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Finding success for downtown office space after COVID-19 | RENX – Real Estate News EXchange

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IMAGE: In Boston, 125 Summer was repurposed into a successful boutique office complex. (Courtesy Stantec)

In Boston, 125 Summer was repurposed into a successful boutique office complex. (Courtesy Stantec)

GUEST COLUMN: Commercial real estate in our downtowns is going to look very different in the coming years.

The COVID-19 pandemic has accelerated trends like the adoption of digital business solutions and work-from-home policies, leading many companies to experiment with reducing their physical footprint as their leases come up for renewal.

This doesn’t bode well for the industry or our cities. Toronto’s office vacancy rate was 11 per cent in Q4 2020. Hard-hit Calgary and Edmonton were at 27 per cent and 26 per cent in Q4, respectively (according to CBRE’s Q4 2020 reports).

This has an enormous effect on business, community prosperity and municipal revenues. In the U.S., the National League of Cities recently estimated U.S. cities could face a $90-billion shortfall this year because of commercial real estate decline.

I believe our downtowns will bounce back — and in some places they already are. They are the heart of a region’s economy, culture and innovation; that’s not going to change. But, they will have to adapt to new market forces and people’s preferences.

When we talk about downtown commercial real estate, the stakes are high. While downtowns average just one to three per cent of city land, they account for 10-30 per cent of tax revenue.

The good news is we can start building a roadmap to get ahead of the problem. Planning tools at our disposal can disentangle rules, policies and overlays, while quickly repurposing and refinancing buildings for different uses.

Doing so will create greater business certainty, leading to business investment and long-term prosperity for municipal coffers.

First, an honest assessment of CRE

There’s no point in mincing words, we are in crisis mode. There are more questions than answers out there when it comes to dealing with fallout from the COVID-19 pandemic. I do, however, clearly see an accelerated flight to quality office space.

The flight to quality is exactly what it sounds like — companies making the move to newer and nicer offices. Choosing to upgrade office space is appealing on several levels: location, amenities, efficiency, prestige. Making that upgrade will be cheaper than any year in recent memory.

While there isn’t an exact standard to classify office space, there are three classes that are generally used. Class-A space includes the most modern facilities with higher ceilings, efficient large floor plates, more elevators, modern HVAC systems and often a LEED certification – all more desirable post-COVID.

Class-B and class-C are older and sometimes difficult to retrofit into a true class-A space.

As companies look to reduce their footprint, resulting in more affordable class-A spaces, B and C spaces are unlikely to come back to widespread office use. In the post-pandemic world, high-quality HVAC systems and more space will simply be more desirable.

This leads to a need (and an opportunity) to change how we think of those lower classes of real estate and to reposition them for new uses. Retrofitting an underutilized building – even if it’s basically just the shell – will often be 50 per cent less costly than a new build, not to mention more environmentally friendly.

Future success lies in filling new needs

So, what are the needs of the post-COVID economy and how can we position all classes of office space for the future? Without claiming to have a crystal ball, some preferences and policies are emerging that we can get in front of now:

Increased desire for flexible spaces. Co-working spaces, technological advancements and remote work have pushed us forward in terms of how we think about office space. Creating more space that caters to less traditional office space requires increased flexibility to maximize both efficiency and comfort.

Experience-first thinking. We need to ask questions like: “How are we making coming to the office better than staying at home?”

More space for people. This applies both inside and outside of buildings. For the foreseeable future, it is important to offer options for social distancing that comply with public health guidelines and pandemic safety protocols. As many jurisdictions have endured long lockdowns, we’ve renewed our love for green urban spaces and a public realm that puts people first.

Pedestrian, parklet and patio experiences. These three Ps will draw people to our downtowns and contribute to an economic development strategy. Commercial real estate form and use have a direct relationship with creating an inviting district, which can be explored creatively with business improvement districts (BIDs).

Finally addressing our housing gaps. Many cities in North America are facing a housing crisis due to affordability and availability. Plenty of B- and C-class commercial real estate is well-suited to affordable housing, senior complexes and student residences.

Inviting in new uses. More affordability in B- and C-class real estate means we could see some unexpected uses for former office buildings. For example, some Boston office space is now being converted to laboratory space. Logistics and distribution centres and ghost kitchens are other uses that have boomed during the pandemic.

Thinking creatively, we can transform our commercial spaces into new and exciting buildings that add value to the community. If done right, building owners can get more value out of their properties and the results can be revolutionary for entire districts.

But, we need to create the conditions for that innovation.

A roadmap for repositioning downtown office space

Every city and BID will have different goals, and every building will have a different best option for retrofitting. There is no one-size-fits-all plan for something as complex as rethinking large commercial assets and how they might fit into a larger plan to reshape a community.

That said, there are several tools at a city’s disposal:

Malleable zoning: Ensure downtown land-use zones allow for adaptability and flexibility of use, form, signage, encroachment (patios and podiums), and reduced parking requirements to maximize places for people. Couple this with pedestrian-only zones to open streets to people and people-centred programming and converting street parking to allow outdoor dining/cafés. Upzoning can allow for greater density, density bonusing and/or accessory dwelling units (ADUs) to help alleviate affordability issues stemming from lack of inventory.

Think differently about historical preservation: Historical preservation is important, but we don’t want preservation bylaws to stymie using historic buildings for the present. A tax credit can help spur investment and give old buildings new life.

Abolish parking minimums: Many cities are removing parking minimums to make new projects or redevelopments more affordable and to let the market decide how much parking needs to be provided. This allows former parking spaces in buildings (e.g., class-B and -C) to be converted to gyms, food production, storage and labs.

Local improvement levies: Local governments can borrow money for improvements and have that debt paid back via a levy on the benefitting area.

Apply for higher order grant funding: Federal infrastructure funding is just starting to flow for the COVID recovery and there are grant opportunities to explore. In the U.S. for example, Stantec’s North American Funding Team has helped clients secure over US$4 billion for projects ranging from environmental assessments to transit-oriented development planning.

Develop housing grants: Provide financial incentives such as grant money per each unit of new housing in markets with weaker real estate economics. Increasing the downtown population has a cascading impact as it generates economic multipliers by creating vibrancy, filling restaurants outside of office hours and creating safer streets.

Tax abatements: Multiyear tax abatements are an incentive to make improvements financially viable while improving the cityscape over the long term.

Public-realm improvements: Investing in public realm improvements (parks, plazas, street trees, benches, pedestrian-oriented streetlights, cobblestone/pavers, mid-block crossings and bulb outs) and urban design improvements of the first 30 feet of building facades helps spur private investment in the building itself.

Expedite permitting and inspections: Encouraging LEED certification, green roofs and green infrastructure, and other desirable qualities can push development along. Temporarily relaxing bylaw standards can also help expedite construction (thus reducing costs).

Disentangling policies and regulations will position us to fast-track the conversion of class-B and -C office space to alternative uses, repositioning these assets for future needs.

The first step is mapping out the needs of the community and initiating collaboration between the city, building owners and BIDs. Building the right roadmap to carry on into the future requires getting the right people at the table and setting some common goals.

As vaccines are rolled out and we see the light at the end of the tunnel, we are poised for an aggressive economic recovery for the next several years. By leveraging the right tools, we can supercharge that economic recovery for our commercial real estate sector and reshape our communities for the better.

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Canadian home sales, prices surge to new record in March

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OTTAWA (Reuters) – Canadian home sales rose 5.2% in March from February, setting a new all-time record amid strong demand in markets across the country, the Canadian Real Estate Association said on Thursday.

The industry group said actual sales, not seasonally adjusted, rose 76.2% from a year earlier, while the group’s Home Price Index was up 20.1% from last March and up 3.1% from February.

The actual national average selling price hit a new record at C$716,828 ($572,821) in March, up 31.6% from a year earlier and rising 5.7% from February.

($1 = 1.2514 Canadian dollars)

 

(Reporting by Julie Gordon in Ottawa)

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Hot real estate market sparks warnings to potential buyers as complaints to regulator double

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As home sales in the province continue on a dizzying trajectory, the province’s real estate watchdog and regulator are warning buyers to be wary of what they may be getting into.

The Real Estate Council of B.C. (RECBC) and the Office of the Superintendent of Real Estate said that in the first three months of 2021, they have seen an increase in inquiries and complaints.

Calls to the regulator were up 42 per cent over the previous year, while complaints, such as how offers were made and accepted, were double the number received in the same period in 2020.

“Buying a home is one of life’s biggest financial decisions. There are potential risks at the best of times, but with the added pressure and stress of the current market conditions, those risks are amplified,” Micheal Noseworthy, superintendent of real estate, said in a statement.

 

 

The Real Estate Board of Greater Vancouver says sales in the region have continued at a record-setting pace.

Residential home sales covered by the board totalled 5,708 in March 2021, up 126.1 per cent from March 2020, when the COVID-19 pandemic hit, and up 53.2 per cent from February of this year.

Rural and suburban areas have experienced the biggest spikes.

For the past two weeks, Jay Park has been in the middle of the buying frenzy.

He and his partner are trying to upgrade from their one-bedroom apartment to a two-bedroom condo or townhouse in Vancouver.

“I wish we had done this a month or two ago,” he said.

 

A condo tower under construction is pictured in downtown Vancouver in February 2020. (THE CANADIAN PRESS/Darryl Dyck)

 

Park put an offer on a $1-million condo, $4,000 above asking price.

“To entice the [seller], we put in a subject-free offer, but it wasn’t successful,” he said. “They accepted $110,000 over asking price that was also subject-free.”

The hot market has led to bidding wars. Some would-be buyers have even lined up outside for days to try to get a jump on a property.

Erin Seeley, the CEO of the council, is warning buyers to do their research and be aware of risks before making an offer.

“It’s really important that buyers have engaged with their lender before they’re making offers so they know how to stay within a reasonable budget,” she said.

Seeley said some of the complaints the council has heard from buyers is that they weren’t aware the seller has a right to take an early offer.

“And the seller was really in the driver’s seat about setting the pricing,” she said.

 

Demand continues to outstrip supply for housing in cities like Vancouver. (Rafferty Baker/CBC)

 

Aaron Jasper, a Vancouver realtor, advises clients to avoid cash offers and to include finance clauses even if it may mean they lose a deal.

“There’s a lot of frustration among buyers, feeling pressure to take some risk,” he said.

“You’re better to be delayed perhaps a year getting into the market as opposed to being completely financially ruined.”

Jasper also says realtors are limited in the advice they can give to clients on legal matters, home inspections, potential deficiencies with homes, and financing.

‘Caught up in the craziness’

Other tips from the council include seeking professional advice before making a subject-free offer or proceeding without a home inspection, and speaking to a professional to determine how market conditions may be affecting prices.

Meantime, people like Jay Park say they are still keen to buy. Park has more viewings scheduled and is optimistic.

“It’s a very exciting time for us, but I also don’t want to get caught up in the craziness and make a purchase that’s above our means.”

Source: – CBC.ca

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Black Press Media introduces one of Western Canada’s best real estate platforms helping home buyers Find. Love. Live. that new home

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Need an agent who knows the community?

Or, is it time to look for a new place to live, but you don’t know what’s on the market?

Whatever the real estate need is for residents in the communities of British Columbia, Yukon & Alberta, there’s a new way to do that one-stop shopping – by visiting Today’s Home.

The slogan for the site is “Find. Love. Live.”

“We want people to find their dream home, love it, and live in it,” said group publisher Lisa Farquharson.

Building on the success of Black Press Media’s niche digital platforms – Today’s Home brings the same wealth of knowledge and local expertise to the search for a home, be it buying, selling, or even just daydreaming about what changes you can make in the future.

Search hundreds of listings that local real estate agents have available.

The listings cover properties around the region, from a one-bedroom, one-bath condo for $339,900 to million-dollar acreages throughout the province of BC, Yukon, Central Alberta and beyond.

Click on a listing, and see not only the realtor handling the property sale, but links to his or her other listings and social media feeds. With the click of a mouse, take a virtual tour of the property, find the property’s walking score, and learn about nearby amenities.

There are links available to schedule a showing, or send the agent a comment or question.

Want to share a listing? When you click on the share button, you’ll actually send an attractive digital flyer of the prospective property, not just a link.

There’s even a button to help determine how much you have to spend, courtesy of the convenient mortgage calculator.

Plus, scroll down the page on Today’s Home and find a list of expert local real estate professionals who can answer questions or help with that home sale, Farquharson explained.

Today’s Home offers the advantage of the massive reach that Black Press Media has built throughout Western Canada with its network of community newspapers and online products. That allows the public to tailor real estate searches based on location, price, and other key factors while allowing real estate professionals to gain unprecedented audience reach with their listings.

Today’s Home will dovetail into the media company’s existing print real estate publications.

“Black Press Media has real estate solutions in print and now we can add in the digital component,” Farquharson said.

Watch for expansion of the Today’s Home platform in the near future, she added. That will come as Black Press Media adds a new component – the development community. Developers will be able to reach a huge audience when their projects are ready for presentation.

For information on Today’s Home, contact group publisher Lisa Farquharson at 604-994-1020 or via email.

Happy house hunting!

Source: – Aldergrove Star

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