Canadian Apartment Magazine by MediaEdge

Apartment CANADIAN

VOLUME 15 / NUMBER 2 / MAY 2018

HIGH RISE

RISKS & RETURNS ATTRACTING INVESTORS IN A COMPETITIVE LANDSCAPE

plus

PA R T O F T H E

WHOâ&#x20AC;&#x2122;S WHO 2018 Q2 MARKET TRENDS PM#40063056

P A R T

TENANT TURNOVER

O F

T H E

Founded on Focus | Connected by Technology | Powered by Culture

MARCUS & MILLICHAP REAL ESTATE INVESTMENT FIRM

Dedicated to achieving superior results and maximizing value for each client, one property at a time Established in 1971, Marcus & Millichap (NYSE: MMI) is the largest firm specializing in commercial real estate investment sales in Canada and the United States. With over 82 offices across Canada and the United States, Marcus & Millichap brings national experience to local market expertise. In 2017, Marcus & Millichap closed more than 8,900 investment transactions for private, public and institutional investors. By closing more transactions annually than any other firm, our investment professionals provide clients with an unparalleled perspective on the investment real estate market locally, regionally and nationally. Included in these transactions were office and industrial buildings, apartment properties, single-tenant net-lease properties, hotels/motels, senior housing facilities, manufactured home communities, self-storage facilities and land.

20 Queen Street West, Suite 2300 Toronto, Ontario M3H 3Z2

416.585.4646 Toronto@marcusmillichap.com

www.marcusmillichap.com

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. Guaranteed vacancy reduction, revenue growth and net profitability — 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

www.metcap.com

EDITOR’S NOTE>>

Apartment CANADIAN

CANADA NEEDS NEW RENTAL HOUSING Affordable rental housing continues to be a much-debated issue, especially in Canada’s largest cities where supply is at an all-time deficit. In our cover story on page 24, we turn to a select group of industry professionals for their insights on what policies have hindered development most and what can be done to encourage, rather than waylay, new construction. Further to the rental housing shortage, we also look at the landlordtenant rapport and provide suggestions for small landlords seeking to mitigate conflicts before they escalate into costly legal showdowns. By simply taking the time to screen tenants methodically, a landlord will be that much further ahead. Always of interest is our annual “Who’s Who” ranking of Canada’s top apartment owners and managers. Special thanks to all those who submitted information and made this list possible. It’s a terrific resource, and we encourage everyone in the industry to fill out the online form each spring in order to ensure it remains thorough and accurate. From market trends and transactions, to the latest apartment industry news—including updates on the new Cannabis legislation and government policies intended to help promote affordable housing (see our CMHC article on page 10), Canadian Apartment is your information go-to. Be sure to follow us on Twitter and sign-up to receive our bi-weekly e-newsletter at www.REMInetwork.com to ensure you never miss a beat.

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Editor

Erin Ruddy

Publisher

Mitchell Saltzman

Senior Designer

Annette Carlucci

Production Manager

Rachel Selbie

Contributing Writers

aula Gasparro P Andy Schwartze

National Sales

Sean Foley Melissa Valentini

Digital Media Director Steven Chester Circulation

Yeshdev Singh For sales information call (416) 512-8186

Canadian Apartment Magazine is published six times a year by:

5255 Yonge St., Suite 1000, Toronto, Ontario M2N 6P4 E-mail: info@mediaedge.ca

President Kevin Brown Group Publisher Sean Foley Copyright 2018 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.

Sincerely,

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.

Erin Ruddy @CdnAptEditor

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

APARTMENT TURNOVER RATE

The turnover rate below measures share of apartment units that changed occupancy in the twelve-month span between Fall 2016 and Fall 2017:

VANCOUVER

13.9%

CALGARY

35.6%

Source: Fall 2017, CMHC

EDMONTON

34.6%

WINNIPEG

22.0%

TORONTO

14.5%

OTTAWA

23.5%

MONTREAL

17.3%

HALIFAX

23.9%

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Apartment CANADIAN

VOLUME 15 / NUMBER 2 / MAY 2018

FEATURES 15 Who’s Who 2018 Our annual ranking of Canada’s top apartment owners and managers

COLUMNS 8 Transactions Robust Demand sees 2018 off to a Strong Start By Erin Ruddy 10 CMHC Investing in Affordable Housing By Paula Gasparro 30 Newsworthy Industry Hot Topics 34 Legislation The Incoming Cannabis Act 36 Insurance Awash with Problems By Andy Schwartze

COVER STORY

DEPARTMENTS

24 Rebuilding the Rental Industry Apartment professionals ponder the uncertainties of rental housing and the critical steps needed to cultivate new supply By Erin Ruddy

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ON THE COVER:

Apartment CANADIAN

Editor’s Note

VOLUME 15 / NUMBER 2 / MAY 2018

The Vancouver skyline

HIGH RISE

RISKS & RETURNS

38 Smart Ideas

ATTRACTING INVESTORS IN A COMPETITIVE LANDSCAPE

plus

PA R T O F T H E

WHO’S WHO 2018 Q2 MARKET TRENDS PM#40063056

P A R T

O F

T H E

TENANT TURNOVER

18042_CAM_May_June_2018.indd 1

2018-05-02 11:03 AM

P A R T

O F

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Robust Demand Sees 2018 off to a Strong Start Another Record Year Could be in Store Canadian commercial real estate activity was off to a strong start in 2018 as demand continues to outstrip supply, according to a new report issued by Morguard Corporation.

“T

he appetite for commercial real estate investment remains at peak highs, with the flow of capital only being limited by the supply of assets available,” said Keith Reading, Director of Research at Morguard. “Investors

are seeing commercial real estate in Canada, with its strong track record of performance, as a safe bet for investment.” Unbalanced demand was noted across all asset classes in the first quarter, with the office sector again leading the way. Multi-

2018 Notable Transactions Address

City

#of Units

Sale Price (Millions)

Sale Price/Unit

Purchaser

Ottmann Portfolio

Vancouver

456

$247.9 M

$543,682

Starlight

Windsor Arms

Edmonton

$21.4 M

$229,570

Resport Equities

101 Cosburn Ave

Toronto

$20.5 M

$297,101

O’Shanter

10 Garfella Dr

Toronto

148

$20.5 M

$138,514

Starlight

1,3 Slessor Blvd

Grimsby

172

$21.1 M

$122,529

InterRent REIT

612 Dawes Rd

Toronto

$13.2 M

$220,000

Akelius

45 Forty Second St

Toronto

$11.0 M

$207,547

Starlight

8 | Canadian Apartment | Part of the REMI Network |

TRANSACTIONS >>

suite residential and industrial sales also remained brisk, with the shortfall in supply forcing investors to look to smaller markets and second-tier assets. “Demand is really remarkable across all the asset classes, even those with increasing headwinds,” said Reading. “The number of notable sales already closed and in the pipeline is signifying another record year for investment, provided the supply of assets for sale remains available.” Lingering uncertainty over North American Free Trade Agreement negotiations contributed to a slowdown in economic activity, with most global equity markets down to start the year. This uncertainty, paired with rising consumer debt, has the Bank of Canada expected to exercise caution on future interest rate hikes. “With global volatility in the equity markets, investors are searching for consistent yields,” said Reading. “When combined with the Bank of Canada’s prudent approach to interest rates, this creates favourable conditions for real estate investment in Canada.”

Starlight acquires four Vancouver apartment buildings In April, 2018, Starlight Investments expanded its Vancouver portfolio with the addition of four landmark apartment buildings comprised of 456 units in total. All four properties are well situated near public transit and local amenities, and will be managed on-site by MetCap Living Management: 1005 Jervis Street – a 19-storey concrete high rise, 135 units 1501 Haro Street – a 22-storey concrete high rise, 144 units 1755 Haro Street – a 19-storey concrete high rise, 138 units 150 East Keith Road – a 12-storey property, 39 units

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2017-10-04 12:39 PM | www.REMInetwork.com | May 2018 | 9

CMHC REPORT >>

Investing in Affordable Housing The Federal Government Launches Multi-Billion Dollar National Housing Co-Investment Fund by Paula Gasparro On May 2nd, the Honourable Jean-Yves Duclos, Minister of Families, Children and Social Development and Minister Responsible for Canada Mortgage and Housing Corporation, was in Toronto to announce the launch of the National Housing Co-Investment Fund (NHCF), a cornerstone initiative of the federal government’s National Housing Strategy.

hrough the NHCF, the Government of Canada will work with partners to create up to 60,000 new affordable units and repair up to 240,000 affordable and community units over the next ten years. Investments will also support the creation or repair of at least 4,000 shelter spaces for survivors of family violence, the creation of at least 7,000 new affordable units for seniors and 2,400 new affordable units for people with developmental disabilities. “Canada’s first-ever National Housing Strategy is built, in part, on the idea that when the federal government works collaboratively with its partners, we can give more Canadians a place to call home,” said Duclos. “The National 10 | Canadian Apartment | Part of the REMI Network |

Housing Co-Investment Fund is this idea in action. By working with our partners at all levels, more middle class Canadians— and those working hard to join it—will find safe, accessible, affordable homes, in vibrant and inclusive communities where families thrive, children learn and grow, and their parents have the stability and opportunities they need to succeed.” With this $13.2 billion Fund, the federal government will have an active, sustained role in housing and draw upon up to $4.52 billion in contributions and $8.65 billion in low interest loans to ensure existing rental housing is well maintained and modernized for better energy efficiency and accessibility standards. It will support the development of new high-performing

affordable housing across the country that is built to last and supports a human rights-based approach to housing. The NHCF will be delivered in tandem with the recently created $3.75 billion Rental Construction Financing initiative and the $208.3 million Affordable Housing Innovation Fund. Combined, these three initiatives represent an investment of over $17.15 billion. This includes investments under Investing in Canada Plan. The collaboration and commitment of partners, including municipalities, is more important than ever before to attain the NHS goal of creating a new generation of housing in Canada and help families in need. Investments under the NHCF will support projects that attract additional

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CMHC REPORT >> funding from other levels of government, not-for-profit and co-operative housing providers, and the private sector. The NHCF will improve accessibility for people with disabilities, increase affordability and contribute to energy efficiency by prioritizing projects that exceed mandatory requirements. Quick facts: • To ensure the next generation of affordable community housing in

Canada is built to last, at least 25% reduction in energy consumption and greenhouse gas emissions over national building and energy codes must be achieved for new construction projects and for repairs to existing projects. These minimum requirements represent the most ambitious environmental standards ever applied by governments to housing programs in Canada. They will be further enhanced and

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increased as the NHS is implemented in light of experience and improvements in technology and building science. • The NHCF sets accessibility requirements for new and renewed projects and targets the construction, repair and renewal of housing for people with disabilities. As such, 20% of units must meet accessibility standards. Repair/renewal projects must be barrier-free in common areas and new construction projects must be barrier free and have full universal design. • The government will aim for a target of 33% of investments to support projects that serve the unique needs of women and girls. The NHCF will support that objective by improving affordable housing options and increasing shelter space. • To maximize the impact of the NHCF, up to $200 million-worth of federal lands will be made available to social and affordable housing providers at a discounted or no cost to encourage the development of affordable homes. • To help more Canadians access housing that meets their needs and they can afford, the NHS sets out to achieve bold outcomes over the next 10 years, including removing more than 530,000 households from housing need, creating 100,000 new housing units as well as repairing and renewing more than 300,000 housing units.

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12 | Canadian Apartment | Part of the REMI Network |

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers unbiased housing research and advice to all levels of Canadian government, consumers and the housing industry. For more information, please visit cmhc.ca or follow us on Twitter, YouTube, LinkedIn and Facebook. To find out more about the National Housing Strategy, visit www. placetocallhome.ca.

To take advantage of CMHC’s Mortgage Loan Insurance, contact Paula Gasparro, Manager, Business Development, Multi-Unit Mortgage Insurance at 416-250-2731 or via e-mail at pgasparr@cmhc.ca.

ARE YOU CONTEMPLATING THE SALE OF YOUR APARTMENT PROPERTY? Consider the following: • Who will represent your best interest? • Who will give your property maximum exposure? • Who will deliver the highest value for your property? With over 30 years of experience, tens of thousands of units sold, and hundreds of clients represented, we have consistently delivered superior results. Through our local and national coverage, we create maximum exposure, ensuring maximum value for your property.

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33 & 77 Falby Court Ajax, ON 422 Suites $255,924 Per Suite SOLD FOR $108,000,000

65 – 99 Silverspring Boulevard Toronto, ON 430 Suites $202,326 Per Suite SOLD FOR $87,000,000*

16 Towering Heights Boulevard St Catharines, ON 135 Suites $222,589 Per Suite SOLD FOR $30,049,508*

49 St Clair Avenue West Toronto, ON 34 Suites $415,000 Per Suite (ON MULTI-RESIDENTIAL PORTION) SOLD FOR $24,250,000

21 Holborn Drive & 75 Old Chicopee Drive Kitchener, ON 154 Suites $139,610 Per Suite SOLD FOR $21,500,000

101 Cosburn Avenue Toronto, ON 73 Suites $280,822 Per Suite SOLD FOR $20,500,000 CBRE Limited, Real Estate Brokerage National Apartment Group – Toronto DAVID MONTRESSOR** Executive Vice President (416) 815-2332 david.montressor@cbre.com

365 Eglinton Avenue East Toronto, ON 48 Suites $302,083 Per Suite SOLD FOR $14,500,000

16 St Joseph Street Toronto, ON 37 Suites $333,243 Per Suite SOLD FOR $12,330,000

** SALES REPRESENTATIVE

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

CRB PROGRAM UPDATE >>

Raising the Industry Standard Continuous Improvement Underpins the Certified Rental Building’s Drive for Respectable Self-Regulation by Ted Whitehead, Director of Certification Now in its 10th year of operation, it is important to visit the original underpinning of FRPO’s Certified Rental Building Program (CRBP). It was founded on a business model that promotes continuous improvement and our industry’s ability to responsibly self-regulate. Equally the CRBP was designed to provide added-value to our key stakeholder groups – property managers, residents, and outside political stakeholders.

ver the past few years, the CRBP has introduced AODA/IASR employees training, new environmental operating standards and training (under the Living GREEN Together brand banner), new tenant Move With Confidence Packages, and now the new State of Condition standards/requirements that provide property managers with a degree of comfort with municipal property standard bylaws and that promote quality “well-maintained” apartment buildings. As the ancient Greek philosopher Plato once characterized: “Necessity is the Mother of all Inventions,” and as such, this saying has never been truer for FRPO’s Certified Rental Building program. A growing number of municipal licensing schemes continue to threaten industry members across the province. In order to meet and respond to the increasing regulatory demands of the marketplace, FRPO’s CRBP is undergoing a significant transformation. When the CRB program was initially conceived, it focused on the inputs, processes, and procedures that a property manager needed to uphold to ensure a “well-run” and “well-managed” building. Over the past several years, as the marketplace has evolved and as tenant advocate groups have gained greater presence with political stakeholders, some municipalities and their property standards staffs have censured CRBP, identifying that it does not fully cover off a review of many of the physical attributes of an apartment building. New “State of Condition” Assessment Our analysis has shown that the City of Toronto has the most rigorous and extensive set of municipal property standard bylaws in Canada. Therefore, it made sense for us to dissect the City’s property standards and related bylaws and to compare them to the CRBP standards and audit practices to determine if any gaps existed. After several months of examination and assessment, 28 CRBP standards of practice were amended, and four new standards were created. New standards establish requirements and address Outdoor Cleaning/Maintenance, Underground Garages, Roof Tops, and Doors and Security. A few of the amended standards address additional requirements for waste management, elevators, HVAC, and Pest Management. These changes do translate into several additional compliance requirements that a CRBP member must be able to demonstrate in order to gain/ensure their status as CRB-approved buildings. The good news is, 14 | Canadian Apartment | Part of the REMI Network |

our pilot testing has shown that most professional property management companies already have the vast majority of these policies and procedures in place. As such, it should not be overly onerous to demonstrate compliance with these CRBP new State of Condition compliance requirements. Benefits of State of Condition Reporting to Property Managers • A “State of Condition Assessment” allows for the pro-active identification of major defects that may be considered “Life and Health Safety” issues. This type of assessment can also facilitate the identification of other property standards deficiencies that may deter from the building and property being perceived as a good quality rental product. • The “State of Condition Assessment” process, while not an engineering review/report, does provide property managers with an Independent third-party review of the condition of many physical elements of your property and buildings. • The “State of Condition Assessment” process helps to reduce the risk of a property /building being subject to a full-blown audit, (and any associated fines or audit costs) by municipal property standards staff audits/inspections • A “State of Condition Assessment” Report provides property managers with a tool to demonstrate to residents that their building is being regularly reviewed and that the property is being well maintained. • Adding the State of Condition Assessment to the CRBP certification process allows CRB-members to market/advertise their properties as being well-run, well-managed, and now well-maintained. FRPO’s CRB program ensures that each successful “certified” apartment building has successfully demonstrated compliance with over 54 Standards of Practice covering Building Management practices, Quality of Service standards, State of Condition standards (physical building attributes), Environmental Operations, Human Resource practices, and Risk Management practices. A respected third-party auditor regularly audits all CRB-approved buildings. For more information about FRPO’s Certified Rental Building Program, please contact Ted Whitehead at twhitehead@frpo.org or call 416 385-1100 ext. #27.

PRESENTED BY:

WHO’S WHO 2018

IN THE CANADIAN APARTMENT INDUSTRY MANAGE ONLY

CERTIFIED NUMBER OF RENTAL UNITS BUILDING

OWN ONLY

CERTIFIED NUMBER OF RENTAL UNITS BUILDING

MANAGE & OWN

CERTIFIED NUMBER OF RENTAL UNITS BUILDING

MetCap Living Management Inc.

22,850

InterRent REIT

8,880

CAPREIT

44,177

The DMS Group

20,596

Healthcare of Ontario Pension Plan Inc. (HOOPP)

3,228

Boardwalk Rental Communities

33,211

Société de Gestion Cogir

15,310

Oxford Properties Group

1,936

Realstar Management

31,820

Briarlane Rental Property Management Inc.

12,400

Ivanhoe Cambridge

1,448

Homestead Land Holdings Limited

25,790

Greenwin Inc

11,418

Westcliff

1,350

Starlight Investments

25,585

10,770

Lanesborough Real Estate Investment Trust

1,234

Northview Apartment REIT

25,188

8,714

SABJOY INC

1,216

Timbercreek Asset Management

20,224

GWL Realty Advisors

8,252

QuadReal

847

Skyline Apartment REIT

16,654

Shelter Canadian Properties Limited

6,136

Canadian Urban Limited

712

Killam Apartment REIT

14,759

Fiera Properties

658

Minto Properties Inc.

11,764

Gateway Property Management Corporation Sterling Karamar Property Management

Devon Properties Ltd.

5,248

| www.REMInetwork.com | May 2018 | 15

CANADIAN APARTMENT WHO’S WHO 2018

CERTIFIED RENTAL BUILDING

RANK

UNITS MANAGE

OWN

BUILDINGS BOTH

TOTAL

MANAGE

OWN

BOTH

TOTAL

CAPREIT

44,177

538

Boardwalk Rental Communities

33,211

230

Realstar Management

31,820

187

Homestead Land Holdings Limited

25,790 25,790

214

Starlight Investments

25,585 25,585

363

Northview Apartment REIT

25,188

433

MetCap Living Management Inc.

22,850

The DMS Group

20,596

Timbercreek Asset Management

Skyline Apartment REIT

Société de Gestion Cogir

15,310

Greenwin Inc

11,418

Killam Apartment REIT

Minto Properties Inc.

Briarlane Rental Property Management Inc.

QuadReal

Mainstreet Equity Corp.

290

25,188

20,224 20,514

143

16,654 16,654

1,069

15,310

3,756

15,174

143

14,759

11,764

12,833

12,400

188

12,400 847

11,258

12,105

11,213

302

303

282

282 72

163

189

299

320 188

272

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16 | Canadian Apartment | Part of the REMI Network |

CANADIAN APARTMENT WHO’S WHO 2018

CERTIFIED RENTAL BUILDING

RANK

UNITS MANAGE

OWN

BUILDINGS BOTH

TOTAL

MANAGE

227

10,997

161

OWN

BOTH

TOTAL

168

Gateway Property Management Corporation

Medallion Corporation

10,291

Vertica Resident Services

9,452

Drewlo Holdings Inc.

9,045

InterRent REIT

Morguard

Sterling Karamar Property Management

Park Property Management Inc.

Oxford Properties Group

GWL Realty Advisors

Globe Property Management

Shelter Canadian Properties Limited

Centurion Asset Management

10,770

8,880 841

8,880 7,910

8,714

1,936

8,751

8,714

106

8,418

6,403

8,339

8,252

26 106

7,113

222

6,358

5,751

6,329

Hollyburn Properties Ltd.

5,719

Osgoode Properties

5,671

Berkley Property Management Inc.

4,978

278

5,256

Devon Properties Ltd.

5,248

125

Royal Property Management

5,000

M&R Holdings

Concert Properties Ltd.

Prospero International Realty Inc.

Kelson Group

Rancho Management Services

Healthcare of Ontario Pension Plan Inc. (HOOPP)

Old Oak Properties Inc.

CLV Group

Ferguslea Properties

2,465

Bentall Kennedy (Canada) LP

2,253

O’Shanter Development Company Ltd.

Apollo Property Management Ltd.

Williams and McDaniel Property Management

Kings College Management Limited

2,100

Brown Group of Companies Inc., The

603

51 52

6,136 578

167

4,810

3,908

4,075

3,891

3,604

450

3,684

3,678

3,228 2,131

3,108

2,600

1,800

2,212

248 12

17 -

2,250 2,212

2,156

248

2,156 20

1,436

2,039

Greenrock Property Management Ltd.

2,000

WJ Properties

1,907

23 30

2,100

18 | Canadian Apartment | Part of the REMI Network |

3,684

3,228 977

40 20

2,000

1,907

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CANADIAN APARTMENT WHOâ&#x20AC;&#x2122;S WHO 2018

CERTIFIED RENTAL BUILDING

RANK

UNITS MANAGE

OWN

BUILDINGS BOTH

1,820

TOTAL

MANAGE

1,820

OWN

BOTH

TOTAL

Colliers International

Westcorp Property Management

459

1,247

1,706

Lawrence Construction/Grant Management

859

805

1,664

ONNI Group

1,657

The Sorbara Group

1,625

AWM-Alliance Real Estate Group

1,573

Melchior Management

462

1,573

1,093

1,555

Steeves and Rozema

1,528

Southwest Properties Ltd.

1,500

Ivanhoe Cambridge

Lameer Management

Westcliff

1,350

Lanesborough Real Estate Investment Trust

1,234

SABJOY INC

1,216

CJM Property Management Ltd.

1,207

Whitehill Residential

1,200

Preston Group

1,182

Davpart Inc.

1,180

State Building Group

1,111

Twin City Management Ltd.

1,016

Tandem Group

1,008

Niot Investments Holdings Ltd.

Summit Properties

Manulife Real Estate

Kroma Management Ltd.

BlueStone Properties Inc.

BayShore Property Management

Canadian Urban Limited

Pacific Quorum Properties Inc.

Fiera Properties

Gillin Engineering & Construction Ltd.

Shindico Realty

I.G. Investment Management, Ltd.

Equitable Real Estate Investment Corporation Ltd.

589

CitiGroup Properties Limited

568

Bedford Properties & Estates Ltd.

20 | Canadian Apartment | Part of the REMI Network |

1,448 1,001

457

750

1,200

159

1,528

1,500

1,448 442

1,443

8 41

8 11

14 16

1,000

977

778

937

913

913 848

748 712

2 15

11 20

712

697

697 658 630

630

519

613

554

15 12

605

11 20

658

605

848 748

12 3

CANADIAN APARTMENT WHOâ&#x20AC;&#x2122;S WHO 2018

CERTIFIED RENTAL BUILDING

RANK

UNITS MANAGE

OWN

BUILDINGS BOTH

TOTAL

MANAGE

552

378

498

443

OWN

BOTH

TOTAL

Northland Properties Inc.

Vancor Group Inc.

120

Gulf Pacific Property Management Ltd.

443

Arnon Corp.

Cominar REIT

432

Martello Properties Services Inc.

400

Goodwood Property Investment Ltd.

Lionheart Property Management Inc.

374

329

Atlantis Realty Services, Inc.

370

Canlight Management Inc

278

314

Summa Property Management

311

441

400

100 SMAR Holdings Ltd.

260

101

Richmond Community Management Services Corp.

102

Canahahns Company Limited

103

Sluis Properties

259 15

104 Lloyd Zerker Realty Ltd.

441

5 3

400

260

209

224

185 172

6 3

259

6 2

185

172

OTTAWA TORONTO

AJAX

EDMONTON

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CANADIAN APARTMENT WHOâ&#x20AC;&#x2122;S WHO 2018

CERTIFIED RENTAL BUILDING

RANK

UNITS MANAGE

105

Downing Street Property Management Inc.

OWN

BUILDINGS BOTH

168

TOTAL

MANAGE

168

OWN

BOTH

TOTAL

106 17A Properties

167

107

140

Atlas Properties

108 Colonnade BridgePort

139

109 ICC Property Management Ltd.

137

110

The Enfield Group Inc.

130

133

111

Wilson Blanchard Management Inc.

118

112

SDM Realty Advisors Ltd.

113

Gitalis Group Inc.

114

Regency Group

115

Melcor Developments

116

Taft Management Inc.

117

Dayhu Investments Ltd.

118

CREIT

119

Percel Inc.

120

Choice Properties Real Estate Investment Trust

60 50 48

8 1

RANKED APARTMENT MANAGEMENT COMPANY

MetCap Living knows the importance of your property investment. With over 30 years in professional property management and experience in owning and managing all aspects of multi-unit housing, we have the expertise to boost your NOI. From Marketing, Leasing, Utilities and Site Management, Collections and Accounts Receivable, we tailor our services to your needs. We manage over $2 Billion in assets owned by private families and institutional investors. Our focus is on revenue growth and vacancy reduction, while maintainting strict control over expenses. We also To ensure the health of your bottom line, contact: Kazi Shahnewaz, Director, Business Development Cell: 647.887.5676 k.m.shahnewaz@metcap.com www.metcap.com | www.REMInetwork.com | May 2018 | 23

COVER STORY >>

REBUILDING THE R Apartment Professionals Ponder the Uncertainties of Rental Housing and the Critical Steps Needed to Cultivate New Supply

by Erin Ruddy

24 | Canadian Apartment | Part of the REMI Network |

COVER STORY >>

RENTAL INDUSTRY

Despite the silent majority of satisfied tenants living in quality accommodations across Canada, often it’s the ugly side of the industry that fills our news feeds. Unforeseen rent hikes, squalid conditions, lax security, wrongful evictions, gentrification, and the tyranny of money-hungry management. The real story, of course, is the lack of available rental stock and the demand that just keeps growing. With vacancy rates at all-time lows and Urbanation reporting a shortfall of 6,000 rental units in the Ontario annually, it’s no wonder prospective renters are disgruntled. Arguably, all sides are vying for same outcomes: more supply to fill the demand; a healthy, thriving rental industry run by

capable professionals; and a steady, satisfied tenant base. So what’s causing the slowdown, and what can be done to stimulate an industry caught up in red-tape and tarnished with a bad reputation? “In most provinces, the lack of rental housing is hindering the ability of tenants to have a broad range of choice, services, and well-maintained rental units at a fair cost,” says Joe Hoffer, Partner at Cohen Highley LLP

Lawyers. “This means that market rents are driven higher and deficiencies in service are overlooked by tenants who are afraid to move out, especially in Ontario and other provinces where rent controls restrict rent increases.” Hoffer suggests that municipal fees and development charges inadvertently deter new construction, contributing to this supply shortage. “In Ontario, the recent removal of the new

construction exemption from rent controls has increased the cost of lease-up—meaning, apartment building owners have to go straight to the top of the market with rental pricing in order to fill the building and make it financially viable. Because of the cost to build, risk and rent uncertainty, there is simply not much incentive to build new rental.” David Hutniak, CEO at LandlordBC, sees similar

| www.REMInetwork.com | March 2018 | 25

COVER STORY >>

stagnation on the west coast where the risk/reward imbalance in the multi-res sector continues to favour condos, particularly in Vancouver. “This imbalance, combined with zoning and excessively long timelines for purpose-built rental approvals in many jurisdictions further exacerbates the problem,” he notes. “We need more rental in medium and lower density neighbourhoods, but the economics generally don’t work, and then you add in zoning issues and NIMBYs, and those projects are dead in the water.” Politicians reacting to “hot-button” issues also complicate the process. When new regulations are hastily implemented to solve one problem and/or appease a wide demographic, they often

create other unforeseen and unfavourable outcomes—and no one has been more rankled by the negative effects of new legislation than those in the business of rental housing. Last spring in Ontario, the Wynne government announced its new Fair Housing Plan—a set of 16 measures intended to bolster affordable housing development and protect tenants from exorbitant rent hikes. But reportedly those measures have served less to bolster and more to waylay new development, with FRPO reporting upwards of 1,000 cancelled or postponed rental units since Bill 124 was introduced. “For the vast majority of landlords in Ontario, the loss of the new construction exemption

from rent controls will badly affect development,” asserts Hoffer. “It means the loss of the ability to pass on ‘extraordinary operating cost increases’ for vital services, such as electricity, heat, water (the pricing of which is beyond the landlord’s control) as those costs continue to escalate. In addition, the carbon taxes that are being introduced are specifically excluded from recovery as a cost. The result is that cuts must occur in other budget lines if the business is to operate and generate a modest return. These limitations are another reason why investors are wary of investing in new purpose-built rentals.” Randy Daiter, Vice President, Residential Properties at M&R Property Management adds that the Promoting Affordable

Housing Act of 2016, aimed at increasing access to mandatory affordable housing through inclusionary zoning, will likely undermine the feasibility of building new rental housing stock. “Then there’s Bill 139, which significantly overhauls the way local planning decisions are reviewed in Ontario,” he says. “With the Local Planning Appeal Tribunal (LPAT) to replace the Ontario Municipal Board (OMB), it will ultimately put greater decision-making and authority in the hands of elected municipal councils, creating more unknown consequences.” Meanwhile, Hutniak believes anything that adds costs to an already prohibitive process is a deterrent: “We need more supports and incentives to make the

Conflict prevention strategies for small landlords: • Ensure your lease includes any additional clauses pertaining to your unique rental agreement • Know the law (i.e. your rights and your tenants’ rights) • Thoroughly screen prospective tenants • Communicate often and respond rapidly • Follow-through • Be knowledgeable, professional and deliver top-quality housing backed by a strong service model

26 | Canadian Apartment | Part of the REMI Network |

COVER STORY >>

numbers work. For instance, it would be great if the federal government waived GST. If you’re a landlord who’s intending to build a rental property to own and manage forever, you are essentially stuck paying GST on an “artificial transaction” that will not occur. Landlords in this situation will need to recoup that cost in higher rent. If all levels of government are truly serious about affordable rental housing, then they need to find ways to help, not hinder, new apartment construction.” The landlord-tenant rapport Aside from the supply shortage, there’s also the reputation of the landlords themselves—people often characterized as unfeeling tyrants who are poised and ready to evict vulnerable renters without just cause. While friction is natural in a “vertical community”, most professional property managers favour conflict resolution ahead of extreme action. Daiter, who has been in the business of rental housing long enough to have witnessed every type of

Ontario invests $60 million in Toronto’s rental housing It was a step in the right direction when Peter Milczyn, Ontario Minister of Housing, announced the government’s plan to invest $60 million in Toronto rental housing in late April. This funding is part of a five-year program to rebate up to $125 million in development charges to developers seeking to build new affordable rental housing in high-density neighbourhoods close to transit and other services. In addition to the funding, Milczyn also addressed Ontario’s commitment to dedicating surplus provincial land for future affordable rental housing, naming the successful developers who were selected to move forward on two projects: • Dream, Tricon and Kilmer Group for its proposed mixed-income rental community in Toronto’s West Don Lands. The rental homes will accommodate nearly 1,450 individuals and families, including retail space and a community hub. • Canadian Real Estate Investment Trust (CREIT) and Greenwin Inc. for its proposed family-friendly mixedincome community between Grenville and Grosvenor streets. The proposed project will be comprised of 700 rental units, retail space and a daycare. “To keep Toronto affordable for people of all ages and income levels, we need all governments working together to take real action on affordable housing,” said Mayor John Tory. “By answering our call to make surplus provincial lands available for the development of new affordable housing, the Province is demonstrating its commitment to cooperation and helping the City of Toronto address our residents’ housing needs.”

COVER STORY >>

Care and due-diligence during the screening process is the single best thing landlords can do to reduce conflict squabble imaginable, maintains that the landlord-tenant relationship will be more harmonious if rules are clearly defined and communication channels are open. “Noise complaints are a common operational issue in high-rise residential buildings,” he says. “They usually stem from one or two tenants living above or below each other. Mitigation measures can be simple, like installing area rugs with a rubber under-padding, or advising tenants to wear slippers in lieu of loud shoes when walking on hardwood floors.” Odours, he says, can also be cause for bickering. But by all accounts, the number

one trigger for conflict leading to litigation, is missed rent payment. “For most professional landlords, real conflict comes when a tenant doesn’t pay rent,” says Hoffer. “Then that tenant, in an effort to defend against non-payment proceedings, alleges the landlord failed to maintain the property. Tenants are less likely to raise issues, such as lack of maintenance, if the landlord uses a professional lease document compliant with applicable provincial legislation.” Of course, with the new standard lease now mandatory in Ontario, all landlords will be bound to the same template. However

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additional clauses pertaining to each unique rental agreement will be at the discretion of the individual landlord. Hoffer maintains care and due-diligence during the screening process is the single best thing landlords can do to reduce this type of conflict with tenants. “Many small landlords, in particular, are so anxious to fill a vacant unit that they often overlook red flags, such as the unexplained need for the tenant to have a quick move-in date, a bad credit history, or questionable references. By spotting inconsistencies, or adhering to a “bad vibe” from an interview, a lot of future suffering can be avoided.” The knowledge gap: mitigating risk through education Second to poor screening tactics, landlords who aren’t familiar with the law are only setting themselves up for conflict. Hoffer warns: “Tenants who know how to manipulate the system will have the upper hand. It puts them in the position where they can challenge any missteps taken by the landlord, and unless the landlord knows the law, the tenant will succeed, and animosity will flow unabated between the parties for the balance of the tenancy.” In British Columbia where small landlords make up a disproportionate share of the industry, Hutniak also recommends rental housing providers educate themselves to the best of their ability. In fact, in January 2017, LandordBC launched the Landlord Registry to address the knowledge gap and give landlords and tenants a tool to mitigate risk. “In B.C. we have a bureaucracy that is struggling to provide landlords and renters with access to timely justice,” he says. “The new government has provided meaningful funding, but it will take time. Unfortunately, with the near-zero vacancy rate, a cohort of our industry took advantage of the situation by acting irresponsibly. LandlordBC supported the government with some legislative changes and, now, through the very positive relationship we have with the provincial government and other stakeholders, we are working hard to prevent that behaviour from happening again.”

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NEWSWORTHY >>

Industry Hot Topics Saskatchewan resumes PST on energy-efficient appliances

Minto announces new Oakville rental property

into Capital Management Inc. announced plans for a new purpose-built rental building located at 1235 Marlborough in Oakville. The 14-storey building will be comprised of 144 units and state-of-the-art amenities, and will be ideally situated in the College Park neighbourhood at Trafalgar and Upper Middle Road. “In developing 1235 Marlborough, we’re proud to deliver a premium rental product that is under-supplied in the GTA market,” said Rob Pike, President of Minto Capital, the investment management division of Minto Properties and wholly owned subsidiary of The Minto Group. “This rental building will help fill a niche for rental housing in the Sheridan College area and provides a solid investment opportunity for our investors.” The pet-friendly building will feature mostly two- and threebedroom units. Ideally located close to public transit, Oakville Place mall, schools and hospitals, the building will appeal to young students, young professionals and families alike. Units will feature modern kitchens and bathrooms with quartz countertops, six energy-efficient appliances including in-suite washer and dryer, luxury vinyl tile throughout the suite and blinds installed in the living room and bedroom area. The building will also feature top class amenities, including a fitness room with yoga space, indoor common area lobby equipped with USB ports throughout, an outdoor common area, quiet study rooms, bike racks, underground parking and an onsite resident services office. The company broke ground on the property on June 4, 2017, and celebrated its topping off in January. Construction of the project is currently on target with pre-leasing underway and move-ins expected to begin in August.

30 | Canadian Apartment | Part of the REMI Network |

askatchewan landlords and developers face a six per cent increase in the price of energy-efficient appliances since the provincial government resumed collecting sales tax on previously exempt ENERGY STAR certified products earlier this month. The move was announced in the recently released Saskatchewan budget, which argued that an incentive first introduced in 2003 is no longer needed to influence consumer behaviour. “ENERGY STAR certified appliances now dominate the household appliance market and constitute the majority of consumer sales in Canada, with the benefit of permanent energy cost savings providing a strong incentive to choose these appliances,” the budget document states. However, less efficient options are still widely available. “The retraction of the PST exemption will have multi-unit residential owners and developers weighing the cost/benefit when purchasing appliances,” says Jamie McDougald, president of the Saskatchewan Landlord Association and chief operating officer with Deveraux Developments, a home and condo builder and owner/manager of purpose-built rental housing. “With large developments and bulk purchases, the upfront cost savings experienced by buying appliances that aren’t ENERGY STAR rated might be too enticing for some to pass up.” Purchasers of ENERGY STAR certified refrigerators, freezers, dishwashers, clothes washers, residential furnaces, boilers and ground- and air-source heat pumps had enjoyed the PST exemption. “Some 15 years of PST exemption has had a meaningful positive effect for property owners, industry, energy savings and carbon targets,” submits Ted Kantrowitz, chief executive officer of the Canadian GeoExchange Coalition. “Both affordability and capital efficiency matter.”

NEWSWORTHY >>

TREB releases market data on GTA condo rentals

Greenwin Names Patrick Eratostene COO

ormerly Senior Vice President, Residential Operations, Patrick Eratostene has been appointed Greenwin’s new Chief Operating Officer, a new position within the company. Since 2012, Eratostene has been running Greenwin’s blended housing portfolio, which includes multi-residential, non-profit, affordable and Toronto Community Housing. “Patrick is a seasoned and trusted leader within our organization,” said Kris Boyce, CEO. “Having been with us since 1988, Patrick is uniquely qualified to drive our organization into the next generation. No one understands residential operations and the transformations occurring in the real estate industry better than him. It is critical that our COO has a strong operations foundation as we expedite Greenwin’s growth. I know that Patrick will continue to ensure operational excellence across the company.” In Erastostene’s newly created role, he will work closely with the Ownership Group on the company’s overall strategy and execution while maintaining oversight of Greenwin’s residential operations and strategy. He will continue to report to Kris Boyce, CEO. “I am looking forward to growing Greenwin, one of Canada’s most trusted and beloved real estate brands,” Erastostene said. “We are facing a tremendous opportunity to grow our presence in the industry and I am excited to work with our team to make our world-class business even more competitive and agile.”

oronto Real Estate Board President Tim Syrianos announced that average rents for one-bedroom and two-bedroom condominium apartment rental units were up well above the rate of inflation on a year-over-year basis in the first quarter of 2018. The average rent for one-bedroom condominium apartments in the TREB market area was up 11.4 per cent on an annual basis to $1,995. The average two-bedroom condominium apartment rent was up by 9.1 per cent over the same time period to $2,653. “The GTA continues to be one of the most desirable locations to live in the world and will remain so over the long term,” said Syrianos. “As people have moved to the region to take advantage of quality employment opportunities, rental demand has remained strong. The result has been heightened competition between renters, in an ultra-low vacancy environment, and double-digit rent growth in some market segments.”

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| www.REMInetwork.com | May 2018 | 31

NEWSWORTHY >>

U.S. birth data hints looming multifamily exodus

.S. housing analysts are drawing links between the rising age of first-time mothers and the country’s vibrant multifamily apartment market in recent years. On the flipside, they suggest recently released data from the U.S. National Vital Statistics System (NVSS) forewarns a looming multifamily exodus as the millennial age cohort continues to slide into its third decade. NVSS recorded an unprecedented outcome in 2016 when the birth rate for mothers aged 30 to 34 (102.7 per 1,000) surpassed the rate for those aged 25 to 29 (102.1 per 1,000) for the first time since such recordkeeping began in 1940. The average age for bearing a first child was pegged at 26.6 years — up from 23.8 in 1986 and 21.4 in 1970 — while 32 per cent of all first-time mothers, or about 484,000 women, were 30 or older. “Women are beginning to catch up from not having kids in their 20s,” concludes a new briefing from CBRE Multifamily Research. “While the overall rising age of first birth has a positive effect on keeping young households

in multifamily rentals longer, the increased birth rate of women in their early 30s is likely providing incentive to move into homeownership.” Birth rates for women aged 20 to 24 fell 4 per cent from 2015 levels and there was 2 per cent drop among women aged 25 to 29. However, year-over-year birth rates

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32 | Canadian Apartment | Part of the REMI Network | Untitled-4 1

climbed for women in their 30s — up 1 per cent for mothers aged 30 to 34 and 2 per cent for mothers aged 35 to 39. This occurs in the context of a consistently declining national birth rate, which stood at 13 per 1,000 women aged 15 to 44 in 2010 but fell to 12.2 in 2016. CBRE multifamily researchers point to growing homeownership among American households in their 30s, exhibited in statistics for the fourth quarter of 2017. They see this as a continuing trend, even as the new U.S. Tax Cuts and Jobs Act erodes some deductions that previously favoured homeowners. “There’s no tax difference between renters and homeowners for the majority of households,” a CBRE backgrounder on the new law explained earlier this year. “The question is: how important are homeownership tax benefits in the home purchase decision-making process? The principal reason for first-time homebuyer to buy a home, according to the National Association of Realtors’ 2017 Profile of Home Buyers and Sellers, is desire to own a home of their own.” However, analysts note that the multifamily sector ended the year strongly despite the steady influx of new supply, tallying about 1.37 million new units nationally since 2011. JLL reported a national vacancy rate at 5.2 per cent and 2.3 per cent effective rent growth for the year. New tax rules also bode well for the investors who were already admirers of the asset class. “Several provisions of the tax reform law are favourable for apartment owners, both private and public (REITs). These changes will help to maintain a very healthy interest in multifamily investment and help maintain high acquisition volumes in 2018,” CBRE projects.

2017-02-07 2:22 PM

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The Incoming Cannabis Act As Legalization Looms, Apartment Owners Demand the Right to Restrict Usage by Erin Ruddy On July 1st, the new Cannabis Act will officially take effect after months of speculation and lobbying by rental industry associations to secure measures that would restrict what new federal legislation is granting: the right for all Canadians to possess and smoke recreational cannabis, and grow up to four pot plants for personal consumption in private residences.

ith odour complaints, altered behaviour, mould, and increased electricity usage topping landlords’ list of worries, some provinces have moved to ban home cultivation, while others have granted apartment owners the right to enforce their own “reasonable” limitations. On April 26, the B.C. government introduced new legislation that LandlordBC is calling “a significant win for the industry.” In an amendment to the Residential Tenancy Act, Bill 30 now grants landlords the right to retroactively prohibit both smoking and growing cannabis in residential units. This means landlords can update current leases to ensure their “smokefree” properties remain that way. In other words, all tenancies that already include a clause prohibiting or limiting the use of tobacco can be extended to include cannabis. Tenancies with agreements that do not address the smoking of tobacco will be considered cannabis-friendly. In Ontario, the fight continues. Currently the province’s strict tenancy laws make it illegal to modify a rental lease before that lease comes due. As such, landlords will be unable to regulate cannabis consumption in their apartment buildings with existing tenants—only with those who apply for tenancy after legalization takes effect. Similarly in Alberta (where adults will be able to grow up to four plants per household), renters and condo-dwellers may be restricted from growing cannabis in their homes based on rules established in rental agreements moving forward. 34 | Canadian Apartment | Part of the REMI Network |

Cultivation prohibition Landlords in Quebec were quick to take action against the upcoming cannabis legalization, where strict rules are already in place by the Province, prohibiting all residents (homeowners and renters alike) from the growing of cannabis for personal use. Under the new plan, Quebec residents may only legally purchase the substance from one of 15 government-run shops, but will not be able to legally cultivate marijuana plants at home. On April 19th, Nova Scotia passed its recreational cannabis legislation—the Cannabis Control Act—which grants landlords the authority to amend existing leases to put reasonable rules in place about recreational cannabis smoking and cultivation. Landlords must provide tenants four months’ written notice of a change before April 30, 2019. When the landlord provides notice, the tenant has one month to consider the change and either agree or terminate the lease. Tenants are required to give the landlord three months’ written notice to terminate using a new form from Service Nova Scotia. Landlords’ predominant concerns around cannabis cultivation include: • Safety hazards due to electrical overloading and excess humidity • Use of hazardous chemicals, such as pesticides • Interference with other tenants through strong odours • Potential liability for the landlord and risk to the tenants and mortgage holder • Potential cancellation of building insurance or the calling of a mortgage with financially disastrous results for the building owner

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Awash with Problems Water Damage and Your Insurance Policy by Andy Schwartze

ater, water and more water. There is no lack of ways in which water affects our lives. From the water we drink to the water we flush, to the rising water levels that pose such a risk to the lives and properties around the world. Here in Canada, the Great Lakes water levels are cause for concern, with unprecedented flooding occurring across several regions where the land levels are low. From Grimsby to Grand Valley, water levels this spring went way up causing serious damage to homes and buildings in those areas. Currently, even Pelee Island is being threatened with serious water problems. Of course Ontario isn’t the only province under threat; Quebec and Alberta have also had their share of costly floods to contend with, while New Brunswick is in the midst of a major crisis.

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For insurers, rising water levels is a nightmare in the making. As with any “event” that can affect thousands of policy-holders at the same time, every insurer (not dissimilar to the banks) fears a run on its balance sheet. At the same time, public pressure to do something for the beleaguered homeowner, whose basement has become an unwanted swimming pool, has been unrelenting. What to do about it—that was the big question. The addition of “Flood” insurance to home insurance contracts simply could not to happen. Floods affect thousands of household simultaneously, and if not limited in coverage scope somehow, would result in devastating losses to insurers. So, in came “Water Infiltration”. The excluding of “Flood” insurance coverage on home insurance policies has now been somewhat minimized by the availability of

this new Water Infiltration coverage. This endorsement gives the policy-holder a lower amount of protection in the event that water seeps in somehow, clearly as a result of lots of rain or waterbodies spilling over. This coverage, however, has a fairly low dollar cap that has been determined by a postal code algorithm that controls the level of coverage. The coverage level typically runs between $50,000 and $100,000 based on where the property is situated, and it comes with a $5,000 deductible. It was the industry’s response to a crying demand for flood insurance and policy-holders can accept or reject the add-on, which usually costs somewhere between $125 to $200 on a typical policy. Commercial buildings have always been able to include flood coverage in their program. These properties are recognized

INSURANCE >>

Flood prevention tips for mitigation property damage: • Begin with an internal flooding risk assessment. This is a probabilistic risk assessment of flooding and other recognized flood sources as a result of pipe or tank failure. • Routinely check sewer openings and drains near the building for build-up of debris. • Monitor local weather forecasts and alerts, and be aware of inclement weather warnings. If excessive rainfall is expected, be sure to clear debris from storm sewer grates at the exterior perimeter of the building. Depending on the season, these grates can be clogged with a combination of snow, ice, leaves, discarded garbage, etc. • Pre-identify domestic water line isolation valves for rapid access in the event of a break. Using up-to-date drawings and floor plans, highlight these areas and train on-site security and operational personnel on shut-off procedures. • Store buckets, safety barriers and tape, squeegees and absorbent materials in convenient locations for easy access. A small “waterbed” pump and garden hose are effective and inexpensive investments for use during emergencies. • Mechanical and electrical equipment should be installed on raised platforms or slabs.

Midnorthern_wrongsize.indd 1

as having much better structural underpinnings, with generally unfinished areas below grade. This represents a much lower loss exposure, albeit the deductible is generally at least five times higher. What commercial buildings have a more serious difficulty with is the bursting of underground piping, especially if it is outside of the bearing walls of the structure. Typical water damage insurance will pay for the resultant damages caused by the water, but not the accessing and fixing of the piece of pipe that burst. If the break has taken place halfway under ground between the building and the city connection, accessing it is very costly—but not insured. Fortunately, we now have ways to provide some coverage for such claims. As time moves along, the growing importance of water-related losses has become the new imperative and, while it moves ever so slowly, the industry is taking careful steps to catch up to demand. Maintaining solid balance sheets is priority number one; regulators require it. Over 20 years ago, there were reports already being published in which scientists were predicting something rather unusual. The message was that the future would bring more wetness to the wet regions of the planet and that the dryer areas would become even drier. From what we are seeing so far in the 21st century, these predictions seem to be holding out.

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Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He can be reached at andy@takecover.ca. | www.REMInetwork.com | May 2018 | 37

Smart Ideas

THE COST OF TENANT TURNOVER

enant turnover can kill profitability, costing landlords thousands of dollars per month. Finding ways to avoid turnover and prevent vacancy in your rental property is crucial to success, and understanding the trends that impact turnover is a key piece of the puzzle. Research shows that both low median age and high job growth correlate to lower retention rates in most major cities, while rent growth seems to have no effect on turnover. Certain amenities can persuade tenants to stay, while others have little to no bearing on the decision. Cleaning the suite, repairing damage, creating ads, showing the property, processing and screening applicants take time and money, costing landlords approximately $1,750 per month per vacant unit.

How to avoid frequent turnover: According to TransUnion Rental Screening Solutions, Inc., landlords can cut back on frequent turnover dramatically by doing the following:

2/ Offering amenities tenants want, like high-speed internet, soundproof walls and in-suite washer/dryer

Responding to tenant requests in a timely fashion

Keeping rents at a fair market price

5/ Maintaining property and common areas

Carefully screening tenants before signing lease agreements

For more tips and research on successful ways to reduce tenant turnover, visit: https://www.mysmartmove.com

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