Canadian Property Management

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VOL. 32 NO. 1 • MARCH/APRIL 2017

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The 22nd Annual Survey of the Canadian Real Estate Industry’s Major Players & Portfolios

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MARCH/APRIL 2017

Editor-in-Chief Barbara Carss barbc@mediaedge.ca Publisher Sean Foley seanf@mediaedge.ca Publisher, Greater Stephanie Philbin Toronto Area & Beyond stephaniep@mediaedge.ca Editor, Greater Michelle Ervin Toronto Area & Beyond michellee@mediaedge.ca Contributing Writers Michael Brooks, Rebecca Melnyk, Daniel Ross Senior Designer Annette Carlucci Wong annettec@mediaedge.ca Designer Jennifer Carter jenc@mediaedge.ca Web Designer Rick Evangelista rickr@mediaedge.ca Production Manager Paula Miyake paulam@mediaedge.ca National Sales Sean Foley seanf@mediaedge.ca

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editor’snote THE COMMERCIAL REAL ESTATE sector is often overlooked or conveniently scapegoated when legislators find it expedient to address other more perilous threats to their power base. Perhaps the ability to feign sincerity is not the primary criterion for making the Ontario cabinet, but, with 13+ years of practice, that government has become particularly deft at inequitable cost distribution in the guise of social good.

Take the murky details of the province's new cap-and-trade system, which the Minister responsible continues to spin as a crackdown on big greenhouse gas (GHG) emitters. This, despite the reality that: 1) the designated large emitters have been given free carbon allowances until at least 2020; 2) they get a rebate on the pass-through costs of emission allowances that other consumers are now paying on natural gas and fuel for vehicles; and 3) the provincial Climate Change Action Plan promises the industrial sector a $1.1 billion chunk of the pot – also known as the Greenhouse Gas Reduction Account – that it isn't paying into.

What does the commercial real estate sector get? Hmmm....well, it gets to pay the new premium on natural gas and other fuel purchases. Theoretically, it should benefit from the $140 to $235 million pledged for research, development and commercialization of low-carbon technologies and the $45 to $70 million for training building operators.

Owners/managers of heritage commerical buildings might be able to tap into the $40 to $80 million slated to "showcase low-carbon technology to the public" in the heritage stock province-wide, and all commercial landlords will be able to compete with the multi-residential and broader public sectors for a share of $80 million tagged for installation of electric vehicle charging stations.

Oh, and let's not forget the new flexibility to claim accelerated capital cost allowances on GHG-reducing technology, which is expected to equate to a $1 million province-wide perk for claimants. Woo-hoo.

So, for those now feeling righteously indignant about this blatant favouring of one business sector's interests over another's, consider why it is that generations of smart, well-educated women with years of experience in the labour force might be frustrated about their gender's general inability to advance to the top ranks of the industry's leadership. You could perhaps say it's not the same thing, but, really, it is.

The prompt for this issue's companion piece to our 22nd annual Who's Who in Canadian Real Estate survey was the arrival of a media release announcing a brand new real estate company's brand new 83% male board of directors. It's curious that this industry has got to a juncture where many leading players consider anything less than a LEED Gold certification to be an embarrassment, but, apparently, the gender split on that board (and others like it) isn't.

Turning to the survey itself, thank you to Daniel Ross for collecting and coordinating this year's results.

Barbara Carss barbc@mediaedge.ca @BarbaraCarss

contents • Cleaning Services • Food Plant Sanitation Services • Hotel Support Services

Focus: Real Estate News & Context 6 Canadian Market Attributes: Commercial real estate plays a key role in the economy.

9 Who's Who in Canadian Real Estate: The 22nd annual survey of office, industrial, retail and multi-residential portfolios.

21 Leadership: The number of women in commercial real estate's C-suites and boardrooms trails the national average.

24 Slipping Returns: 2016 results from the REALPAC/IPD Canada Property Index reveal an atypical year for investment properties.

30 Skills Demand: Employers search for talented prospects, while keeping their wallets closed.

36 Cyber Safeguards for Smart Buildings: Addressing vulnerabilities across connected portfolios.

ENTRANCE LOBBY PARKING

Departments 3 Editor’s note

• Specialty Services • Healthcare Sanitation Services • Disaster Restoration Services

• Technical Trade Services & Energy Management • Event Support Services

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investment

DEFINING A

SOPHISTICATED AND MATURE MARKET The Top 10 Attributes of Canadian Real Estate

By S. Michael Brooks

ALTHOUGH CANADA is a small nation in economic terms relative to the United States, Europe and Asia, it has a sophisticated and mature real estate market. The dominant players in the Canadian commercial real estate market are publicly traded corporations, pension funds, life insurance companies, real estate investment trusts (REITs) and other pools of professionally managed capital. To be sure, there are still many wealthy individuals and families invested deeply in real estate throughout Canada, but many have also sold their assets to a public entity, or taken their company public so as to allow further growth through access to public capital markets.

Commercial real estate is a large part of the Canadian economy. REALPAC commissioned a report in 2012 that conservatively suggested the Canadian commercial real estate sector produces: more than $60 billion in annual economic activity approximately 340,000 jobs $7.2 billion in personal and corporate income tax revenue annually $18.1 billion in earned income annually.

The purpose of studying real estate management as a science is to understand 6 March/April 2017 | Canadian Property Management

the business of commercial real estate and to train people to acquire, develop, sell, finance, lease and manage commercial real estate for both income and, hopefully, capital appreciation through up and down cycles.

Society benefits when a country’s real estate is well developed and well managed because it supports all economic activity.

Canada is no exception.

The top 10 attributes of Canadian commercial real estate are:

1/

A Relatively Small Market The Canadian commercial real estate market is large to Canadians but small in relation to the global market. With US$784 billion of institutional grade real estate, there is much to choose from in Canada. On the other hand, Apple Inc. had a market capitalization of US$735 billion as at June 2015.

If Canada's institutional grade real estate market was one-tenth the size of the U.S. institutional-grade real estate market, Canada’s market size would be US$2.6 trillion. As it is, Canada is not even 5% of the U.S. institutional grade real estate market.

This suggests Canadians would benefit from making investments in real estate outside their borders.

2/

Investability The Canadian real estate market may be small by world standards, but offers ample opportunity for investment. Those with capital seeking a return on investment can purchase income-producing real estate and obtain a yield and perhaps capital appreciation as time goes by.

Traditionally, well-maintained real estate is a good inflation hedge. In most cases, capital appreciation can be enhanced by appropriate additional capital investment, active and intelligent management, careful leasing and proper ongoing maintenance.

On the other hand, capital appreciation is not guaranteed. Most real estate markets are cyclical, reflecting the ups and downs of the economy at large or, in some situations, unique market ups and downs based on local overbuilding, poor management, regional economic events, a significant immediate drop in local demand and the like.

Prudent investors diversify their investments to avoid or minimize the effect of down cycles. Declines in value in one area or asset class can be offset by stability in the other areas or asset classes and leave enough equity or cash on hand to enable the investor to ride out the down cycles.

3/

Physicality The physicality of commercial real estate is very evident in Canada with its diverse geography, climate, businesses and industries, cities and countryside. You can see real estate. You can touch real estate.

You can drive by real estate. You can show real estate to your family. You can show real estate to your banker. It has been estimated that 70% of the world’s wealth is tied up in real estate. Real estate cannot be made obsolete by a better invention (although it may be made less valuable).

4/

Adaptability Canadian commercial real estate has proven to be very adaptable as industry and commerce have changed and the population increased. Buildings are built and rebuilt and densities have increased in urban centres. The layout or appearance of commercial real estate changes as properties are repurposed and the quality of property can be upgraded as new technologies enter the marketplace.

On the other hand, buildings can depreciate to the extent they become functionally obsolete, accumulate a large amount of deferred maintenance or fall

into disrepair. Property can become locationally obsolete for an intended use.

Adaptability goes both ways – owners can add or subtract value.

5/

Collateral Canadian commercial real estate is good security for a loan. Many sources of domestic and international financing exist for good real estate. Public equity for real estate is sourced in Canada through stock markets, primarily the Toronto Stock Exchange.

Private equity might be sourced through family and friends or small syndications or from professional investors.

Public debt may be sourced through bonds and commercial mortgage-backed securities that may trade on a public stock exchange. Private debt such as a mortgage may also be used. Typically, a purchaser may be able to obtain first or second mortgage financing from a bank, credit union, private lender or a life insurance company. A mortgage broker can often assist in finding the best mortgage “fit.”

6/

Mortgages A strong mortgage market is essent ia l for f i na nci ng commercial real estate and the

Canadian market is huge. As of May 2014, the disclosed institutional commercial mortgage market in Canada was estimated at approximately $145 billion. In other words, this was the amount of loans outstanding by institutional lenders secured against commercial real estate in Canada. Given the size of the Canadian institutional grade real estate market (estimated at US$784 billion in 2011), less than 20% of institutional grade commercial property in Canada was funded by institutional grade lenders in 2013.

7/

Profitability Canada is an excellent country in which to invest in real estate.

The country is politically stable and federal, provincial and municipal laws encourage growth while systematically guiding rational development of residential areas, commerce and industry. As with all investments, there is both opportunity and risk in commercial real estate.

There is opportunity because of the ability to add value through physical improvements to land. There is the ability to add value through regulatory approvals to land (such as by increasing permitted height and/or density, or changing permitted uses to a use more highly valued in the marketplace).

There are opportunities to benefit from Canadian Property Management | March/April 2017 7

investment increasing rents to the extent there is scarcity of supply (or excess demand) in a given market for that particular use or location.

There is the ability to achieve capital gains if inflation makes substitute properties more expensive or if the market demand for the rent generated by the building increases the value of the building.

8/

Risk of Loss Risk of loss is a normal business risk. In Canada, the last major real estate recession occurred in

the 1990-1994 period, with shorter economic shocks in 2000-2002 and 2007-2008.

In the 1990-1994 period, the combination of a broad market recession, massive overbuilding in office real estate in many Canadian markets (especially Toronto), highly leveraged bor rowers and undisciplined market activity, as well as a rapid increase in interest rates, led to a partial collapse of commercial real estate as an asset class in many cities.

In that recession, many landowners lost their equity and indeed were

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forced to forfeit their properties to their lender, many of whom also lost money.

Indeed, many Canadian trust companies were wiped out by real estate losses in the 19901994 period.

9/

Strong Banking System In 2014, the World Economic Forum voted Canada’s banking system the best in the world for the seventh year in a row. Strong banks help stabilize real estate. Many younger Canadians employed in today’s commercial real estate market have never lived through a major recession that drastically impacts commercial real estate.

The global financial crisis of 2007-2008 barely impacted Canadian commercial real estate, except for a short period of time in 2008 when capital markets froze. Otherwise Canada experienced no material diminution of lending activity overall, no fire sales of assets, and no spikes in mortgage defaults similar to the defaults that occurred in the U.S. during 20072009. The Canadian real estate market indeed benefits from the most stable and responsible banking system in the world.

10/

People and Reputations Although commercial real estate is made up of land and buildings, it is really a business about people, for people and by people: giving people a place to live; giving people a place to work and shop; giving people places to go; giving places life. Places that are attractive to people draw renters and generate higher rents; those that do not, generally do not rent well or rent at a lower price point.

Those needs change over time, reflecting changing societal priorities, technological advancement and economics. Low-ceilingheight industrial was made obsolete by lift trucks that could lift pallets of goods higher.

Newer industrial facilities now have ceiling heights approaching 40 feet. Strip retail and main street retail were overtaken (at least for a time) by modern enclosed (and air conditioned) indoor shopping malls.

Older brick office and other buildings with fixed interior concrete walls were made obsolete by steel and concrete office towers with clear longer spans between the elevator and the external windows, and movable partitions. Elevators and air conditioning made obsolete those buildings that did not have them. zz The preceding excerpt from the new textbook, Canadian Commercial Real Estate: Theory, Practice, Strategy draws from chapter one, outlining the investment context. Michael Brooks is the textbook author and the Chief Executive Officer of REALPAC.

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TOP

TEN OFFICE OWN & MANAGE

MILLIONS OF SQ. FT.

Brookfield Office Properties

OWNED & MANAGED IN CANADIAN REAL ESTATE

RETAIL OWN & MANAGE

MILLIONS OF SQ. FT.

APARTMENT OWN & MANAGE

MILLIONS OF SQ. FT.

20.300

Riocan REIT

41.492

CAPREIT

37.575

Oxford Properties Group

20.018

Smart REIT

30.496

Boardwalk Rental Communities

Dream Office REIT

17.200

First Capital Realty

25.278

Realstar Management

27.180

17.213

Homestead Land Holdings Limited

23.211

Ivanhoe Cambridge

15.601

Starlight Investments

21.942

Cominar REIT

12.372

Timbercreek Asset Management

20.83

QuadReal

15.817

Cominar REIT

14.522

Cadillac Fairview Corporation Limited

12.249

Allied Properties REIT

11.549

Cadillac Fairview Corporation Limited

Oxford Properties Group

11.715

Manulife Real Estate

10.300

H&R REIT

11.467

H&R REIT

10.278

Morguard

9.050

Morguard

7.714

Plaza Retail REIT

7.769

MILLIONS INDUSTRIAL OWN & MANAGE OF SQ. FT.

OTHER OWN & MANAGE

MILLIONS OF SQ. FT.

Pure Industrial Real Estate Trust

CAPREIT

28.278

NorthWest Healthcare Properties

4.000

22.050

Cominar REIT

18.025

QuadReal

16.416

Dream Industrial REIT

16.200

Morguard

12.303

Oxford Properties Group

12.251

CREIT

10.039

Kevric Real Estate Corporation

1.948

Dorset Realty Group

0.950

Melchior Management

0.442

IMP Group International

0.283 0.270

Beedie Development Group

9.704

Westcorp Property Management

Agellan Capital Partners

9.000

Ronmor Holdings Inc.

0.252

BUSAC Real Estate

0.196

H&R REIT

8.631

Firm Capital Properties Inc.

#

43

4810 DUFFERIN STREET, SUITE E TORONTO, ON M3H 5S8

29.000

Skyline Apartment REIT

14.683

Killam Apartment REIT

12.695

Minto Properties Inc.

11.426

Vertica Resident Services

9.982

Q. A.

What contributed to making last year a record year for your company?

BGIS focused on deepening relationships with our existing clients and securing new clients through acquisitions in Canada & the US. Our goal is be a global leader in the real estate & facilities management services industry.

Gord Hicks CEO Americas www.brookfieldgis.com

0.171

#

82

668 MILLWAY AVENUE, UNIT 7 VAUGHAN, ON L4K 3V2

Canadian Property Management | March/April 2017 11

TOP

TEN MILLIONS OF SQ. FT.

OFFICE OWN ONLY

OWNED IN CANADIAN REAL ESTATE

RETAIL OWN ONLY

MILLIONS OF SQ. FT.

Healthcare of Ontario Pension Plan Inc. (HOOPP)

9.337

Choice Properties Real Estate Investment Trust

35.414

I.G. Investment Management, Ltd.

5.535

Crombie REIT

18.093

Manulife Real Estate

3.800

Fiera Properties

2.080

Healthcare of Ontario Pension Plan Inc. (HOOPP)

8.039

Ivanhoe Cambridge

2.056

I.G. Investment Management, Ltd.

4.883

Melcor REIT

1.567

QuadReal

1.321

1.000 0.752

CREIT

2.162

Canadian Urban Limited

0.641

Smart REIT

2.041

I.G. Investment Management, Ltd.

0.561

Fiera Properties

1.400

Fiera Properties

0.542

1.067

QuadReal

0.470

Melcor REIT

INDUSTRIAL OWN ONLY

MILLIONS OF SQ. FT.

OTHER OWN ONLY

Healthcare of Ontario Pension Plan Inc. (HOOPP)

11.850

Choice Properties Real Estate Investment Trust

5.514

I.G. Investment Management, Ltd.

11.559

Oxford Properties Group

3.907

Fiera Properties

5.804

Ivanhoe Cambridge

2.768

MILLIONS OF SQ. FT.

Davpart Inc.

5.318

Morguard

0.581

Ivanhoe Cambridge

1.237

PRO REIT

0.274

1.227

Cadillac Fairview Corporation Limited

0.188

Melcor REIT

0.108

Ronmor Holdings Inc.

0.100

Lanesborough Real Estate Investment Trust

0.081

Shelter Canadian Properties Limited

0.035

0.307

Dayho Investments Ltd.

0.302

#

142

HEAD OFFICE 245 CARLAW AVENUE, SUITE 107 TORONTO, ON M4M 2S1

12 March/April 2017 | Canadian Property Management

1.111

Oxford Properties Group

0.443

Armadale Property Management Inc.

1.174

Lanesborough Real Estate Investment Trust SABJOY INC

Concert Properties Ltd.

0.766

Ivanhoe Cambridge

2.815

0.609

PRO REIT

2.712

2.519

Choice Properties Real Estate Investment Trust

0.800

7.500

Healthcare of Ontario Pension Plan Inc. (HOOPP)

Partners REIT

1.000

Manulife Real Estate

InterRent REIT

MILLIONS OF SQ. FT.

Ivanhoe Cambridge

Crombie REIT

Concert Properties Ltd.

APARTMENT OWN ONLY

Q. A.

What are some of your recent initiatives?

Expanding from six core staff at its June 2016 launch, QuadReal now numbers 500 employees who are excited to be part of a dynamic new Canadian company with deep roots.

Susan L. MacLaurin, CFA EVP Corporate Development www.quadreal.com

#

59

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17-15161

TOP

TEN

MANAGED IN CANADIAN REAL ESTATE

OFFICE MANAGE ONLY

MILLIONS OF SQ. FT.

RETAIL MANAGE ONLY

MILLIONS OF SQ. FT.

Brookfield Global Integrated Solutions (BGIS)

151.28

Brookfield Global Integrated Solutions (BGIS)

26.367

CBRE Limited

34.001

CBRE Limited

22.328

GWL Realty Advisors

27.909

20 VIC Management Inc.

17.098

Bentall Kennedy (Canada) LP

12.451

Bentall Kennedy (Canada) LP Colliers International

17.982 17.138

Colliers International

9.939

Morguard

5.482

Société de Gestion Cogir

5.033

6.064

Avison Young Real Estate Management Services

4.875

Morguard

5.844

Strathallen Capital Corp

4.396

Avison Young Real Estate Management Services

5.200

Triovest Realty Advisors

4.126

INDUSTRIAL MANAGE ONLY

MILLIONS OF SQ. FT.

Triovest Realty Advisors

14.523

Blackwood Partners Corporation

7.200

Canderel/ HumFord

Bentall Kennedy (Canada) LP

26.078

CBRE Limited

23.604

APARTMENT MANAGE ONLY

MILLIONS OF SQ. FT.

MetCap Living Management Inc.

20.565

The DMS Group

15.183

Société de Gestion Cogir

14.868

Briarlane Rental Property Management Inc.

10.616

Gateway Property Management Corporation

10.128

GWL Realty Advisors

9.574

Greenwin Inc.

8.736

Sterling Karamar Property Management

7.518

Shelter Canadian Properties Limited

5.522

ComField Management Services Inc.

5.250

MILLIONS OF SQ. FT.

OTHER MANAGE ONLY

MILLIONS OF SQ. FT.

CONDO MANAGE ONLY

Brookfield Global Integrated Solutions (BGIS)

29.189

FirstService Residential Management Canada

116.244

CBRE Limited

24.123

77.020

7.500

Brookfield Condominium Services Ltd. Del Property Management Inc.

57.600

GWL Realty Advisors

18.736

Triovest Realty Advisors

17.236

Regional Group of Companies Inc., The

Colliers International

16.275

Colliers International

4.143

Wilson Blanchard Management Inc. 38.748

Blackwood Partners Corporation

7.200

The DMS Group

1.400

Rancho Management Services

31.404

1.111

Pacific Quorum Properties Inc.

23.064

Canderel/ HumFord

Canderel/ HumFord

4.623

EPIC Realty Partners

4.265

Downing Street Property Management Inc.

Avison Young Real Estate Management Services

3.950

Shelter Canadian Properties Limited 0.580

Realspace Management Group Inc.

3.645

Avison Young Real Estate Management Services

0.605

0.525

Harvard Property Management Inc. 0.409

#

73

763 WOODBINE AVENUE TORONTO, ON M4E 2J4

14 March/April 2017 | Canadian Property Management

ICC Property Management Ltd.

21.433

AWM-Alliance Real Estate Group

20.579

Gateway Property Management Corporation

17.778

KDM Management Inc.

12.182

#

29

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CANADIAN PROPERTY MANAGEMENT WHO’S WHO 2017 OFFICE TOTAL SQ. FT. MANAGE (MILLIONS)

Brookfield Global Integrated Solutions (BGIS)

206.584 151.280

FirstService Residential Management Canada

116.244

CBRE Limited

105.480 34.001

Brookfield Condominium Services Ltd.

77.020

OWN

INDUSTRIAL BOTH

MANAGE

OWN

RETAIL BOTH

MANAGE

OWN

APARTMENT BOTH

MANAGE

23.604

22.328

1.425

27.909

18.736

3.137

9.574

Bentall Kennedy (Canada) LP

58.172

17.982

26.078

12.451

1.661

Del Property Management Inc.

57.600

Oxford Properties Group

57.224

Colliers International

51.599

Choice Properties Real Estate Investment Trust

44.583

RioCan REIT

43.242

0.619

17.138 1.321 0.045

5.238 12.372

0.319

Rancho Management Services

38.250

Triovest Realty Advisors

36.236

Smart REIT

34.512

Healthcare of Ontario Pension Plan Inc. (HOOPP)

31.938

9.337

Ivanhoe Cambridge

31.433

2.056

5.605

Cadillac Fairview Corporation Limited

30.946

0.395

12.249

H&R REIT

30.376

Boardwalk Rental Communities

29.000

Gateway Property Management Corporation

28.872

Realstar Management

27.180

7.714

0.787

35.414

5.482

9.050

0.174

2.070

3.267

17.236

4.126

0.351

1.895 0.177

0.007

0.581 38.748

0.067

0.006

31.404

2.712

2.815

15.601

0.901

17.213

8.631

5.514

30.496

8.039

1.237

10.278

2.041

9.750 0.020

0.002

1.268

11.850

4.143

0.029

14.523 0.080

3.907

0.001 41.492 0.100

1.174

2.768 0.188

11.467 29.000

0.390

0.049

0.196

0.127

10.128

0.204

17.778

27.180 3.476

21.942 25.278

24.575

0.180

0.014

0.233

0.500

0.016

0.412

Homestead Land Holdings Limited

23.211

1.084 1.080

23.064

1.047

20.579 23.211

I.G. Investment Management, Ltd.

22.859

5.535

0.322

CREIT

22.301

0.019

2.998

Pure Industrial Real Estate Trust

22.050

20 VIC Management Inc.

21.503

3.393

ICC Property Management Ltd.

21.481

0.029

Timbercreek Asset Management

21.025

20.300

12.303

6.043 2.328

0.470

0.340

23.633

Brookfield Office Properties

28.278

0.389

0.645

AWM-Alliance Real Estate Group

20.565

2.513

0.614

Pacific Quorum Properties Inc.

20.980

0.148

1.080

0.752 1.777

16.416

1.268

Société de Gestion Cogir

9.939 18.025

5.844

MetCap Living Management Inc.

11.715

15.817

0.609 0.027

2.538

14.522

41.107

25.419

12.251 16.275

41.772

25.278

37.575

57.600

Morguard

Starlight Investments

BOTH

24.123

0.844

20.018

Wilson Blanchard Management Inc.

First Capital Realty

OWN

77.020

67.316

49.013

MANAGE

29.189

59.356

45.308

MANAGE

OTHER

116.244

CAPREIT

QuadReal

BOTH

26.367

GWL Realty Advisors

Cominar REIT

OWN

CONDO

11.559

4.883 10.039

2.162

0.561 7.043

0.040

22.050 1.012

17.098

0.007

0.013

0.195 0.546

21.433 20.830

0.280

5.033

14.868

0.253

20.565 20.300

Canderel/ HumFord

20.145

Crombie REIT

19.093

6.064

The DMS Group

18.600

0.292

Manulife Real Estate

17.500

0.400 0.911

3.754

4.623

0.306

3.914

1.000 1.162 3.800

0.293

1.111

0.080

18.093 10.300

Minto Properties Inc.

17.325

Dream Office REIT

17.200

Dream Industrial REIT

16.200

Skyline Apartment REIT

15.123

0.440

Dorset Realty Group

15.119

0.665

Avison Young Real Estate Management Services

14.550

5.200

0.563 0.800

1.200

15.183 0.100

1.459

0.300 0.283

1.400 0.600

3.246

11.426

17.200 16.200

Blackwood Partners Corporation

14.400

7.200

Shelter Canadian Properties Limited

14.364

0.074

Davpart Inc.

14.064

16 March/April 2017 | Canadian Property Management

14.683 0.205

0.933

3.950

3.415

1.850

7.101

4.875

0.950 0.525

7.200 0.889

0.127

1.573

0.052

1.515 5.318

5.370

0.356

0.011

5.522 1.751

0.200

4.963

0.580

0.035

0.091

CANADIAN PROPERTY MANAGEMENT WHO’S WHO 2017 OFFICE TOTAL SQ. FT. MANAGE (MILLIONS)

Greenwin Inc

13.005

Killam Apartment REIT

12.695

Briarlane Rental Property Management Inc.

12.446

0.131

ComField Management Services Inc.

12.330

0.080

Sterling Karamar Property Management

12.274

0.447

KDM Management Inc.

12.182

Allied

11.910

0.067

Apollo Property Management Ltd

11.598

0.560

Agellan Capital Partners

10.845

0.850

Concert Properties Ltd.

10.546

Regional Group of Companies Inc., The

10.310

Percel Inc.

10.030

Vertica Resident Services

9.982

Beedie Development Group

9.878

Fiera Properties

9.826

Drewlo Holdings Inc.

9.757

EPIC Realty Partners

9.265

Park Property Management Inc.

9.174

Royal Property Management

9.000

Berkley Property Management Inc.

8.550

Westcliff

8.532

Prologis

8.200

Canlight Management Inc

8.080

ONNI Group

7.964

Plaza Retail REIT

7.769

NewWest Enterprise Property Group Inc.

7.571

InterRent REIT

7.500

Royale Grande Property Management Ltd.

7.380

Downing Street Property Management Inc.

7.330

GPM Property Management Inc.

7.200

Mainstreet Equity Corp.

7.177

One REIT

6.950

360 Community Management Ltd.

6.604

Globe Property Management

6.348

Harvard Property Management Inc.

6.280

M&R Holdings

6.192

OWN

0.160

INDUSTRIAL BOTH

MANAGE

0.180

0.101

OWN

RETAIL BOTH

MANAGE

OWN

0.109

APARTMENT BOTH

MANAGE

0.347

8.736

OWN

CONDO BOTH

MANAGE

OTHER MANAGE

OWN

BOTH

3.372 12.695

0.989 1.361

0.710

10.616

1.000

5.250

2.721

7.518

6.000 0.228 12.182

0.299

11.550 0.140

0.410

0.950 0.443

9.000

1.456

0.500

1.227

4.868

0.200

10.278

0.210

0.360

7.500

0.045 0.057 0.500

0.167

2.328

1.250

0.015

10.015 9.982

9.704 2.080

0.130

5.804

0.044

1.400

0.542 9.757

4.500

4.265 0.050

0.500 1.500

0.048

7.576 4.500

0.750

0.400 0.870

0.250 0.295

0.235

0.707

4.500

5.100

0.250

1.800

0.300

0.057

7.200

6.425

8.200 0.253

0.220 0.845

0.050 3.683

2.117

1.170

0.150

7.769 3.254

1.888

2.316

0.014

0.099 7.500 7.380

0.923

2.484

0.887

0.151

2.280

0.005

0.605

7.195 0.016

0.134

7.027

6.950 6.604 0.300 1.770

0.060

0.796

0.110

0.077

Strathallen Capital Corp

6.161

Northam Realty Advisors Limited

6.130

Warrington PCI Management

6.048

LaSalle Investment Management

5.986

SDM Realty Advisors Ltd.

5.733

2.000

Shindico Realty

5.708

0.245

Nadlan-Harris Property Management Inc.

5.612

0.923 1.247

1.765 5.504 2.286

4.329

0.162 1.990

0.184

2.388 2.600 0.335

0.409

0.183

4.396

0.708

0.128

2.211 0.356

0.464

3.132

6.048

0.308 1.050

0.138

0.577

0.879 0.158

0.083 0.521

3.174

0.085

0.358

0.010

0.136

5.612

Devon Properties Ltd.

5.570

0.143

Kevric Real Estate Corporation

5.482

0.068

Realspace Management Group Inc.

5.477

1.197

0.129 2.911

Colonnade BridgePort

5.338

2.652

Menkes Property Management Services Ltd.

5.319

2.432

0.356

Crown Property Management Inc.

5.180

2.137

3.043

Osgoode Properties

5.142

0.034

Firm Capital Properties Inc.

5.088

Skyline Commercial REIT

5.062

BTB Real Estate Investment Trust

4.970

0.464

0.050

3.645

0.635

1.582 0.797

4.588

0.710

0.041

1.017

1.948 0.086

1.568

0.166

1.826

0.531

5.062 0.276

0.047 2.234

0.051

0.171

5.062 2.142

1.500

1.328

Canadian Property Management | March/April 2017 17

CANADIAN PROPERTY MANAGEMENT WHO’S WHO 2017 OFFICE TOTAL SQ. FT. MANAGE (MILLIONS)

OWN

INDUSTRIAL BOTH

MANAGE

OWN

RETAIL BOTH

MANAGE

Martello Properties Services Inc.

4.729

0.675

0.540

0.910

Landmark Properties Inc.

4.720

1.002

3.481

0.005

0.149

3.111

1.381

OWN

APARTMENT BOTH

MANAGE

OWN

CONDO BOTH

0.258

MANAGE

MANAGE

2.186

0.160

Canreal Management Corp.

4.641 4.628

BayShore Property Management

4.558

0.700

Ontario Property Management Group Inc.

4.523

4.508

3.858 0.014

Centurion Asset Management Inc.

4.439 4.182

0.349

0.029

0.227

0.825

2.617

Prospero International Realty Inc.

4.104

0.278

0.284

1.069

2.392

0.081

4.040 4.000

Canadian Urban Limited

3.813

Dayhu Investments Ltd.

3.796

Redbourne Properties Inc.

3.649

BOTH

4.628

CitiGroup Properties Limited

NorthWest Healthcare Properties

OWN

0.233

Hollyburn Properties Ltd.

Pinedale Properties Ltd.

OTHER

0.447

0.224

0.206

0.047

3.992 0.135

3.501

0.062 4.000

0.577

2.213 0.041

0.371

2.898

1.567

0.072

Immomarketing Inc

3.639

Melcor Developments

3.495

KRP Properties

3.200

3.200

Kelson Group

3.170

0.070

Old Oak Properties Inc.

3.147

0.154

Shape Property Management Corp.

3.008

0.382 0.302

0.231

0.641

3.188

0.211

0.137

0.242

0.003

0.090

0.125

1.067

0.054 3.285

0.098

0.325

0.108 3.100

0.064

0.021

0.977

1.931

0.190

0.825

1.283

3.008

Melcor REIT

2.875

Westcorp Property Management

2.862

1.567 0.231

0.133

Aspen Properties

2.650

2.650

Lawrence Construction/Grant Management

2.552

0.055

0.255

Melchior Management

2.535

0.185

0.228

Partners REIT

2.519

Kings College Management Limited

2.490

Gulf Pacific Property Management Ltd.

2.469

0.065

1.067

0.108

0.041

0.023

0.392

0.017

0.111

0.706

0.725

0.161

0.105

0.983

0.431

0.270 0.083

0.002

0.142 0.442

2.519 0.693

Skywater Property Management

2.450

Brown Group of Companies Inc., The

2.444

Arnon Corp.

2.410

The Enfield Group Inc.

2.381

Ronmor Holdings Inc.

2.296

0.465

Greenrock Property Management Ltd.

2.136

0.330 0.100

0.400

0.200

1.890

0.326

1.100

0.350 2.450

0.011

0.067

0.502

1.279

0.409

0.020

0.009

0.543

0.052 0.117

0.017

0.008

0.662

1.292 0.397

0.266

0.041

2.224

0.791

0.100

0.006

0.252

1.800

State Building Group

2.100

O'Shanter Development Company Ltd.

2.025

1.000

1.000

PRO REIT

2.001

Atlantis Realty Services, Inc.

1.860

0.179

1.470

0.177

Tillyard Management Inc.

1.831

0.726

1.010

0.095

WJ Properties

1.805

Skyline Retail REIT

1.753

Metcalfe Realty Company Limited

1.741

1.501

0.147

0.092

Madison Properties Inc.

1.705

0.800

0.450

0.455

Williams and McDaniel Property Management

1.704

0.075

0.175

1.454

BlueStone Properties Inc.

1.633

0.215

0.615

0.803

0.405 0.154

0.007

0.766

1.620

0.806

0.274 0.034

0.089

1.716 1.753

Groupe Axwood

1.568

Around The Lakes Property Management Limited

1.512

0.049

IMP Group International

1.463

Huntington Properties Ltd.

1.404

BUSAC Real Estate

1.359

Ashelron Ltd.

1.355

0.900

Antrev Management & Consulting, Inc.

1.258

0.634

Gillin Engineering & Construction Ltd.

1.240

0.304

0.443

0.285

0.054

0.432 1.512

0.056 0.105

1.124 0.790

0.283 0.090

0.419

1.163

18 March/April 2017 | Canadian Property Management

0.196 0.080

0.138 0.647

0.311

0.153

0.375 0.022 0.017

0.576

CANADIAN PROPERTY MANAGEMENT WHO’S WHO 2017 OFFICE TOTAL SQ. FT. MANAGE (MILLIONS)

Lanesborough Real Estate Investment Trust

1.232

Lionheart Property Management Inc.

1.161 1.120

0.303

1.106

0.250

1.063 1.060

Concorde Group Corp.

1.010

Rathcliffe Properties

1.000

SABJOY INC

1.000

0.940

0.066

Tower Building Management

0.909

0.354

Tandem Group

0.907

Armadale Property Management Inc.

0.899

Kroma Management Ltd.

0.822

Mutual Developemnt Corp

0.705

Aldgate Group

0.660

0.543

Condominium Living Management Inc.

0.518

Northland Properties Inc.

0.496

Glenview Management Limited

0.490

BOTH

MANAGE

OWN

BOTH

MANAGE

MANAGE

0.041

OWN

BOTH

0.081

0.824

0.500 0.540

0.370 0.100

0.600 1.000

Merkburn Holdings Ltd

Plaza Cote des Neiges Canada Inc.

OWN

0.756

0.300

0.971

0.575

MANAGE

0.816 0.100

0.100

0.965

0.600

BOTH

OTHER

1.063

Twin City Management Ltd.

Fana Group of Companies

OWN

CONDO

0.560

MARCARKO LTD

Fyrst Avenue Property Management Inc.

MANAGE

APARTMENT

1.111

York Heritage Properties Preston Group

BOTH

RETAIL

0.337

Equitable Real Estate Investment Corporation Ltd.

Provincial Property Management Limited

OWN

INDUSTRIAL

0.971 0.076 0.238

0.889

0.097

0.526

0.200

0.013 0.355 0.907

0.154

0.190

0.159

0.307

0.024

0.064 0.822 0.005

0.195

0.430

0.200

0.500

0.035

0.600 0.300

0.065

0.110

0.030

0.113

0.035

0.035

0.430 0.518 0.496

0.226

0.208

0.014

0.018

0.024

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Canadian Property Management | March/April 2017 19

CANADIAN PROPERTY MANAGEMENT WHO’S WHO 2017 OFFICE TOTAL SQ. FT. MANAGE (MILLIONS)

Lloyd Zerker Realty Ltd.

0.440

0.013

Loncom Property Management

0.438

0.055

Vancor Group Inc.

0.435

OWN

INDUSTRIAL BOTH

MANAGE

OWN

RETAIL BOTH

MANAGE

OWN

APARTMENT BOTH

MANAGE

0.250

0.225 0.008

Taft Management Inc.

0.387 0.376

Gold Castle Holdings Ltd.

0.352

0.300

0.052

0.159 0.036

0.350

0.004

0.021

0.344

0.201

0.143

Creative Realty Corp

0.295 0.287

Chester Developments Ltd.

0.279

0.040

0.018

0.075

0.086

0.341

0.100

Goodwood Property Investment Ltd.

0.284

MANAGE

0.227 0.240

Edie & Associates

Bedford Properties & Estates Ltd.

BOTH

0.202

Gitalis Group Inc.

REMCO

OWN

CONDO

0.325

0.290

0.005 0.287 0.284 0.040

R.W. Commercial Property Management Inc.

0.250

Gistex

0.250

0.080

Leimerk Developments Ltd

0.245

0.046

Summa Property Management

0.238

Nelson Education Ltd.

0.233

Canahahns Company Limited

0.202

17A Properties

0.191

Regency Group

0.101

Sluis Properties

0.090

Oak Bridge Properties Inc.

0.064

Parkhurst Asset Corp

0.015

0.239

0.250

MetCap_CPM_WhosWho_Supplement_2017.pdf

0.170 0.067 0.033

0.132 0.178

0.027

0.233 0.014

0.188 0.191

0.030

0.071 0.090

0.014

0.050 0.015

1

2017-03-20

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OTHER MANAGE

OWN

BOTH

industryleadership

REAL ESTATE RARITIES

Senior Leadership Accommodates Few Women

By Barbara Carss THE PRESENCE OF women in C-suites and boardrooms of the Canadian real estate industry appears even rarer than their already modest profile in the broader economy. An analysis of 62 companies reporting portfolios of at least 10 million square feet to Canadian Property Management's 2017 Who's Who in Canadian Real Estate survey finds two female Chief Executive Officers (CEOs), three Chief Operating Officers (COOs) and 17 Chief Financial Officers (CFOs).

Using each company's own definition of its senior management team (as presented on its website) to tally the g e n d e r b r e a k d ow n o f r a n k i n g leadership, women fill 141 or slightly more than 22% of 627 listed positions.

The number of individuals recognized in each company varies from a low of two to a high of 36, but women are the cited majority in just one case – at Killam Properties/ Apa r tment R EIT. Meanwhile, 14 companies have no women highlighted in senior management roles.

In part, the gender imbalance in real estate's hierarchy says more about the 20th century than this one given that climbing the corporate ladder is typically a multidecade undertaking.

"This is a long career supply pipeline and the mostly male CEOs and board members coming out at the end started their careers 30 to 40 years ago when the vast majority of real estate employees were male," acknowledges Michael Brooks, CEO of REALPAC, the association that represents many of Canada's leading real estate companies and institutional investors.

Ye t , c h a n g e management specialists caution

that a homogeneous perspective among top decision-makers can be stifling in fluid times. Notably, 2015 and 2016 MSCI research on the correlation between women in leadership and financial performance found that companies with higher proportions of female executives and at least three women directors/trustees on their boards have achieved better return on equity and ea r nings per sha re than predominantly male bastions.

No direct causal link has been identified, but analysts hypothesize that diversity leads to better decision making. There is also evidence that companies moving toward gender parity suffer less employee turnover and enjoy higher levels of employee engagement, which tends to show up in economic performance.

"The commercial real estate industry has a very long way to go," submits Sheila Botting, Canadian Real Estate Leader and Partner with Deloitte. "If we

don't reflect diversity in a more holistic and focused way, we won't keep pace with the Canadian economy or the wider business community."

LEVERAGING SHAME Looking at those potentially positioned to move up or into senior management, there are 21 executive or senior vice presidents and 41 vice presidents among women identified on the 62 company websites. In addition to the CEOs, COOs and CFOs, six women fill other C-suite roles as Chief Counsel, Chief Human Resources Officer and Chief Marketing Officer.

These numbers are expected to rise as the more balanced workforce of the 21st century gains seniority. "There are a lot more women coming in the front end of the pipeline who will be CEOs, CFOs and VPs in the near future, in addition to the ones who are there already," Brooks predicts.

Canadian Property Management | March/April 2017 21

industryleadership A little more than half, or 33 of the 62 companies have boards of directors or trustees. Here, women's representation trails even further, numbering 50 or about 17% of 292 board positions.

Seven boards are all-male – in two cases, mirroring the company's allmale executive leadership. Another 15 companies have just one woman director/trustee.

Canada's recently released 2017-18 budget points to a slightly more generous

share of leadership roles for women across the entire private sector, citing the 2016 figures at 26% of senior management and 19.5% of Financial Post 500 board members. A mong 94 Ca nadia n companies in the MSCI ACWI Index, data from the fall of 2016 pegs women's board representation at 22.5%, with 47 of those boards boasting at least three female members.

Eight of the 33 real estate companies have three or more female board

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members. The three boards with four or more women members are pension funds: HOOPP; Cadillac Fairview; and OMERS/ Oxford Properties. That's in keeping with other evidence that pension funds are typically more active advancers of environmental, social and governance (ESG) initiatives.

The Canadian government is promoting a target for women to comprise 30% of board membership, nationwide, by 2019. With the 2014 introduction of what's commonly dubbed comply-or-explain requirements through the Ontario Securities Commission, publicly traded companies must transparently report the gender composition of their boards – a tactic that essentially leverages shame, if, indeed, unit/shareholders feel and wield it, to inspire change.

"Good governance practice for boards typically involves a skills, diversity, gender and age matrix. They look for particular skills in key board committee areas – finance, investment, accounting, legal, banking, compensation, governance – and then look to fill those needs with an eye to diversity, gender and age," Brooks explains. "Of course, there are women with all those skill sets today.

You just have to find them."

MULTIDISCIPLINARY MIX OF EXPERIENCES Real estate offers a multidisciplinary career path and women have experienced varying success in ascending the domains of proper ty ma nagement development, leasi ng a nd i nvest ment /asset management. By definition, Canadian Property Management's Who's Who survey focuses primarily on the first function, which, Botting suggests, has traditionally been more open to women with legal and accounting

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48% 4

Killam Properties/ Apartment REIT

12

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expertise than the deal-making facets of the business.

"In my view, there is a glass ceiling for women in the commercial real estate industry," she says. "Some of the obstacles are related to value systems."

Fissures are appearing in the ceiling and spreading in a few directions. Finance/ accounting is clearly the most frequented route to the C-suite, while residential management appears to offer more opportunities in general.

Seven of the 10 companies with the highest percentage of women in their senior ranks are primarily focused on residential management. (See chart.) One of the two women CEOs heads a residential management company, while the two companies where women hold both the COO and CFO positions also provide mainly residential services.

"If we post an opening for a manager, typically 80% of the replies we get are from women," reports Raymond Wilson, P resident of Wi lson Bla ncha rd Management, who shares the C-Suite with COO Karen Reynolds and CFO Paula Davis.

Wilson Blanchard offers a good example of mentoring, as both women were recruited and grew into senior roles in step with the company's relatively rapid expansion to today's 41-million square feet under management. Davis is an original employee who had worked elsewhere with Wilson and his partner, Dave Blanchard, prior to the 1995 launch of their company. Reynolds ran her own property management company and was a student in a course Wilson taught at Hamilton's Mohawk College when he offered her a part-time position.

"That's just been one of the best moves we've ever made as long as we've been in business," Wilson affirms.

SUPPORTS AND STRATEGIES Women's success in residential management ironically occurs in the real estate milieu least likely to fit neatly into an eight-hour daytime workday. Studies consistently show that women shoulder a disproportionately greater share of family and household-related labour, and the childcare-intensive stage of their lives is often when their male peers outmanoeuvre them on the career track.

Technological advances, along with evolving attitudes about work-life balance and what constitutes a workplace, now provide more flexibility to work outside a formal office setting and/or stagger work hours around other responsibilities. "Twenty years ago, people didn't have these oppor t un ities, a nd, today, t hese advantages are helping to recruit women and men alike" Botting observes.

With the resources (a growing complement of women poised to move into leadership roles) and infrastructure (technology and workplace culture) in place, she sees proactive strategy as the next necessary piece. As an example, the industry's somewhat meteoric acceptance of green building principles is proof that it can be open to, and profit from, new business practices and philosophies.

If sustainability is considered a must-have to appeal to the millennial sensibility and to attract and retain quality tenants, Botting argues it shouldn't be a stretch to frame diversity the same way.

"For the industry overall, it's very much an opportunity," she says. zz

Despite the constant barrage of new ways to communicate, email still stands tall among marketing channels for reaching out to existing clients and sourcing new business.

Keep these three items in mind when planning your next email marketing campaign: • Seventy-two per cent of people prefer to receive promotional content through email, versus 17 per cent who prefer social media. Put this in perspective of the end user. No one likes an influx of marketing messages clogging their Facebook feed. The content-first nature of social media marketing employs a completely different strategy, so be certain your messages that are overt marketing are confined to email.

• Mobile now accounts for 54 per cent of email opens. With 70 per cent of consumers immediately deleting messages that don’t render well on their device, you can’t ignore mobile.

Any good email marketing software offers a mobile-friendly template. If yours still doesn’t, start shopping for alternatives now.

• Personalized email messages improve click-through rates by an average of 14 per cent. If you’re using email marketing software, make sure you have the capabilities to import your contact’s names and company names along with their email address. You’re far more likely to get attention from the user if their name and company are reflected in the subject line and within the message’s content.

Steven Chester is the Digital Media Director of MediaEdge Communications. With 15 years’ experience in cross-platform communications, Steven helps companies expand their reach through social media and other digital initiatives. To contact him directly, email gosocial@mediaedge.ca.

Canadian Property Management | March/April 2017 23

investment

INVESTORS SEE SLIP IN 2016 REAL ESTATE RETURNS Canada Property Index Shows Downward Trend

By Barbara Carss CANADIAN REAL ESTATE delivered uncharacteristic although not entirely unexpected torpid investment returns in 2016. Annual results of the REALPAC/IPD Canada Quarterly Property Index, released in early February, reveal a year of belowaverage performance for index participants' directly held standing assets.

A total return of 5.7% across 43 portfolios, encompassing more than 2,400 individual properties collectively valued at nearly $142 billion, trails the projected global average of 10.7%, and is well below the three-year, fiveyear and 10-year Canadian return. Modest capital growth of 0.7% cloaks more marked regional disparity, as values declined in six of eight surveyed national markets.

Meanwhile, an income yield of 4.9% fell below the 2015 level that index producer, MSCI Inc., had deemed "the tightest in 15 years" to achieve new distinction as "the tightest in 30 years".

"If you exclude the financial crisis, 5.7% is the lowest return we have seen in literally 24 March/April 2017 | Canadian Property Management

decades," Simon Fairchild, MSCI's Executive Director, told a Toronto gathering. "We are starting to feel significant and meaningful falls in value in Calgary and Edmonton. If you think of the market as a whole, you'd bundle it into the slipping category, but, relative to the rest, Toronto and Vancouver are showing some resilience."

Industry insiders on hand for Fairchild's presentation affirmed they had been prepared for a slip, but not necessarily a pervasive downward trend across all markets and sectors. With prompts from REALPAC Chief Executive Officer Michael Brooks, the on-the-spot panel deciphered the results through the lenses of the Canadian economy and real estate cycle, globa l ma rket t rends a nd institutional investors' strategic needs – concluding that one year of weaker results is unlikely to trigger a panicked pullback from new construction and/or planned overhauls of assets, but could raise the profile of other options.

"Institutional capital isn't really thinking in terms of developing or not developing.

They are looking at real estate in relation to other asset classes," advised Blair McCreadie, Senior Vice President with Fiera Properties. "It's a question of: how much money are we going to flow into real estate based on what else is out there?"

From the longer term perspective such investors typically favour, index participants have seen better 10-year (9%) and five-year (9.%) returns on their standing assets than bonds, equities or REITs have garnered.

However, REITs have been the top performer, at 8%, over the three-year horizon, while both the broader equities class, and REITs within it, soared past the index last year with returns of 21.2% and 18.2% respectively.

LOW YIELDS ARE NEW NORM Steadily increasing values over the past several years also play into this year's numbers. "Falling cap rates have been

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investment APARTMENT FUNDAMENTALS RETAIN INVESTOR FAVOUR Apartment buildings were top performers last year for institutional investors participating in the REALPAC/IPD Canada Property Index.

Recently released 2016 results show an 8% total return on 340 residential properties – well above the 5.7% per cent total return across the entire index, which encompasses more than 2,400 directly held standing assets in 43 portfolios.

The results reinforce reports of cap rate compression in many major Canadian markets over the past 12 months.

Residential income returns of 4.3% were the lowest of the four major property sectors, but apartments enjoyed the largest surge in value with 3.6% capital growth.

"It's still a very desirable asset type, but it's not producing a lot of cash," observed Michael Brooks, REALPAC's Chief Executive Officer, as he facilitated discussion at the results presentation in Toronto.

If real estate in general is aligned with institutional investors' needs for stable, predictable returns over the long term, apartment fundamentals particularly match that criteria. Top strategists for index participants hailed the residential sector's ballast qualities in a year when office values declined and the Calgary and Edmonton markets suffered a loss on investment.

"Residential is always solid on the occupancy front," noted Blair McCreadie, Senior Vice President an fund manager with Fiera Properties. "The multi-res space is not really a market that has had a lot of surprises."

"You have a clear view on revenue growth," concurred Vince Brown, President and Chief Executive Officer of Triovest.

In a year-over-year comparison, residential properties were on par with their 2015 performance when the sector achieved a 7.9% total return. Other property types dropped more off the previous year's pace. Notably, the retail total return topped the chart at 8.8% in 2015 and fell to 6% in 2016; office properties registered a total return of 5.5% in 2015 and dropped to 4.7% in 2016.

The index producer, MSCI, pegs the total value of apartment properties in the index at $12.4 billion, equating to about 9% of its total capital value. In contrast, the seven open-end funds participating in the REALPAC/IPD Canada Property Fund Index, hold a greater weighting of residential properties.

Apartments are pegged at 17.5% of the capital value of the property fund index, which encompasses about 900 individual properties collectively worth about $26 billion. MSCI reports the property fund index delivered a net fund total return of 6.5% last year.

26 March/April 2017 | Canadian Property Management

“There is activity, but it is careful and thoughtful activity.” part of our lives in real estate for the last decade," Fairchild said. "Returns are low because yields are low. In a sense, this is the new norm."

"One of the big reasons income has been going down is because capital is so high," McCreadie reiterated.

The Canadian 2016 index results were among the first of 32 national indices that MSCI released this year. Many country-tocountry comparisons were still not definitive, but Ireland was placed as the world-beater again this year, with a total return of 12.4%. The United States also outperformed Canada with a total return of 7.6%. Both countries have fallen off their 2015 pace, when Ireland recorded a 25% total return and the U.S. surpassed 10%.

"I think the general trend here, and you've got Canada with it, is that returns have slowed," Fairchild said.

Among property types, only residential showed improved performance with the chart-topping total return of 8%, up marginally from 7.9% in 2015. Office was this year's laggard, delivering a 4.7% total return in the face of a 0.6% drop in capital value. Retail and industrial were closely bunched in the middle, with returns of 6% and 5.8%.

"In the grand scheme of things, that's not a very wide spread in sectors. What's much more noticeable is the spread across the markets," Fairchild said.

Even so, more than half of the properties in the index are located in Vancouver or Toronto, somewhat cushioning the impact of weaker performance elsewhere. The two metropolises outdistanced the pack, but with results below their 2015 performance.

Vancouver recorded total returns of 12%; Toronto followed with total returns of 8.6%.

All others slumped below the national average, ranging from Winnipeg's 5.1% return to Calgary's 2.8% loss on investment.

PAIN AND POSSIBILITIES Calgary is home to about 13% of the index and panellists identified slope for its slide to continue. Although discount prices were largely unseen in the earlier phases of what has now been a prolonged downturn, there is an

expectation that any new round of transactions will reset the bar.

"In a falling market, you always have a lag. I think that's where we are at," said Pierre Bergevin, Managing Partner with Brookfield Financial.

"I think we are testing the bottom on leasing," observed Vince Brown, President and Chief Executive Officer of Triovest, but he foresees values could dip further.

"The vendors recognize they've got to take some pain," McCreadie concurred.

Yet, on the potential upside, he points to the now approved TransMountain pipeline and renewed expectations for the Keystone XL pipeline as stimuli for Alberta's oil and gas sector and Calgary's office tenancy.

In exploring other 2016 results and how they might apply to 2017, panellists agreed investors will be looking outside Canada, but may also become more proactive within its borders. Bergevin drew a correlation between the higher performance of superregional malls – a 7.2% total return in 2016 – and the massive capital investment that owners have poured into refurbishment and expansion projects in recent years.

"When we look at these returns, you can sit passively and accept them, or you can do something else," he said. "The superregional malls are bucking the trend and doing a tremendous job."

Brown also pointed to the perennial consideration of diversification and weighting of assets, which keeps investors open to opportunities as they arise in various sectors and markets.

"There is activity, but it is careful and thoughtful activity," he reported. "This sort of market is actually a great market if you're somebody, as most of us are, who just loves to operate real estate."

When asked to predict, panellists all pegged the 2017 total return in the range of 6 to 6.5%. Turning to past prognostication, Greg Spafford of LaSalle Investment Management was named the annual contest winner for most closely targeting last year's total return – a prediction of 5.9%, made in February 2016.

"You had to be on the bearish end of the spectrum to get it right," Fairchild noted. zz

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Priority Submetering Solutions celebrates th its 15 anniversary A look back on what made the company what it is today 2000

» Expanded Priority’s services from electricity to also include water and natural gas » Launched Priority’s website (which has been relaunched twice since, and is better every time)

2010

» Moved in to Priority’s new and current facility to accomodate Priority’s growth

After growing up in a submetering family, the idea to run and expand Priority’s services came to President Andrew Beacom as he developed a keen interest in how electricity was measured.

» Rebranded and renamed Priority to better identify with the submetering industry.

“As I got older and became familiar with the industry, I realized there was a hole in the market for good, honest submetering and billing

» Attained an A+ rating with the Better Business Bureau » Expanded into the US Market

2015

Priority Submetering Solutions has had a lot to celebrate recently: expanding into the U.S. market, the launch of a new website and company re-brand, and huge company growth, to name a few. In 2017, Priority will also be celebrating its 15th anniversary as a major Canadian submetering provider.

» Increased staff by 75% in one year to accomodate current and future growth » Expanded services to include thermal metering

solutions. With the guidance and help of friends and family, Priority was born!” he explains.

Established in 2002, the company started as a two-person operation that handled all the sales, marketing and customer service from a small office in Pickering.

Now, Beacom runs a staff of 23 at a company that is well-known and respected in the industry.

Priority’s products and services have really evolved over the last 15 years. The company has grown from strictly offering electrical billing, to now providing the installation, billing and administration of all types of submetering systems, in all types of buildings. They’ve also added more utilities to their roster including water, natural gas and thermal. The company is also unique in that it has the ability to read and bill all types of metering systems and offers flexible solutions to suit any client’s needs.

Suite metering, the company’s main offering, is an excellent and money-saving solution for property managers as it gives them a detailed overview of utility usage for full transparency. Typically, residents and property managers will see a change in usage within two to three months of implementing a submetering system, but that time can vary depending on the building, residents and weather patterns.

Priority is different from its competitors because, although it has grown exponentially in its 15 years, at its heart it’s still a small company with good values. The

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company also prides itself on offering the best value for fullservice suite metering. Unlike its competitors, Priority guarantees pricing for the term of the contract and will not tack on any surprise charges, deposits or hidden fees. Plus, clients will never find fine print on its contracts. All of its meters are subject to strict verification by the governing bodies of the industry.

“We are honest, accountable for our actions and approachable.

Our customers are not just another number,” Beacom says.

“In addition to offering topquality services and products, we go above and beyond to be as transparent as possible, from contract creation, to being actively engaged in social media and really, by just being good people.”

Beacom attributes the company’s success to his staff.

“Although we were just two [people] when we started, we’ve really had, and have, some amazing people working here,” he says. “These people have brought different expertise to help us grow, and we’ve really become a family.”

“I have worked at Priority for over 10 years and watched the company grow from four employees to over 20,” says Tom Ellerby, a longtime sales associate at the company.

“Priority is successful because the goal is to be the best we can be by treating both employees and customers with integrity and respect. Priority is a great place to work and will continue to grow and prosper because it cares.”

To celebrate the company’s anniversary, Priority ran a promotion on its website giving away gift cards to 15 customers.

Later this year, the company will be doing some giveaways from its booth at the SpringFest trade show in Toronto. In-house celebrations included food and a 15th Anniversary cake. Each employee also received a varsity Priority t-shirt with their name and employee number on it.

When asked how he feels about the upcoming celebrations, Beacom says it feels surreal.

“I can’t believe it has been 15 years. The time has flown by and to see some of the original people from the early days still here is very rewarding.”

During the company’s anniversary year, Beacom continues to look forward. “I think [in the future,] Priority will only become better known in the industry,” he says.

“In terms of change, I think change will come with growth – but in growing, we will be true to our core values, and we are sure to have some fun along the way.”

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HR/skills

REAL ESTATE EMPLOYERS KEEP A LID ON SALARIES

Commercial Managers Out-Earn Peers in Residential Sector REAL ESTATE employers are lamenting their limited pool of job candidates, but still keeping a lid on salary levels. Results from a national survey of the demand for human resources reveal that 59% of respondents in the property and facilities management sector experienced a pickup in business activity last year; yet, only one quarter bumped up salaries by more than 3% and 16% offered no raises at all.

It's a trend registered across the wider labour force, as 81% of survey respondents from Canada's 10 major business sectors reported that skills shortages have negatively affected their operations, but just 22% plan to boost salary rates by 3 to 6% in 2017. At the same time, 62% of those employers anticipate an increase in business activity over the coming year.

"While employers expect the economy to pick up and business activity to continue to increase, most are hoping to do more while keeping payroll costs the same," says Rowan O'Grady, President of the recruitment firm, Hays Canada, which produces the annual overview of job functions and relate d comp ensat ion. "T h is is 30 March/April 2017 | Canadian Property Management

understandable with the turbulent economy still causing some uncertainty, but it does mean that even as the economy and business activity pick up, most Canadian workers will not see that improvement affect their lives for at least another year."

In some cases, identified skill shortages are quite select – for example, the oil and gas sector is uniquely in need of restructuring consultants. In contrast, real estate employers report they are pressed to fill some of the industry's key job functions, including: commercial property manager; condominium property manager; building operator; and commercial leasing agent.

Prospective openings are drawing fewer applicants and/or a larger share of jobseekers who lack qualifications for available positions. In response, Hays consultants suggest companies could broaden the scope of their search and invest in training workers lured from other sectors.

The sector also needs to do more to promote the appeal of its careers. "There is a common misconception that jobs in the property and facility industry are maintenance roles when, in fact, many

roles are about customer service, business development, and life cycle planning and energy management," the survey report observes.

Turnover further compounds staffing issues, particularly in residential management. "Strata/condo management professionals are especially in high demand as it is a very demanding and intense area of the industry, which causes professionals to move on to other areas fairly quickly," the reports states.

Survey findings show that Vancouverbased condominium managers typically earn up to 20% more than their peers in rental residential buildings. The inverse is true in Montreal, where typical salaries for rental residential property managers are pegged in the range of $60,000 to $70,000 versus typical salaries of $50,000 to $60,000 for condominium managers.

Typical salaries for commercial property managers surpass those for residential managers in all seven surveyed Canadian markets – ranging from a low of $65,000 to $75,000 in Winnipeg and Montreal to a high of $80,000 to $89,000 in Calgary.

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Canadian Property Management | March/April 2017 31

HR/skills DESIGN AND CONSTRUCTION SKILL SHORTAGES Revit specialists and estimators have a commanding position in the labour market as the design professions actively embrace building information modelling (BIM) and the construction bid process grows more complex. Newly released survey results charting the demand for human resources in major Canadian markets and business sectors identify the two roles among highly sought expertise in the development industry.

Nearly 40% of surveyed employers in the construction sector expect to hire more permanent staff in 2017. This follows a year when 48% of them reported an increase in business from 2015.

Meanwhile, architecture firms generally anticipate a bounceback from 2016 when 36% of surveyed employers suffered a decline in business, including a need to augment staff. More than half indicate they will add permanent staff, while another 40% may find their goal to retain their existing roster almost as challenging.

"There is a good deal of movement between companies, as some lose projects while others gain projects, and staff retention and turnover has come more into focus for many firms," states analysis from Hays Canada, accompanying its annual survey results. "The more senior the architect, the harder it tends to be to attract them away from their current employer. Good technologists

Salaries in Calgary are likewise the highest in the country for several other positions, including those Hays Canada categorizes as "in demand".

Typical salaries for commercial leasing representatives are in the range of $90,000 to $105,000 in Calgary compared to $70,000 to $80,000 at the low end of the scale in Montreal. Building operators typically earn $55,000 to $65,000 in Calgary versus $45,000 to $50,000 in Winnipeg, Ottawa and Montreal.

Although Vancouver and Toronto are consistently named Canada's most flourishing real estate markets, salary levels in the two metropolises are rarely chart-topping. This perhaps signifies the ambiguity Hays Canada analysts encountered across all business sectors and regions.

"Less than two-thirds (52%) of employers are certain they are paying market rate, and 22% don't know what the market rate is.

What's more, almost half of professionals don't believe they are paid market rate, or don't know what market rate is," the report notes. "With fewer companies offering salary increases, this trend is likely to continue. Employers who aim to maintain or improve retention without increasing payroll costs must ensure they are offering other benefits and perks to keep employees engaged." zz The preceding article is reprinted from the REMI Network at www.REMInetwork.com.

32 March/April 2017 | Canadian Property Management

or architects proficient in Revit are highly sought after, and best efforts are made to retain successful employees."

Construction employers are similarly facing an "experience gap" as a large cohort of skilled trades nears or reaches retirement.

"Competition is tight for experienced workers and managers," the report notes. "The estimator shortage nationwide continues to be a challenge, especially since the bid process has become more complex and the construction models have changed with the introduction of P3 and other new models."

Other occupations deemed to be in demand include: project managers; project architects; specification writers; civil construction workers; and multifamily and commercial construction professionals. Design and construction skill shortages also have flow-through impacts on the timing for staffing up projects.

Across the entire survey base, more than 50% of employers now budget a two- to six-month timeline to fill a "candidate-short" position, while less challenging hires are typically accomplished in two weeks to a month. Specifically in the construction sector, 35% of survey respondents reported it was "significantly to extremely difficult" to recruit top talent.

MAINTENANCE RECRUITMENT & RETENTION Inadequate remuneration is a significant contributor to skills shortages in the retail facilities management and maintenance sector. A newly released membership survey from the Professional Retail Store Maintenance Association (PRSM) reveals that more than two-thirds of their recent departing employees had done so because they got better offers elsewhere, while 37 per cent specifically attributed moves to inadequate salary or bonuses.

Survey respondents unanimously report that finding qualified candidates is their top recruitment challenge. The maintenance skills shortage translates into particular demand for project managers and trades such as HVAC technicians, electricians, plumbers, mechanics and construction managers.

The PRSM Supplier Talent Acquisition & Retention Benchmarking Report concludes that employers' profile in the market and social media proficiency can help to attract jobseekers, while lengthy hiring processes can alienate job candidates and/or push them to openings with other employers. It includes a checklist of best practices for retaining staff, covering topics such as compensation and benefits, manageremployee communication, career development and workplace culture.

"From a supplier's standpoint, we all

have different companies, but we are all faced with a very similar problem: how we recruit people and how we keep good employees," observes Amanda Holup, co-chair of PRSM's benchmarking committee and president of Low-Slope Solutions, a roofing maintenance and repair company.

Increasingly, prospective employees are found via social media, which is now a predominant job-search venue for young and experienced workers. Survey results indicate that 86% of salaried, non-management positions were filled using social media, with LinkedIn ranked as the top recruitment vehicle followed by Facebook and Twitter.

Beyond directly posting job openings, the PRSM report highlights the value of promoting a company's brand and workplace culture. "Social media is a great way to spread the message about what your company is all about and what you do for employees," Holup notes.

PRSM also urges employers to consider the talent pool coming available as military personnel leave the service. "Veterans have the proven ability to learn new skills and concepts. The complex missions the military must accomplish teach the value of teamwork and the confidence to overcome adversity," maintains PRSM chief executive Bill Yanek.

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March/April 2017

Courting tenants with office staging a rising trend

New B.C. liquor laws complicate retail leases

An increasing number of landlords across Canada are refreshing old office space with new build outs in order to attract smaller companies and growth tenants and to remain competitive in markets filled with new office towers and high vacancy rates.

New amendments to the provincial Liquor Control and Licensing Regulation allow all types of businesses to apply for a liquor license — potentially giving physical store locations an extra perk to counter online competition, but also increasing landlords’ risks under the Occupiers Liability Act.

Shared facilities agreements increasingly complex As developments become increasingly complicated, so do the relationships between condo corporations and other parties bound by co-ownership of building assets such as parking garages.

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Canadian Property Management | 2017-04-05 March/April 12:12 2017 PM 35

technology/IT

VULNERABLE

ENTRANCE LOBBY

CONNECTIONS

ENTRANCE PARKING LOBBY PARKING

Smart Systems Necessitate Sharp Surveillance

By Rebecca Melnyk BUILDING SYSTEMS are becoming increasingly connected to the Internet through new technologies that help property managers better serve and protect their tenants. Yet, despite creating more functional assets, smarter components – from HVAC and lighting control systems to fire alarm and automated building management systems – also increase the chance of harming tenants.

More connected buildings and shared networks create easier access for cyber attacks and privacy invasion, as unauthorized users, anywhere in the world at any time, could find gaps and abuse the vast network of physical objects connected to the Internet, known as the Internet of Things (IoT).

The era of IoT is well underway. Cisco estimates that there will be around 50 billion connected devices worldwide by 2020. Such innovation, specifically within building operations, cannot truly enhance customer service if it doesn’t also prioritize the security of both occupants and real estate providers.

Luciano Cedrone, Vice President of National Security at Brookfield Properties, recently moderated a property management VIP roundtable discussion: Cybersecurity Vulnerabilities of Today’s Buildings, an educational session last December at The Buildings Show in Toronto. He warned that property management companies can no longer take chances and hope for the best.

“Unfortunately, cybersecurity has been downplayed, undervalued, even kept at arms36 March/April 2017 | Canadian Property Management

length. The perception has always been that it costs a lot of money, slows down services and puts obstacles in your way,” Cedrone recounted. “Only in recent years, has a real understanding started to come into the industry in terms of the real cost of not properly protecting your systems.”

Speakers on the panel helped elaborate on these ramifications, from liability and financial damage to marring the reputation of a brand. The discussion also orbited around lesser known areas related to cybersecurity and free strategies to mitigate cyber intrusions.

CYBERSECURITY RISKS A new Accenture security survey, Building Confidence: Facing the Cybersecurity Conundrum, indicates that overconfidence may be putting organizations at higher risk for attacks. Two-thirds of Canadians surveyed were confident in their ability to protect their enterprises, but findings show that in the past twelve months the average Canadian company has experienced three effective attacks per month.

While the financial services industry has been an early adopter of cybersecurity due diligence, the issue is still not taken as seriously within property management.

Kevvie Fowler, Partner and National Cyber Response Leader at KPMG, has spent many years overseeing the execution of security strategies, assessments and

compliance activities for finance sector organizations. He affirmed sensitive information, such as financial data and customer information, like personal health data, is at risk.

This personal information can be duplicated and stolen, leading to issues like health fraud.

In a country with universal health care, this type of fraud has been tagged as a high threat and could cause liability if the breach is traced back to a property management company.

“The number one source for criminals looking to extort money from organizations is emails,” Fowler noted. “Cyber criminals are breaking into organizations and stealing gigs and gigs of email messages and running data analytics on it, identifying instances of sexism, discrimination, comments about senior staff or executives within the organization and sending messages with their findings, asking for a ransom.”

Secondly, physical security must also be in place. A primary way individuals are breaking through security is via drones, where cell phones with blue tooth technology can be attached to drones and flown to a top floor of an organization.

Property managers might want to consider an anti-drone policy, something Fowler says should stipulate what tenants can and cannot do, and how an organization will respond to flying drones. The future of property management could see security extending to air waves, with cameras facing upwards to

technology/IT monitor drones, as opposed to just downwards to monitor a lobby or entrance.

Mobile applications are another problematic area. Such apps that review invoices and contracts and make payments must be checked and vetted. Such sensitive information associated with these apps must be identified and protected with a predatory legislative contract in place, in case of an intrusion.

Jim Trak, Vice President and Regional General Manager for Brookfield Property Partners, responsible for Brookfield Place and Bay Adelaide Centre, reports Brookfield is now looking to separate building automated systems so that each building would have its own network to prevent the scenario of a hacker getting access to multiple properties.

He also flags parking garages controlled by a third party manager as vulnerable because they collect a lot of data from credit cards to bank records.

STRATEGIES TO MITIGATE CYBER INTRUSIONS For better protection against cyber attacks, there are many common sense strategies that organizations can implement without having to purchase products, said Joseph Lau, a Manager in the Cyber Security Partnerships Branch at the Communications Security Establishment, the Canadian equivalent to the National Security Agency in the United States.

These include application whitelisting, which allows an organization to identify what programs should be running on its computers and helps prevent malicious software and unapproved programs from running.

Another strategy is patching applications and operating system vulnerabilities. An organization should get its IT staff to roll out new patches and software updates.

Unfortunately, Lau notices very old and effective vulnerabilities being used and, in some cases, five years after the information about the vulnerabilities has been made public.

The third strategy includes restricting administrative privileges on operating systems and applications to those who really need the access. IT staff should look into critical systems that are not internet accessible and allow connectivity to certain users. Building a defendable environment is key and could include redesigning a network to make it more secure from the ground up.

In conclusion, Lau said strong cybersecurity requires a process of continuous improvement and should have three elements: strong IT security, strong operational technology security and strong physical security.

COMPLIANCE AND IMPLICATIONS OF FAILURE Discussion naturally turned to compliance on the part of property management and

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technology/IT ramifications of failure to protect due diligence. Brian Rosenbaum, National Director of Legal & Research Practice at AON Risk Solutions, said the legal and regulatory community, along with governance, is just beginning to try and sort out what laws apply to the IoT. In what Rosenbaum calls “this borderless situation,” sensors, users and providers could be different jurisdictions with different consumer protection, privacy and competition laws. As it stands, he suggests the country is moving at a “snail’s pace” in terms of what the law can offer with liability.

“As far as I’m aware, and I’ve looked into this very comprehensively, there is no overarching Internet of things law in any country in the world,” Rosenbaum said. “So, you’re going to be looking at fragmented laws in different jurisdictions all over the place.”

If a building operating system is hacked into and functions are disabled, there is no telling where liability rests. In theory, he added, an IoT security breach could include a landlord or owner in Canada, the hacked device manufacturer in China, the sensor designer in Japan, the software programmer in Germany and the company that hosts the user data in the U.S., with a local Canadian service provider.

38 March/April 2017 | Canadian Property Management

“Any and all of these parties could be directly or indirectly liable for that breach,” he observed.

CONTRACTS & INSURANCE There is pressure on governments to regulate cybersecurity issues, but without any specific IoT law, it is difficult to determine where vulnerability lies and who is responsible.

Rosenbaum noted that contracts currently determine much of that liability.

“In speaking with IT lawyers, in a lot of cases, companies haven’t properly addressed these exposures in their contracts with each other,” he said, adding that this poses a challenge for property managers who are often end users of these products and may not know how liability is allocated between these parties.

With respect to building automation systems, there could be a number of parties within the IoT supply chain that need to be vetted into the actual contract. Some may not be apparent due to being invisible in the whole process. Tenants should also understand what a property management company is responsible for versus what they are responsible for and how compliance would occur in the wake of an incident.

Property managers should insist suppliers of IoT keep in touch about security issues, updates and patches. As a best practice,

carefully review contracts in the supply chain to determine where each party stands.

End users should be asked if they have reviewed the contracts of the person who precedes them.

Rosenbaum encourages managers to try and “unravel the contractual web.” If there is a liability issue, responsibility will be easier to determine, as a lawsuit could become very expensive with many parties involved.

With regards to insurance, Brookfield’s Trak investigated what is available for cyber attacks and found that organizations don’t seem to be covered for anything. Claims could be made about business interruption, but there is no pre-set plan of what insurance looks like with respect to an attack.

“The insurance community is desperately trying to figure out how to cover this stuff,” noted Rosenbaum. “I can tell you, there are gaps in many of your commercial general liability and property policies. Even if you buy cyber policies, there are issues there. If you haven’t had a talk with insurance companies about specific coverage enhancements to deal with this stuff, you are likely not covered for any of it.” zz Rebecca Melnyk is Online Editor with the REMI Network. See www.reminetwork.com.

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