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Office, industrial, multifamily, retail: What's to come? | RENX – Real Estate News EXchange



IMAGE: Allied Properties REIT president and CEO Michael Emory. (Courtesy Allied)

Allied Properties REIT president and CEO Michael Emory. (Courtesy Allied)

When four panelists met to lay out their prospects for the four major commercial real estate asset classes during a recent RealCapital virtual panel in Toronto, trends had been pretty clearly established in three of the sectors.

Industrial and multiresidential were (and are) performing well. Certain segments of retail continue to generate strong returns, while others are struggling. However, while there’s a consensus among many office owners and occupiers that most employees will return post-pandemic, there’s still some uncertainty about the home and office mix once the pandemic ends.

“The sectors are always evolving and total return performance varies,” said moderator Peter Senst, CBRE’s president of Canadian capital markets, in his introduction. “Every sector has its own cycle. It’s therefore critical for leaders of real estate companies to make strategic decisions knowing that the future of different asset classes may, and likely will, change their momentum.”

That set the table for the four highly respected senior executives, including Allied Properties REIT (AP-UN-T) president and chief executive officer Michael Emory, who tackled the office sector.

Allied and the office sector

Allied is focused on providing distinctive urban workspaces to knowledge-based companies in major Canadian cities. Despite the pandemic, Emory said 2020 was an encouraging year.

“We had virtually no tenant failures in the office component of our tenant base. Our same-asset NOI (net operating income) sustained itself relative to 2019, which we were very pleased about given the amount of rent we abated under the CECRA (Canada Emergency Commercial Rent Assistance) program.

“We did 258 lease transactions in 2020, which is a staggering number; 103 of those lease transactions represented deals with tenants that are new to our portfolio across the country.”

Allied had a 17.3 per cent average net rent increase for renewals across its portfolio over 2020. Emory attributed that to the strengths of its three largest markets: Toronto, Montreal and Vancouver.

While there’s been a lot of talk about how working from home will impact the market, Emory said almost all of Allied’s office users intend to return their entire workforces to the office after the pandemic is over.

They’ve experienced corporate cultural disintegration and declines in engagement and productivity as people have continued to work from home.

Emory said knowledge-based organizations’ top priorities aren’t costs and cost-containment, but attracting and retaining top employees.

Allied is very urban-focused and Emory doesn’t believe companies will make any major migration to the suburbs for office space. While he said the suburbs remain viable, he thinks the pre-COVID-19 trend of increasing urban intensification will continue.

“Centuries of human history is not going to reverse itself because of a transitory pandemic,” said Emory. “It just isn’t.”

While trading in office buildings essentially stopped when pandemic shutdowns kicked in last spring, it restarted late last year largely where it left off in February 2020.

“We don’t expect to have any distress opportunities in 2021,” said Emory. “We will pay top dollar for whatever becomes available to us that fits squarely within our investment and operating focus in 2021.

“And if we don’t, someone else will. There’s a tremendous amount of money looking for a home. A lot of it is very long-term investment capital. I expect it to be expensive and I expect trading to be considerably more active for high-quality urban office space in Canada in 2021 than it was in 2020.”


Summit Industrial Income REIT (SMU-UN-T) owns and manages an 18-million-square-foot portfolio of light industrial properties in Ontario, Quebec and Alberta. CEO Paul Dykeman said fundamentals for the class were the strongest ever in February 2020 and the year ended in a similar position.

More than 90 per cent of Summit’s portfolio remained open through the pandemic, though some small-bay tenants were impacted and utilized the CECRA program and rent deferrals. Occupancy remained between 98 and 99 per cent throughout 2020.

Summit increased rents by more than 20 per cent on expiring leases and closer to 30 per cent in the Greater Toronto Area. Some increases approached 50 per cent, according to Dykeman.

“By August, we shifted into offensive mode and went into the capital markets a couple of times and the debt markets a couple of times and ramped up our acquisition program,” said Dykeman.

Interest in industrial has grown substantially in the past few years; it’s seen as a stable and safe income-producing investment vehicle with increasing growth upside. Dykeman said Summit is only buying industrial properties in the Toronto and Montreal areas because it forecasts continued growth and demand in those markets.

Dykeman said industrial land is trading at up to $3.5 million per acre, which would push rents per square foot up to $13 to $15, while in-place rents are around $6.50.

With a limited supply of quality industrial space to acquire at below replacement cost, Summit is becoming more active in development. Dykeman said the downside is industrial properties now take longer to build and the cost will approach $300 per square foot. It was around $175 just a few years ago.

Amazon’s aggressive Canadian expansion is dragging the industrial market along and pushing rents up, but it’s not alone. Other e-commerce players are also driving demand and Dykeman said more attention is being placed on the onshoring of additional inventory after product shortages and international shipping delays caused problems in the early days of the pandemic.


BentallGreenOak is a global real estate investment management adviser and service provider with $66 billion of assets under management. Toronto-headquartered Sun Life Financial Inc. acquired a majority stake in BentallGreenOak in July 2019.

Managing director of portfolio management Christina Iacoucci said BentallGreenOak’s multiresidential portfolio has held up very well through COVID-19 headwinds, including higher unemployment, lower immigration and reduced post-secondary student populations. All of these factors have combined to increase vacancies in the rental market.

Sun Life’s portfolio has been repositioned over the past four years to focus on the intensification of urban cores. Iacoucci said that has paid off even though the pandemic prompted some younger families to move out of the core due to affordability and to take advantage of low interest rates and more space.

BentallGreenOak is building purpose-built rentals in Hamilton, which Iacoucci said has created an affordable live, work and play environment that’s attracting young people.

“Downtown markets have been hit harder than the suburban markets due to an influx of new purpose-built rental supply that has come on stream, as well as the increased shadow rental supply that we’re seeing from short-term rentals and condos,” said Iacoucci.

Iacoucci expects a significant post-pandemic snapback in urban and suburban apartment demand as market and economic fundamentals are still strong.

“There’s still going to be a wide range of investors looking to add multifamily to their portfolios,” she said. “Despite the greater amount of new purpose-built rental that has come on to the market and will continue to come on to the market, the demand will still outweigh supply.”

Multiresidential yields can take advantage of low-interest Canada Mortgage and Housing Corporation financing for leveraged investments, Iacoucci added.


IMAGE: Jonathan Gitlin is president and COO of RioCan REIT. (Courtesy RioCan)

Jonathan Gitlin is president and COO of RioCan REIT. (Courtesy RioCan)

RioCan REIT (REI-UN-T) owns, manages and develops retail-focused and increasingly mixed-use properties in high-density transit-oriented areas. Its portfolio was comprised of 223 properties, with RioCan’s interest accounting for 38.3 million square feet of leasable space, as of Dec. 31.

Part of RioCan’s diversification strategy is due to the challenges facing the retail sector. However, president and chief operating officer Jonathan Gitlin said: “Our biggest challenge is bridging that wide gap between perception and reality.”

While 2020 showed weak spots in bricks and mortar, Gitlin said physical retail outlets still have a critical function in providing goods to consumers. Necessity-based retail has performed well through the pandemic and Gitlin expects shoppers will want to return to experiential retail stores once the majority of Canadians are vaccinated.

There’s been some weakness in urban storefront locations, but Gitlin believes there will be a resurgence and major Canadian markets will once again thrive.

RioCan has benefited from stronger suburban markets, however, where its retail locations have done well and Gitlin said tenants are happy to renew. The trust has sold all 506 units of a retail/condominium mixed-use development it’s building in the Greater Toronto Area city of Oshawa.

Gitlin said 2020 was quiet for retail transactions due to uncertainty about underwriting, which left many potential investors uncomfortable. He believes grocery-anchored shopping centres are resilient and safe and a good investment opportunity for a variety of different investors.

The lending community is still willing to lend money on the backs of well-located retail properties, according to Gitlin. He believes the Canadian investment market, especially for grocery-anchored and necessity-based retail, will ramp up.

Enclosed malls are difficult to underwrite and predict and are experiencing more strain. While retail power centres have an enhanced perception of risk, Gitlin thinks they’ll also be recognized as safe places to invest.

Gitlin said there are still solid fundamentals in place for good retail property operators and managers in good locations with value-oriented tenants. The sector also offers another benefit.

“These are typically very conveniently located parcels of land that have great income streams on them. But there’s a lot of flexibility in what you can do with those parcels of land.”

There are opportunities to buy retail in public markets at deeply discounted values and Gitlin expects that discount to net asset value will narrow.

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



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.”

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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 – Aldergrove Star



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!

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PGIM Real Estate, Revera Affiliate Target UK Market in Newly Formed JV



Real Estate Sales In September

PGIM Real Estate has been active in recent months providing capital to facilitate blockbuster senior housing acquisitions. Now the firm is looking to capitalize on demand for senior housing in the United Kingdom.

The Madison, New Jersey-based real estate investor and lender announced this week it is entering into a joint venture with Signature Senior Lifestyle, an affiliate of Revera, to develop and operate senior housing communities around greater London

Mississauga, Ontario-based Revera serves 20,000 older adults in long-term care homes and retirement residences in Canada. It is also the majority shareholder of Sunrise Senior Living, one of the largest senior housing providers in the U.S. The company operates a portfolio of 12 communities in the U.K. under the Signature Senior Lifestyle brand, with one community in development that is slated to open in autumn 2021.


The JV has one development underway — a senior housing community, or “prime care” home, in southwest London. PGIM worked with Elevation Partners, a London-based investor and asset manager in U.K. health care real estate, in sourcing, structuring and executing the venture. Additionally, PGIM will retain the firm to leverage its expertise.

PGIM and Revera did not respond to requests for comment from Senior Housing News regarding details about its development pipeline.

London is emerging as a future hotbed of senior housing development, spurred by favorable demographic growth trends and a lack of available supply, and the PGIM-Revera venture will find competition.


Maplewood Senior Living CEO Gregory Smith told SHN last month that demand for U.K. senior housing is comparable to major U.S. markets such as New York and San Francisco, where supply has historically been constrained.

Maplewood and its investment partner, Omega Healthcare Investors (NYSE: OHI) are looking to expand its luxury Inspir brand to the U.K., and identified five suburban markets around London with high barriers to entry that are favorable for the brand’s growth.

Revera CEO Tom Wellner sees similar untapped upside potential for senior housing in the U.K.

Source: – Senior Housing News

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