporting regulation enacted in Ontario A provincial regulation has now been enacted to help large buildings cut down on greenhouse gas (GHG) emissions.

Privately owned buildings that are 50,000 square feet and larger are required to report their energy and water usage in order to improve efficiency as part of the Ontario Regulation 20/17: Ontario’s Reporting of Energy Consumption and Water Use. Using ENERGY STAR Portfolio Manager, users must report monthly energy and water consumption, GHG emissions and intensity and building characteristics information. The types of buildings included in this mandate are commercial, multi-unit residential with more than 10 residential units, and some industrial facilities and properties.

Visit: www.ontario.ca/laws/regulation/r17020 for more information.

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