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Hungerford sells Icon Business Park in Calgary – Real Estate News EXchange

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The Icon Business Park in Calgary. (Courtesy Hungerford Properties)

Hungerford Properties has sold the 46-acre Icon Business Park in Calgary, which it bought in 2013 and repositioned from a vacant single-use property to multi-tenant facility that is 98 per cent occupied.

Michael Hungerford, partner in Hungerford Properties, confirmed the sale of the property to RENX late Wednesday. Due to confidentiality articles in the transaction, he did not reveal the buyer of the business park nor the sale price.

The Icon Business Park includes a 762,000-square-foot industrial facility in southeast Calgary that has about 11.5 per cent of its total space reserved for office use.

“Today as I look back, the plan that we had to execute on, we’ve completed. So the time had come for us to hand it off to another owner with a different plan. The value creation that we undertook is complete and that led us to the decision to sell,” said Hungerford. 

“I’m reluctant to talk about the particulars of the deal because there’s confidentiality.

“Out of respect for confidentiality with the purchaser, I’m not at liberty to talk about it. It’s a well-respected institutional buyer.”

In a release Thursday morning, Equium Group announced it will be the new property manager of Icon. Calgary-based Equium’s services include property management, development, construction, marketing, leasing and property investment. It specializes in commercial, condominium and residential real estate services.

Equium Group’s portfolio under management is valued in excess of $1.1 billion.

History of Icon Business Park

Hungerford Properties bought the site and building from manufacturer Haworth. The building was originally built in 1999 by Calgary entrepreneur Mogans Smed.

The facility consists of about 85,000 square feet of office space. The warehouse portion is another 676,000 square feet.

The Haworth building was originally put on the Calgary market for sale in the spring of 2010. The Haworth manufacturing facility was listed for sale as the U.S.-based company wound down production in the city.

Although the original list price was not revealed, the property was assessed for $60 million at the time and was being marketed internationally.

Smed International operated in Calgary from 1982 to 2000, at which time the facility was purchased by Haworth.

Haworth, which designs and manufactures office furniture and workspaces, is headquartered in Holland, Mich.

In August 2009, the manufacturer announced it was cutting about 600 jobs in Calgary as it was consolidating its Calgary manufacturing operations to west Michigan.

Hungerford’s redevelopment

IMAGE: Michael Hungerford, a partner in Hungerford Properties. (Courtesy Hungerford Properties)

Michael Hungerford, a partner in Hungerford Properties. (Courtesy Hungerford Properties)

When Hungerford bought the property, it undertook a redevelopment that included new building systems, new exterior access points, improved landscaping, more than 60 new loading doors, new fitness amenities, new office storefronts and interior tenant improvements.

“The plan was to buy the property, invest in it and reposition it and bring in business. Stabilize it with good long-term tenants,” said Hungerford. “As we looked at where we sit now, we achieved all that and we said it makes sense for another, in this case, institution to take ownership of it.

“Our vision was to transform this underutilized industrial space in Calgary into a bustling industrial park and we are thrilled to see this vision come of life.”

Today, Icon has national and international tenants including:

* CHEP, a global supply-chain logistics services group;

* Robert Thibert Inc., an international automotive parts distributor;

* ABB Inc., a Fortune Global 500 robotics, power, heavy electrical equipment and automation technology provider;

* Rolf C. Hagen Inc, the world’s largest privately owned pet products manufacturer and distributor;

* and The Data Group, one of Alberta’s largest single graphics communications companies.

Most recently, Icon leased 42,700 square feet of office space to Energy Safety Canada, Canada’s oil and gas safety association.

That tenancy brought the building to 98 per cent occupancy and represented one of the top-10 suburban relocation deals in the Calgary office market since 2015, according to Colliers International.

“Hungerford brought their expertise, creativity, commitment and vision to Icon and as a result, it has performed well,” said Paul Marsden, executive VP and partner at Colliers.

“Icon is a quality asset in a great location and, in addition to providing quality service to its tenants, Hungerford has brought new life to the area through these additional businesses, their employees and clients.”

Calgary industrial attractive

Hungerford said the company sees Calgary as an attractive centre for a diversified portfolio as part of its Canadian strategy – particularly its industrial strategy.

“That’s what we’ve certainly invested in, in the Calgary market. We continue to hold that view,” he told RENX.

“So, while we might be a seller at this particular asset, we’re also a buyer in others and have bought and have been active buying in the last couple of years in Calgary. It’s a long-term view in the market.

“As we look ahead, we like the regional story of Calgary industrial and the value for tenants in the market. We expect to be participating in the industrial market going forward.”

Beside the Icon Business Park, the company currently is completing construction of the Icon Retail Centre which has about half of its space committed to leases. Construction will be complete in 2021.

The Icon Retail Centre includes two strip buildings on four acres of land comprising about 14,000 square feet. It is anchored by a Petro-Canada gas station.

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Greening federal gov't building portfolio offers CRE 'opportunity' – Real Estate News EXchange

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IMAGE: A new eight-storey office building to be built at Ottawa's Zibi development will have the federal government as its dominant tenant. (Courtesy Dream)

An eight-storey office building being constructed at Ottawa/Gatineau’s highly sustainable Zibi development will have the federal government as its dominant tenant. (Courtesy Dream)

The ongoing pandemic, a quest to green its real estate footprint and a portfolio of buildings nearing the end of their useful lifespans will lead to a major transformation of the federal government’s real estate footprint during the next couple of decades.

That was the message from Stéphan Dery, the assistant deputy minister, real property services, for Public Services and Procurement Canada during his annual update on the government’s real estate plans at the virtual Ottawa Real Estate Forum this week.

While many of these changes had already started well before the pandemic, Dery said the effects of COVID-19 have accelerated some of the transformations, and the government’s owned-building portfolio isn’t getting any younger. Decisions on its future are becoming more pressing.

The feds do own a significant portion of the 75 million square feet of space they occupy. Of that portfolio, about 38 million square feet is in Ottawa, Gatineau and the National Capital Region (NCR), and 18 million square feet is leased from private owners.

Dery and PSPC work with 102 departments and agencies which employ about 240,000 people, just over half of them in the NCR.

Any shift in strategy will have wide-reaching implications for commercial real estate owners and operators, from those now leasing space to the feds, to companies wanting to sign government agencies as future tenants, and others hoping to buy aging assets for redevelopments.

“I think what you will see in the next few years is the Government of Canada disposing of large, old high-GHG-emission assets and replacing those assets by either new space that is leased, that is carbon neutral, or old space that is modernized and carbon neutral,” Dery told the CRE executives attending the online interview conducted by Nathan Smith, senior vice-president at the Cushman & Wakefield Ottawa office.

L’Esplanade Laurier could be sold

He offered the example of L’Esplanade Laurier, a complex including two 23-storey office towers connected by a podium, with three levels of underground parking in downtown Ottawa.

“I can see L’Esplanade Laurier in the next four, five or six years being on the market for the private sector either to redevelop it into apartments/condominiums, or redevelop it for office space, a hotel, whatever the private sector and the city will need at the time,” Dery said.

“These large assets that are at the end of their useful lives, we are going to be looking to dispose of them.”

The message was clear for firms looking to do business with the government, which has committed to reducing its greenhouse gas emissions by a minimum of 40 per cent by 2030. Real estate will be a major contributor.

“A lot of our inventory is old . . . it’s significant GHG emissions. So we are really looking for the next inventory, where we are going, to make these buildings, either leased or old, carbon neutral. It’s quite important to us,” Dery said.

“In 2030, 75 per cent of our lease(s) will have to be carbon neutral.”

As for how much space the government will occupy, Dery said current projections are to continue down the path to cut 30 per cent of its footprint.

Feds remain committed to smaller footprint

“Our portfolio plan says that over the next 25 years, we are thinking about reducing our footprint by 30 per cent or more depending on the outcome of COVID. It might be accelerated, but it’s not something that is going to be done overnight.”

Smith noted, however, if the government does shed aging real estate in favour of leasing newer, more environmentally friendly space, that could actually offer an opportunity for the CRE sector.

“When we talk about a 30 per cent reduction in your space over a 25-year horizon, people in the room would start to get nervous. Is public works going to significantly downsize their lease portfolio?” Smith asked.

“I would say it’s probably an opportunity for growth in your lease portfolio as you exit some of these Crown-owned assets.”

Dery left all options open, but reinforced his earlier comments about greening the portfolio. He wanted the message to be “quite clear” – this is where the opportunity will be.

“I know that really today, none of our lease would meet that (GHG) criteria in Gatineau, Ottawa and (the NCR). So we have an opportunity here.

“If you are a landlord, an owner, an investor, and you want to keep leasing space to the Government of Canada, just think about that. Seventy-five per cent of new leases or renewals in 2030 will have to be carbon neutral.”

The process has already started, with the disposal of several aging federal buildings in the NCR. In 2019, it was announced the feds will lease 158,000 square feet at a new eight-storey office building being constructed at the carbon-neutral Zibi development straddling Ottawa and Gatineau.

The government is also looking to develop a 1.6-million-square-foot office campus on land it owns at 599 Tremblay Rd. in East Ottawa, working with a developer on a land-lease basis.

Return to office and potential vacancy

Dery touched on a number of other points during the wide-ranging, half-hour presentation.

On current lease renewals, he said the government is looking at shorter time frames for properties it renews, but so far it has not made significant space reductions.

“We know that space may be used differently, but we’ll need space. So over the last 18 months, the COVID period, we have approximately renewed 100 leases, totalling 3.2 million square feet in the National Capital Region,” Dery said.

“If it’s going to reduce, it’s going to reduce over time. It’s not something that you turn on a dime.”

On return-to-office, he said government data shows pre-pandemic most public service offices had in-person occupancy of about 60 per cent capacity on a daily basis due to a combination of many factors – hybrid work schedules, staggered working times or shift work, travel, time off, illness, etc.

Current in-person staffing remains well below that level and he said he foresees permanent on-person staffing levels dropping by another 10 per cent or so.

“I could definitely see an increase in that with the work from home, or hybrid model equal to 10 per cent . . . easily 10 per cent.”

Smith put that into perspective, noting vacancy in Ottawa had declined to the six per cent range pre-COVID and is sitting around 10 per cent now with some reabsorption occurring.

“On a market basis, is that three or four per cent? Somewhere in that range, and that is really delivering two or three new buildings into the market at once and letting the market absorb that space,” Smith offered.

“I would suspect the market will be resilient and be able to absorb that vacancy that obviously is coming to us post-COVID.”

Government co-working model

Dery also envisioned the possibility of a government network of workspaces allowing remote workers to access facilities closer to where they live.

Modelled on the co-working office format, he said it could involve a number of departments sharing workspaces.

“You may have a building in a remote location but it doesn’t serve only one department . . . it serves all of the federal public service and it’s that kind of co-working space,” he explained. “We see a take-up on that and interest from multiple departments.

“I think it is going to work well with the hybrid (work schedules): you need to go to the office, there is an office not too far from your house and you reduce the GHG emissions.”

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Anthem building two Calgary shopping centres – Real Estate News EXchange

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Isaac Beall, Senior Director of Development at Anthem Properties Group Ltd.

Isaac Beall, senior director of development at Anthem Properties Group Ltd. (Courtesy Anthem Properties Group Ltd.)

Vancouver-based real estate company Anthem continues to be bullish on the Calgary market and needs-based retail, launching two new shopping centre projects in the region to service growing residential communities.

The firm also announced the acquisition of the 300,612-square-foot Junction Shopping Centre in Mission, B.C. The grocery-anchored, tier-1 property was acquired in partnership with Crestpoint Real Estate Investments.

“Calgary is a core market for Anthem. It is a great city, with great people. It is affordable, has a well-educated population and is a better deal for families, all in, than Toronto or Vancouver,” said Isaac Beall, Anthem’s senior director of development, during an interview with RENX.

“It will grow and Anthem will continue to build homes, develop new communities and lease up commercial and industrial spaces to those people requiring it.”

Anthem’s D’Arcy Crossing and Highstreet at Cornerstone

The two new shopping centres – D’Arcy Crossing and Highstreet at Cornerstone – are being developed by Anthem Properties for the communities of D’Arcy in Okotoks, just south of Calgary, and Cornerstone in Northeast Calgary.

Those residential neighbourhoods are being developed by Anthem United.

The D’Arcy Crossing shopping centre, with Safeway as an anchor tenant, will also include Shoppers Drug Mart, a liquor store, restaurants, coffee shops and other businesses to service the daily needs of Okotoks-and-area residents. It will be the largest commercial centre in North Okotoks at 151,000 square feet and is scheduled to open in the spring of 2023.

The shopping centre will have more than 40 businesses when completed.

Beall said the northern part of the town has more than 60 per cent of Okotoks’ total population. D’Arcy is a 280-acre community that launched in 2018 bordering the D’Arcy Ranch Golf Club.

Once completed, it will have more than 2,200 homes. About 300 homes have already been built in the community with full buildout expected by 2026.

Anthem is also building the neighbouring community of Wedderburn in Okotoks, which will include about 1,300 homes on completion, which is also expected by 2026. So far 50 new homes have been built.

Highstreet at Cornerstrone will be 139,000 square feet, and is scheduled to open in Spring 2023. (Courtesy Anthem Properties Group Ltd.)

Highstreet at Cornerstone, which will be 139,000 square feet, is under construction off Country Hills Boulevard and 60th Street N.E. It is scheduled to open in spring 2023. (Courtesy Anthem Properties Group Ltd.)

Cornerstone is a 1,100-acre community launched in 2015. It will comprise about 9,500 homes on full buildout by 2030, with 1,500 already built.

The new shopping centre, which will be 139,000 square feet, will feature a new Chalo! FreshCo and a Shoppers Drug Mart. It is under construction off Country Hills Boulevard and 60th Street N.E.

It also is scheduled to open in spring 2023.

Quickly growing Calgary neighbourhoods

The Cornerstone shopping centre will be a regional draw for other residential communities in the area which includes Redstone, Cityscape and Skyview Ranch – newer neighbourhoods built in the northeast part of the city in recent years.

“Eight years ago, there was nothing. Redstone was just starting and there are now 35,000 people that live there,” said Beall. “It’s staggering. There are so many homes up there it’s absolutely shocking.”

Calgary has been an integral part of Anthem’s business in recent years. The company has developed or has slated for development 4,100 acres in Calgary, Chestermere and Okotoks.

It also has about 513,000 square feet of existing retail and commercial space.

Anthem’s North American presence

Anthem, founded in 1991, has more than 270 residential, commercial and retail projects across Western North America.

Its portfolio includes 15,000 homes completed, in design or under construction, from master-planned, mixed-use and multiresidential, to townhome and single-family communities.

It also owns, co-owns, manages or has previously owned more than eight million square feet of retail, industrial, residential rental and office space.

The company is bullish on Calgary due to affordable real estate, lower taxes, great social and physical infrastructure and the fact people will be moving to the province.

It currently has eight active residential communities in the area which includes Cornerstone, Glacier Ridge in the northwest, Belmont in the southwest, Pine Creek in the southwest, Sirocco in the southwest, Wedderburn in Okotoks and Chelsea in Chestermere.

Some of Anthem’s other communities also have commercial components planned for future phases, but D’Arcy and Cornerstone will be the first to open. They are also the first commercial centres in its land developments to be developed and built by Anthem.

“The No. 1 amenity for all of these residents is grocery,” said Beall, “and part of our business model going forward is to provide that amenity.”

The format for successful retail

Beall said a grocery-anchored shopping centre is the hub and the heart of a community and increasingly so during the current pandemic.

“That type of retail format we have a lot of confidence in, because our paradigm has always been food, booze and drugs when it comes to these centres. People need grocery stores. They need drug stores to get their medications and a liquor store,” he said.

“It’s sort of the prototype piece of critical amenities that communities want, and around that you provide that finer-grain service.

“You add some doctors in. You add the quick-service food and the hair salons and dentists. It’s a sort of tried-and-true recipe and we like to keep that within the community.

“Also from a sustainability standpoint. We try to integrate them in in a thoughtful way as opposed to dropping them in a field in the middle of nowhere so it keeps people from having to travel far distances to have those needs met.”

Beall said there is a need to tread carefully because not every community can support a shopping centre. A critical mass is needed, but wherever possible Anthem will pursue the opportunities.

“At the end of the day, it’s always the grocery store that drives the bus. We’re at the mercy of grocery tenants. Fundamentally their target trade area that most grocers look for is a population within their catchment in excess of 30,000 people,” said Beall.

“That’s sort of the magic number where a store starts to make sense, where they can draw enough shoppers in.”

The Junction Shopping Centre acquisition

The Junction Shopping Centre in Mission includes about 40 tenants and is located at the intersection of the Lougheed Highway and the Abbotsford-Mission Highway about 70 kilometres east of Vancouver.

Anchored by Save-on-Foods and London Drugs, the regional shopping centre has a diverse roster of ancillary tenants including Winners, Cineplex, Goodlife and Starbucks.

The tenant mix is tailored to local demographics providing a mix of daily needs retail which also includes liquor, financial services, health and personal care, entertainment and discount retailers.

It is 98 per cent leased.

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Canadian home prices have jumped 21.4 per cent since last year, survey finds – CTV News

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TORONTO —
A new survey from the real estate firm Royal LePage shows that housing prices in Canada have jumped an astounding 21.4 per cent since this time last year.

The Royal LePage House Price Survey, released on Friday, shows that the aggregate price of a home in Canada has risen to $749,800 in the third quarter of 2021, compared to $617,800 in the third quarter of 2020.

The aggregate price refers to a “weighted average of the median values” of both condominiums and single-family homes for a given area.

During the third quarter, housing sales also slowed down, largely due to waning supply and demand, coupled with lessening pandemic restrictions, Royal LePage notes.

“With easing pandemic restrictions, there was finally something to talk about other than real estate, and people began travelling and socializing again,” Phil Soper, president and CEO of Royal LePage, said in news release.

“In addition, a year of relentless competition for too few properties drove some would-be purchasers to the sidelines as buyer fatigue set in. Yet their fundamental need or desire for a new home remains and we are seeing pent-up demand grow. We expect another unusually busy winter season building to a brisk 2022 spring market.”

When broken down by housing type, the median price of a single-family detached home rose 25.2 per cent, while the median price of a condo rose 13 per cent.

When it comes to regional housing prices, each of the major Canadian cities and their surrounding areas saw a jump in home prices, with the biggest jumps coming in Greater Vancouver (20.8) and Ottawa (20.7).

“Vancouver and the surrounding greater region remains firmly in a seller’s market,” said Randy Ryalls, general manager, Royal LePage Sterling Realty in Vancouver.

“Although activity showed signs of slowing modestly in the summer and early days of September, the market has picked up again, now that families are back in their usual routines.”

Of the 62 Canadian cities included in the survey, every single one showed rising aggregate home costs, but the slowest rise in prices came out of Thunder Bay, Ont. (2 per cent), West Vancouver (3.7 per cent) and Toronto (4.8 per cent).

When it comes to the fastest-growing areas in terms of aggregate home prices, Saint John, N.B. (36.4 per cent), Kingston, Ont. (36 per cent), Belleville/Trenton, Ont. and London, Ont. (32.4 per cent) top the list.

Royal LePage is also predicting a 16-per-cent increase in aggregate home costs for the fourth quarter of 2021 when compared to last year’s fourth quarter.

“Looking back to the late spring of 2020, the Royal LePage benchmark value of a home was $580,000,” Soper said. “The subsequent ‘Covid-catalyst’ which drove legions of Canadians to upgrade their living situations, has created a period of exceptional home price growth with real estate values on track to grow 33 per cent by year end.”

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