Blackstone’s Americas Real Estate Division Bets on Canada. Here’s Why.

New York-Based Asset Manager Could Seek To Tap Population Growth With Multifamily

The head of Blackstone’s real estate group in the Americas says Canada’s growing population has the world’s largest alternative asset manager looking to step up investments in the country’s logistics and residential property.

Blackstone, with more than US$1 trillion in assets, has opened its first office in Canada in Toronto at 333 Bay St. with the expectation that it will be an important part of its expansion in the country.

“This is a market that we are really committed to and excited about. It’s been very active in the last decade,” said Nadeem Meghji, senior managing director in the real estate group at Blackstone, in an interview with CoStar News. “Canada is third behind only the U.S. and U.K. in global destinations for our investor capital.”

Blackstone made its first big deal in Canada in 2018, in a CA$3.8 billion acquisition involving Pure Industrial Real Estate Trust, partnering with Ivanhoé Cambridge, which continues to have a minority stake in Pure. Pure Industrial remains the vehicle for Blackstone’s industrial presence in Canada today. The company has about CA$27 billion of capital in the country.

“We want to continue to invest [in Canada] because of the long-term fundamentals, which we think are quite positive, including population growth five times that of the U.S.,” Meghji said.

Statistics Canada said the country’s population has continued to increase after reaching 40 million residents this year. For the 12 months ended July 1, the Canadian population grew by 1.2 million people, the largest for one year since 1957.

While there are opportunities, there are also challenges. Moving into any new market takes time to develop business relationships. And there’s already a well-established rival in Toronto-based Brookfield Corp., which controls Brookfield Asset Management and has US$850 billion in assets under management.

Meghji, who is based in New York but was in Toronto last week for the opening of Blackstone’s office, chuckled when asked whether there was any rivalry about being on Brookfield’s Canadian turf: “I don’t have a comment on that, and all I will say is we have enormous respect for Brookfield.”

Building Around Leader

Blackstone’s Toronto office has 10 full-time employees after announcing it had hired Janice Lin as managing director to head up operations in Canada about 18 months ago.

“We started by finding the right leader,” said Meghji. “We built a team around Janice, or she built it. We have folks from other parts of Blackstone, including our private wealth solutions team and our credit team, but fundamentally, having a team on the ground, we think, will make us more effective. We want to send a message that our commitment to Canada is long-term.”

By asset class, logistics and warehouses remain a priority for Blackstone. “Fundamentals remain as strong as anywhere in the world today,” Meghji said. “Supply is muted, and e-commerce penetration continues to grow.”

Blackstone is on the hunt for rental housing in the long term, and taxation rule changes last month, which lowered taxes paid on built units in some provinces by up to 13%, have only strengthened that conviction.

“We would love to find ways to invest in rental housing over time, especially if we can be part of the solution” to the country’s housing shortage, said Meghji. He emphasized that the investment philosophy does not target single-family rental homes in Canada, which is a very tiny asset class north of the border and is hard to profitably own based on housing prices in most cities north of the border.

Blackstone is considering whether to build multifamily and is ready for partnerships with Canadian developers. “There is nothing imminent, but we are open to it. We have been big investors in rental housing globally,” said the executive. “We have very modest exposure to rental housing in Canada at the moment. About 80% to 90% of what we own [in Canada] is logistics.”

The country’s change in apartment construction taxes, whereby developers are 100% exempt from the federal 5% tax and partially exempt or fully exempt in some provinces, did not go unnoticed at Blackstone’s headquarters in New York. “What we know is there is a big need for housing,” said Meghji.

Data centres are also on the agenda for Blackstone, which has been building a platform for them in the United States while being active in India and Japan. “Canada is another market we think presents a real opportunity over time,” said Meghji.

Other Investments

With the latest data from CBRE showing an overall 18.1% vacancy rate for office space in Canada, it is not surprising the sector is not a priority for the American investment giant.

“Canada is very similar to the U.S. in terms of office fundamentals and office utilization. We think it’s time to be cautious, and we were cautious even before the pandemic,” said Meghji. “We are going to be very selective on office.”

The company hasn’t bought a regional mall in Canada or the United States since 2011 because of the pressure from e-commerce. However, grocery-anchored shopping centers are still something Blackstone will consider.

With a long history of buying publicly traded vehicles, Blackstone isn’t ruling out buying a real estate investment trust, either in Canada or elsewhere.

“Globally, we have done over 50 public company transactions over our history in Blackstone real estate,” said Meghji.

He added that “there are moments in the cycle when public companies are mispriced and trade at a discount to the underlying value of their real estate. Given our scale of capital and privatizing companies, that is always something we are open to doing, especially in asset classes we believe in long-term. In moments of volatility, it can often present a company not fully appreciated in the public markets.”

Source CoStar. Click here to read a full story

Subsidiary of Estonia and Latvia Developer Makes Second Investment in Canada

Hepsor Expands Development Pipeline in Toronto With Downtown Purchase

An Ontario developer with roots in Estonia and Latvia is making its second investment in the Canadian real estate market and has two additional deals on the horizon.

Hepsor SPV I Ltd., an Ontario-based subsidiary of Hepsor AS, said it purchased an assembly of three properties in downtown Toronto at 164-168 Isabella St. with its Canadian partners.

No price was not disclosed, but the company said Elysium Isabella LP was founded to develop the property in which various Canadian and European investors are participating in addition to Hepsor and its Canadian partners. Fasken, one of Canada’s largest law firms, advised Hepsor on structuring the deal.

“Hepsor started developing its Canadian business in the spring of 2022 after the start of the war in Ukraine with the aim of finding new growth opportunities and mitigating the geopolitical risks associated with the current home markets,” said Andres Pärloja, chairman of the supervisory board of Hepsor AS, in a statement.

In June, the company made its first purchase in Canada, buying land around Weston Road in Toronto it planned to develop into housing. And Hepsor has more projects in the Toronto area in the works.

“In addition to the Isabella project and Weston Road project, two additional developments of a similar nature in Toronto and the greater Toronto area are currently under preparation,” said Pärloja.

The goal of the first phase of the Isabella Street development project is to assemble the three properties and apply for zoning approvals to permit a residential hi-rise tower on a podium with a projected gross floor area of 450,000 square feet.

The total value of the land and project costs equates to 41 million Euros, according to the statement. The assembly and zoning is expected to take between two and two and a half years, after which Elysium Isabella LP will decide whether to take advantage of the value it created and sell the land or move on to the construction phase.

“Toronto is one of the fastest-growing cities in North America. The city is in desperate need of new quality living space in order to keep up with the growing population. We, together with Hepsor and our investors, strongly believe that developing residential land in Toronto is a very attractive business to be in,” said James Torpey, one of Hepsor’s partners in Elysium Isabella LP and the owner of Canadian-Lithuanian development group VPH Group.

Source CoStar. Click here to read a full story

First Gulf Breaks Ground on New Logistics Hub in Whitby, Ontario

Hopkins Logistics Hub To Add Nearly 300,000 Square feet of Distribution Space in the Durham Region

First Gulf Corp. announced it has begun construction on the Hopkins Logistics Hub, a nearly 300,000-square-foot warehouse facility located at 901 Hopkins St. in Whitby, Ontario, scheduled for delivery in July 2024.

Developer First Gulf and Nicola Wealth Real Estate, the in-house real estate team of Canadian financial planning and investment firm Nicola Wealth, acquired the 13.5-acre industrial development property in 2021. Located within an existing industrial node on Hopkins St., close to downtown Whitby, the site is accessible to the 401 via the nearby Thickson Road interchange.

Leasing for the speculative industrial development is being handled by Cushman & Wakefield’s James Mildon, along with Peter A. Schmidt, Dan Hubert and D’Arcy M. Bak.

Source CoStar. Click here to read a full story

Construction Supplier Buys Facility in the Vaughn Industrial Park

Oxford Properties Group Sold Building on Royal Group Crescent to Newmar Alpa Lumber Group for $81.5 Million

Alpa Lumber Group, one of the largest suppliers and manufacturers of construction products distributed across Canada and within the United States, accomplished a rare feat by acquiring a 281,265-square-foot industrial building in Oxford Properties’ Vaughan Industrial Park for $81.5 million in an off-market transaction.

Oxford rarely parts with properties in the industrial park, according to local brokers. The building at 81 Royal Group Crescent is located in Concord, north of Toronto. The sale was arranged by Lennard Commercial Realty broker Jonathan Gorenstein, MBA, SIOR, and reported earlier by Real Estate News Exchange.

The property, which occupies a 10-acre parcel and was built in the late 1990s, is currently tenanted by automotive supplier Martinrea, with five years remaining on its lease. A previous furniture supplier tenant went out of business and vacated the property earlier this year.

The Vaughan Industrial Park encompasses 3 million square feet situated around the Royal Group Crescent, and is owned and managed by Oxford.

Source CoStar. Click here to read a full story

Investors Seek Retail Centres in Emerging Markets With Opportunities To Densify

Retail Investors Favour Secondary Markets Near Toronto

With retail properties performing well in the Greater Golden Horseshoe, investors bet on two malls in emerging urban centres with plans to densify. The sale of two super regional malls — Conestoga Mall in Waterloo and White Oaks in London, Ontario — signals confidence in outer retail markets near Toronto.

In recent years, a total of 15 malls across the Greater Toronto Area have proposed plans to add residential towers on their properties to create larger consumer populations surrounding their shopping centres.

This trend has expanded out into the Greater Golden Horseshoe and beyond into London, Ontario. In August, Westdell Development Corp. added White Oaks to its commercial holdings and plans a new to rejuvenate the center by renovating the facade, adding new stores on pads separate from the mall, and residential towers on-site. Westdell purchased the 698,500 square foot super regional mall from BentallGreenOak for $141 million or $202 per square foot. The site sits on 46 acres, translating to 35% coverage, lending to the new redevelopment plans by allowing plenty of land for intensification.

London, Ontario — a smaller city 200 kilometres west of Toronto — offers affordable urban living while still being in proximity to larger metropolitan centres accessible by major highways and transit. The city of London is investing more than $200 million in renewing aging infrastructure with projects focused on supporting growth, including two rapid transit projects. London is one of Canada’s fastest-growing cities and these investments will facilitate the city’s expansion and recent boom in population growth boosted by immigration and inter-provincial migration.

Similarly, the purchase of Conestoga Mall by Primaris Real Estate Investment Firm from Ivanhoe Cambridge for $270 million conveys assurance in Waterloo’s retail market. Conestoga Mall recently underwent a significant $46 million redevelopment in 2018 under its former owners. The mall was the first Canadian shopping center outside a major metropolitan region to see annual sales per square foot surpass $1,000 in 2018, according to the Canadian Shopping Centre Study 2018. At the time of sale, the mall was 94% leased and sits on 49.78 acres, covering just 31% of the property, leaving the potential for intensification. Conestoga Mall is a major transit hub connecting to the route of Waterloo’s new ION LRT, which was completed in 2019, making the site ideal for residential development.

Retail leasing picked up in 2021 in the Greater Golden Horseshoe, backfilling most of the spaces that were vacated during the pandemic, and many retail landlords are adapting to changing consumer behaviours. With a marked increase in online shopping, the amount of space required by retailers has decreased as consumers shift to an omni-channel approach to shopping. Brick-and-mortar locations are serving as showrooms for consumers to see products that they can purchase online and conveniently have delivered to their homes.

Overall retail leasing has since dropped by 17% year to date from the five-year quarterly average of 400,000 square feet and 83% down in the third quarter to date. Net absorption within shopping malls in the Greater Golden Horseshoe over the past 12 months slowed by 47% in the second quarter from a high of 165,000 square feet in the first quarter of 2023. Since the beginning of 2022, when adding the London CMA to the Greater Golden Horseshoe region, leasing activity increased by 22%, nearing 3 million square feet.

This elevated leasing activity bodes well for emerging retail markets surrounding the Greater Toronto area even as the market experiences a slowdown through the latter half of 2023.

Source CoStar. Click here to read a full story

Slate Prepares to Launch Steelport, Corktown in Hamilton

Corktown to comprise 2 condo towers; Steelport a huge 800-acre industrial development

Slate Asset Management is bullish on the Hamilton market as it launches two major projects in the city – the two-tower Corktown condos and its 800-acre Steelport industrial development.

Corktown is Slate’s vision for a design-forward residential 27-storey tower and 14-storey mid-rise, with retail spaces at the ground level. It will have more than 700 condos on completion.

Steelport, on the historic harbourfront of Hamilton, was acquired from Stelco Inc. in 2022.

Slate has introduced the new name, along with a new identity and preliminary vision for the industrial lands and buildings. Its vision is to reshape the underutilized property into one of the largest, state-of-the-art intermodal industrial hubs in the country.

The redevelopment will bring new industry to Hamilton, create up to 23,000 jobs and inject up to $3.8 billion into Ontario’s economy over the next decade, according to an economic study conducted by EY.

Slate considers Hamilton a growth market

Brandon Donnelly, managing director of development for Slate, said the two projects are part of the company’s broader long-term commitment to Hamilton.

“We think of ourselves as city-builders, meaning we think beyond each of our individual projects and more about what we can give back to the communities we invest in,” Donnelly told RENX.

“With Corktown, not only are we bringing quality architecture and design to the region, but we are investing in jobs, economic development and the greater Toronto housing market. We think this commitment to the City of Hamilton is really the beginning of a renaissance and we’re excited for what’s to come.”

Slate is a Toronto-based global alternative investment platform targeting real estate assets. Its platform has a range of real estate and infrastructure investment strategies, including opportunistic, value-add, core-plus and debt investments.

Steven Dejonckheere, senior vice-president at Slate, said the company’s thesis for a while has been that Hamilton is primed to evolve and grow in a big way.

“I think that’s based on a number of things. Of course there’s the spillover from demand and affordability in the GTA,” he said. “But I think beyond that we’ve always seen Hamilton as the first major municipality outside the GTA that is kind of its own city. It has its own history, its own infrastructure, it’s less dependent on being a bedroom community of the GTA.

“I think along with that there’s all the underlying fundamentals of a growth story there from first-class universities that are bringing in high talent, to sophisticated medical systems, to a thriving arts and cultural system, to the affordability factor that’s bringing in a lot of young professionals. We felt that all of those elements sort of set up Hamilton to really grow when we’re looking out for the next decade or two.”

A “revolution” in the steel industry, which has been Hamilton’s calling card for decades, is opening up further opportunity.

“You fold into that all the changes happening to the steel industry and the fact that it is getting completely revolutionized over the next decade and really changed the image of the heavy industry that has been in Hamilton . . . we know that of course will continue to be part of Hamilton’s story but it’s going to evolve and change and open up room for a lot of new, exciting manufacturing and logistics industries and jobs that come along with that,” Dejonckheere said.

“That’s a complete picture of good momentum that we believe is going to be long-lasting in Hamilton and we believe makes it a good investment for all of our projects.”

Corktown a two-tower development

Corktown is a full city block development in the downtown. The first phase will be the 27-storey Corktown East tower.

Corktown West will be a 14-storey mid-rise building – an L-shaped building fronting on John Street. The first tower will include 372 condo suites and the second phase, which is yet to launch, will likely be about the same unit count.

Donnelly said the mix of units includes about 60 per cent one-bedroom and one-bedroom-plus-den and the remaining 40 per cent are larger suites including two and three bedrooms. The first phase launched in May.

“We’ve seen really great response to the offering, so we’re close to 60 per cent sold in that first phase,” he said. “We plan to start construction on that tower next year and then we’ll also launch sales in the future for the second phase.”

The first phase has a target completion of 2028 with the mid-rise completing later in 2028 or 2029.

The development is two blocks south of the Hamilton GO station and transit hub.

“That’s really something that we look for in all our development projects, especially our residential projects,” he said. “We’re focused entirely on infill projects. We look for existing urban centres where we can build on top of existing infrastructure like transit.

“We like transit. We like walkable communities, urban amenities. Those are the types of things we look for when selecting sites.”

Steelport to become major multi-modal hub

A rendering of the concept for the Slate Asset Management Steelport development in Hamilton. (Courtesy Slate)
A rendering of the concept for the Slate Asset Management Steelport development in Hamilton. (Courtesy Slate)

Dejonckheere said Steelport will be a state-of-the-art intermodal and industrial hub second to none in Canada.

“It has north of 3.4 kilometres of actual water frontage. Half of that is deep-water dock wall,” Dejonckheere said. “From our knowledge, it’s the longest deepwater port on the Canadian Great Lakes. So really this is going to be a world-class manufacturing and logistics hub.”

Stelco will continue to operate a cold-roll steel mill on 75 acres near the centre of the site.

“That will open up a little more than 700 acres of new development surrounding that and we foresee it being a wide range of industrial and manufacturing uses,” Dejonckheere said..

“We’re anticipating somewhere between 11 and 12 million square feet of new industrial uses, everything from your large-scale big-box logistics uses down to new-age technologies and manufacturing, energy production, logistics that are associated with the port and the rail connectivity.”

He said the development will be interwoven with retail offerings and areas for use by residents and visitors.

“It really is the majority of the Hamilton waterfront,” Dejonckheere said. “So, interwoven through all the development we’re planning is a pretty extensive public realm network that will help bring people out to the waterfront and also currently is envisioning proposing retention of some of the steel manufacturing structures and potentially repurposing them into public amenities as well.”

Steelport will be a 10-plus-year project. Officials anticipate it will house everything from one-million-square-foot distribution centres  to smaller unique spaces.

“We’ve designed the plan to centre the larger structures and locate those at the centre of the plan and urbanize the edges of the site some more,” Dejonckheere said. “What I mean by that along the waterfront for instance, which is pretty unique, we anticipate more flex office, small-bay industrial, perhaps opportunities to work with institutions for some sort of innovation, or knowledge or bio-tech based campus setups.

“We’ve also seen interest from creative industries and the film industry.”

Donnelly said Slate believes Steelport is the largest private investment in Hamilton, with a total investment of more than $3 billion when all the buildings and infrastructure are built.

The site is so large Donnelly said Steelport comprises three times the total area of downtown Hamilton.

Source Renx.ca. Click here to read a full story

Commercial Title Insurance: How Are You Managing Risk?

Title insurance protects you and your portfolio from the hard-to-anticipate risks present on every property.

As a successful commercial real estate investor, you know how to assess and manage your risk as you grow your portfolio. But not all risks on a deal are apparent.

Every transaction comes with unknowns, and those unknowns can come with price tags. Title insurance protects you and your portfolio from the hard-to-anticipate risks present on every property. As your portfolio expands, those risks compound. Here are three examples:

1. Title fraud

Purchasing title insurance as part of closing lets you move forward knowing that, if the worst happens, your investment is protected. The seller may not be who they say they are, and not every discharge on the title may be legitimate. Every deal carries the risk of substantial losses, because ID theft and title fraud in Canada are getting more sophisticated.

But so are we. FCT is the leader in fraud detection and prevention among title insurers in Canada. Our ability to react to new fraud trends, techniques and technology lets us keep your protection up to date. FCT’s underwriters monitor deals we receive for signs of fraud, and step in to inform buyers and lenders of red flags.

Fraud continues to pose risks to your investment long after point of sale. That is why FCT’s commercial title insurance covers up to $5 million in post-policy losses from fraud. Without that protection, it can be difficult or even impossible to recover any part of your loss from a fraudster registering a mortgage on your property or transferring its ownership.

2. Gap coverage

Even the most straightforward deals have gap periods—points in a transaction where an intervening interest can, even unintentionally, cause losses. Two gaps in particular pose risks for investors:

The work order gap
When you purchase a commercial property, your lawyer will submit municipal searches to check if any work orders have been issued. While the search is in progress, a new work order could be submitted, and you might not find out about it until after the closing date. FCT’s commercial coverage includes an endorsement to protect against losses from work orders submitted after your lawyer’s search and before your closing date.

The title registration gap
When your lawyer submits your transaction documents to a Land Titles Office (LTO), you are still at risk until those documents finish certification. If there are issues with the documents themselves, or worse, an intervening registration is submitted before certification completes, the LTO can reject those documents. Depending on your jurisdiction, this can happen even after you have transferred the funds and received the keys. This is why registration gap coverage is included in every FCT title insurance policy.

3. Errors in government responses

Your lawyer conducts thorough searches on the titles of the properties you purchase. They protect you by conducting due diligence, writing to applicable authorities to verify status and reviewing all the documents attached to your new property’s title to ensure you are aware of potential risks.

If government responses contain any errors, you could take on significant losses without warning, following closing or even years later when you sell. To help prevent this from happening to you, FCT’s commercial policies include a government response endorsement that provides coverage for losses from errors in written off-title responses from government that deal with deficiency notices, outstanding work orders or zoning.

It’s our duty to defend you

Title fraud, gap coverage and errors in government responses are not the only risks you face on every property you purchase—you may also have to defend your title, when the time comes. Your title insurance policy outlines dozens of covered risks, and FCT’s underwriters work to find new ways we can protect our insureds. Defending your interests is an important part of that protection, separate from coverage itself.

Every title insurance policy from FCT carries a duty to defend. That means that if someone claims an interest in your property, we take on the costs of defending your title, even going to court if necessary.

Title insurance is valuable because it can cover losses thousands of times higher than what you paid for the protection. It helps de-risk your position, letting you deploy more capital, with lower reserves.  But, possibly most importantly, it provides peace of mind. It lets you focus on what really matters: growing your portfolio. Unexpected risks can always arise—FCT will be there to meet them with you.

Source Renx.ca. Click here to read a full story

Some of Canada’s Top CRE Execs Examine Industry Trends

Industrial and office portfolios

While Diamond said the rapid industrial rent escalations of the past five years weren’t sustainable, the sector still offers good margins. He doesn’t believe there will be a major slowdown with the asset class.

Developers can still profitably build industrial facilities as long as their land costs are reasonable, according to Diamond.

More employees have returned to offices in Asia and Europe than in Canada and the United States and, while Canada is going through a period of adjustment with hybrid work models and some people working from home at least a few days a week, Welch believes that offices still have a major role to play in society.

Diamond said Choice itself uses a hybrid model. He said its offices are 80 to 90 per cent full from Monday to Thursday, but that number drops down to 20 per cent on Friday.

RioCan has a mandatory three-days-per-week in the office policy for its over 600 employees, and Gitlin said it’s working reasonably well.

He feels real estate companies should be leaders in office attendance, however, since their business is based on getting people into buildings.

Source Renx.ca. Click here to read a full story

Transforming Office Buildings To Livable Space

Key considerations for office-to-residential and office-to-hotel conversions.

The pandemic was been a key driver for reimagining our relationship with the built environment and is presenting new opportunities across portfolios and sectors.

With a surplus of office space resulting from evolving workplace strategies, owners in conjunction with teams of developers, city planners, architects and engineers are actively managing a variety of complex conversions of these commercial building types into viable living spaces.

But not all office buildings are candidates for conversion. A feasibility study is required to assess the economic, aesthetic, environmental, structural, engineering and market viability for a successful conversion. Consideration must also be given to livable residential uses that range from apartment rentals and condos to affordable housing and hotels.

In this Insight Article, we provide our perspective on key drivers and considerations that are shaping the transformation of commercial office buildings to livable spaces based on our experience leading more than 20 completed, under construction and in-design projects in Canada, the US and UK.

1. Economic viability

The staying power of hybrid and remote work is presenting a real challenge for commercial office owners and developers. While the industry is managing a post-pandemic era, the reality remains that a percentage of existing office buildings are finding economic renewal in converting to livable or mixed-use spaces.

Eroding tax bases due to vacant office buildings can be a lightning rod for adaptive reuse in downtown cores. City planners and local municipalities often greenlight office conversions far faster than new builds to secure a stable tax base. Tax incentives for market-rate and affordable housing also contribute to the benefits of repurposing commercial space and offer developers more avenues to realize economic viability.

These measures help municipalities realize their ultimate goals of returning residents to the city’s most vibrant places. Activating dormant commercial neighbourhoods and reigniting downtown cores only happens with urban regeneration strategies and densification. Existing office buildings are often near transit hubs and retail centres, making them an attractive option for livable uses. Location is key and walkability is high on the list to command desirable units for future tenants.

While each region and municipality has planning approvals and guidelines for such conversions, most cities in North America, including Toronto and Calgary, are offering incentive programs to drive economic recovery in the core. These incentive programs vary based on specific goals.

The UK announced a provision through Class O Permitted Development Rights. This provision removes the requirement to make a formal planning application as development is automatically deemed approved, with the exception of listed buildings of historic interest. These projects are provided with a certificate of lawfulness, usually prior to development, which enables them to be funded or mortgaged, and work can progress in very short timeframes.

2. Environmental and carbon considerations

Converting existing office space to residential-type units often requires adapting existing plumbing, electrical, mechanical and building systems – and in some cases, an entirely new building envelope. Not only do these enhancements improve the energy performance of the existing building, but they help to lower the operational carbon over time, therefore reducing the carbon footprint of the building.

The carbon-reduction effect on the environment by repurposing rather than demolishing or rebuilding cannot be overstated. As architects and engineers, we have a great responsibility for a sustainable future. With aligned interests, a carbon emission analysis at the start of a project informs decisions to reduce both embodied and operational carbon. As energy costs increase in response to climate change the repurposing of existing structures begins to make greater economic sense.

3. Location, characteristics and structural integrity

The location of the target building will have a dramatic effect on its suitability for conversion. The neighboring infrastructure is critical to the initial selection of a suitable conversion.

Many office buildings are simply not suited for residential adaptation. Large commercial office floor plates (10,000 SF2 / 1000 SM2 or greater) result in lightless cores, outdated electrical, plumbing and HVAC systems – all contributing to a costly and exhaustive undertaking. These buildings may be suitable for other adaptive uses with more open floor plan characteristics. However, if development proformas pencil-out, creative solutions are available for most repositioning challenges. Often, smaller and older buildings offer more manageable space for conversions and come equipped with features like higher ceilings and larger windows that are highly desirable for residential use. Hotels are arguably even more appropriate for conversion to senior residences or affordable housing models.

NORR
The Westley Hotel, an office-to-hotel adaptive conversion in Calgary, AB.

Historically significant buildings may also be able to take advantage of preservation funding which will assist the economics of the conversion and add to the urban fabric of older neighborhoods.

Preparation and pre-analysis of the existing structure is imperative. Once the basics are understood it is a matter of building flexibility into the design layout, ensuring minimal shifts to the core to avoid compromising the structural integrity. Post tension structures can be particularly challenging as are several other systems including clay tile slabs and other older structures. An integrated design approach with a deep knowledge of the systems and understanding of the market conditions of residential planning metrics is paramount to a repositioning success.

Modern technologies like laser scanning and 3D point-cloud modeling mean a faster, less intrusive way to work with existing structures. As we continue to find new ways to repurpose buildings for multiple sectors, the lessons learned are transferable from each conversion project.

4. Market trends and social impact

Residential design excellence provides personalization and pride of place, and the flexibility for different living patterns and household demographics. Premium amenity spaces must be integrated using open areas with direct connections to circulation spaces (stairs, elevators, entrance lobbies, mailrooms, etc.). Fortunately, many older office buildings have amenity spaces that can easily be converted for residential users and may be conveniently located to other neighborhood amenities. This is very much about supporting and fortifying the idea of a 15-minute neighborhood as urban cores continue to repopulate creating livable, walkable, sustainable neighbourhoods.

It is incumbent of any conversion project to respect the adjacent neighbours, yet firmly establish itself with the ideals of its new identity, knitting itself into the existing architectural characters of the streetscape and surrounding fabric. Fostering diversity and inclusion of tenants and space types will support thriving micro-communities and evoke an excitement that will draw people in. Developments have not been without their controversy when space standards, amenities and quality of space are not properly considered. When approached responsibly, conversations can provide an answer to what to do with unoccupied buildings, how to reduce the use of embodied carbon and help provide a solution to the shortage of quality housing within our urban centers.

The conversion of commercial buildings can be viewed as filling the gap, or could be a trend that advances livable communities, but it is a reminder that flexibility is needed to respond to our evolving world. As long as the need for housing abounds, we all have accountability to investigate existing opportunities.

Source Renx.ca. Click here to read a full story

Feel Like Toronto Has Way More Cranes Than It Used To? That’s Because They’ve Doubled

Toronto once again has, by far, the most cranes out of any city in North America, according to a new report.

Whether you’re for it or against it, every Torontonian can agree it feels like there’s now a new towering development going up on every block. As it turns out, that sense of increased high-rise development is entirely justified, as Toronto has now doubled its number of cranes compared to before the pandemic.

A new Crane Index report from Rider Levett Bucknall found that in the third quarter of 2023, Toronto had a staggering 240 cranes in the city. Not only is this the most out of all other North American cities measured — well outpacing second-place Seattle’s 45 cranes — but it’s about two times the 121 cranes seen in the first quarter of 2020.

The number of cranes in Toronto really took off in the first quarter of 2021, jumping to 208. It’s continued to grow fairly consistently since then.

“The residential sector continues to see the most consistent growth in crane count, up seven more cranes this quarter, however, the hospitality sector has dropped by four cranes in the past six months,” the report says of Toronto. “It’s worth noting that behind the relatively consistent crane counts, there’s been a very active ongoing construction scene, with over 50 new projects introducing cranes in the past six months.

“Of these new construction projects, 41 are residential projects, 7 are commercial projects, and the remaining three are institutional projects.”

The State of Housing Starts

Just last month, the Canada Mortgage and Housing Corporation (CMHC) reported a 28% increase in year-to-date housing starts in Toronto, which came even as starts across the country dipped. However, zooming into just the latest available data, there’s actually been a decline in housing starts in Toronto, falling from 7,171 in June to 5,200 in July to 4,137 in August, making the increase in crane numbers during that time a somewhat surprising one.

The construction of apartments has led the way in Toronto this year, with starts of this housing type jumping up 58% in the first half of 2023, according to CMHC.

The government of Ontario has been laser-focused on getting municipalities to increase their housing starts, implementing some often-contested tactics to do so. From holding forced refunds of application fees over the heads of municipalities for not approving development applications quickly enough to unveiling the Building Faster Fund — a $1.2B incentive program to reward municipalities for hitting or exceeding their housing targets — the Province has made clear that it sees cutting municipal red tape as a key in solving the housing crisis.

It doesn’t help, however, that at the same time a number of developers, both in Toronto and otherwise, have had to pause, postpone, or even cancel development plans as rising interest rates and fewer interested buyers have made projects less financially viable.

In an October report, CMHC noted that sales of new condos were down 52% between January and June of this year compared to the same time period in 2022.

“This has made it more difficult for developers to achieve the sales necessary to access construction financing,” CMHC said, also noting that “elevated construction costs and interest rates likely present challenges for future projects.”

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