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Real estate observers see rocky road ahead



A person walks by a row of houses in Toronto on July 12.COLE BURSTON/The Canadian Press

Crumbling consumer confidence is dampening hopes for a rebound in Canada’s real estate market as economic signposts point to more strife ahead.

One industry executive who holds that view oversees a network of agents at 14 offices across Ontario.

John Lusink, president of Right at Home Realty Inc. and, dives into statistics and forecasts, but he also relies on one proprietary yardstick: his firm’s trust account.

“That’s always a fantastic predictor,” he says. “Over 17 years, it has never let us down.”

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When buyers have an offer accepted by the sellers, the buyers provide a deposit, which is held in trust by the real estate brokerage until the deal closes.

At the beginning of October, the amount held in trust by the firm had plunged 38 per cent from this time last year.

The sharp decline in funds held in trust is an accurate measure, Mr. Lusink says, and he sees no signs of a turnaround.

At Toronto-Dominion Bank, economist Rishi Sondhi raised his forecast for the Bank of Canada’s benchmark interest rate and downgraded his projections for Canadian home sales at the same time.

Mr. Sondhi predicts the central bank will lift interest rates by another 75 basis points to bring the policy rate to 4 per cent by the end of the year. That revised forecast comes with upside risk, given that inflation is still high, he warns.

Higher borrowing costs will further erode housing affordability and weigh on overall economic growth, according to Mr. Sondhi, which in turn will drag down demand for real estate. He believes sales will bottom out at about 20-per-cent below their pre-pandemic levels in the early part of 2023 and remain subdued.

Economist Carrie Freestone, who tracks consumer spending at Royal Bank of Canada, reports that home-related spending is trending lower as the housing market cools. Purchases of essential and discretionary items levelled off into the fall, with discretionary spending settling below post-lockdown highs, Ms. Freestone notes.

The most recent data from Statistics Canada on retail sales shows that consumers spent less than expected in July. The numbers indicate households are trimming spending in the face of high inflation and rising interest rates.

Mr. Lusink also points to the tally of rental agreements at Right at Home, which have swelled to 45 per cent of incoming transactions from the more typical level of 35 per cent at the start of the fall market.

The shift to renting comes as more buyers are priced out of owning, he believes.

Mr. Lusink recently met with one heavyweight developer that is taking steps to mitigate its own risk by ensuring that agents and financial institutions are educating prospective buyers about the amount of financing they can realistically obtain from a lender.

“They want people knowing from the get-go what they’re getting into,” he says. “They would rather know they’re working with qualified, approved buyers.”

Mr. Lusink notes that readings of consumer confidence have also been shaky as people worry about inflation, rising interest rates and the risk of recession, but he views sentiment as a lagging indicator.

He expects sales and listings this fall to remain depressed. Some homeowners who are in a position to trade up are deciding to stay where they are because there are few good listings to choose from. In turn, that prevents them from adding to the supply by listing their current home.

“The continuing decline in transactions is going to continue into the fall,” he says. “Based on the data, it’s going to be challenging for the next eight months.”

Across Ontario, some of the hottest markets in 2021 are now cooling rapidly: Prices soared in Barrie, Ottawa and Burlington during the pandemic but they are quickly adjusting now. The established markets of Moore Park and Rosedale in Toronto, for example, remain more resilient.

Mr. Lusink acknowledges that some of the firm’s own agents would prefer that he keep his pessimistic forecast quiet. But he adds there is no value in obfuscating the facts. Instead, he advises the managers and agents in the network to analyze and really understand the data.

“At the end of the day that’s what the customer wants us to help them interpret. Sometimes it comes down to what’s happening on that street as opposed to what’s going on around the corner.”

Having a strong grasp of the numbers will help with accurate pricing for sellers and accurate expectations for buyers, who need to understand what they can afford, he says.

“We end up in a lot less trouble.”

Mr. Lusink is referring to the potential for deals to fall apart if buyers stretch too far. Some have buyer’s remorse and try to walk, others have appraisals fall short of the sale price, and some run into problems with financing.

Mr. Lusink says agreements faltered when the market drastically shifted in the spring and prices began to slide. Some market participants were caught off guard.

Now buyers and sellers have mostly adjusted to the transition.

“If anything we’ve seen a slight decrease in transactions that didn’t close. It’s been less worrying than we thought.”

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November Capital Region Commercial Real Estate Report – Business Examiner



A rendering depicting a redevelopment proposal for 129-135 Gorge Road East, which includes a public waterfront component. The project will deliver nearly 500 new rental units to Victoria’s Burnside Gorge neighbourhood. © Belmont Properties / Intracorp Projects

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A nearly $890 million replacement project for Duncan’s Cowichan District Hospital has taken a major step forward as land clearing at the Bell McKinnon Road site begins.
Initially scheduled for 2021, the North Cowichan property near the intersection of Herd Road and the Trans Canada Highway is being cleared this month ahead of a construction start planned for 2023, pushing the hospital’s completion target to 2027 after some three and-a-half years of building.

A landmark condominium project coming soon to Esquimalt’s Gorge Waterway is now selling one, two and three-bedroom residences with ‘junior’ floorplan options.
Central Block, from Victoria-based developer Abstract Developments, is comprised of 99 suites at pricing from $339,900. Nearly 40 per cent of Central Block’s inventory is priced below $500,000 and over 80 per cent of homes are available from under $750,000.
Slated to begin construction next March, the six-storey Central Block will rise in the former location of the Gorge Pointe Pub opposite Gorge Park’s Tillicum Road entrance, offering unimpeded views of the picturesque Gorge Waterway from many homes, and park, city and urban canopy views from most units.

BC Housing has started work on the last of six facilities announced in the spring of 2021 to house individuals in the Capital Region experiencing homelessness or who may be at-risk of homelessness.
As construction winds down on five buildings in Victoria, Saanich and Central Saanich, crews have begun preliminary work on a 56-unit complex at 953-959 Balmoral Road in Victoria’s North Park neighbourhood.
The five-storey low-rise will be operated by the Cool Aid Society as permanent housing with support services, and is scheduled for occupancy in 2023.
Collectively, the six builds will contribute nearly 300 permanent supportive homes as part of a provincial plan to address homelessness in the Capital through the creation of 24/7-managed housing solutions.

A nearly 100-unit rental proposal is in motion from telecommunications giant TELUS and Victoria-based Aryze Developments for several parcels at Feltham Road and Tyndall Avenue in Gordon Head.
Planned for 1805-1811 Feltham Road, TELUS and partner Aryze are working to redevelop a TELUS network facility into TELUS Living, a five-storey, purpose-built rental project that would provide high density housing to Gordon Head in addition to network infrastructure for the telecom.
Although the proposed building height and density are a departure from the immediate area’s built form, a document drafted by Aryze’s Director of Development, Chris Quigley, for the District of Saanich and the local community describes the effort as taking “an existing public utility site and [transforming] it into a much-needed rental housing development while also continuing to deliver critical telecommunications infrastructure.”

A 488-unit rental project envisioned for the 100-block of Gorge Road East in the Burnside Gorge neighbourhood could also include a significant public realm improvement along the Gorge Waterway.
Proposed for 129-135 Gorge Road East, property owner Belmont Properties and partner Intracorp Projects have unveiled plans for a five-building redevelopment of the Oxford Motel (turned rental complex) and three rental blocks known as the Gordreau Apartments. The existing density totals 200-units, and is described by the proponents as nearing its end-of-life.
Belmont and Intracorp, along with architectural firm IBI Group, have designed a two-phase masterplan that will deliver 488 new residential units on the land, padding the City of Victoria’s rental housing stock by 288 net rental homes.

Victoria-based Alpha Project Developments has proposed its latest residential investment in the James Bay neighbourhood’s legislative precinct.
Planned as a seven-storey complex at 475 Kingston Street, the lowrise will include approximately 60 up-market condominium suites in one, two and three-bedroom configurations, along with ground oriented, family-sized layouts.
The majority of the property is presently a surface parking lot, as is an expansive province-owned parcel immediately to the east known as the ‘Q-Lot,’ currently planned as future office space for government ministries.

A boutique pre-sale comprised of seven three-bedroom plus-den townhomes is coming soon to Victoria’s Fairfield neighbourhood.
Known as Seven by Aryze, the offering represents an evolution in design from a firm known for its innovative, market-leading infill projects, at a time when ‘missing middle’ housing is top of mind among urban homebuyers.
Situated at 931 McClure Street – a quaint no-through lane between Vancouver and Quadra streets – Seven’s location is within short walking distance to the heart of downtown Victoria, Cook Street Village, and the Dallas Road waterfront.

Mike Kozakowski is with Citified Media and can be reached at

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Is now the right time for your business to buy real estate? – BNN Bloomberg



For small businesses hoping to establish or expand their brick-and-mortar presence, it may seem like a bad time to sink cash into a commercial property purchase.

Amid predictions of an upcoming recession, the U.S. Federal Reserve increased the federal funds rate for the sixth time in 2022, citing inflation risks and global conflict. Inevitably, this will make loans more expensive for borrowers.

In reality, though, the perfect time to buy commercial real estate doesn’t exist. And when you consider the bigger picture, not all signs point to doomsday.

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 “There are still really amazing opportunities out there, but I think it really requires small-business owners to think about what their goals and their plans are,” says Alyssa Dangler, a commercial real estate attorney and president-elect of Commercial Real Estate Women Network.

Here’s what small-business owners should consider when deciding whether to purchase commercial real estate.


While higher interest rates might not make or break a deal, they could push business owners to cut the size of their down payments or reduce spending elsewhere to accommodate larger monthly payments. Small-business owners waiting for interest rates to fall might be in a holding pattern for longer than they expected, though. According to the Federal Reserve, future fed rate hikes are likely.

However, today’s interest rates don’t seem as astronomical when you look at rates throughout history, Dangler says. For instance, the annual average rate for a 30-year fixed-rate mortgage was 8.39 per cent in 1992 and 16.04 per cent in 1982. This year’s average currently stands at 5.08 per cent.

Some entrepreneurs, like Elaina Paige Thomas, owner of Next Paige Talent Management and Production, are choosing to move forward despite rising rates.

“It didn’t scare me because I know that we can always refinance down the road,” Thomas says. “It’s still going toward ownership and equity, so for me, that was always the goal.”


Buying commercial property becomes more complicated if construction loans are involved. Interest rates for this type of financing are typically variable, leaving plenty of opportunity for rates to climb over the duration of the project.

To mitigate the risk of a business being unable to afford costlier future payments, Dangler explains, lenders may ask borrowers to purchase an interest rate cap. While this safety net ensures their rate won’t exceed a set limit, it’s also an additional cost.

Understand and prepare for these added costs before moving forward with a real estate deal. If you’re concerned about stretching your finances too thin, consider looking at buildings that don’t require major renovations, or scale back the scope of the project to only the essentials.


Typically, more mature businesses have capital and a strong understanding of their growth trajectory. These factors, plus time in business and more established credit, make for a more appealing loan application — and likely a better interest rate.

On the other hand, startup businesses may want to consider leasing before buying right away, suggests Max Grover, president-elect of Commercial Alliance of Realtors West Michigan. As opposed to more established businesses, he says, some startups might see better returns putting their cash toward inventory, equipment, hiring or marketing. Additionally, leasing gives them more flexibility to move locations if they grow.


Connecting with a commercial real estate agent or broker who specializes in a particular type of property can help buyers weigh their options.

“It helps to have your own representation so that your interests are pursued,” says Barbi Reuter, CEO, chairman and designated broker of Cushman & Wakefield ‘ PICOR, a commercial real estate firm. “You want to have the expertise to move at the right time.”

In particular, they can help small-business owners narrow down their options, compare buy-versus-lease situations, run calculations and navigate market changes, she adds. They can also look into commercial zoning laws that determine which types of businesses can occupy the property and how it can be used.


Factor in the market conditions for your particular industry and geographic region before committing to a space. Property demand may vary from sector to sector, which dictates how much competition you’ll face and, subsequently, how much negotiating power you’ll have.

Depending on your business type, Reuter suggests finding out where your customer base, suppliers or workforce are located, too.

 “You really have to be super focused on what the dynamics are in your … geographic market and the market in which you sell or trade or operate your business,” Reuter says.

Data on where people are moving to and from, as well as industry reports on how other businesses in your sector are faring, can provide more insight.

This article was provided to The Associated Press by the personal finance website NerdWallet. Hillary Crawford is a writer at NerdWallet.

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Blackstone To Limit Withdrawals From $125 Billion Real Estate Fund




Blackstone will limit investor withdrawals from its $125 billion real estate investment fund following a spike in redemption requests, according to the New York-based firm, following an announcement that it will sell its stake in two Las Vegas properties.

Key Facts

Only 0.3% of the fund’s net assets will be available for redemption in December, according to a notice sent to investors Thursday, following a surge in requests in November and October.

In October, Blackstone received $1.8 billion in redemption requests—2.7% of the net asset value—and has already received requests in November and December exceeding its quarterly limit, according to the Financial Times.

Only 43% of redemption requests from investors were fulfilled in November, totaling $1.3 billion in assets.

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Following the announcement, shares at the company fell by as much as 10%.

Blackstone will receive $1.27 billion in cash—generating about $730 million for shareholders—from Vici Properties Inc. for its 49.9% stake in the MGM Grand Las Vegas and the Mandalay Bay, two properties valued at $5.5 billion total, according to a release Thursday.

Crucial Quote

“Our business is built on performance, not fund flows, and performance is rock solid,” a Blackstone spokesperson told the Financial Times, adding the company will continue to focus on rental housing opportunities.

Big Number

$69 billion. That’s the estimated value of Blackstone’s assets across logistics facilities, apartment buildings, casinos and medical office parks. Forbes estimates the real estate firm totaling $15.5 billion in revenue through 2022.

Key Background

The Blackstone Real Estate Income Trust rose in the real estate industry with its inception in 2017, according to Bloomberg, as it quickly acquired apartments, suburban homes and dorms during a period of low interest rates. Investors have become increasingly more cautious about accumulating money in assets that are hard to trade and value while Blackstone continues to place more limits on access to its funding. Because of the two Las Vegas property sales, in addition to the earlier $5.6 billion sale of The Cosmopolitan, the firm now has access to more liquid assets, potentially allowing it to redeem more requests in the near future.

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