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editor’snote Market transformation occurs when consumers find reasons to change their customary habits. Perhaps they’re responding to new options they haven’t had before. Perhaps they’ve re-evaluted the worth of traditional goods, services and practices. Perhaps economic circumstances have made some purchases costprohibitive or newly attainable. Or perhaps regulatory decrees have restricted the availability of some products and pushed demand in other directions. All these factors are now in play in the design and density of the built environment. Our Focus on planning and development looks at some of the trends. The public and private sectors are very much partners in the process even though the partnership can sometimes look like a power struggle. Developers typically take on daunting financial risks that few of their critics [or admirers] would ever contemplate. Ultimately they need a return on investment that makes economic sense. Meanwhile, civic planners must weigh the interests of the broader community and consider how any proposed project will use resources, generate tax revenue and/or affect municipal operating costs, encroach on other residents’ enjoyment of the city, and fit with the overall plan of how and where the municipality wants to channel growth and economic development. That doesn’t mean developers’ and planners’ agendas can’t be compatible. As the feature on the proposed new LEED (Leadership in Energy and Environmental Design) rating system for planning and development reports, a growing number of developers are finding good business reasons to modify the onetime conventional approach to building subdivisions. In part, that’s because local and provincial governments have been enacting policies to rein in sprawl and, in part, it’s because homebuyers have been receptive to a new kind of product. “For residential, we are kind of the leading edge, but in 20 years we might be the standard,” observes Hélène Gignac, Chief Operating Officer with Faubourg Boisbriand LP, which is building a LEED pilot project on the site of a former General Motors assembly plant in the city of Boisbriand, Quebec. Environmentally diligent approaches to planning and development are particularly important in coastal and waterfront areas, which are accommodating rapid growth and/or are central to urban revitalization plans in cities throughout North America. We look at some of the concerns that planners, environmental agencies and insurers are raising about rising water levels, and more frequent and intense storm surges. Finally, an excerpt from the Urban Land Institute’s overview of 2009 global demographics reminds us that Canada is one of a handful of nations with so-called mature economies that is still projected to expand – largely due to immigration. We need to plan accordingly for future growth.
Barbara Carss barbc@mediaedge.ca
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VOL. 24 NO. 4 s August 2009
August 2009
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Sprawl Subdued
LEED FOR NEIGHBOURHOOD DEVELOPMENT DEMOGRAPHICS & REAL ESTATE WATERFRONT HAZARDS PARKING RATE SURVEY AIR PURIFICATION TECHNOLOGY 09035_CPM_August_09.indd 1
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contents 6 August 2009 | Canadian Property Management
Focus: Planning & Development 10 LEED for Neighbourhood Development: Canada and US Green Building Councils plan to take LEED to the field of planning and development, as Canadian developers participate in the pilot project. 17 Demographics and Growth: Population shifts, immigration patterns and age group breakdown underlie real estate demand and investment potential. 20 Safeguarding Waterfronts: Coastal areas continue to attract development as hazardous conditions intensify and property losses increase.
Articles: 24 Asset Management Software: The Saskatoon Health Region gains a strategic grasp of its capital needs and priorities. 26 Elevator Retrofit: Improving dispatch, traffic flow and safety. 28 IAQ Trends: Gas-phase air purification brings fresh air to indoor pool areas.
Departments 4 Editor’s note 30 Advertising index
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industrybriefs BOMA BESt INCREASES SCOPE The Building Owners and Managers Association (BOMA) of Canada has reached a milestone 1,100th certification through the BOMA BESt performance assessment and benchmarking program. The recent announcement of three new BOMA BESt certification categories, for light industrial, enclosed shopping centres and open-air retail properties, also allows for even wider participation in the fouryear-old initiative to promote sustainability and energy efficiency in Canada’s existing building stock. “Given that we have at present 220 additional applications in process, with new ones being added to the queue all the time, we expect many more buildings to attain certifications this year,” reports Diana Osler Zortea, President of BOMA Canada. The 1,100th certification was awarded to the Trillium Executive Centre in Markham, Ontario, which achieved Level 3 certification. Features contributing to the building’s performance include tenant submetering, automated lighting controls and sensors, LED lighting and zone-control rain sensors that reduce the need for extra watering on the suburban property’s grounds. The building is owned by bcIMC Realty Corporation and managed by GWL Realty Advisors, which sees BOMA BESt as a template for measuring the performance of its portfolio. “It provides a consistent, effective methodology that tenants recognize as enhancing their workplace,” says Carmen Romagnuolo, Director of Technical Services with GWL Realty Advisors. The new certification categories similarly allow participants to assess their holdings on-line, followed up with third-party, on-site verification. Program developers have worked with representatives from the industrial and retail sectors to find ways to measure aspects that are distinct from those in the commercial sector, while continuing to emphasize energy benchmarking, tenant engagement and continual environmental improvement. For more information, see the web site at www.bomabest.com. CaGBC INTRODUCES ON-LINE BENCHMARKING The Canada Green Building Council (CaGBC) has launched an on-line assessment tool, building on the results of its on-going pilot projects, to help building owners and managers measure energy 8 August 2009 | Canadian Property Management
efficiency, water use and carbon emissions within their portfolios and compare individual building performance against a database of all participants. GREEN UP is part of the CaGBC’s Green Building Performance Initiative and initial pilot project involving 15 commercial real estate companies, 34 school boards/ districts and 31 public sector entities overseeing government buildings. In total, information was gathered from 60 commercial properties, 75 government buildings and 330 schools to establish performance benchmarks. This database has now been made widely available, along with associated details from building performance audits and pilot project participants’ workshops. Users are encouraged to track and record the performance of their buildings against the water and energy use indicators in the database. A second phase of pilot projects f o c u s i n g o n u n iv e r s i t y / c o l l e g e campuses and non-food retail properties is planned for the coming year, with results that will augment the database further. Eventually CaGBC aims to cover all building sectors. CaGBC’s recent annual National Summit also saw the launch of the new LEED (Leadership in Energy and Environmental Design) rating system for existing buildings, operations and maintenance. (See Canadian Property Management, April 2009) Awards were presented at the Summit Gala, honouring people and organizations that have demonstrated leadership in and commitment to the green building sector. Recipients are: • Chapter Leadership: Doug Webber, Sustainable Design Manager, Halsall Associates • Government Leadership: City of Vancouver • Industry Leadership: Minto
• Academic Leadership: Daniel Pearl, Université de Montréal • Life Leadership: Ray Cole, University of British Columbia • Student Leadership: Justin Downey, ECO3 • CaGBC Volunteer: Joanne Perdue, Director of Sustainability, University of Calgary • Green Building Champion: Jack Meredith, Founder & President, Healthy Green Buildings Consultants For more information, see the web site at www.cagbc.org. MANITOBA HYDRO PLACE TOPS TALL BUILDING LIST The new Manitoba Hydro headquarters now nearing completion in downtown Winnipeg has received yet another in a string of accolades. The Council on Tall Buildings and Urban Habitat (CTBUH) has named it the best tall building in the Americas and one of four finalists for the Best Tall Building of 2009 to be named in Chicago in October. The CTBUH is an international organization of architects, engineers, planners and construction professionals to facilitate the exchange of ideas and expertise in the planning, design, competition and operation of tall buildings. Judges for the Best Tall Building competition are instructed to look for seamless integration of form, structure, building systems, sustainable design strategies and life safety for occupants, as well as sustainable qualities that will support urban quality of life into the future. For Manitoba Hydro Place, the Awards Jury stated: “The project was designed to be completely site specific. This design could not be transplanted to another city and still work, thus making it the perfect response to the seeming homogenization of the world’s skylines.” The three other finalists for 2009 are The Broadgate Tower in London, UK, the
industrybriefs Tornado Tower in Doha, Qatar and the Canadian centres as the median monthly Linked Hybrid in Beijing, China. parking rate climbed 72%, but at $190, it is still one of the most affordable markets PARKING RATES JUMP IN 2009 surveyed. The economic downturn is not reflected in The Colliers survey tracks 140 downtown parking rates, which have jumped nearly parking districts around the world and this 10% over last year’s average across 12 year reported a downward trend in many major Canadian markets. Results of US cities, equating to an average decrease Colliers International’s annual parking rate of nearly 1% in monthly rates across 49 survey, conducted in June 2009, pegged the surveyed markets. Four Canadian cities average daily parking rate at $17.78 and were among the 50 most expensive for average monthly costs at $222.75. monthly parking rates – Calgary at 18th, T h e r e a r e s o m e s i g n i f i c a n t Toronto at 40th, Montreal at 43rd and differences within that average, Edmonton at 45th. Toronto was the only however, with monthly costs ranging Canadian city among the 50 most expensive from a high of $460 in Calgary to a cities for daily parking – placed at 50th. low of $100 in Kitchener-Waterloo. With the exception of New York City, Daily rates ranged from $22.50 in European cities are the most expensive Toronto to $8 in Regina. places to park on a daily basis with rates Montreal and Vancouver were the only substantially higher than in Canada. markets where parking rates decreased Amsterdam’s $70.77 median rate positioned since 2008, with both monthly and daily it as the most expensive city, followed by rates dropping Montreal, while median downtown London at $56.68. In Canada, daily rates fell by 2.86% in Vancouver. the daily median rate was below $20 in all Even so, Montreal’s monthly median surveyed markets except Toronto and parking rate of $256.48 makes the list of Calgary. world’s 50 most expensive cities for After Calgary’s extreme of $460 for monthly parking. In contrast, Winnipeg monthly parking, median rates drop Precise_CPM_Jul/Aug issue_halfpgH:Layout 1 7/9/09 2:44 PM Page 1 recorded the most dramatic increase among sharply in other Canadian markets – at
$305 in Toronto, $280 in Montreal, $275 in Edmonton and $224 in Vancouver. Although it is a top economic performer in the national picture, Saskatchewan’s cities are among the least expensive places to park. Saskatoon boasts median daily rates of $9 and a monthly median of $158, and Regina’s rates are lower still at $8 daily and $148 monthly. Nevertheless, analysts suggest continual upward pressure on rates might be beginning to change commuters’ habits for the better. “Employee automobile commuting is often a large component of a company’s carbon footprint. A key carbon-reduction strategy for employers is to reduce parking and related employee automobile use,” says Nancy Searchfield, Colliers’ Canadian Leader of Brokerage Sustainability and Vice Chair of the Canada Green Building Council. “Promoting carpooling and public transit, including subsidizing employee fares and providing company car-share programs, telecommuting solutions, bike racks, showers and change facilities are all effective ways of reducing car-related carbon impacts, while reducing the costs of providing parking on-site.” zz
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Canadian Property Management | August 2009 9
planning&development
Curtailing Grow Developers Apply LEED Across a Wider Landscape By Barbara Carss
Photo courtesy of Faubourg Boisbriand LP
10 August 2009 | Canadian Property Management
planning&development
wth’s Footprint
Images courtesy of Bordeaux Properties
Engineers and urban planners are historic, but not necessarily harmonious partners in forging the built environment. The evolution of the LEED (Leadership in Energy and Environmental Design) program is a good example of how the two disciplines can constructively critique and complement each other. LEED for Neighbourhood Development (ND) is one of the most recent initiatives of the US and Canada Green Building Councils aimed at broadening the context for sustainability beyond the walls of a building or the boundaries of a site. It targets development lands and considers how the location, density and form of development can make the most efficient use of resources and mitigate the impact that the development’s occupants have on the environment. “The LEED program is meant to push the industry to see what is achievable,” reflects Dan Leeming, the Co-Chair of the Canada Green Building Council’s (CaGBC) LEED ND committee and a principal of the
consulting firm The Planning Partnership. “Personally, I have seen quite an increase in the number of well known developers who are prepared to make that shift.” More than 20 Canadian developers are now participating in the US Green Building Council’s (USGBC) LEED ND pilot program, while the CaGBC committee is assessing criteria developed through the US program and modifying them to fit Canadian climatic, environmental and regulatory conditions. The USGBC wrapped up a public consultation period for its pilot program in June and is now developing the final version of the LEED ND criteria, which the USGBC membership will vote on later this year. CaGBC expects to have its LEED ND program ready for launch in the spring of 2010. Like other LEED programs for construction and design of new buildings or operations and maintenance of existing buildings, LEED ND establishes some prerequisites and a wide range of options f o r a c c u m u l a t i n g p o i n t s t owa r d Canadian Property Management | August 2009 11
planning&development
Above: Big box retail is concentrated at Faubourg Boisbriand's highway frontages. Below: Residential development is a mix of triplexes, row-houses, townhouses and condominium apartments
certification. In this scenario, however, the USBGC collaborated with the Congress of New Urbanism and the Natural Resources Defense Council to devise the pilot criteria. This melds differing yet compatible expertise in energy-efficient and sustainable infrastructure, pedestrianand transit-friendly design and ecosystem protection to create a more comprehensive framework than merely assessing how buildings perform as isolated entities. “It’s not just about new houses. It’s about everything,” Leeming asserts. Prerequisites and potential points are divided into three main categories: smart location and linkage; neighbourhood pattern and design; and green construction and technology. A few points are also available for innovative design and design processes. Certification can be awarded at three different stages: 1) for the initial conceptual plan for a development area; 2) when that plan is approved by an entity of authority – typically a municipal government; and 3) when the development or the first phase of a development with a long-term buildout is complete.
planning&development
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Conceptual plan for Faubourg Boisbriand
Harmony's village core
“It’s not just about new houses. It’s about everything.” BROWNFIELD INFILL Faubourg Boisbriand, an envisioned 1,700-unit residential community on the site of a former General Motors assembly plant in the city of Boisbriand, Quebec, is one of the first Canadian pilot projects to break ground, after achieving LEED Gold status in Stage 2. About 800 residential units have already been sold and the developers expect about 300 will be built and occupied by the end of this year. “We think by 2013 it will be quite advanced,” says Hélène Gignac, Chief Operating Officer with Faubourg Boisbriand LP. A mix of condominium apartments, triplexes, row-houses, townhouses and seniors’ housing are slated for approximately 54 acres of the 240-acre site, which also accommodates retail/ commercial development and an area for a future business park. More than two-thirds of the planned 1 million square feet of retail space has now been built, mostly along the site’s frontage on Highways 15 and 640 where big box stores are concentrated. Smaller, boutique-style shops and restaurants are planned for the main
streets of the village core within easy walking distance for residents. “When the LEED ND pilot program was introduced, we had just begun to plan our residential so it was a question of timing in our case,” Gignac recalls. “Our vision of how to do real estate development was a good match for the criteria. We looked at the criteria and we looked at what we were doing in terms of our vision and we said: we’re there.” As a redevelopment site within a built-up area, it already met some key LEED ND objectives since it was connected to existing infrastructure and public transit routes and would remediate and make productive new use of a derelict property. (Ultimately, property tax revenue from the site is projected at more than three times what GM paid annually for its facility.) From the developer’s perspective, the site’s size and location at the intersection of two well-travelled highways on the Montreal metropolitan region’s north shore more than counterbalanced its status as a brownfield site. “From an economic point of view, the north shore is the fastest growing region of
the province,” Gignac says. “In terms of land assembly, it was cutting down on the time and risk of assembling the land, and the contamination was not very deep or serious or complicated. It was in pockets.” Other point-earning initiatives are likewise based on a cost-benefits analysis and projections for return on investment. In its role as land developer, Faubourg Boisbriand LP strived to establish design parameters that would make economic sense for residential developers to come in and build out the plan’s vision. These directives focus primarily on energy efficiency, water efficiency and pedestrianfriendly and transit-oriented features. Housing must be built to the Nouveau Climat standard – a level of energyefficiency at least 25% better than the requirements of Quebec’s Building Code. Dual-flush toilets and low-flow faucets and showerheads are mandatory, while plants, trees and shrubs must be selected from a list of approved native species that require limited watering. Even the lawns have been specified to reduce water use. “We developed a recipe, working with an agronomist,” Gignac reports. “It has two types of fescue with some clover.” Canadian Property Management | August 2009 13
planning&development Pedestrian paths throughout the site provide links from the residential to commercial areas, and essential services such as the grocery store are situated within convenient walking distance of the homes. For longer distances, the developer is now working with other public interest groups to advocate for new commuter train service between Boisbriand and the northern end of Montreal’s subway line located on the island of Laval. This would augment existing bus and train service. GREENFIELD DEVELOPMENT Across the country in Alberta, the developers of a new community in the County of Rocky View face similar issues on the rapidly growing suburban edge of a major Canadian city – in this case, Calgary – but also the challenges of a different development culture and tradition of land use. “In Alberta and Saskatchewan and probably in Manitoba as well, greenfield development is still going to be fairly predominant for many, many years to come,” maintains Birol Fisekci, President and Chief Executive Officer of Bordeaux Properties, the developer of Harmony, an envisioned mixed-use community with
14 August 2009 | Canadian Property Management
Conceptual plan for Harmony
3,500 residential units and a local base for employment building on the economic development potential of the nearby Springbank municipal airport. “The one challenge for LEED ND for us is that it
really does tend to focus on brownfields.” Nevertheless, the conceptual plan for the 480-acre tract of former ranch land has been LEED certified at Stage 2 and development could begin as early as the spring of 2010 if market demand justifies it. The lands have been deemed of marginal agricultural value and thus arguably a preferred place to channel the growth that is forecast to come to the area. Although the density of development is lower than that of other LEED pilot projects, the plan scored points for energy and water efficiency, pedestrian-friendly configuration and balance of green space – which Fisekci calls a positive alternative to the growing trend in cities like Calgary toward ever larger homes on smaller lots. “LEED ND is our benchmark, but I am a big believer in the triple bottom line,” he stresses. “The environmental initiative is extremely important, but not to the exclusion of economic and social factors.” At Harmony, densities will range from a low of 2.5 units per acre at the periphery to 11 units per acre in the village core. In addition to 1,000 units of housing, including seniors’ housing and fourstorey multi-family buildings, the 50-acre village core will encompass main street retail, medical offices, community space and an arts facility housing a music conservatory affiliated with Calgary’s Mount Royal College. For Rocky View, this represents a significant departure from a previous pattern of estate development on 2 to
4-acre lots. “We have to keep in mind we are in an area where traditionally all residential has been single-family. The County is taking a very positive leap forward in changing its land use practices for developable land by allowing us to have a significant multi-family component as well,” Fisekci says. On the sustainable technology front, the development will be built with the piping to allow for reuse of grey water within buildings even though Alberta continues to prohibit the practice. Bordeaux Properties is also working with the non-profit public interest group WaterSMART to encourage the provincial government to revise rules for grey water use. DEGREES OF DIFFICULTY Such steps are in sync with LEED’s market transformation goals. Devisors of the CaGBC’s LEED ND program have been particularly conscious of the need for standards that are applicable across the country, can be realistically but not too easily achieved, and don’t require participants to expend extra money, time and labour to document procedures that are simply part of securing municipal planning approvals. “In many jurisdictions in Canada there are already very rigorous planning controls in place,” Leeming observes. “What we find in Ontario, for example, is a very tight structure of urban boundaries. Leapfrog sprawl really is not permitted.” The various stages and levels of LEED ND certification provide for a spectrum of application, investment and commitment – from planning principles to actual communities with low or no carbon footprints. For example, municipal officials in the Town of Oakville on the west side of the Greater Toronto Area have now withdrawn from the USGBC’s pilot program because the market conditions aren’t yet right for development to move forward in a vast 5,400-acre greenfield area slated to one day accommodate 50,000 to 55,000 residents and 30,000 to 35,000 jobs, but a LEED ND compliant template is in place. “The principles are still to a large degree embedded in our secondary plan,” says Charles McConnell, Oakville’s Manager of Long Range Planning. “We’ve established our own sustainability checklist that we will monitor ourselves on a subdivision-bysubdivision basis. It is part of our process.” This is really what Stages 1 and 2 of the LEED ND process are meant to accomplish. Alternatively, the criteria can also provide guidance in the absence of proactive plans. “There are many jurisdictions that may
planning&development
“In a greenfield subdivision it’s much, much harder to build a LEED ND project.” be working with older plans and older planning instruments,” McConnell adds. “Through the LEED ND program there is a whole series of criteria that can lead to a model for sustainability and provide a means of measuring how we can actually meet the criteria.” As with all LEED rating systems, the levels of certification signify and reward attainment of increasingly meritorious and difficult performance targets. However, Silver, Gold or Platinum certification could be an even harder stretch since LEED ND’s greater emphasis on connections to the surrounding environment leaves developers and investors more reliant on external factors than in building-specific programs.
“If you’re doing a brownfield infill site on three acres in downtown Toronto, you’ve got the density, the transit, the connections to existing services,” Leeming says. “In a greenfield subdivision it’s much, much harder to build a LEED ND project. You don’t have any control over when the school and other community services are going to get built. You don’t have any control over transit. You’re typically dealing with lower density, which also undermines the economic case for some of the technologies like district energy.” In part, that’s why Fisekci wanted to participate in the USGBC’s pilot program. “I thought it would give me an opportunity to really voice an opinion,” he says. zz
Canadian Property Management | August 2009 15
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planning&development
Demographics Drive Real Estate Prospects Mature but Expanding Economy Supports Canadian Investment By Leanne Lachman and Deborah Brett Investing where demographic demand is strong and deep is far more rewarding over time than investing in markets with little or no growth. Looking forward, the greatest urban population increases will occur in the world three largest countries: China, India and the United States. Mature but still growing economies w i l l o ff e r a t t r a c t ive r e a l e s t a t e investment and development prospects once the current recession subsides. In this context, think Canada, United States, United Kingdom, Ireland, Australia and New Zealand. The size and capabilities of national labour forces are important investment considerations. Growing numbers of moderate and middle-income households generate demand for retail, residential and hospitality projects.
Service employment growth supports office developments, while industrial expansion requires manufacturing and distribution facilities. Two labour gaps are evident, one visible and one emerging: • The skilled construction trades – carpenters, sheet metal workers, electricians, mechanics, operating engineers, etc. – are not attracting enough young people. Young people born in the United States are not being encouraged to work with their hands so technical schools target new immigrants. This aspect of secondary and tertiary education deserves more focus. • As baby boomers begin to retire, the industry will lose management talent. The succeeding demographic group – Generation X – tended to bypass real
estate because there were no entry level jobs when they finished college during the collapse in the early 1990s. Thus, the real estate industry lost a generation. MIDDLE CLASS MARKET FORCE Even in nations with a large percentage of low-wage workers or high-income inequality, recent economic growth and changing demographics have resulted in the growth of middle class and affluent households. As incomes improve in the developing world, moderate-income households can u p g r a d e t h e i r s h e l t e r, m ove t o permanent structures (with a lease or a mortgage), add more space and enjoy electricity and safe drinking water. Earth’s population of 6.7 billion will reach 8.3 billion by 2030 and 9.2 Canadian Property Management | August 2009 17
planning&development billion by 2050. Developed countries will contain a smaller and smaller share of the world’s residents, but this category contains both growing and shrinking countries. Japan, the countries of the European Union and Russia face population declines. Six English-speaking countries that encourage immigration and assimilation of newcomers will continue to expand – Canada, United States, United Kingdom, Ireland, Australia and New Zealand. Although mature economies, and particularly growing ones, offer attractive real estate investment and development prospects, emerging m a r k e t s p r e s e n t n e a r l y i n fi n i t e opportunities to create residential, retail, office, logistics and hotel properties, as well as master-planned c o m m u n i t i e s t o s e r v e g r ow i n g populations. More basically, those nations also need infrastructure investment to literally pave the way for contemporary real estate development. By 2050, seven of 10 global residents will live in urban areas as compared with five out of 10 today. Meanwhile, 600 million fewer people will live in rural areas by 2050. High-income nations include Canada, United States, Japan, South Korea, Australia, New Zealand and most of western and northern Europe. The category also includes a number of small Caribbean islands with affluent expatriate populations, several Persian Gulf countries, Estonia and the Czech Republic. The upper-middleincome cluster features a handful of African nations that have stable governments and well-developed economies, along with other such emerging markets as Russia, Romania, Turkey, Mexico, Argentina and Brazil. These classifications are helpful in identifying nations that warrant consideration for real estate investment. The northwestern hemispheric region encompassing Canada, United States, Bermuda and Greenland contains 5% of global population. Between now and 2030, 67 million people will be added, representing 4% of world growth. Populations in this region are the most urbanized in the world with Bermuda at 100%, United States at 81.4% and Canada at 80.3%. Still, the 18 August 2009 | Canadian Property Management
movement of people from rural to urban areas is ongoing. By 2050, more than 90% of the region’s population will live in cities and suburbs. As is true in all regions, migration to urban areas in North America generates real estate demand in receiving locations. Conversely, though, as populations fall in some less attractive urban areas, fewer residential and commercial buildings are needed. Demolition may be required. Excess space becomes more visible in times of economic stress, and abandonment is now increasingly evident in the least appealing neighbourhoods of lowgrowth or no-growth urban areas. AGE-BASED CONSUMER TRENDS The oldest baby boomers are now 63 years old. Retirements have begun among this generation, but the recent economic downturn will likely delay full retirement for many workers in Canada and the United States. For half a century, commentators have fixated on the predilections of baby boomers, often convincing themselves that this demographic cohort was monolithic despite the fact its births extended over 18 years. If truth be told, the youngest boomers turned only 45 in 2009 and they have a m p l e t i m e t o r e c o u p a ny l o s t investments before retirement. The McKinsey Global Institute points out that the earnings peak for the oldest half of the baby boomers will occur in 2015; for the youngest half, the peak will not be until 2025. Boomers have lots of working time ahead. According to a survey the American Association of Retired Persons (AARP) conducted a year ago, 14% of retirees were considering returning to work because of stock market losses and that proportion is likely higher n ow. Fo r b o o m e r s a p p r o a c h i n g retirement age, this is a time of reconsideration. Although surveys have consistently shown that average baby boomers intend to work longer and more intensely past age 65 than their predecessors did, researchers have never been sure what would happen when the respondents actually reached retirement age. Boomers are not the only large demographic cohort. Generation Y, or the Net Generation, which contains 15
to 32-year-olds, totals approximately 74 million in the United States (and a similar proportion of the Canadian population). As young adult immigrants arrive, they add to the ranks of this demographic group so it will exceed the size of the boomer group and then keep growing. Retailers certainly recognize the size and consumption preferences of techno-savvy Generation Y. Colleges enjoy strong enrollments and apartment owners profitably cater to these young adults and their mix-andmatch roommates. However, their importance to North America’s labour market and their potential real estate and consumer demands are not fully acknowledged. The older portion of this generation, who are currently primarily renters, will become the first-time homebuyers who take advantage of the bargain prices when the economy begins to recover. In massive numbers, they will furnish those houses, become hardware store devotees, buy small cars, shop on-line, take ‘green’ seriously, travel, go to concerts and set new social and consumer trends of their own. Generation X is the smaller demographic group born from 1965 to 1976 that falls between the boomers and Generation Y. Although this cohort has not received the same attention, the transitional Generation X offers a hint as to the probable behavioural patterns of its successors. One of the interesting characteristics is low fertility – 20% of women ages 40 to 44 are childless, twice the level of 30 years ago. Furthermore, the other 80% of women have an average of 1.9 children versus 3.1 for their counterparts in 1976. In Generation X, women married later and bore their first children at a more advanced age. Early indicators suggest a possible reversal of that pattern among Generation Y, but definitive data are not yet available. zz The preceding article is an excerpt from the Urban Land Institute’s overview of Global Demographics 2009. Leanne Lachman is a real estate consultant and executive-in-residence at the Columbia University Graduate Business School. Deborah Brett is real estate and planning consultant. For more information, see the Urban Land Institute web site at www.uli.org.
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Canadian Property Management | August 2009 19
planning&development
Shoreline Surety Coastal Development Under Scrutiny By Deb Callahan and Mindy Lubber
Changing c l i m at i c conditions pose an unprecedented threat to coastlines. Sea level rise, temperature increases, changes in precipitation patterns and other climaterelated changes are expected to occur and to become increasingly severe over the coming decades. As coastal developing is intensifying, so are coastal property losses. The higher wind speeds, storm surge, flooding and erosion hazards intrinsic to coastal regions increase the likelihood of property damage, degradation of coastal ecosystems and subsequent social costs. Reducing the physical and economic risks associated with coastal hazards is not only critical, but also cost-effective. An analysis from the US National Institute for Building Safety concluded that investments made to minimize the impact from 20 August 2009 | Canadian Property Management
earthquakes, flood and wind yielded $4 of benefit for $1 spent. Priority must be placed on providing local governments with the predictive capacities and other tools they need to adapt land use and infrastructure for an uncertain future. The need to adapt is also an opportunity to restore coastal ecosystems, which are a critical complement to defensive infrastructure. The Resilient Coast Blueprint is envisioned as a first step toward reconciling the ecological, social and economic health of coasts. RISK ASSESSMENT Calculating future risks based on forecasts of climate change are fraught with uncertainties that make effective adaptation planning difficult. A critical step toward better quantifying future change is to advance scientific understanding and
develop the methodologies necessary to refine forecasts and make them useful for adaptation purposes. Current estimates of sea level rise have uncertainties both in terms of timing and extent. This could delay implementation of adaptation plans or lead planners to address only the higher-probability, lower-impact scenarios. Improving technologies and methodologies to reduce uncertainty would prove invaluable. In the case of sea level rise, as one example, the relationship between rising temperatures and ice sheet breakdown must be better understood. Current flood, shoreline and inundation maps used for land use and infrastructure planning and mortgage due diligence do not accurately reflect current risks, let alone future risks, posing significant challenges for adaptation. In the case of sea level rise, the development and dissemination of high-definition, digital flood and coastal maps, based on assessment of data from LIDAR (a light detection and ranging remote sensing system used to collect topographic data) surveys and other data gathering techniques is essential. These maps should be created to include a variety of scenarios for potential future sea level increases. There is also strong need for climate change models and other tools that enable improved predictions of future coastal storms, and that clearly describe the uncertainties of those predictions. PLANNING AND BUILDING STANDARDS During the land use planning process, government entities should consider climate related risks including the likelihood and extent of climate change related hazards, and identify actions to protect or adapt in specific geographic locations. In especially vulnerable coast areas, government entities might designate no-build and no-rebuild zones similar to floodway zones in riverine areas and/or provide private property owners with incentives to relinquish property or
planning&development
development rights in these areas through land exchanges, land banks and the transfer or trading of development rights. Construction, retrofit and operational standards for new and existing public and private infrastructure should be routinely assessed and modified. New approaches to infrastructure might be considered, such as decentralized energy and water treatment systems that would be less susceptible to catastrophic loss or disruption than the traditional centralized systems. The risk mitigation strategy should recognize the enormous protective value of ecosystems and other natural infrastructure such as coastal wetlands, barrier islands, trees, mangroves and other vegetation. This natural infrastructure is essential to society’s efforts to address climate change and these systems must be included as part of any adaptation strategy. Public and private entities should protect and restore these natural features to mitigate threats to built and natural systems. For example, government entities can establish incentives and/or regulations to make ecosystem preservation and enhancement part of adaptation funding, risk-based land use planning and post-disaster rebuilding. Adaptation plans must be flexible and amendable to incorporate higher levels of climate change protection as required. For example, a bridge built to function under five-foot storm surge conditions might be designed so it could be modified should higher levels actually occur. DILIGENCE While not every risk is insurable regardless of the price, a resiliency strategy must recognize insurance as an indispensible tool and maximize its effectiveness. Insurance cannot play its role if land use regulations, building codes and physical protection are not sufficiently robust. In turn, the insurance industry must give appropriate consideration and weight to the demonstrable reduction in risk provided by improved building standards and other risk mitigation efforts.
A stable private insurance market should provide the right price signals and incentives for risk mitigation. As the risk to property grows because of location and other climate related factors, the associated insurance premiums will increase because of the greater likelihood of damage, providing an incentive to build in less risky areas and/or build or retrofit properties to higher standards. Wise investing will involve asset managers understanding the impacts of climate change on their investments and
managing that risk, especially in real estate, infrastructure and other financial instruments. Responsible banks will need to understand the levels of exposure with their investment and lending portfolios by incorporating climate risks into their due diligence. zz The preceding article is excerpted from Resilient Coasts: A Blueprint for Action, a joint report of the Heinz Center (see www.heinzctr. org) and Ceres (see www.ceres.org.)
URBAN DWELLERS CONCENTRATED IN THREATENED ZONES LECZ – low elevation coastal zones – is an acronym we will see more and more. LECZ, which are areas less than 10 metres or 33 feet above sea level, constitute only 2% of the earth’s land area, but are home to 10% of the global population and 13% of urban dwellers. Every global region is threatened, but the highest numbers of threatened urbanites are in Asia, Oceania, the Middle East and North Africa. Coastal flooding threatens some large cities and will become more dangerous as sea levels rise. Salinity may also penetrate the water table and make water undrinkable. However, coastal cities are not the only ones with freshwater problems: supplies are inadequate in one major market after another from Las Vegas to New Delhi. Apart from Venice’s periodic aqua alta, one of the most extreme examples is the tiny Micronesia nation of Kiribati, which is severely threatened by the rising Pacific Ocean. As salt gradually pollutes the groundwater, islands become uninhabitable long before they are submerged. Over time Kiribati’s population is being restricted to fewer and fewer islands. Numerically, Asia’s population is at greatest risk with more than 250 million people living in LECZ urban areas, some of which are growing rapidly. One of the most vulnerable is Dhaka, the capital of Bangladesh, where the population of 13.5 million is expected to reach at least 22 million by 2025. Dhaka’s elevation ranges from 2 to 13 metres above seal level. Almost 60% of the city’s extremely dense slums have poor or no drainage and are already susceptible to frequent flooding. Source: Global Demographics 2009, the Urban Land Institute. See associated story, page 17.
Canadian Property Management | August 2009 21
WELCOME TO MONTRÉAL
BIENVENUE AU MONTRÉAL CONFÉRENCE ET EXPOSITION NATIONALE DE BOMA CANADA
Dear Delegates,
Chers délégués,
I would like to invite you to attend the 2009 edition of BOMEX®, the most prestigious Canadian real estate industry event, which is being held in Montreal this year. In keeping with its avant-garde reputation, BOMEX® 2009 will present the best of what our industry has to offer, including recent technological innovations in the real estate sector. The event will also feature presentations by leading lights in the industry, who will be sharing their views on the major issues we face. This is a wonderful opportunity to network and keep abreast of the latest changes and developments. Some one hundred exhibitors and 1000 participants and visitors are expected at this major get-together of real estate professionals. Come and enjoy the friendly ambience of Montreal, a city that is a delightful mix of cultures and a place where business and pleasure go hand in hand! We have put together an interesting program that is sure to meet your expectations, and then some! For details, visit www.bomex.ca. Don’t miss out on this important rendezvous taking place from September 22 to 24, 2009 at the Palais des Congrès convention centre in Montreal.
J’aimerais vous inviter à prendre part à l’édition 2009 de BOMEX®, le plus prestigieux événement de l’industrie immobilière canadienne, et dont Montréal est l’hôte cette année. Fidèle à sa réputation d’avant-gardisme, BOMEX® 2009 vous donne accès à ce que notre industrie offre de mieux. Vous y découvrirez notamment les plus récentes innovations technologiques en immobilier. Par la même occasion, vous pourrez entendre certains des meilleurs penseurs de notre domaine, qui partageront avec nous leurs vues sur les grands enjeux de l’heure, une occasion de ressourcement unique. Près d’une centaine d’exposants et quelque 1000 congressistes et visiteurs sont attendus à ce rassemblement incontournable des professionnels de l’immobilier. Comme eux, venez vous imprégner de l’ambiance chaleureuse de notre belle ville, un heureux mélange de cultures où les affaires et le plaisir font merveilleusement bon ménage! Nous vous avons concocté un programme de choix qui sera à la hauteur de vos attentes les plus hautes, c’est promis! Pour de plus amples renseignements, visitez le www.bomex.ca. C’est donc un rendez-vous à ne pas manquer, du 22 au 24 septembre 2009, au Palais des Congrès de Montréal.
I look forward to seeing you there!
Je vous y attends!
Sonia Trudel President, BOMA Québec
Sonia Trudel Présidente, BOMA Québec
Building Owners and Managers Association of Canada
he t e v i l e m o C
l a ĂŠ r t Mexopenrience
ORGANIZED BY
assetmanagement
Pegging Portfolio Priorities Saskatoon Health Region Evaluates Capital Allocation By Grant Sommerfeld and Susan Anson
Deferred fa c i l i t i e s maintenance has been a major and growing issue for the Saskatoon Health Region (SHR), an integrated health delivery agency serving nearly 300,000 residents in Saskatchewan’s most populous urban centre. A large number of hospitals and medical facilities of varying ages, sizes and conditions situated throughout a wide geographic area presented a challenge to maintain a clear picture of building conditions across the entire portfolio. Annual capital budgets that were not sufficient to maintain all the buildings in good condition compounded the problem. Facilities managers found themselves constantly dealing with emergencies and spending the limited a va i l a b l e c a p i t a l o n a l a r g e l y reactionary basis. There was no real agreement on how to allocate funds because there was no 24 August 2009 | Canadian Property Management
solid, objective data that anyone could point to. Thus, it became critical for the SHR to find an objective way to assess the current condition of its portfolio and to allocate capital dollars. As a first step, the SHR set out to better understand the condition of its existing facilities – including 10 hospitals, 29 long-term care facilities and numerous primary health care sites, public health centres, mental health and addictions centres, and community-based settings – to make a compelling case for needed operating and capital funding for facility renewal and ongoing operational maintenance. Some of the concerns included: aging infrastructure; a mismatch between the demand and the capacity of these facilities; needed space for children’s services; and the delivery of higher volumes of both acute and long-term care.
DEFINING INVESTMENT NEEDS In March 2006, a pilot project was approved to conduct a facilities condition assessment of three Saskatoon hospitals and a long-term care home. Capital asset management and planning software was used to collect, organize and report information in an accessible way that engineers and non-engineers alike could grasp. Each building was assigned a facility condition index (FCI), which measures the ratio of deferred maintenance (also known as problem dollars) to replacement dollars. Software-supported calculations gave the facilities team the ability to compare and benchmark similar buildings across the portfolio and more readily identify the buildings that were in the greatest need of updates. From there, SHR opted for a detailed facility condition assessment in nearly four million square feet of health facilities to provide a broader look at the whole portfolio. With a more comprehensive and accurate understanding of facilities’ conditions, decision makers could create multiyear capital plans and budgets. The FCI helped facilities staff to explain their needs. Indeed, SHR received an increase in government funding in the year after the conditions assessment, partly because capital needs were validated. Third-party, conflict-free funding forecasts for facilities needs enable the SHR to understand and discuss long-term capital needs. Priorities associated with each requirement
support the region in ensuring the continuity of mission-critical systems. The SHR now has the tools to understand the impact of different funding decisions on portfolio condition and capital costs over time. It also has tools to determine how to bundle approved capital projects costeffectively by system, category, location, etc.. ONGOING APPLICATIONS S H R c o n t i n u e s t o u s e fa c i l i t i e s management software on a daily basis to allocate operating funds, prioritize work, justify decisions and track inventory. Ultimately, budgeters and facilities management staff would like to tie the database into legacy databases and Excel spreadsheets. They are also considering a capital spending management solution to manage the entire capital spending process. This could streamline capital budget creation, requisition processing, purchasing and reconciliation of expenditures. The SHR now adds all new buildings to the database – having them assessed and the condition data input to the system. This also prompts regularly scheduled reassessments to keep the data current, particularly with acute care sites. Perhaps the most valuable result of the Saskatoon Health Region’s capital management program has been strategic. The effort has raised the awareness of facilities needs to the executive suite, while the metric of facility condition index (FCI) has become a valuable tool for discussing facility needs and concerns with executives regardless of their functional specialty. The facilities staff now has a bigger role to play. It is the steward of the largest single capital asset in the region, and needs, which have often understated in the past, have now become clearer. Facilities management has come to the table in decision making. zz Grant Sommerfeld is the Director of Facilities and Engineering Services with Saskatoon Health Region. Susan Anson is General Manager of VFA Canada Corp., providers of VFA facility, Capital Planning and Management Solution, the facilities maintenance software adopted by the Saskatoon Health Region. For more information, see the web site at www.vfa.com.
assetmanagement
It became critical for the SHR to find an objective way to assess the current condition of its portfolio.
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Canadian Property Management | August 2009 25
Photo courtesy of Schindler Elevator Corporation
26 August 2009 | Canadian Property Management
retrofitprofile
A Lift for Traffic Flow Improved Dispatch Lowers Capital and Operating Costs Passenger volume and the elevator bank’s atypical configuration recently prompted the owners of a noted Manhattan hotel to upgrade both the look and the performance of the system. The original elevators were installed in 1985 around a circular core in the middle of the hotel – a design choice that subsequently limited options for increasing service since adding more elevators would compromise the aesthetics of the hotel. The design prevented passengers from seeing all of the elevators from one vantage point so they would often miss the elevators that came outside of their view. Meanwhile, the hotel staff frequently had to wait as long as three minutes for a service elevator to arrive. New destination dispatch technology helped to resolve these snags in traffic flow. It allows passengers to use keypads in the hallway to input their floor destination and eliminates the need to push buttons inside the elevator cab. Once the required floor is keyed into the system, its controls identify and assign the elevator that can go to that destination in the most efficient way possible. The technology is based on a variable algorithm that calculates the fastest travel time to the required location. The system can also track the frequency of input requests on the keypad and factor in the capacity of the car based upon its weight. Thus, full cars can run in an express mode and skip unnecessary stops, which can be one of the main causes of elevator delay. Performance analysis indicates that the system can improve overall traffic efficiency by up to 30%. At the New York City hotel, the upgrade program began with six service elevators. This resulted in a 50% reduction in the average number of elevator trips, from 2,000 trips per day to 1,000, and a drop in waiting
times from an average of two to three minutes to 35 to 55 seconds. Next, the 16 guest elevators were replaced to deliver a 35% increase in passenger capacity. A total reconfiguration of the elevator bank was avoided, allowing for the best use of the existing space. The elevator contractors also modernized 16 of the facility’s escalators and installed 4 new escalators as part of an overall $150-million hotel renovation program. “Anything we can do to make a guest’s stay more comfortable and memorable is very important to us,” asserts Mike Stengel, market Vice President and area General Manager for NYC Marriott Hotels. “For years we were challenged by the sheer volume of elevator use and now we have seen a tremendous change in the accessibility and speed with which guests are able to travel amongst floors.” There are spinoff operating cost benefits as the streamlined traffic flow reduces the number of stops and makes the elevator system more energy-efficient. It also promotes accessibility in accommodating customers with special needs who may need more time to enter the elevator cab, audible cues, or more room in the cab. For building operators, the destination dispatch system can be remotely monitored using electronic systems that detect nonconformances. Around-the-clock monitoring helps identify problems before they become major issues that would necessitate a costly system shutdown. zz Jeff Blain is Nor th American sales manager with Schindler Elevator Corporation, providers of destination dispatch technology and the contractor for the elevator replacement and system upgrade at the New York Marriot Marquis. For more information, see the web site at www.us.schindler.com.
Courtesy of Schindler Elevator Corporation
By Jeff Blain
ELEVATOR SECURITY OPTIONS By Rob Michie
Video cameras can deter graffiti and other damage in elevator cabs and provide enhanced security for passengers, but property owners may want to factor material costs and installation complications before choosing a system. Elevators typically have to be decommissioned during the installation of hardwired video cable (coax) that runs from the mechanical room to the cab, while the costs of the material and labour could range from $15,000 to $25,000 per elevator, depending on the number of floors in a building. Cable for the hardwired system would also likely have to be replaced within five to 10 years. Wireless video systems are another alternative. The system has no movable parts, thus requiring less maintenance. It can send real-time, DVD quality video at any traveling speed, while encrypted wireless technology prevents accidental or intentional interception. Such systems can also be installed in about 45 minutes with no elevator shutdown required. With a unit cost of about $4,000, the technology is also price-competitive. Rob Michie is with VideoComm Technologies, a manufacturer and marketer of wireless security surveillance systems. For more information, see the web site at www.videotransmitters.com. Canadian Property Management | August 2009 27
HVACIAQ
Pool Purge Multi-Tasking Dehumidifier Combats Air Contaminants By Nick Agopian
Photo courtesy of Nottawasaga Inn Resort
An aging dehumidifier’s replacement schedule proved good timing for the Nottawasaga Inn Resort to introduce new technology to counter one of the most common and challenging eye and lung irritants in indoor pools. The popular year-round convention/resort facility located about 60 kilometres north of Toronto now boasts Canada’s first gas-phase air purification system in its indoor 28 August 2009 | Canadian Property Management
pool facility to combat chemical odours associated with chloramines. Chloramines are formed in pools when chlorine molecules attach to ammonia and other organic by-products of the human body. Pool operators have traditionally controlled waterborne bacteria chemically with chlorine, meaning that the gaseous chlorine-based by-product can linger and recirculate through the HVAC
dehumidification system. Although conventional mechanical fabric media filters on the dehumidification systems can trap airborne particulates, gases such as chloramines are not captured. In contrast, gas-phase filtration uses carbon-based impregnated pellets as a media to continuously adsorb the ga s e o u s c o n t a m i n a n t s a s a i r i s re-circulated through the pool dehumidifier. Similar technology has
HVACIAQ
been used for decades to remove gaseous contaminants at wastewater treatment plants, paper/pulp mills, petrochemical refineries and other heavy industrial applications. At Nottawasaga Inn Resort, a proprietary blend of adsorbent compounds developed specifically for indoor pools is a custom-mixed green blend of coconut-based media that’s more environmentally-friendly to use and manufacture. This media is regularly tested and replaced when necessary since all gas-phase media loses effectiveness after four to six months in pool applications. “Within 48 hours of starting up the new dehumidifier there was a unique freshness to the indoor air that was never experienced before and it was a hundredfold improvement than before the dehumidifier installation,” reports Peter Biffis, the Director of N o t t a w a s a g a I n n R e s o r t . “ We continually get positive comments from guests and lifeguards.” Previously, introducing additional outdoor air to the dehumidifier’s return air was the most common IAQ solution for the build-up of chloramines, especially during large bathing loads Nottawasaga experiences regularly during holidays. However, continually heating the outdoor air to maintain the n a t a t o r i u m ’s 2 8 ° C ( 8 4 ° F ) a i r temperature set point is costly, while increasing carbon emissions. Additionally, exposure to chloramines can corrode and prematurely end the lifespan of building components such as door hinges, electrical contacts, plumbing fixtures, lockers, etc. “During the retrofit design period the resort’s board of directors requested a unit design that would provide more outdoor air to relieve the chloramines build-up during capacity days, but we didn’t think we could get larger ductwork into the tight-spaced mechanical room,” recalls Ed Carney with the contractor, Toronto-based Kilmer Environmental. “So I suggested trying the newest technology in controlling chemical gases in indoor pools – gas-phase filtration, which would perform better
and save energy versus increasing and heating outdoor air.” The gas-phase purification application fits on a new dehumidifier that recovers heat to provide the pool water heating. It also controls air temperature/humidity and ties into the resort's central plant boiler and heat pump systems. The new 13,500-cfm dehumidifier was an identical drop-in replacement m o d e l o f i t s p r e d e c e s s o r, bu t refrigeration component technological advancements have improved energy efficiency in the intervening 15 years. The new unit has a 70-minimum circuit ampacity (MCA) and 110-maximum overload protection (MOP) versus the older unit’s 83-MCA and 125-MOP. This equates to a total kilowatt-hour savings of 24,000 kWh annually based on 90-percent compressor run times.
Along with the energy cost savings, the resort’s managers see the new system as an investment in business development for the 7,000-square-foot pool area and the entire 70,000-square-foot Sports & Leisure Dome. “When our golf course closes for the season, the indoor pool is the jewel of our facility, so when people have a great experience without any negative effects of chloramines that are common in all indoor pools, the word of mouth spreads quickly,” Biffis says. zz Nick Agopian is Vice President of CirculAire, a subsidiary of Dectron Internationale, a conglomerate of indoor air quality equipment manufacturers, including the Chloraguard® air purification system and DRY-O-TRON® pool dehumidifier installed at Nottawasaga Inn Resort. For more information, see the web site at www.dectron.com.
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Canadian Property Management | August 2009 29
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30 August 2009 | Canadian Property Management
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