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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!

Read more at https://www.redevgroup.com/news-article/the-smart-building-market-is-worth-billions—strike-while-the-iron%E2%80%99s-hot

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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.

Read more at https://www.redevgroup.com/news-article/the-appeal-of-single-tenant-retail-properties

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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.

Media

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.

Read more at https://www.redevgroup.com/news-article/edmonton-vacancy-rates-at-historical-lows-for-industrial-cre

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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.

 

Read more:

https://www.redevgroup.com/news-article/multifamily-real-estate-strengthens-cre-investor-portfolios-in-canada

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All Maison Birks Stores in Canada to be Reopened

When the pandemic forced most businesses worldwide to shutter their doors, Birks Group wasn’t the exception. The luxury jewellery retailer temporarily closed all its Maison Birks stores across Canada to prevent the further spread of COVID-19.

Fast forward several months, and we can now finally revisit all Maison Birks stores, albeit following specific health and safety guidelines.

 

Concierge Service and Online Shopping

Although all 28 Maison Birks stores across Canada were closed until recently, customers could still shop online. Even with the stores open once again, they can always make orders online and have their timepieces and jewellery delivered straight to their door.

A big part of Birks Group is working closely with clients to help them find their perfect timepiece, necklace, ring, and a wealth of other jewellery pieces.

Following the lockdown, the company launched a concierge service in Toronto, Montreal, Vancouver, and Calgary.

The pandemic hasn’t put a stop to celebrations, such as anniversaries and graduations, so Birks made a mission to be there for all its clients. Canadians could make orders by phone or email to get a top-notch concierge service and receive their orders by mail.

Even with all the stores reopened, they can still reach out to Birks by phone to enjoy its luxury concierge service.

 

Read more at:
https://www.redevgroup.com/news-article/birks-group-reopens-all-its-maison-birks-stores-in-canada

 

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Final Construction Phase for Bayside Toronto

Commercial real estate investors are constantly searching for ways to keep their funds moving and growing. Toronto continues to prove be a magnet for CRE investors and projects similar to Bayside Toronto, a luxury waterfront development located in the East Bayfront. These projects and their investor’s funds continue to work for them even during covid-19.

 

T3 Bayside

T3 Bayside will also be a mixed-use space, except it will have commercial use. It will feature offices and retail properties, all leased by the CBRE Group, Inc.

This part of the Hines’ project will include two mixed-use buildings, which will occupy over 500,000 square feet of space. Due to the high market demand and the sustainable build (the two T3 buildings will use mass timber for construction), they’re expected to attract many tenants.

 

Bayside Toronto

Bayside Toronto is one of the biggest Canadian commercial real estate projects by Hines, an international real estate agency, and this project is speeding up its development. Together with other investors Hines, just like ReDev Properties, are creating a mixed-use spaces that includes retail, offices, condos, cultural venues, restaurants, and shore promenades in Toronto.

Aqualuna is the fourth and final construction phase of the Bayside Toronto project. The other three include Aqualina, Aquavista, and Aquabella, all of which are luxury condominium complexes at the waterfront.

Aqualuna is also primarily a condo complex that’s a joint venture of Hines and Tridel, a Toronto-based real estate developer. Nevertheless, it will also feature a large retail space – about 18,000 square feet on the ground floor. Its total 468,000 square feet of space will also house a luxury lounge, an amenity terrace, and a pool overlooking Lake Ontario.

 

Read more at:
https://www.redevgroup.com/news-article/bayside-toronto-enters-its-final-construction-phase

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Toronto Mixed-Use, Multi-Tower Redevelopment

Upgrades to the commercial districts of Toronto, Ontario are always welcomed by retailers and CRE investors alike. And this time, it’s the Golden Mile district mixed-use redevelopment that’s set to undergo massive changes. This redevelopment project is expected to attract more visitors and more foot traffic. With everything going according to plan, Golden Mile’s multi-tower project is on the path to becoming the hottest part of town.

 

Plenty of Green Spaces 

While the multi-tower mixed-use redevelopment project initially suggested a total of 3,500 m² for parks and open spaces, the area’s been increased to astonishing 5,694 m².

This comes as great news for retailers who are expecting an increase in foot traffic. After the coronavirus pandemic’s been put under control, consumers are expected to flock to parks and open spaces and enjoy greater freedom once again, which will inevitably lead to more interest in brick-and-mortar shops, cafes and restaurants nearby, and subsequently more spending.

 

What This Means for Canadian CRE Investors 

With the proposed redevelopment project in Toronto, everyone’s showing greater interest in the Golden Mile district. From potential new renters in the area to business owners looking for new office space and excited retailers who are looking to increase their sales – everyone is excited to see this project succeed.

Now is a good time to invest in retail CRE in Ontario and receive a higher return on investment.

 

Read more at:
https://www.redevgroup.com/news-article/multi-tower-mixed-use-redevelopment-in-toronto

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Canada March 2020 Retail Sales: Who were the winners?

When looking at how fast stay-at-home orders came into effect, social distancing, work from home, and masks became more normal it’s no surprise that retail and stores took a hit in sales during March. Even with online orders and outside pick up to help ease people’s minds and keep everyone safe, many people are not shopping. You can see this fear and unease in people even in statistics, looking at retail sales data for March has had a significant decrease.

 

Retail Sales Data

Statistics Canada released record-breaking sales data for retailers in the country. The data is broken out by each sector and you can clearly see what has happened to non-essential businesses when they were forced to close their doors halfway through March. 

Looking at the March sales data you can capture a glimpse into the panic during the first weeks of closure and see the overall decline in sales of 10 percent in March to approximately $47 billion, just as the lockdown was starting to take effect. According to the Financial Post, only 40% of retailers were closed for an average of five business days in March. However, 91% of clothing and other such accessory stores were closed for an average of 13 days.

What is the data showing and what does it mean? Although it looks like there was a decline of 10 percent in March, if we take out gasoline and auto sales, the stats actually reveal an increase of 2.8% in retail sales in March 2020, driven mainly by grocery sales. Grocery sales have had a significant increase, accounting for a third of retail in March.

April however is likely a different story as retailers were forced to be closed for the whole month. StatsCan is estimating that Aprils’ data will show approximately a 15 percent decline in sales. 

Overall as businesses are closed in May as well, this back-to-back decline for such a long period of time will be new unchartered waters for all of us. 

 

Who are the Losers and Winners during March 2020?

One thing is certain; many Canadians are itching to go back to normal, so the question is, where are we headed next? 

The main deciding factor between winners and losers during this time is if it is an essential or non-essential retail business.

Retailers that sell things such as clothes, shoes, and luxury goods have been some of the hardest-hit, they lost half their retail sales if not more, as compared to last year during the same time. Retailers that did the best obviously include groceries, but also beer, liquor, and beverages; earning 20 to 30 percent more compared to March in 2019.

Other sectors that did well include health and personal care that had a 4.6 percent increase, e-commerce jumped up by 40.4 percent, and cannabis climbed up 19.2 percent.

The stark contrast in these numbers and each different market show a true divide between the retailers directly affected and those who actually boosted profits or faired well. As investors, we need to stay on top of knowing who were the winners, and who will continue to be to know exactly where to direct our investments.

 

Summary

As the data shows, Canada retail had varying outcomes during March 2020 but overall did okay. Losses were found in more luxury services and retail businesses but boosted in essential services. April will show huge declines in sales because of the month-long closure but May will hopefully show a bit of bounce back with retailers finding ways to still provide their services. 

Which businesses will bounce back and who will drive the eventual economic recovery, is ultimately the largest question of all and what everyone will be watching for.

https://www.redevgroup.com/news-article/canada-march-2020-retail-sales-who-were-the-winners

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How COVID-19 Has Affected the Canadian CRE Market | Canadian Real Estate News

As you may have already read, the novel coronavirus has left an impact on industries around the globe with the Canadian real estate market being no exception. 

These unprecedented developments have left several CRE investors pondering on the future of the market. 

While the situation is very severe from a health stance, Canadian retail CRE investors are actually in a good place and would benefit from investing in commercial real estate during COVID-19. Here’s why!

 

Canada and COVID-19

The number of confirmed cases with COVID-19 are on the rise and this has sent some into a state of panic. Many fear that the worst is yet to come, and governments, healthcare officials, and businesses are doing all they can to stop the epidemic from spreading. 

That means closing restaurants, schools, gyms, museums, and shopping malls around Canada. Many private and public institutions have officially shut down to flatten the curve and remain compliant with social distancing norms.

 

Industries Thriving in the Pandemic 

While clothing retailers, restaurants, and coffee shops cannot help but to close their doors for the duration of COVID-19, Canadian CRE investors don’t actually have any cause for anxiety. Many commercial retail spaces are open to serve people who are in lockdown. 

Grocery stores, pharmacies, medical supply shops, and medical offices are naturally getting more foot traffic, and this will go on for the duration of COVID-19. 

They provide essential products and services, and even if a complete lockdown is ordered, as we’ve seen in countries such as Italy and Spain, and in various cities in both China and the U.S., these retail locations have remained operational. 

 

The Future Is Hopeful 

Regardless of the current situation, the future is bright for retail CRE. Those who invest in retail real estate now stand to benefit financially. At the moment, the costs of buying CRE are lower, and once the pandemic is put under control, retailers will jump at the opportunity to rent out spaces, open up shops, and regain financial stability just like what’s happening in China as many retailers start to reopen

It’s expected that shopping at brick-and-mortar locations across Canada will improve to pre-Corona levels; especially restaurants, entertainment venues, gyms and discount retailers. 

 

Conclusion

Investing in Canadian retail CRE could offer a big return on investment once the pandemic threat has passed. There are already reports analyzing “retail recovery following containment of COVID-19” as China has initiated its reopening. This confirms that while many around the world are currently experiencing restrictions, it will not last forever, and the future appears to be bright for those wise enough to make strategic investments now. 

For more information, please visit:

https://www.redevgroup.com/news-article/covid-19-and-its-effect-on-canadian-cre