Montreal investment market gets closer look

In response to a Canada Mortgage and Housing Corporation report assessing cash flow in Montreal’s new high-rise condo towers—specifically concluding that up to 75% of investor-landlords are in the red—it’s being posited that the report paints an incomplete picture.

“What we tend to see, the smaller the unit the higher the chances of it being an investment,” Sacha Brosseau, chief brokerage officer at Sotheby’s International Realty Canada, is quoted as saying in the Montreal Gazette. “When we sell smaller sized units, more often than not, our agents that represent them see questions asked like, ‘How much do you think we can rent this for?’”

All the real estate news you’ll need, every single month – all in CREW.
Use code HOLIDAYS2018 to get your festive subscription gift.

Jennifer Walker, a broker with Sutton Group Centre Ouest and founder of the Montreal Real Estate Investor’s Group, notes that finding a new rental condo with positive cash flow isn’t without its challenges if the down payment is only 20%. However, cash flow is far from investors’ only goal.

“A lot of people buy on the potential, meaning appreciation, that the value will be going up,” Walker told the Gazette.

To be fair to the CMHC report’s author, Francis Cortellino, an economist, intended the report to be an open-ended question about the city’s condo investment market.

“This report is more of an open question about Montreal. We’d have to dig deeper,” Cortellino previously told CREW. “Investors in Montreal may be hoping for the same result that cash flow may be negative in the short-term, but when they sell their units, value would increase a lot. This report is the first step to seeing what’s going on in those new very large high-rises in Montreal.”

Previous CMHC research determined that foreign buyers are more likely than domestic purchasers to pay for their units in cash. A 2015 study found that 40% of foreign buyers who bought a downtown Montreal condo didn’t obtain a Canadian mortgage, compared to 15% of locals who did.

by Neil Sharma10 Dec 2018
www.canadianrealestatemagazine.ca

Commercial real estate sales down across all sectors: REBGV

Sales slowed nearly 20 per cent overall, with land sales posting the largest decrease quarter-over-quarter

Commercial real estate sales across Greater Vancouver were down 19.5 per cent overall last quarter, according to the lastest statistics report from Real Estate Board of Greater Vancouver.

Slowing demand has impacting all commercial sectors, with land sales decreasing the most. Land sales declined 34.8 per cent this quarter, dropping from 305 sales in the second quarter of 2018 to 199 in the third. Office and retail sales decreased the least, down just 4.2 per cent quarter-over-quarter. 

“We’re seeing less demand across our commercial market compared to recent years and supply is beginning to ramp up with a number of projects expected to complete in our region over the next year,” said Phil Moore, REBGV president.

Total dollar volume of sales, however, barely decreased, down 0.9 per cent overall year-over-year. Office, retail and multi-family dollar volumes increased this quarter, up 45.5 per cent and 3.9 per cent, respectively. 

I line with slowing sales activity, the B.C. Real Estate Association’s Commercial Leading Indicator (CLI) measuring economic activity in the province is down a modest 1.3 per cent year-over-year. Quarter-over-quarter, the CLI has measuring flattening growth, which points to a “continued positive, if somewhat slower, growth environment for commercial real estate activity.”

New Westminster industrial sales showed the biggest increase in dollar value of all sectors and regions in Greater Vancouver, increasing 1366 per cent over last quarter. Coquitlam multi-family sales posted the largest decrease in quarter-over-quarter dollar volume, decreasing 87.9 per cent.

commercial-edge-chart.png

Canadian retail will be a great investment destination in 2019

Statistics Canada reported that the national retail sector beat earlier predictions of flat growth with a 0.2% increase in activity last September, despite some evidence of sluggishness in the third quarter.

Food and beverage retailers stood at the vanguard with a 0.9% increase, along with car and clothing outlets.

During the same month, retail sales also increased in 6 of 11 subsectors tracked by StatsCan. These accounted for 75% of September’s retail trade, the agency told Bloomberg.

These numbers dovetailed with a new Morguard Corporation report, which found that the powerhouse retail segment will have a vigorous 2019, defying risks such as mixed leasing performance.

“While retail sales growth continues to moderate, properties with development or repositioning potential are expected to generate strong interest among the investment community looking ahead to 2019,” Morguard explained.

“Sustained economic expansion over the next few years bodes well for the Canadian commercial real estate sector as a service provider to the economy. Canadian commercial property sales activity will remain robust over the near term, against a backdrop of positive overall sector performance.”

Together, all of the gains along with the good prospects helped offset the 1.1% decline in gas station sales in September, amid renewed instability surrounding oil prices.

www.canadianrealestatemagazine.ca
by Ephraim Vecina28 Nov 2018

After a relatively sedate 2018, Toronto is heating up again

After exhibiting relatively modest performance for most of 2018 with the advent of stricter mortgage qualification rules, Toronto is seeing a resurgence in market competition once again.

The latest numbers from the city’s real estate professionals’ association indicated that the total number of active for-sale listings in the GTA saw a 9.8% year-over-year decrease in November, down to 16,420 units.

During the same time frame, the volume of new for-sale listings in the region shrank by 26.1%.

“New listings were actually down more than sales on a year-over-year basis in November,” TREB President Garry Bhaura said, as quoted by Bloomberg.

Read more: Toronto apartment inventory having trouble catching up with demand

“This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth,” Bhaura added.

Average home sales price last month was $788,345, growing by 3.5% from the same time last year.

Meanwhile, total sales in November stood at at 6,251 completed deals, representing a 14.5% annual decline.

TREB stressed, however, that any year-over-year comparison should take into account that November 2017’s performance is “distorted” due to a large number of buyers rushing to beat the implementation of B-20 in January 2018.

www.canadianrealestatemagazine.ca
by Ephraim Vecina07 Dec 2018

Vancouver office tower to showcase latest green innovations

A 36-storey office tower touted by its developers as the tallest commercial building in Vancouver to date will feature the latest innovations to meet the “net zero carbon” emissions standard – a major step in Canada’s long-term program to combat the worst effects of global climate change.

The 161.5-metre Stack tower by Oxford Properties Group will be among Canada’s very first buildings to pilot the new standard, a move that is anticipated to magnetize a greater volume of high-quality investment, according to head of real estate management Andrew McAllan.

“There’s a convergence of interests in sustainable building. Some are altruistic and some are just good, old-fashioned capitalism,” McAllan told The Globe and Mail.

Scheduled for completion by 2022, the complex will offer 540,000 square feet of office space. That volume of commercial space operating to the specifications of the most advanced green standards will cement Canada’s place as a worldwide leader in sustainable development, Oxford said.

Read more: Vancouver office sector to see good inventory, falling vacancy

The building is the latest in Canada’s drive towards illustrating that environmental consciousness and high-class commercial spaces are a package deal. The Canada Green Building Council estimated that since 2004, it has certified over 3,600 LEED buildings nationwide and registered over 7,600.

“Overall, Canada ranks very high in terms of green building construction,” Starlight Investments building automation and energy specialist Trevor McLeod stated. “More than ever, sustainability is now in the conversation with regard to building design or retrofits, so things are moving in the right direction.”

New small-space flex offices push $1,000 a square foot

Metro’s high-tech sector driving demand for new office-industrial strata projects

New light industrial/office strata projects springing up from Mount Pleasant to East Vancouver may have tapped into a profitable path, despite per-square-foot prices ranging from $800 to $1,000.

The most recent manifestations include a four-storey project on Yukon Street at West 6th Avenue – formerly the 3 Vets outdoor store – by Chard Development, which bought the site last year for $20.4 million.

Now under development, the 49,000-square-foot Yukon project will feature a high-ceiling ground floor for light industrial, with bay access for trucks, capped by three floors of stylish office space.

Chard recognized a demand for smaller office sizes from the area’s tech, finance and retail services industries. As a result, Yukon will feature smaller unit sizes (1,000 to 5,000 square feet) to adapt to this new Vancouver real estate reality, according to Byron Chard, Chard’s principal and CFO.

A similar Chard project at 34 West 7th Avenue sold out all 48,000 square feet while still under construction.

Nothing has pre-sold yet at the Yukon, where strata space starts at $1,000 per square foot.

The building will include a freight elevator, bike lockers, showers and 83 parking stalls, and it could prove popular, according to the type of high-tech tenant Chard is targeting. Completion is expected in 2020.

“I can definitely see the demand,” said Dogu Taskiran, a partner and founder at Stambol Studios, a virtual-reality startup that concentrates on the real estate market.

Taskiran said the Mount Pleasant location and ample parking would be among the draws.

Stambol is currently splitting 2,000 square feet of space in False Creek Flats, where the total monthly rent is $3,000, which Taskiran described as “a very good deal, very cheap.”

Chard noted that a startup could buy office or industrial space at Yukon and lease out part of it until it expands, but he expects most of the buyers will be sole owner-occupiers.

“Our goal is to make the space as flexible as possible,” he said.

Alliance Partners is trying the same concept in East Vancouver with a five-storey, 55,000-square-foot light industrial/office strata project on Clark Drive at Adanac Street.

Kevin Kassautzki, vice-president at Avison Young, which is handling sales of the project, expects per-square-foot prices to be in the $700 range for industrial space and $800 for offices.

“I think this area is on its way to becoming the next Mount Pleasant,” Kassautzki said.

There is an appetite for buying strata office space from larger players in the tech community, Taskiran said, but he added that Stambol and other startups often prefer to lease. A common theme, he said, is to stay out of the downtown, where higher lease rates and a lack of parking are considered obstacles.

Frank O’Brien | Western Investor
November 21, 2018

RioCan Living Announces Inaugural ‘ECentral’ Rental Project In Toronto

Nine months after RioCan REIT announced its official entry into the residential market through the residential brand RioCan Living, it is poised to start leasing its first rental development, eCentral, in midtown Toronto.

The 466-unit, purpose-built rental located at Yonge and Eglinton accounts for a fifth of the approximately 2,300 rental units currently under construction in the RioCan Living portfolio. The RioCan Living portfolio could include more than 5,000 completed residential units within the next five years. In addition, there will be residential development commencements in that same period comprising several thousand additional units.

  Frontier, Gloucester Silver City Shopping Centre, Ottawa

Frontier, Gloucester Silver City Shopping Centre, Ottawa

“The launch of RioCan Living this past March was in part motivated by a shortage of new purpose-built rental buildings in large Canadian cities,” says Ed Sonshine, Chief Executive Officer of RioCan. “The government of Ontario’s recent amendment to rent control legislation as it applies to new purpose-built rental development has encouraged RioCan to move forward more expeditiously to expand our rental residential portfolio. RioCan is uniquely positioned to address the void by developing the properties we already own in major markets that are also strategically located on transit lines.”

“Our ability to come to market with a product like eCentral within the same calendar year as our residential brand launch is indicative of the strength of our team and development capability” adds Jonathan Gitlin, Chief Operating Officer of RioCan. “We have a deep and talented roster of experts in place who are working to deliver best-in-class, professionally managed residential units to the cities and communities that need them most.”

eCentral is a 36-storey rental residence situated within ePlace, a 712,000 square foot (net leasable, or saleable area) mixed-use development that also features retail, office and residential condominiums. Located at the intersection of the Yonge-University subway line and future Eglinton Crosstown LRT, eCentral is the prototypical RioCan Living development, with an emphasis on design, quality, professional management, retail integration and access to transit. Leasing will begin before the end of 2018 and residents will start to move into the building in the first quarter of 2019.

A second RioCan Living development is also slated to begin leasing this year. Frontier is a joint partnership between Killam Apartment REIT and RioCan Living. The 23-storey, 228-unit rental residential development is located adjacent to RioCan’s Gloucester Silver City shopping centre and is steps from the newly built Blair LRT station. Frontier will be the first residence of a five-phase community in the Gloucester neighborhood in Ottawa, and will enter the thriving market in the nation’s capital when leasing opens to prospective residents in December. Zoning is complete for all five phases of the development and site plan approvals are in place for the second phase.

Massive redevelopment envisioned for Coquitlam Centre shopping mall

A complete redevelopment of Coquitlam Centre into a massive mixed-use district could create a regional Town Centre that rivals Brentwood, Oakridge, and Lougheed.

Mississauga-based Morguard Investments operates the sprawling 60-acre shopping mall property on behalf of owner Pension Fund Realty, and it has unveiled highly preliminary conceptual plans of what a redevelopment of the entire site could look like.

The real estate firm recently launched a public consultation process that will lead to a concept design for a master plan in spring 2019, and a formal Official Community Plan amendment and rezoning application for Phase One to the City of Coquitlam in summer 2019.

  Artistic rendering of the Coquitlam recent redevelopment. (Morguard Investments)

Artistic rendering of the Coquitlam recent redevelopment. (Morguard Investments)

Phase One entails a 16-acre area on the northeast corner of the property — immediately adjacent to SkyTrain’s Lincoln Station — that is currently underutilized with the former vacant Sears building and ground-level parking.

This phase will be constructed based on market demand, and it is not currently known when construction will be completed.

  Aerial view of Coquitlam Centre’s existing condition. (Google Maps)

Aerial view of Coquitlam Centre’s existing condition. (Google Maps)

  Aerial view of Coquitlam Centre’s existing condition. (Google Maps)

Aerial view of Coquitlam Centre’s existing condition. (Google Maps)

Rezoning will be guided by the master plan, which outlines the site’s overall land use, urban design framework, housing strategy, sustainability designs, transportation plan, parks and public spaces strategy, and public amenities strategy.

Early principles for the master plan align with the master plans of major redevelopments elsewhere in the region, including Brentwood Town Centre and Lougheed Town Centre. This includes a transit-oriented, multi-modal development with a new street grid complete with pedestrian and bike infrastructure, as well as traffic calming strategies that will “reinforce that the urban core is a destination and not a through route.”

  Artistic rendering of the Coquitlam recent redevelopment. (Morguard Investments)

Artistic rendering of the Coquitlam recent redevelopment. (Morguard Investments)

There is a desire to create “an authentic city centre” by creating streets lined with retail and restaurants, distinctive landscaping, and residential and office frontage that is “conducive to place making.”

Given the scope of the redevelopment, there could be “unparalleled” opportunities for parks, public art, civic, and cultural and performance spaces.

“Through a phased development approach, with the flexibility to respond to market demand, [the redevelopment will] strengthen the existing retail and surrounding areas with a new high-density complete community with a mix of uses and a high-quality and exciting public realm. [It will also] lead the evolution of Coquitlam Centre from a successful retail centre today into a new and unique downtown core.”

Early artistic renderings indicate the developer envisions high-quality architecture, tall tower heights, and a retainment of at least a portion of the existing indoor shopping mall.

Kenneth ChanNov 19, 2018 6:10 pm14,329 | Busuness Urbanized Vancouver | dailyhive.com