Connect with us

Real eState

Battered Calgary office owners await 'new normal' fallout – Real Estate News EXchange



Battered Calgary office owners await 'new normal' fallout – Real Estate News EXchange

Todd Throndson is a principal, and the managing director of Avison Young’s Calgary office. (Courtesy Avison Young)

As office buildings in Canada are prepared for workers to return, the big question is how much space companies will need in the new reality with COVID-19 impacting revenues, and the potential increase in remote work.

That question is even more significant for the beleaguered Calgary downtown office market which continues to see an elevated vacancy rate due to persistent low oil prices.

Todd Throndson, managing director and principal of commercial real estate firm Avison Young and a member of BOMA Calgary’s board of directors, said change is inevitable, but that isn’t necessarily a bad thing.

“Every organization is re-looking at how they use their office space and most organizations that we have talked to have found that they’ve been able to operate their business with their people at home in a reasonable fashion, if not a good fashion,” he said.

As a result, he expects more people to be able to work from home.

“That doesn’t mean that they’re not going to continue to need space,” he said. “Most organizations will still define that they need most of their people to be able to come into the office. Let’s say two-thirds of an operation will stay structured in a downtown buns-and-seats type of environment.

“A third of the office is going to be a floating group. That could mean they’re permanently off-site working from home or working out of their car or working from hotels.

“Or it could mean an organization is rotating people around to get some connectivity still in their office space for different business lines.”

Office workspaces to be adapted

While there might be fewer employees, he expects companies will adapt their workspaces to allow individuals more space. He also expects more personal work areas to be created.

Another factor to consider is whether business will want to be downtown, because public transportation will become a bigger issue.

At the end of Q1 2020, Calgary’s downtown vacancy rate was 24.7 per cent with an additional 225,000 square feet on the market, according to Avison Young.

Net absorption for the last 12 months is 316,000 square feet, but the five-year average annual absorption for office space in downtown Calgary is -897,000 square feet/year.

There are many questions right now.

How many businesses will survive the pandemic? How will tenants use their space when they return? What will be the impact to vacancy and occupancy costs? What type of market will there be for office lease transactions?

How will landlords approach deals when tenants’ financial covenants are strained due to reduced revenues? What will Calgary’s CRE industry look like in a year’s time?

“It is unlikely we will see much impact from the COVID pandemic on the office market until the third quarter of 2020. Calgary’s unemployment rate increased to 8.6 per cent in March 2020, up from 7.4 per cent just one month prior,” said the Avison Young report. “How high it will reach is anyone’s guess, but the reporting we have so far is just the tip of the iceberg.

IMAGE: How much space will office tenants want as they rethink their requirements in the post-COVID era? It's a question which is doubly important in Calgary, which has already been impacted by an ongoing downturn in the oil and gas sector. (Google Street View)

How much space will office tenants want as they rethink their requirements in the post-COVID era? It’s a question which is doubly important in Calgary, which has already been impacted by an ongoing downturn in the oil and gas sector. (Google Street View)

“The good news is landlords and building owners are already making changes to their buildings to keep their tenants safe, preparing for the eventual return-to-office timeframe. Cleaning and sanitation schedules will be increased. HVAC systems will be modified or improved.

“Population densities in common areas such as lobbies and elevators will be regulated. Changes to office layouts will be made to accommodate social distancing. In a very short period of time, the experience of going to an office will be much different for the foreseeable future.”

BOMA Canada’s Pathway Back to Work

BOMA Canada recently released its Pathway Back to Work guide to help building owners and property managers provide a safe return for building personnel, visitors, vendors, contractors and others to commercial real estate across Canada.

“No two properties are alike, so we cannot recommend a single one-size-fits-all approach nor can the approach . . . capture every single consideration. Instead, we have prepared a framework which individual property managers can both adapt and adopt,” said the report.

Benjamin Shinewald, president and CEO of BOMA Canada, said the guide’s key message is one of hope.

“There may be ups and downs and there may be timing issues, but we will get back to normal. We will be at a point where COVID is behind us. We are at the earliest stages of that process right now and now is the time to start to prepare for re-entry, staggered or otherwise, into our assets,” said Shinewald.

“We exist for our tenants and they’ve got to be able to enjoy their space, but it’s a weird moment and it’s hard. It’s complicated, but let’s start now with that process.”

Lloyd Suchet, executive director of BOMA Calgary, said the one other characteristic of Calgary’s office market is the extensive Plus-15 walkway network connecting downtown buildings. That will have to be taken into consideration for health and safety protocols during the reopening of towers in the core.

Suchet said the economic downturn caused by COVID and lower oil prices will continue to weigh on the downtown office market in Calgary.

“It was a challenging market prior to COVID and this is only going to make it even more challenging,” he said.

“Real challenges lie ahead and (when) you look at the role commercial real estate plays in our society and in our market in a lot of public pensions, there is significant concern out there.”

BOMA Canada has about 3,500 members spread across 11 regional chapters. It focuses on asset management, property management, building operations and associated vendors, suppliers and partners.

BOMA Canada is an affiliated member of BOMA International, a federation of 93 BOMA U.S. associations and 16 international affiliates.


* Skyline buys 1.1M sq. ft. of Calgary industrial property

* MSCI/REALPAC property index dips to open 2020

* COVID-19’s potential impact on CRE valuations, by asset class

Let’s block ads! (Why?)

Source link

Continue Reading

Real eState

What Is the Canada Mortgage and Housing Corporation (CMHC)



Protecting your mortgage in Canada

The Canada Mortgage and Housing Corporation (CMHC) is a Canadian Crown Corporation that serves as the national housing agency of Canada and provides mortgage loans to prospective buyers, particularly those in need.

Understanding the Canada Mortgage and Housing Corporation (CMHC)

The Canada Mortgage and Housing Corporation (CMHC) serves as the national housing agency of Canada. CMHC is a state-owned enterprise, or a Crown corporation, that provides a range of services for home buyers, the government, and the housing industry.

CMHC’s stated mission is to “promote housing affordability and choice; to facilitate access to, and competition and efficiency in the provision of, housing finance; to protect the availability of adequate funding for housing, and generally to contribute to the well-being of the housing sector.”1

A primary focus of CMHC is to provide federal funding for Canadian housing programs, particularly to buyers with demonstrated needs. CMHC, headquartered in Ottawa, provides many additional services to renters and home buyers, including mortgage insurance and financial assistance programs. CMHC acts as an information hub for consumers, providing information on renting, financial planning, home buying, and mortgage management.

CMHC also provides mortgage loan insurance for public and private housing organizations and facilitates affordable, accessible, and adaptable housing in Canada.2 Additionally, CMHC provides financial assistance and housing programs to First Nations and Indigenous communities in Canada.3

Professionals and Consumers

CMHC provides services to both professionals and consumers. For professionals, CMHC aims to work in collaboration with different groups to provide affordable housing. Services include project funding and mortgage financing, providing information to understand Canada’s housing market, innovation and leadership networks to access funding and talent to spur housing innovation and increase supply, and providing speakers and hosting events for the industry.4

For consumers, CMHC seeks to provide all the tools an individual would need to either buy a home or rent a home and a variety of information and assistance for current homeowners, such as managing a mortgage, services for seniors to age in place, and financial hardship assistance.56

For financial hardship and mortgage assistance, CMHC provides tools that include payment deferrals, extending the repayment period, adding missed payments to the mortgage balance, moving from a variable-rate to a fixed-rate mortgage, and other special payment arrangements.7

Canada Mortgage and Housing Corporation (CMHC) and the National Housing Strategy

In November 2017, the Canadian government announced the National Housing Strategy.8 Rooted in the idea that housing is a human right, this 10-year, $70 billion project will largely be administered by CMHC, although some services and deliverables will be provided by third-party contractors and other Canadian federal agencies.9

Strategic initiatives of the National Housing Strategy include:

  • Building new affordable housing and renewing existing affordable housing stock
  • Providing technical assistance, tools, and resources to build capacity in the community housing sector and funds to support local organizations
  • Supporting research, capacity-building, excellence, and innovation in housing research10

History of the Canada Mortgage and Housing Corporation (CMHC)

CMHC was established in 1946 as the Central Mortgage and Housing Corporation by the federal government in Canada with the primary mission of administering the National Housing Act and the Home Improvement Loans Guarantee Act and facilitating discounts to mortgage companies. Initially, CMHC began by providing housing to returning Canadian war veterans, and toward the end of the 1940s, CMHC began to administer a program providing low-income housing across Canada.11

In 1947, CMHC was responsible for opening Regent Park, a large low-income housing project, and Toronto’s first urban renewal project. By the 1960s, CMHC introduced co-op housing and multi-unit apartment buildings throughout Canada.11

In 1979, the Central Mortgage and Housing Corporation changed its name to the Canada Mortgage and Housing Corporation

Continue Reading

Real eState

Canadian home price gains accelerate again in May



LACKIE: Real estate market going through 'recalibration' of supply, demand – Toronto Sun

Canadian home prices accelerated again in May from the previous month, posting the largest monthly rise in the history of the Teranet-National Bank Composite House Price Index, data showed on Thursday.

The index, which tracks repeat sales of single-family homes in 11 major Canadian markets, rose 2.8% on the month in May, led by strong month-over-month gains in the Ottawa-Gatineau capital region, in Halifax, Nova Scotia, and in Hamilton, Ontario.

“It was a third consecutive month in which all 11 markets of the composite index were up from the month before,” said Daren King, an economist at National Bank of Canada, in a note.

On an annual basis, the Teranet index was up 13.7% from a year earlier, the 10th consecutive acceleration and the strongest 12-month gain since July 2017.

Halifax led the year-over-year gains, up 29.9%, followed by Hamilton at 25.5% and Ottawa-Gatineau at 22.8%.

Housing price gains in smaller cities outside Toronto and its immediate suburbs again outpaced the major urban centers, with Barrie, Ontario leading the pack, up 31.4%.

On a month-over-month basis, prices rose 4.9% in Ottawa-Gatineau, 4.3% in Halifax and 3.7% in Hamilton.

The Teranet index measures price gains based on the change between the two most recent sales of properties that have been sold at least twice.

Canada‘s average home selling price, meanwhile, fell 1.1% in May from April, Canadian Real Estate Association data showed on Tuesday, but jumped 38.4% from May 2020.


(Reporting by Julie Gordon in Ottawa; Editing by Christopher Cushing)

Continue Reading


Bank of Canada seeing signs of cooling in hot housing market



Canada’s mortgage insurer tightens rules

The Bank of Canada is starting to see signs that the country’s red hot housing market is cooling down, although a return to a normality will take time, Governor Tiff Macklem said on Wednesday.

The sector surged in late 2020 and early 2021, with home prices escalating sharply amid investor activity and fear of missing out. The national average selling price fell 1.1% in May from April but was still up 38.4% from May 2020.

“You are starting to see some early signs of some slowing in the housing market. We are expecting supply to improve and demand to slow down, so we are expecting the housing market to come into better balance,” Macklem said.

“But we do think it is going to take some time and it is something that we are watching closely,” he told the Canadian Senate’s banking committee.

Macklem reiterated that the central bank saw evidence people were buying houses with a view to selling them for a profit and said recent price jumps were not sustainable.

“Interest rates are unusually low, which means eventually there’s more scope for them to go up,” he said.

Last year, the central bank slashed its key interest rate to a record-low 0.25% and Macklem reiterated it would stay there at least until economic slack had been fully absorbed, which should be some time in the second half of 2022.

“The economic recovery is making good progress … (but) a complete recovery will still take some time. The third wave of the virus has been a setback,” he said.

The bank has seen some choppiness in growth in the second quarter of 2021 following a sharp economic recovery from the COVID-19 pandemic at the start of the year, he added.

(Reporting by David Ljunggren and Julie Gordon; Editing by Peter Cooney and Richard Pullin)

Continue Reading