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Smart buildings are changing the way tenants are thinking about moving into condos!

Many global properties have shifted to become fully sustainable as a result of the concept of preserving our Earth’s natural resources, implementing green construction practices, and using advanced technology.

It’s a revolutionary and exciting time for tenants, investors, and property managers as modern technology creates superior commercial and residential buildings! Smart Technology and enhanced connectivity are improving tenant experiences on all fronts thanks to the Internet of Things (IoT). Corporate tenants who are seeking new space, as well as residents looking to live in a building that is forward-thinking in terms of environmental sustainability, will find smart buildings a great option.

Thanks to the Internet of Things, smart buildings can be remotely controlled. High-quality green buildings (more energy-efficient, lower carbon footprint properties) can take the stage in the future thanks to the interconnectivity of the system, especially for tenants seeking sustainable lifestyles. Green buildings have improved our planet in the following ways:

  • Upcycled architecture that reuses resources to build new properties. By reducing waste, preserving natural resources and limiting energy uses, green buildings can be extremely efficient structures that can withstand the test of time.

  • Smart buildings are extremely durable. Going green is just the best way to ensure that your property will need less maintenance and improve air quality in the process.

  • Healthier air. Seriously. Green buildings avoid using building materials that may contain harmful Volatile Organic Compounds (VOCs) or plastic by-products that have been linked to the release of toxic fumes and carcinogens into the atmosphere.

As the global commercial real estate market rapidly shifts to create a culture of innovation and sustainability across a wide range of property types, greener properties are becoming an emerging business strategy. As the need for sustainable apartments is amplified, so does the appeal of moving into environmentally-conscious apartments that have a reduced carbon footprint. Finding a home that has a positive impact on our planet is about more than finding a property with low rent in a great neighborhood.


Suburban Toronto records its first period of positive net absorption since start of pandemic

The suburban construction pipeline continued to be carried forward, currently boasting more than half a million sq. ft. of office space under construction. 

Commercial real estate firm CBRE says for the second quarter in a row, the country’s suburban office vacancy level was lower than the rate seen for downtown regions.

The firm says the national suburban office vacancy rate was 16 per cent in its most recent quarter, while the national downtown office vacancy sat at 16.9 per cent.

During the second quarter, seven out of 10 Canadian markets recorded tightening suburban vacancy, most often in larger magnitudes than were seen downtown.

Positive Shift in Market Does Not Necessarily Mean a Recovery

The suburban GTA office market recorded roughly 457,000 sq. ft. of positive net absorption over the quarter. This marks the first instance since Q1 2020 that net absorption has been overall positive. These encouraging results were primarily driven by the Markham North & Richmond Hill submarket in the East, and the Airport Corporate Center submarket in the West, where 123,000 sq. ft. and 185,000 sq. ft. of positive net absorption were recorded, respectively.

As the flight-to-quality trend seen throughout various markets in previous quarters continues, 60.2% of the overall net absorption in the market was also accounted for by Class A space. While this quarter’s uptick in leasing activity is encouraging and might signal a start of recovery from the effects of the pandemic, current economic uncertainty amidst a looming recession is likely to deter occupiers’ confidence in the market for a little while longer.


Suburban Construction Activity

Development in the suburban office market is slowly gaining traction. The total space under construction in the market has more than doubled year-over-year, with 675,000 sq. ft. currently in progress. The East market leads construction activity, with an estimated 473,000 sq. ft. of Class A office space in the pipeline. Metrus, who is currently developing the largest of the four eastern sites, continues construction of The Crosstown Place at 844 Don Mills Road. The 265,000 sq. ft. office tower has approximately 55.0% of the original space still available, as the anchor tenant Celestica, had already pre-leased the top 3 floors. Construction at 60 Mobile Drive continues as well, with 76.0% of the 124,000 sq. ft. redevelopment already pre-leased to it’s anchor tenant OSSTF. 

Veering to the North market, G Group Developments is currently constructing the third largest office project across the suburban market and has already broken ground late last year. The 10-story mixed-use office tower is located at 5250 Yonge Street and is set to add an additional 119,000 sq. ft. of office space to the market, and another 80,000 sq. ft. of retail below. The West market is trailing slightly behind the North and East in terms of the size of projects under construction. However, it is the only suburban market to see new supply this year and is still expected to receive an additional 83,000 sq. ft. of new supply over the next two quarters.


Despite uncertainty about future office demand — combined with a near-term economic slowdown, rising financing and construction costs, and labour shortages no developments have paused construction and landlords remain committed and optimistic.


REITs Softening in Canada?

A report from CIBC Capital Markets in June 2022 pointed to the fact that REITs seem well-positioned to withstand rising rates well into 2026 for a few reasons, which include the way REITS tend to structure their debt (and being subjected to potentially higher rates each year) and the ongoing return to pre-pandemic operational activity.

Meanwhile, Global real estate services firm Jones Lang LaSalle Inc., in its Q2 real estate outlook, predicted that different segments of the REIT universe would hold up better than others if the economy takes a turn.

“Both industrial and retail are expected to remain resilient to softening economic conditions as the year wears on,” the report said. “Office, however, is expected to experience a delayed recovery from COVID-induced occupancy losses.”

The outlooks came after a generally strong quarter across the board.

On the retail side, as landlords continue to adapt to the realities of post-pandemic life, they are looking for new ways to bring value to their tenants, which include sharing data and offering more diverse experiences.

Companies are seeking to help retailers reconfigure their stores and environments as shopping preferences shift. This includes evolving retail spaces, drive aisles in parking lots, signage and even loading flows. With these tactics, commercial real estate companies are confident it can withstand any turbulence inflation might inflict on the retail sector.

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The Metaverse and CRE: The money-making future

The Commercial Real Estate (CRE) market has adapted to thousands of changes over the last decade, and it has prevailed. So what’s next on the horizon? The Metaverse that allows simulated plots of land to be purchased as a way to entice potential investors!

The Metaverse is a network of 3D virtual worlds focused on social connection – it’s the Internet as a single, universal virtual world that is facilitated by the use of virtual and augmented reality devices. The metaverse is how individuals will experience the next generation of the Internet, so it’s a wise decision to continue to expand further into the CRE mainstream. It’s all about creating a digital-first experience for all users, and HSBC is doing the right thing by dipping into the virtual property market earlier than later.

With a large portion of the world dipping into the Metaverse pool, also formerly known as Facebook, it’s safe to say that the platform will quickly become prevalent in numerous CRE closing deals. Leading the charge is the banking giant HSBC – Hong-Kong based bank HSBC has announced that it would join the metaverse through the Sandbox platform. The bank will be an innovator in the field of purchasing a plot of land in the digital universe, with the main focus being on sports, e-sports and gaming.

After HSBC announced it would be joining the Sandbox, the platform’s native cryptocurrency, SAND, jumped more than 11% on Wednesday to $3.01. The token was priced at about $2.96 as of Wednesday afternoon, still up 9%.

HSBC is following in the footsteps of JP Morgan who has set up a large virtual presence in the Metaverse with a blockchain-based Decentraland. The American bank giant has already opened a lounge space in a virtual mall, hoping to increase their profits through attracting a newer audience.


Reduce your commercial operating costs with window tinting and LED lighting

Building a sustainable future is a collective responsibility. When it comes to Commercial Real Estate (CRE), it’s more urgent than ever to discover new ways to decrease climate risk and move towards a more environmentally-aware future. We are rapidly shifting our way of thinking from ‘bigger and better buildings’ to ‘sustainable and eco-friendly properties’, so it’s wise to get on board quickly!

The commercial real estate industry has completely embraced the potential of high-tech efforts to improve tenant occupancy and the overall resident experience. Whether it’s reading real-time energy data that is being used to monitor areas of wasted power or tracking occupancy rates on different floors, sustainable smart-tech buildings optimize energy distribution. When you have collected the data, you will be able to solve specific eco problems that may not have had a viable solution in the past.

How are sustainable solutions and the CRE sector interconnected?

In this day and age, building environmentally-conscious properties and investing in CRE go hand in hand. Commercial properties have a significant impact on carbon emissions and energy consumption. Whether you are a long-term CRE investor, a tenant in a large condominium building or leading a construction company, we are all responsible for taking care of our planet for future generations.

Investing in ways to reduce carbon emissions will be less of an option and more of a requirement. Greener practices will only bring advantages to us and our planet, and hopping on the sustainable (eco-friendly) train will undoubtedly build a better financial portfolio, as you will be reducing costs as well.

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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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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.


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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.


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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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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