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How Businesses Can Lead A Corporate Real Estate Revolution – Forbes

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Complexity is the defining business and leadership challenge of our time. But it has never felt more urgent than this moment, with the coronavirus upending life and business as we know it. For the past few months, we’ve been talking to leaders about what it takes to lead through the most complex and confounding problems, including the pandemic. Today we have a second conversation with corporate real estate veteran Chris Kane, author of Where is My Office? Reimagining the Workplace for the 21st Century. Kane was the Vice President of International Corporate Real Estate for The Walt Disney Company, before acting as Head of Corporate Real Estate at the BBC. He is a Fellow of the Royal Institution of Chartered Surveyors and a founding member and director of Six Ideas, a global consultancy focused on workplace development and innovation. 

David Benjamin and David Komlos: In your book, you say that the commercial real estate sector is “set in its outdated ways and firmly resistant to change” and that “winter is coming” for the sector. Have you seen any signs that winter is now here and the resistance is breaking?

Chris Kane: Despite the future of offices and office work being catapulted into the mainstream as a result of Covid-19, the corporate real estate sector still struggles to see the link between people and place because as a landlord, it’s very, very difficult to unwind decades of good times. 

The office sector is synonymous with mass standardization, huge value accretion, windfall profits, and ‘easy bucks’, and the industry is fighting to defend that status quo. They’re telling themselves this is just a market downturn similar to the global financial crisis and everybody will come back to their offices. The truth is that the problems are much more structural. I agree that people will come back to the office, but not as intensely as before. 

When the history books are written about this period, it will be seen as a pivotal time in humankind and its evolution. But landlords are hoping that this is all going to go away and we’ll get back to normal at some point in the not too distant future.

David Benjamin and David Komlos: In addition to Covid-19, what other factors will fuel what you call a “workplace revolution” going forward? 

Kane: One factor is the shift from consolidation to networked and distributed work. In the future, you’ll still have the big city center office buildings in downtown Toronto and in Manhattan but they will be used very differently. We may even have hit ‘peak office’. We may have sufficient office stock so that, like tending a garden, we need to repurpose or replace the stuff that’s not fit for purpose, rather than adding more. The reality is that even pre-Covid, most office occupiers only used 50% of their capacity, and it took the pandemic to force businesses to ask what is the purpose of their offices?

Another factor is that demand is going to be very different in the years ahead, and that will force the real estate industry to figure out who its customers really are and to start talking to them to better understand their needs. 

Policymakers will also play a role in driving change. Some cities are looking to use the shift that’s underway as an opportunity to drive their sustainability agenda. In Paris, for example, the mayor has worked with Carlos Moreno, an urban planner, to introduce the concept of a 15-minute city, where you live, work, and play all within one neighborhood. 

David Benjamin and David Komlos: How will the commercial real estate industry need to adapt?

Kane: The sector thinks it’s delivering an asset, but its consumers want a tool to enable their business. The disconnect is partially because the sector and its end consumers have never had a direct relationship; everybody is talking through intermediaries. That’s going to have to change. 

With respect to the shift from fixed to fluid use of space, WeWork let the genie out of the bottle by showing companies that there’s choice. Whereas 90-95% of our office space has always been bought, leased, or sub-leased, over the next three to five years, that number is going to drop to about 50%, and the other half will rely on other on-demand models (like work from home, “third places” and distributed co-working facilities). 

The digital age has enabled people to work anywhere, anyhow, anytime. Some companies won’t ever go back to forcing people into two-hour commutes. That doesn’t mean they’ll get rid of office space completely, because there is still a social interaction richness to an office environment. Leaders will certainly have to adjust their thinking to include many other options as well. 

We’re in for an interesting time, and the real estate industry hasn’t yet faced up to the disruption that’s underway. 

Benjamin and Komlos: Going forward, what will it take for the sector to wake up to its need for transformation, if not a global pandemic?

Kane: The transformation the sector needs to go through is really complex, and I’ve learned that navigating complexity requires doing the difficult work of engaging people and seeking out a variety of perspectives. The challenges now are too big for one sector or one individual to take on. However, a lot of people in my sector have a vested interest in the status quo, so they don’t want to do that work and don’t understand why it’s important. I think the first thing to do is for real estate providers to start building a relationship with their customers and start talking about this stuff directly. We need big, powerful organizations to recognize that they have choices beyond just buying or leasing a building, and to demand change. 

We can’t rely on people in property-related roles to make those demands because they have a strong emotional connection with commercial real estate that makes them reluctant to rock the boat. Business leaders, HR Directors, managers, and so on – they’re the ones who may have to lead the way into the necessary conversations.

Benjamin and Komlos: Any other advice you can offer? Parting words?

Kane: The real estate sector can actually make more money if they get smarter about all of this. It comes down to shifting the focus from buildings to people, recognizing that it’s not either/or between the office and the home, and breaking down silos so we can really think about this holistically. The industry needs to offer a blended range of options – core, flex, on-demand, and work from home.  All underpinned by a space as a service model with a sustainability focus,  rather than just renting space.

It’s time to do away with the medieval concept of landlord and tenant; it’s time for a remodel.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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B.C. voters face atmospheric river with heavy rain, high winds on election day

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VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.

Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.

The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.

Wednesday was the last day for advance voting, which started on Oct. 10.

More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.

Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.

An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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No shortage when it comes to B.C. housing policies, as Eby, Rustad offer clear choice

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British Columbia voters face no shortage of policies when it comes to tackling the province’s housing woes in the run-up to Saturday’s election, with a clear choice for the next government’s approach.

David Eby’s New Democrats say the housing market on its own will not deliver the homes people need, while B.C. Conservative Leader John Rustad saysgovernment is part of the problem and B.C. needs to “unleash” the potential of the private sector.

But Andy Yan, director of the City Program at Simon Fraser University, said the “punchline” was that neither would have a hand in regulating interest rates, the “giant X-factor” in housing affordability.

“The one policy that controls it all just happens to be a policy that the province, whoever wins, has absolutely no control over,” said Yan, who made a name for himself scrutinizing B.C.’s chronic affordability problems.

Some metrics have shown those problems easing, with Eby pointing to what he said was a seven per cent drop in rent prices in Vancouver.

But Statistics Canada says 2021 census data shows that 25.5 per cent of B.C. households were paying at least 30 per cent of their income on shelter costs, the worst for any province or territory.

Yan said government had “access to a few levers” aimed at boosting housing affordability, and Eby has been pulling several.

Yet a host of other factors are at play, rates in particular, Yan said.

“This is what makes housing so frustrating, right? It takes time. It takes decades through which solutions and policies play out,” Yan said.

Rustad, meanwhile, is running on a “deregulation” platform.

He has pledged to scrap key NDP housing initiatives, including the speculation and vacancy tax, restrictions on short-term rentals,and legislation aimed at boosting small-scale density in single-family neighbourhoods.

Green Leader Sonia Furstenau, meanwhile, says “commodification” of housing by large investors is a major factor driving up costs, and her party would prioritize people most vulnerable in the housing market.

Yan said it was too soon to fully assess the impact of the NDP government’s housing measures, but there was a risk housing challenges could get worse if certain safeguards were removed, such as policies that preserve existing rental homes.

If interest rates were to drop, spurring a surge of redevelopment, Yan said the new homes with higher rents could wipe the older, cheaper units off the map.

“There is this element of change and redevelopment that needs to occur as a city grows, yet the loss of that stock is part of really, the ongoing challenges,” Yan said.

Given the external forces buffeting the housing market, Yan said the question before voters this month was more about “narrative” than numbers.

“Who do you believe will deliver a better tomorrow?”

Yan said the market has limits, and governments play an important role in providing safeguards for those most vulnerable.

The market “won’t by itself deal with their housing needs,” Yan said, especially given what he described as B.C.’s “30-year deficit of non-market housing.”

IS HOUSING THE ‘GOVERNMENT’S JOB’?

Craig Jones, associate director of the Housing Research Collaborative at the University of British Columbia, echoed Yan, saying people are in “housing distress” and in urgent need of help in the form of social or non-market housing.

“The amount of housing that it’s going to take through straight-up supply to arrive at affordability, it’s more than the system can actually produce,” he said.

Among the three leaders, Yan said it was Furstenau who had focused on the role of the “financialization” of housing, or large investors using housing for profit.

“It really squeezes renters,” he said of the trend. “It captures those units that would ordinarily become affordable and moves (them) into an investment product.”

The Greens’ platform includes a pledge to advocate for federal legislation banning the sale of residential units toreal estate investment trusts, known as REITs.

The party has also proposed a two per cent tax on homes valued at $3 million or higher, while committing $1.5 billion to build 26,000 non-market units each year.

Eby’s NDP government has enacted a suite of policies aimed at speeding up the development and availability of middle-income housing and affordable rentals.

They include the Rental Protection Fund, which Jones described as a “cutting-edge” policy. The $500-million fund enables non-profit organizations to purchase and manage existing rental buildings with the goal of preserving their affordability.

Another flagship NDP housing initiative, dubbed BC Builds, uses $2 billion in government financingto offer low-interest loans for the development of rental buildings on low-cost, underutilized land. Under the program, operators must offer at least 20 per cent of their units at 20 per cent below the market value.

Ravi Kahlon, the NDP candidate for Delta North who serves as Eby’s housing minister,said BC Builds was designed to navigate “huge headwinds” in housing development, including high interest rates, global inflation and the cost of land.

Boosting supply is one piece of the larger housing puzzle, Kahlon said in an interview before the start of the election campaign.

“We also need governments to invest and … come up with innovative programs to be able to get more affordability than the market can deliver,” he said.

The NDP is also pledging to help more middle-class, first-time buyers into the housing market with a plan to finance 40 per cent of the price on certain projects, with the money repayable as a loan and carrying an interest rate of 1.5 per cent. The government’s contribution would have to be repaid upon resale, plus 40 per cent of any increase in value.

The Canadian Press reached out several times requesting a housing-focused interview with Rustad or another Conservative representative, but received no followup.

At a press conference officially launching the Conservatives’ campaign, Rustad said Eby “seems to think that (housing) is government’s job.”

A key element of the Conservatives’ housing plans is a provincial tax exemption dubbed the “Rustad Rebate.” It would start in 2026 with residents able to deduct up to $1,500 per month for rent and mortgage costs, increasing to $3,000 in 2029.

Rustad also wants Ottawa to reintroduce a 1970s federal program that offered tax incentives to spur multi-unit residential building construction.

“It’s critical to bring that back and get the rental stock that we need built,” Rustad said of the so-called MURB program during the recent televised leaders’ debate.

Rustad also wants to axe B.C.’s speculation and vacancy tax, which Eby says has added 20,000 units to the long-term rental market, and repeal rules restricting short-term rentals on platforms such as Airbnb and Vrbo to an operator’s principal residence or one secondary suite.

“(First) of all it was foreigners, and then it was speculators, and then it was vacant properties, and then it was Airbnbs, instead of pointing at the real problem, which is government, and government is getting in the way,” Rustad said during the televised leaders’ debate.

Rustad has also promised to speed up approvals for rezoning and development applications, and to step in if a city fails to meet the six-month target.

Eby’s approach to clearing zoning and regulatory hurdles includes legislation passed last fall that requires municipalities with more than 5,000 residents to allow small-scale, multi-unit housing on lots previously zoned for single family homes.

The New Democrats have also recently announced a series of free, standardized building designs and a plan to fast-track prefabricated homes in the province.

A statement from B.C.’s Housing Ministry said more than 90 per cent of 188 local governments had adopted the New Democrats’ small-scale, multi-unit housing legislation as of last month, while 21 had received extensions allowing more time.

Rustad has pledged to repeal that law too, describing Eby’s approach as “authoritarian.”

The Greens are meanwhile pledging to spend $650 million in annual infrastructure funding for communities, increase subsidies for elderly renters, and bring in vacancy control measures to prevent landlords from drastically raising rents for new tenants.

Yan likened the Oct. 19 election to a “referendum about the course that David Eby has set” for housing, with Rustad “offering a completely different direction.”

Regardless of which party and leader emerges victorious, Yan said B.C.’s next government will be working against the clock, as well as cost pressures.

Yan said failing to deliver affordable homes for everyone, particularly people living on B.C. streets and young, working families, came at a cost to the whole province.

“It diminishes us as a society, but then also as an economy.”

This report by The Canadian Press was first published Oct. 17, 2024.

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