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The Smart Building Market is Worth Billions – A Bright, Sustainable Future is Ahead of Us!

It’s estimated that the North American smart building market is projected to grow to 121.6 billion by 2026; it’s worth taking notice!

Smart buildings are a large part of creating a sustainable future, as about 28% of global energy-related CO2 emissions are directly correlated to the operation of buildings. As we continue to move forward towards a highly sustainable future, you as a CRE investor can greatly benefit from smart buildings. Think of investing in smart buildings as financing the next frontier of making people’s lives more efficient and sustainable, while reaping the financial rewards of investing early in the market.

Between work and home, North Americans spend about 75% of their time indoors, so comfort is extremely important. Smart buildings can include hospitals, data centers, and offices so the possibilities for investing in these infrastructures are endless. The term ‘smart buildings’ refers to the protocol that enables properties with lower power but longer-range connectivity. A smart building is based on the structure of IoT (Internet of Things) that uses hardware, software, and connectivity to manage security, HVAC, and lighting to reduce a company’s carbon footprint.

In simple terminology, smart buildings are connected to wireless sensors to be deployed throughout a building to reduce electricity in areas that are not occupied. Utilizing the automated control of a building’s electrical systems, a comfortable environment can be created for all occupants while consistently lowering their environmental impact. The best part? Modern smart solutions can be embedded into older buildings so most properties have the potential to become ‘smart buildings’.

Green buildings are, and continue to be, at the forefront of a large CRE revolution. As the demand for sustainability is getting more urgent, the people and the planet can greatly benefit long-term!

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Media, News

The appeal of single-tenant retail properties

While some types of retail property have done better than others during the pandemic era, there is one retail type that has proven to be a clear winner.

Stand-alone retail properties, also known as Triple Net Lease (NNN) properties are usually occupied by a corporate client such as a major bank, grocery store or big pharmacy. They have long been a preferred asset for investors, but now we’re seeing a significant increase in buyers searching for this type of commercial property.

The appeal for many savvy investors is the security and stability offered by the strong covenants and long, triple-net terms that usually govern the leases of these types of properties.


Media, News

Rising Prices And Rising Real Estate Today. Why? A Quick Explanation

By Richard Crenian

There is a lot of capital out there that has been building up waiting to be spent and that money has now gone into real estate. Is that a good thing or a bad thing? You’re now scratching your head and saying, “Why are home prices going up?”.

Well, because you’ve been sitting at home for 18 months not spending anything. There was also a lack of housing built in the past five years, especially in the US, so now they’re trying to catch up. All of a sudden, prices are shooting up. Why? Well, lower interest rates, not enough supply and lots of demand. So is housing a good investment? Well, today it is. If you own your own house and somebody was knocking on your door trying to buy it, it’s probably worth substantially more now than what you bought it for.

What happens from here? If you have inflation, which we believe is here now, then your house should be worth more money in five years. So there’s a lot of money chasing homes. It is the same with apartment blocks. There is so much money chasing apartment blocks right now. So what does that mean? Well, a cap rate is generally what investors are looking at. A cap rate is how you measure whether or not you should be buying an apartment block. Most apartment blocks were being traded at a 5% cap rate, and in bigger communities, it was 3%.

If I bought something for 5%, and cap rates have now compressed to 3%, I made money. It’s real money that I made on a product. So if you have lots of money chasing real estate deals, you’re going to make money if you have the product. It’s very hard right now to find good product. If I can find some good product, I’m grabbing it, whatever the cost may be. On the other hand, if you’re a value investor like I also am, I’ve been sitting very, very quiet on the sidelines. Somebody described me as a lonely investor because there’s no such thing as a value investment today. If you go into a store today and you want something you have to buy it at full price or someone else will.

For example, Rolex watches have gone crazy. Why? Because everybody wants a Rolex watch When you look at a Rolex Daytona, the prices of have increased from approximately $17,000 to $50,000 CDN from a reseller. There is not enough supply and the demand is huge.
Another example is the vehicle market. I don’t know if you’ve been in and tried to buy a car, but you have to wait up to 12 months in Canada. If you were paying $110,000 for a Cadillac Escalade, now it will cost $160,000 CDN. And you still have to wait. You’ve got chip shortages and labour shortages. The car dealers can’t produce enough cars to meet demand.

Along the same lines, if you were in fashion and you wanted to buy a Yves Saint Laurent bag, Balenciaga bag or any kind of bag, not only are they limited in supply, but because of the demand, companies like The RealReal have been buying the used products and are now selling them for high markups. There’s so much money out there driving up the prices. Again, inflation? Yes. I was introduced to RealReal by my daughter. I walked around the store and I’m looking at all these old sneakers. I’m thinking I would never put my feet in a pair of old sneakers that somebody else had worn.

She goes, “Dad, how much do you think this is worth?” I go, “I don’t know, I probably wouldn’t pay 5 cents for it.” She says, “Yeah, this pair is worth $10,000.” And I go, “What? A pair of sneakers?” The demand for old style nostalgia is crazy right now. I’ll relate this all back to real estate but the point is that there’s a lot of money out there chasing very few products today. If you want a car and your salesperson tells you it’s worth $50,000 and you have to wait 10 months, you write the check for $50,000 and you’re done. There’s no argument. You buy it. If you go into any store and you want something, there are no deals to be had. You don’t go into a Rolex dealer and say, “I want a deal on my Rolex Daytona,” he’ll kick you out of that store so fast.

What is happening? Why is real estate the same way? Well, it’s the same with trying to be a value investor today. There’s no such thing as a value investor anymore. If you want an apartment building, a retail building or even land, and there’s no availability and the vendor says to you he wants $1, he’ll likely get $1.10. Is there inflation? Yes. So, if you’re a value investor you’re sitting on the sidelines. Good luck to you because you are probably sitting in a chair somewhere, lonely all by yourself. If you want to be an active investor it’s time for you to write the check, as awful as it sounds, that’s the truth.


Increase Your Productivity and Add Balance Your Life!

Since the pandemic started, the question has arisen “What is a proper work-life balance?”. The struggle between, “I like to work but I also like to have my own time” is only increasing.

It is my opinion that if you’re a young entrepreneur, with no spouse or children, then you should have no life to distract you. You may not agree with me, however until you achieve all your goals, you should focus 100% of your energies on work.

From your 20s’ to your 30’s, you’re building up your business and you’re trying to fulfill all your lofty goals. You should just focus on work and there should be little time to play. You must work 12 hours a day to achieve your goals!

Spend all your time trying to succeed! After you work 12 hours, you can sleep for four hours and that still leaves you several hours for free time. You can still do anything you want but only after you have spent 12 hours on working to achieve your goals.

Now you are in your 30’s and you have made a little bit of money. You’re enjoying life and thinking about what work-life balance means. You may be getting married at 35, and thinking about having kids, and you might say, “I need to start thinking about work-life balance now, because my spouse wants me to be helping out with the kids.” Or one spouse says to their partner, “Hey, listen, I have a job. I need you to stay home, just to help out with the kids and to make things manageable.” Here’s the problem: You’re still achieving your goals BUT you haven’t achieved the epitome of what you want to do.

And if you remember what your dreams were when you were in your 20’s, you haven’t achieved them in your 30’s. Even if you’ve become a billionaire by the time you’re in your 30’s, you still haven’t achieved what you wanted to achieve, because it’s not all about monetary success (believe it or not). You might also be looking for academic success or the type of success where you would be acknowledged by your peers. If all your peers are doing the same thing at the same level, and you haven’t really achieved that level, and that’s how you measure success, then you should still be working. Maybe instead of 12 hours a day, you only work 10. But you should still be following up on that goal!

And then you hit your 40’s and your kids are growing up and you say “I’ve worked so hard since my 20’s. Now it’s time for me to breathe and focus on work-life balance. I can now do yoga and exercise and try to figure out how to get to the next level so that I can balance work and enjoy my life.”

In your 40’s you can really start thinking about it. Reflect on all the goals, the hopes, the dreams that you had in your 20’s and in your 30’s. Have you achieved them? Are you content where you are? If so, then focus on work-life balance. Between the ages of 45 and 55, focus on building a better you; focus on building a better family. You’re having kids later now, and you’re doing all the things that you should be doing and hopefully your business is where you want it to be at this point.

In your 50’s, your kids go to high school and you want to participate with them. You’re playing football games or hockey games. You’re taking them here, there, and everywhere else. You’ve become Uber! At that point, again, your work becomes secondary. You actually don’t have a balance anymore because you focus on your kids and their needs. You must decide what’s important for your family and move forward with them as a team. You need to figure out what works best for your situation. It’s important to have balance. In my opinion while you are in your 20’s and 30’s and still have the energy to build your life, you don’t need to worry about work-life balance. The life stuff will all come, and you’ll be able to have lots of fun in your 40’s and 50’s.

Live a lot! Laugh a lot more!

I know a wonderful and energic young Realtor in Saskatoon with a beautiful 10-year-old son. Tanya works extremely hard and is a very successful realtor and single mom. She still has time for her son and has time to work on her charity foundation. When you are balanced, you’ve met success. Good luck Tanya!

She is what success can be. She works hard, achieves and still manages to have a wonderful home life with her son. Is that not what we all want? A perfect Live/Work life that is balanced and maintained?

As I am always posting business related articles, I thought it was time to share some personal thoughts on this subject that so many people are dealing with. We can get so caught up in spending 100% of our energies on work that we need to remember the importance of finding the right balance.

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Edmonton Vacancy Rates at Historical Lows for Industrial CRE

As we know, COVID-19 pandemic impacted all verticals. However, one of the most substantial impacts it made is perhaps that in the industrial warehouse sector. Supply has been leased and bought up but there is still a strong demand for more space. Fear and worry seems to be driving that demand as business owners are worried that future events involving the pandemic might disrupt their supply lines. When fear of lack of supply is a factor, the demand for more industrial warehouse space increases.

While the pandemic may have caused disruptions at the start in Edmonton, Alberta, huge warehouse demand continues to boost commercial real estate. The vacant offices in downtown, along with the 3.9 million square feet of warehousing space under construction, Edmonton offers attractive investment opportunities. Learn more about investment opportunities in the Edmonton area and see why so many are considering it.



Industrial, Multifamily, Office, Retail – Canadian CRE market

Photo Credit: Pixabay

The year 2020 brought a lot of uncertainty to the Canadian CRE market, especially in urban centers like Edmonton, Toronto, Victoria, and Regina. Several sectors have experienced heavy losses during the COVID-19 lockdowns, but many more have proven to be exceptionally resilient.

Industrial and multi-residential markets across Canada fared surprisingly well, while office and retail sectors are only now starting to show signs of life after a challenging year.

To gauge what is to come in Canadian CRE markets, four panellists met up to discuss current and future trends in the industrial, multifamily, office, and retail sectors. Take a look at their expert insights.

Industrial Sector the Top Performer 

The pandemic has pushed businesses to embrace e-commerce and turn to online orders and deliveries to make ends meet. Unsurprisingly, this paradigm shift has resulted in a significantly increased interest in industrial solutions like warehousing.

Throughout 2020, the industrial sector has proven to be the most resilient one, making it the safest income-producing investment. The demand for industrial CRE is far outweighing the supply, forcing rents to go up for all quality solutions. The trend is expected to continue, driven in part by the rising shift to e-commerce and Amazon’s aggressive Canadian expansion plans.

Office Sector Recuperating 

The office sector has fared slightly worse at the start of the pandemic, but it has quickly recuperated. Allied Properties REIT had virtually no tenant failures in 2020, performing an astonishing 258 lease transactions last year, almost half of which were with new tenants to their portfolio.

While early spring in 2020 disrupted the office sector, things started returning to normal by late fall. It is expected that 2021 will bring no new disruptions as businesses slowly return to offices, so the future is looking bright.

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Canadian CRE Investor Portfolios Strengthen with Multifamily Real Estate

The Canadian Commercial Real Estate (CRE) market seems stronger than ever, despite all the ongoing pandemic challenges.

New opportunities to strengthen investment portfolios continues to be available for Canadian CRE investors. Multifamily real estate properties are some of them.

Canada’s Housing Market Is Hot!

When COVID hit, many experts predicted a decline in home prices across Canada, some saying they would decrease by up to 18%. But it seems, Canada’s housing market is going as strong as ever.

Canada’s housing prices have already been high, but no one expected them to reach new record highs during the pandemic; Increasing by 13.5% in the past year and reaching a $676,600 benchmark in January. Interest rates have jumped lower though, which is excellent news for people looking to borrow funds to buy a home or invest in commercial real estate.


Supply and Demand for High-Rise Multifamily Properties Stays High

Multifamily properties have always been considered a smart and profitable investment. These days, a growing number of Canadians are looking for well-located, high-rise multifamily properties to live in, especially those with energy-efficient programs.

That’s why many CRE investors are currently focusing on those properties to meet the high demand with an even higher supply.


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The Future of Offices and Malls in Canada

No other sector was quite as affected by the COVID-19 pandemic as office and retail. Imposed business closures, shorter working hours, requirements for working from home, and social distancing restrictions disrupted the two sectors and completely altered their daily processes.

While many are skeptical about just how soon things will return to normal, some industry leaders share a positive outlook about people returning to work in offices and shopping at the mall.

Canadian businessman and CEO of Brookfield Asset Management, Bruce Flatt, shares his views on what the future holds for office and retail.

The Combined Power of Online Trading and Physical Store Presence 

Although many businesses struggled and are still struggling, the e-commerce sector underwent massive growth during the pandemic. With most Canadians turning to online shopping in the face of business closures, e-commerce in the country took off.

But the future of retail doesn’t lie solely in the digital world. According to Flatt, shopping malls and retailers need to focus on creating a balance between online trading and physical store presence.

We’ve already seen several examples of just how beneficial the combination of online and offline presence can be. Shopping malls and retailers across Canada showed great ingenuity during the pandemic by offering online orders with curbside pick-ups. Several stores began offering local deliveries to loyal customers or partnering with Uber Eats and similar services to connect with their shoppers.

Other industry leaders and Canadian retail CRE investors believe diversification is the key to success in the post-COVID world. Mixed-use spaces are increasingly on the rise, proving to be some of the most lucrative investments in the long run.



Best Space Use Models for CRE Properties During & After COVID19

Photo Credit: Pexels

Due to COVID-19 health concerns, many businesses across Canada are operating at a limited capacity. Some provinces in the country, just this month, closed non-essential stores to prevent the further spread of the virus.

That accelerated the growth of online shopping, takeout orders and the need for more delivery service. Now retailers and CRE property owners are facing a more significant challenge – what to do with their empty or limited retail space?

Here are some of the best space-use models retailers are using right now.

Industrial is the new Retail. Retail is now Office. Restaurants are kitchens-only.

Mixed-use properties have always included retail, but now retail spaces themselves are becoming more mixed-use.

Not only are retail mall spaces converting to warehouse use, but retail centres are also welcoming office workers to help businesses with high workplace density. Many are turning their retail space into medical offices, research centres, daycare centres, self-service grocery stores, and more.

When it comes to food, people now mostly rely on delivery services and takeouts. Thus this is causing restaurants to make the switch to the ghost-kitchen model, where they only use the kitchen space to make food and prep food for delivery.

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High Expectations for 2021 in the Canadian CRE Market

With 2020 in the rearview mirror, Canadian CRE investors and business leaders are looking forward to a possibly brighter future in 2021. The COVID-19 pandemic had an immeasurable impact on the global economies, affecting people and businesses of all types and narrowing profit margins for all.

However, with the introduction of the vaccine, we’re looking at CRE market stabilization and a slow return to normal. Lets take a look at the expert 2021 forecast by Avison Young of what this year may bring to the multi-family, office, industrial, and retail sectors and what this means for Canadian CRE investors.

Multi-Family Property Types Favored by Investors 

Canadian investors have long favored multi-family properties as they involve low risk and high reward. Despite the pandemic and the accompanying uncertainty associated with employment and the economy, multi-family property types have remained in good standing.

The demand for these properties remains high throughout Canada, and the expectations of this trend is expected to remain high well into 2021. With the support of the Bank of Canada and the imposed decision to keep interest rates at 0.23% by 2023, investments in multi-family properties are on the rise.

Offices Under a Question Mark 

The office sector was severely affected by the imposed measures to contain the COVID-19 pandemic. There was an increase in work-from-home (WFH) orders, and businesses with office expansion plans had to put them on hold.

Avison Young analysts forecast that we could see fewer employees choosing to return to office (RTO) everyday, even after the pandemic’s been dealt with. The idea that traditional workplace models returning is not likely for many businesses, as WFH has proven to bring unique benefits.

Furthermore, even with office supply being high right now, demand remains low. There are some tech companies making large space commitments in major hubs (Vancouver, Ottawa, Montreal and Toronto), while simultaneous issuing indefinite WFH plans and putting space up for sublease.

As of third quarter of 2020, the national vacancy for office was 10.9% and it is forecasted that that will rise in 2021 to 12.0% by year-end. The unknown continues to be if tenants will RTO or WFH post-COVID.

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