3 Trends Driving Greater Resilience In Commercial Real Estate

While commercial real estate companies are still dealing with the uncertainties driven by the pandemic, many have found new ways to complete projects and serve clients. Some segments of the industry have even thrived during the pandemic.

This challenging new way of life prompted astute leaders to seize on opportunities. They accelerated the pace of digital innovation, redefined business processes and models, diversified asset classes and leaned into predictive analytics to help guide their decisions. As a result, many are optimistic about their prospects for the new year.

According to Colliers’ 2022 Global Investor Outlook, 87% of investors are optimistic about the economic outlook and “intend to maintain high real estate allocations even though pandemic-related uncertainties have not fully lifted.” That sentiment is buoyed by investor optimism about today’s market liquidity, “with many commenting on the incredible levels currently available. After a record-setting 2021, 2022 is lining up to be even stronger.”

Throughout the pandemic, Capital One’s commercial real estate team has been supporting its clients with financing and asset class investment needs. John Hope, senior vice president and head of originations for the West region at the bank, recently talked with The Business Journals about trends related to industry growth areas and how commercial real estate companies can continue to drive resilience during challenging times.

1. Investors are making choices based on market demand and the need for asset diversification

According to the Colliers report, the top three sectors commercial real estate investors are most likely to target in 2022 are industrial and logistics (67%), multifamily (53%) and office (45%).

The industrial and logistics sector is benefitting from a demand for products, a rise in online shopping and the need to have warehouses and delivery services close to consumers. Multifamily is attractive because of favorable financing and its reputation as one of the safest asset classes. Meanwhile, the office market is also showing signs of stabilization.

The pandemic showed it’s difficult to predict where the next stress or challenge will show up. As the market continues to adapt to this changing landscape, many investors are focusing on balancing their portfolios based on risk appetite and the opportunity for greater returns. For example, Hope said, some asset classes may be considered higher risk but are attractive buying opportunities that present investors with better relative returns, while others may be considered safer investments.

Similarly, the same property could be more or less valuable to individual buyers based on their existing portfolios; even if it’s not the best near-term growth opportunity, it could have the potential to positively impact the total portfolio in the long term.

2. Regional diversification will be important for office investors

As investors eye the office market, Hope said they’ll need to keep tabs on where talent is located and where it is moving. Reports show that big cities such as New York, San Francisco and Los Angeles were the top places people left in 2020 as they took advantage of remote work and moved to locales with fewer people, a lower cost of living and more room to spread out. “Investors should consider that jobs are moving with people these days as opposed to people having to move to take a job,” Hope said.

While investors will always be interested in markets like New York, San Francisco and Los Angeles, regional plays to other target areas are becoming more attractive. Office markets in the Sunbelt like Nashville, Austin, Charlotte and Raleigh are seeing a lot of investor demand, Hope said.

“Are people going to look for value plays in New York? Sure,” Hope said. “Are they also going to look at growth plays in a market like Nashville, too? Yes. We expect flexibility to be baked into any office investment strategy.”

Hope shared that investors’ considerations will include whether it’s a short-term investment or a longer-term investment as well as the expectations and risk appetite of capital partners.

3. Companies are embracing organizational and technology agility

Some commercial real estate companies and investors may have more confidence in 2022 knowing they’ve been able to adapt and persevere through the pandemic-induced disruption, Hope said. On the organizational side, leaders initially focused internally to boost communication, engage teams, keep morale high and make sure operations were sound so the business plan could be executed.

Technology agility came in the form of virtual leasing and construction monitoring, 3D property walkthroughs, digitizing documents and turning to tools like Google Earth for site inspections. Many companies didn’t miss a beat and even became more productive, according to Hope.

“At first, CRE [commercial real estate] companies had to make these changes because it was a matter of functioning or not,” Hope said. “Over time, they saw a huge amount of productivity gains that came out of it. It’s now morphed into, ‘This is something we want to do.’”

As companies continue to stay agile in the face of uncertainty and build upon the resilience they’ve developed over the past two years, Hope said, communication and relationships will continue to be foundational to their success.

“We’re relying on relationships more than we ever have,” Hope said. “CRE companies have demonstrated their agility and flexibility in finding new ways to communicate with employees and engage with clients and still have business success.”

Source The Business Journals. Click here to read a full story

Bluebird Self Storage Building, Buying To Expand Portfolio

Bluebird Self Storage is capitalizing on the growing consumer demand for storage space as it continues building and buying assets to expand its portfolio across Canada.

Reade De Curtins, principal of the Toronto-headquartered company, said Bluebird currently has 28 locations. It plans to grow to 50 locations within 18 to 24 months as the firm builds what he considers Canada’s first nationwide “premium” self-storage concept.

“Within the last year we’ve gone coast-to-coast with locations now in New Brunswick and Nova Scotia,” De Curtins told RENX. “Then, we’ve got a location that’s opening in probably 45 to 60 days in Vancouver.”

The current portfolio includes 2,540,00 gross square feet and 21,440 units. Over its 40-year history, Bluebird has developed over 10 million square feet of self-storage facilities.

“You’ve got a lack of self-storage supply across Canada as a whole and in particular the opportunity we’ve identified is the lack of institutional-quality, class-A self-storage facilities in Canada,” De Curtins explained.

“If you compare Canada to the U.S., in the U.S. you’ve got over nine square feet of self-storage per person in the top-25 most populated markets and here in Canada we’ve got a little over three square feet per person.”

Bluebird focuses on premium self-storage

De Curtins said Bluebird is focusing on that premium market.

“If you dig down to quality class-A product, there’s even greater disparity. . . . There’s not an existing supply of class-A storage to be acquired in Canada.

“Even if an institutional player wants to come along and consolidate and spread a class-A premium brand across Canada, that opportunity does not exist.

“We are developing what we believe to be the first class-A portfolio coast-to-coast.”

De Curtins said the company believes innovation sets it apart in the industry because it provides a consistent customer experience no matter where they are located in Canada.

Bluebird and investment partner Harrison Street have recently acquired two self-storage assets.

One is in Mississauga and is currently under construction. It will be 155,770 gross square feet with 1,074 units. The other is an operating 46,400-square-foot facility in Cochrane, Alta., on five acres of land with room for future expansion.

The company is also opening its new Sheridan store in June in Mississauga, a state-of-the art facility of 169,000 gross square feet with 1,246 climate-controlled units.

“Bluebird strives to be the first national storage company focused on the customer experience. We want each customer to feel secure about their storage decision no matter where in Canada they are located,” said James Bennett, De Curtins’ business partner.

New demographic, new approach

De Curtins said people traditionally have looked to self-storage space as places where they can store possessions if they are in transition in their lives and moving to a different home.

“That’s changed and what we’re experiencing right now is this post-pandemic consumer. We believe that we are seeing a younger demographic these days. We believe younger generations are not prioritizing larger homes and larger mortgages,” said De Curtins.

“Your younger consumer, especially many times in the urban locations where we locate, they’re moving into smaller apartments and condominiums and they need a place to store their stuff, basically.”

People now working from home may have converted spare rooms or areas into offices and therefore need space to store furniture or other items they’ve moved out of those spaces.

“I think there’s some trends right now post-pandemic that are creating an even greater demand for self storage,” added De Curtins.

Bluebird’s ongoing growth

Bluebird is leveraging its owners’ significant experience in the industry to capitalize on those changes.

De Curtins said the ownership team, including Bennett and his father Richard Bennett, have developed more than 100 self-storage locations in North America since 1983 under various strategies and brand names.

“Primarily we had worked in the Southeastern United States, mostly the Carolinas and Florida and Ontario, throughout our history and we’ve had different brand names, different concepts,” he said.

“In 2016, when we rolled out Bluebird Self Storage, that’s when we decided that we’re going to try and get coast-to-coast (with) this premium concept.”

Originally the company’s focus was in the Greater Toronto Area.

“We pretty quickly expanded out West. I moved to Calgary in 2019 and we’ve grown very quickly here. Particularly in Calgary, we’ve got a very strong pipeline right now.

“We’ve got six new locations coming up in Calgary and they’re all very high-profile retail locations.

“We’re really excited about that. The big news for us is our coast-to-coast growth, but there’s still a lot of filling in to do in the middle.

“We’re already working on some sites in the Prairies as well.”

Source Real Estate News EXchange. Click here to read a full story

Influx Of New Space Pushes Canada’s Office Vacancy To 16.3%

The national office vacancy rate in Canada has moved up slightly to 16.3 per cent in the first quarter of this year, but the main cause of that isn’t a lack of demand.

According to a new report by commercial real estate firm CBRE, it’s the amount of new supply that has come onto the market with demand continuing to stay positive. Nationally, there’s 14.7 million square feet of office space under construction with 56.2 per cent of that pre-leased. Tenant demand for modern offices has resulted in all projects underway in Winnipeg, Halifax and the Waterloo Region (Southern Ontario) being 100 per cent pre-leased.

Jon Ramscar, managing director of CBRE’s Toronto downtown office, said the vacancy rate in the last quarter was largely driven by supply.

“We’ve had some natural rollover of supply coming through with some new built development, particularly in the major cities,” said Ramscar.

“It’s the timing of companies that are moving from older products to new build, new development that’s come online. So it’s really a timing of supply-driven fundamentals over the last quarter.”

During the quarter, about 686,000 square feet was delivered to the market with 71.2 per cent of that pre-leased.

Office vacancy has risen steadily

The overall national office vacancy rate was 14.6 per cent in the first quarter of 2021 and rose each of the subsequent quarters last year to 15.3 per cent, 15.7 per cent and 15.9 per cent, respectively.

Across the country, overall office vacancy ranges from a low of 6.9 per cent in Vancouver to a high of 30.9 per cent in Calgary.

CBRE said downtown cores have been reinvigorated by the recent easing of lockdown measures. The outlook is optimistic, with many businesses soon set to more formally return to in-person work.

Markets that recorded positive net absorption include those with earlier provincial reopening guidelines in Western Canada, namely: British Columbia, Alberta and Manitoba. However, overall net absorption was a negative 1.9 million square feet in the first quarter.

The report said the first quarter recorded a first for the Canadian office market with downtown vacancy currently higher than in the suburbs, albeit marginally – 16.6 per cent compared to 16.1 per cent.

Ottawa now outranks Toronto as the second-tightest downtown market in North America, at 10.2 per cent and 11.3 per cent, respectively. Vancouver remains the tightest at 7.7 per cent.

Alberta markets also noted improvement downtown, with Calgary decreasing 40 basis points (bps) to 32.8 per cent and Edmonton holding steady at 21.1 per cent.

Office demand “very robust”

Ramscar said the ultimate crystal ball question is where the vacancy rate will go next.

“The underlying demand has actually been very, very robust over the last quarter and if you look nationally at the Canadian offices we have some positive absorption and vacancy has actually ticked down in those Western markets that have been open and not restricted with lockdowns,” he said.

“We’ve learned a lot in the last two years through the pandemic, that those markets when they’ve opened up have seen a huge level of pent-up demand. So you would anticipate that vacancy will go down going forward if this level of pent-up demand is able to come through and it’s safe to continue without lockdowns.”

Ramscar said there are huge challenges with construction cost increases and access to labour delaying potential development projects. However, pre-leasing of current development projects in Canada is “very strong.”

“There’s a unique fundamental in the Canadian office market from a global perspective, we have kind of a small group of Canadian investors that really own the majority share of the office product in Canada,” Ramscar said.

“So it’s heavily controlled and that means the development supply is heavily controlled and we’ve been very conservative in history in terms of issuing new product into the market, almost to a fault, so we have to catch up to now attract these new larger global occupiers that want to expand and come into Canada.

“They command newer-quality and international-quality office product and so we have to catch up. We’re in a very healthy place in terms of pre-leasing. I look at this going forward, based on the demand that we see coming into the country, and we have to be able to accommodate new organizations with new product.”

The CBRE report said sublets account for 18.7 per cent of vacant office space across Canada, or three per cent of total inventory. This is down from the market high of 22.2 per cent of vacant space recorded a year ago in Q1 2021.

A combination of high demand for quality built-out spaces and users retaining their space should continue to decrease sublet options over the year, it said.

The average class-A net rent has also climbed from $20.68 in Q1 2021 to $20.84 in Q2 2021 , $21.07 in Q3 2021 , $21.47 in Q4 2021 and to $22.00 in Q1 2022.

Industrial sector remains tight

While the office market in Canada has faced some challenges, the country’s industrial real estate market has been on fire.

CBRE said the market hit unprecedented heights in Q1 with the amount of warehouse and distribution space under construction surging to a record 41.7 million square feet nationwide. And 69 per cent of that industrial pipeline is pre-leased.

In the first quarter, 8.6 million square feet of industrial space was absorbed, pushing availability down 20 basis points to a new record low of 1.6 per cent.

“Despite the record levels of industrial construction in response to the overwhelming wave of demand, this forthcoming new supply represents just 2.2 per cent of existing inventory and will not keep pace with the blistering pace of leasing,” CBRE Canada vice chairman Paul Morassutti said in a statement.

“We have effectively run out of available industrial space and many occupiers have no practical present-day options.”

CBRE said Montreal’s availability rate is one per cent, Vancouver is at 0.9 per cent, and Toronto, which saw 2.3 million square feet absorbed in Q1 alone, is at 0.8 per cent — all-time lows for Vancouver and Toronto.

Edmonton (5.9 per cent) and Calgary (4.6 per cent) — which each recorded 1.9 million square feet of net positive leasing activity this quarter — had the largest quarterly decreases in availability rates in Q1, falling 110 bps and 80 bps, respectively.

“Amid skyrocketing demand for industrial space, the national asking net rental rate grew at its fastest pace ever, rising 17.4 per cent year-over-year to a new record high of $11.20 per square foot.

“Vancouver continues to have the highest average asking net rent in Canada of $17.40 per square foot, followed by Toronto ($13.59), Ottawa ($12.70), Montreal ($11.34) and Edmonton ($10.40),” said the CBRE report.

Source Real Estate News EXchange. Click here to read a full story

RioCan Plans Colossal Redev. At GTA’s Colossus Centre

RioCan REIT has ambitious long-term plans to redevelop its 61.7-acre Colossus Centre shopping centre in Vaughan with up to 25 towers and buildings comprising over 10 million square feet of housing and retail.

Colossus Centre is located north of Toronto and surrounded by Highway 400 to the east, Highway 7 to the north, Weston Road to the west and Highway 407 to the south. The existing unenclosed shopping centre has more than 60 units and approximately 570,000 square feet of leasable retail area.

“It’s in a very, very busy node of the city that the city is investing in with all of the work that’s being done along Highway 7 and the VMC (Vaughan Metropolitan Centre),” RioCan (REI-UN-T) development vice-president Anton Katipunan told RENX.

Colossus Centre is most recognizable by the distinctive Cineplex Cinemas Vaughan movie theatre, which is shaped like a flying saucer. Other major tenants include HomeSense, Marshalls, Bed Bath & Beyond, Staples and Golf Town.

It’s shadow-anchored by a Costco and there’s a Petro-Canada gas station at the northwest corner which aren’t part of the 61.7 acres, though they’re thought of by most people as being part of Colossus Centre and are expected to remain.

Redevelopment plans for Colossus Centre

Hariri Pontarini Architects designed the master plan for the Colossus Centre redevelopment project.

RioCan’s long-term vision for Colossus Centre involves 25 buildings ranging from eight to 55 storeys. It would include approximately 9.47 million square feet of residential space with 13,000 units, approximately 646,000 square feet of non-residential space and almost 1.08 million square feet of parkland encompassing three parks and a multi-use trail.

“We’re really excited about converting to the highest and best use,” said Katipunan. “In our opinion that is a retail-focused mixed-use development that we want to work with the city, the community and the retailers that are there to figure out what’s the best solution that will meet the needs of that community.”

Katipunan believes the green space and parkland will appeal to future residents since the site is currently full of asphalt and parking lots. The residential component of Colossus Centre will likely include both purpose-built rental apartments and condominiums.

“As we go through our planning, what we want to do is understand what the market is dictating and what the best outcome is,” said Katipunan. “We’re looking to satisfy what the community is going to benefit from the most as well as from our unitholders’ standpoint.”

Colossus Centre’s location and proximity to major roads and public transit should appeal to retailers, its developer believes, as should plans that will encourage pedestrian movement through the addition of new public and private roads with sidewalks.

It’s still up in the air whether Colossus Centre will also include an office component.

Colossus Centre timelines, phases, partners

RioCan has made an application for an official plan amendment and is hoping to apply for zoning for Phase 1 of the redevelopment sometime this year.

The first phase will include two residential towers with a podium, according to Katipunan.

“We’re hoping that within a five-year time frame we’ll have an idea of when construction will start,” said Katipunan.

These are large and ambitious plans and one might think bringing in partners may be necessary to bring them to fruition, but Katipunan said it’s too far out to think about at this point.

“We always want to make sure that we’re putting our best foot forward, and sometimes that involves bringing in a partner. We’ve been building our team up internally to be able to tackle a project like Colossus. The projects that we’ve achieved over the past several years are testament to what we can produce.

“Colossus, at this scale, is not something that you come across on a regular basis. We’ve been hard at work on building the right expertise in-house and we’re confident that we could approach this project on our own.

“But as the planning process evolves and the market dictates what we want to put there, we would definitely be open to considering partnerships if the timing and situation is right.”

Connection with Vaughan Metropolitan Centre

VMC was created to become Vaughan’s downtown core with residential, retail, office, restaurant, green space, recreational and public transit components. The VMC subway station is approximately 1.6 kilometres east of the Colossus Centre site.

While much of VMC has been completed and it has become a population hub, there’s more development still to come. It’s therefore important to provide better linkage between VMC and Colossus Centre.

“We’re working with the city and the province on building a secondary overpass over the 400 to link to the southern part of the VMC,” said Katipunan.

“The idea is that we’re offering multiple options and access points into the VMC and Colossus Centre. You can use a vehicle, walk or ride a bike, so the interconnectivity between the VMC and Colossus Centre is well-planned out.”

Source Real Estate News EXchange. Click here to read a full story

Live-Work Park Community Reimagines A Legacy Office Complex

Despite becoming one of the most transportation-connected locations in Toronto, the northwest corner of Sheppard Avenue and Leslie Street has been an underutilized commercial zone of empty lots and aging commercial buildings. That’s about to change in grand style with the development of Central Park, a live-work community just north of the Leslie station on the Sheppard subway line.

The 12-acre site that skirts the East Don Parkland will be redeveloped with five new residential towers. Two existing office buildings on the site will become key components of the new community as they’re upgraded and reclad with energy-saving glass and steel fins that create a visual effect that resembles movement when viewed from different angles.

The forested setting on a protected ravine and convenience as a transportation hub inspired the concept of a master-planned live-work community, says Jason Shiff, sales manager for Amexon Development Corp., which is breaking ground on the project this spring for occupancy in 2025.

The pair of 30-year-old buildings are rectilinear and dated but still solid, so it’s much more sustainable to upgrade them rather than tear them down and put the material into landfill.— Deni Poletti, partner of CORE Architects Inc.

The complex will have direct connections to the Leslie subway station and a relocated Oriole station on the Richmond Hill GO line, that provides non-stop service to Union Station. By car, it’s 500 metres to the Leslie Street interchange with Highway 401 and three kilometres to the Sheppard interchange with Highway 404/Don Valley Parkway.

According to Mark Fieder, president of Avison Young Canada, the project is part of an intensification trend that’s seeing large-scale residential developments incorporate legacy commercial buildings to create live-work districts.

“In many cases, it’s economically viable to retain a structure that’s in good condition and fits existing plans,” Mr. Fieder explains. “In other cases, a building may be designated historical; or if the planned community is large in scale, a phased approach may see some office and commercial buildings continue to bring in revenue during redevelopment. As the community takes shape, those commercial spaces may become more attractive, and the developer may revisit the plan to replace them.”

At Central Park, “the pair of 30-year-old buildings are rectilinear and dated but still solid, so it’s much more sustainable to upgrade them rather than tear them down and put the material into landfill,” says Deni Poletti, partner of CORE Architects Inc., which is designing the buildings at Central Park that will feature interiors by II By IV Design.

Upgrading office façades while tenants still occupy the space is becoming more common throughout Canada to improve energy efficiency, Mr. Poletti says. CORE recently designed the recladding of an office tower at Dundas Street and University Avenue while office tenants continued to work inside. The project added floors of condominiums on top to create the 55-storey Residences at 488 University.

Central Park in Sheppard-Leslie development will feature cafes. retail and markets.

All commercial buildings can lend themselves to such extensive upgrades while still in use, Mr. Poletti says; it just takes co-ordination and working with the tenants to make sure vibration is kept to a minimum as well as scheduling most of the work outside of office hours.

“Typically, what happens to protect the users inside, we put up hoarding around the perimeter with sufficient space for workers to access the skin and do the proper detailing and tying in of membranes,” he explains. “Depending on the type of work that has to be done, there may be situations where tenants have to move temporarily. At 488 University, that was not the case, but some cases may require areas be cleared for staging mechanical or electrical equipment.”

Renovating the Central Park office buildings will be a significant project. The four- and eight-storey buildings, which are connected by a two-storey link, total 325,000 square feet of space and have multiple tenants. Services in the commercial buildings include a privately operated daycare and an outdoor playground.

The concept for the reclad exteriors was envisioned to compliment the forested landscape of the Don River ravine, Mr. Poletti says. “We’re creating an optical illusion, with subtle waves in the skin of the building, and depending on where you stand, the look constantly changes. The idea is to transform these rectilinear objects into something more organic and interesting.”

The curving fins that create the fluidity will be made of enamelled steel. “We’re looking at something finished with a white enamel that has a reflective quality to add more pronunciation to the waves.”

All the glass is going to be replaced with more energy-efficient full-height windows, providing more light into the offices than does the current glazing, which is substandard by today’s norms, he says.

The next-generation mechanical systems to be added provide enhanced air flow and HEPA filtration systems and intelligent LED lighting systems and solar panels. The buildings will get energy-saving green roofs that will also enhance the view from the residences, Mr. Poletti adds.

Adding to the amenities for both residents and office tenants, the entire site will connect to the recreational trail in the Don River ravine and the Central Park, which gives the community its name, that includes a landscaped three-acre common, surrounded by cafés, bistros and a central market. Parking will be underground, with 2,000 spaces in a garage that extends beneath the entire site, and each will have a plug for electric vehicle charging, he adds.

The newly built glass-clad presentation centre on the west side of Old Leslie Street will remain a private events space and restaurant. A rooftop between two of the towers will contain part of the 55,000-square-foot Park Club for residents and guests, which includes a health club and saltwater pool.

It’s been a long process to finally break ground on the site Amexon originally acquired in 1995 and received zoning for in 2013, Mr. Shiff says. A small commercial building on the site that will become the residential zone was demolished 10 years ago and the office tenants were relocated to the other Amexon properties, and a rezoning process began.

“The development will transform the underutilized site from single-purpose daytime office use to a vibrant round-the-clock use within a community where people can live, work and play,” he says.

Source The Globe And Mail. Click here to read a full story

Office Leasing Begins For Toronto’s Canary Landing

Avison Young has begun marketing six floors and 251,552 square feet of boutique office space as part of the Canary Landing mixed-use development at 125 Mill St. on the eastern edge of downtown Toronto.

Canary Landing is being developed by Kilmer Group, Dream and Tricon Residential, with Dream acting as the office building’s property manager.

“You’re putting a new office development in a really cool and happening area with lots of retail and visitors,” Avison Young sales representative and principal Brett Armstrong told RENX.

“It’s something very different from what an office user typically gets from an office building. It’s more and more important now, as companies are looking at where to lease their office space and how to energize their employees and bring employees back to the office, to look at things outside of the physical office space like amenities and green space.”

What Canary Landing has to offer

The second through sixth floors at Canary Landing will have floorplates averaging around 50,000 square feet and there will be six rooftop terraces, each comprising approximately 1,000 square feet. There will be 4,200 square feet of retail at ground level, residential units above the office space and underground parking.

Canary Landing will provide: an enhanced, high-powered heating, ventilation and air-conditioning system; ultraviolet air purification and MERV 16 filters; access to natural light with 11-foot floor-to-ceiling windows; a raised floor system; touchless entry and destination dispatch elevators; real-time energy metering and smart enabled indoor air quality sensors; and mobile phone-enabled entry and integration to a building management application.

The building is targeting LEED Gold and WELL Core and Shell certifications.

Canary Landing will have direct access to 24 acres of dedicated parkland at Corktown Common. It’s directly adjacent to the Cherry Street Toronto Transit Commission streetcar loop and in the future will offer easy access to an Ontario Line subway stop and a GO Transit stop.

Since it’s not far from the Great Lakes Waterfront Trail, Canary Landing will offer secure bicycle parking and shower facilities for those who prefer to bike, jog or walk to work. It will have a Walk Score of 90, a Transit Score of 96 and a Bike Score of 100.

The Canary District, The Distillery Historic District and Riverside neighbourhoods surround Canary Landing, making a variety of retail and entertainment options, restaurants, bars, the Cooper Koo Family YMCA, parks and open spaces easily accessible.

There are more than 6,100 new residential units within a 500-metre radius of the rapidly growing area and about 22,000 people live within a kilometre.

“I think adding office will be important because, as everyone has been working from home over the past few years, it’s going to change the way companies evaluate the locations of their office space,” said Armstrong.

“Putting offices in a neighbourhood like this could be something really cool and make it a true mixed-use neighbourhood.”

Plenty of interest expected

Armstrong anticipates a high level of interest and activity for Canary Landing and Avison Young has already had preliminary talks with a number of groups. He expects a variety of tenants to be interested, led by the technology sector but also including professional services and financial services companies.

Armstrong surmises Canary Landing will attract a few tenants looking to take an entire floor or more. He doesn’t want to consider splitting up full floors this early in the leasing process.

“A lot of the deals that have been happening throughout the pandemic, and especially in 2022, have been in new developments,” he said.

The retail component of Canary Landing will likely act as an amenity for building occupants and could possibly include quick-service retail, a coffee shop or a bank branch. Armstrong said it’s too early to start leasing that aspect of the building.

Tenants are expected to begin fixturing their spaces in the third quarter of 2025 and Canary Landing should be fully occupied and operational in early 2026.

New office space is coveted

Armstrong said competition for premium downtown Toronto office space has been heating up and driving up rents, particularly in new developments, which have been beneficiaries of a flight to quality by companies.

Armstrong cited The Well, 16 York, 100 Queens Quay East and Waterfront Innovation Centre as examples of new office developments with high leasing activity and interest.

“It’s not the same activity level as it was pre-pandemic, but it’s certainly getting to a point where we see that happening toward the end of this year,” said Armstrong.

Source Real Estate News EXchange. Click here to read a full story

Spillover Effect From Toronto Heats Up Industrial Land Demand In Waterloo Region

This fall, Angstrom Engineering Inc., of Kitchener, Ont., will move into a 53,000-square-foot building in a new tech-oriented business park 10 kilometres away, ending a prolonged effort by the fast-growing company to buy industrial property.

Rising demand and shrinking supply of serviced industrial land in the Waterloo Region (which includes Cambridge, Ont.) have tested companies such as Angstrom and others competing for property in one of the country’s hottest industrial markets. The COVID-19 pandemic, supply chain disruptions and dwindling inventory of municipal industrial parks contribute to the current squeeze.

Three years ago, Angstrom officials looked for 20,000- to 30,000-square-foot buildings but, with company growth, broadened their search to facilities of 50,000 square feet. What they found, says Angstrom president David Pitts, was “almost nothing in that 30,000- to 50,000-square-foot size … It was challenging.”

If you can attract the best talent to the area, you will attract very good corporations. That war for talent has come to the industrial marketplace, especially in advanced manufacturing.— Mark Kindrachuk, president of Intermarket Properties

His experience is familiar to Waterloo Region realtors.

“I joke that over the 30 years of my career, for the first 25 to 27 years, I was trying to drag people out of Toronto to look at Kitchener-Waterloo, saying, ‘Please come and have a look and buy something,’ ” quips Karl Innanen, managing director of Colliers International in Kitchener. Given “the spillover effect” from Toronto-area demand, he says, “for the last two to three years, I’ve felt like a bouncer at a big party trying to keep them out.”

In the fourth quarter of 2021, industrial vacancy in the Waterloo Region fell to 0.7 per cent, according to a report by Colliers, given demand from local and out-of-town land buyers. Average asking net rents increased to a record $8.51 per square foot in the final quarter of last year (up 23.5 per cent over the same period in 2020).

Last fall, for the first time, the cost of some industrial land crept above $1-million per acre, spurred by COVID-19 disruptions, causing manufacturers and suppliers to relocate some of their production from abroad back to Canada.

At Angstrom, which designs and builds machines that create nano-film materials used to research the evolution of everyday products such as cellphones and batteries, as well as high-technology products, the search for new quarters predated the pandemic.

“The main driver was growth, and we needed more space,” Mr. Pitts says.

As the company outgrew its 15,000-square-foot facility in Kitchener, Mr. Pitts says Angstrom was determined to stay in the area for its existing work force and its links to skilled graduates from the region’s postsecondary institutions.

In early 2021, Angstrom purchased a five-acre parcel in Cambridge IP Park, an industrial campus developed by Toronto-based Intermarket Properties to attract companies in advanced manufacturing, research, distribution and logistics.

Unlike some newcomer developers, Intermarket Properties president Mark Kindrachuk dates his involvement in the Waterloo Region to 2001. Over a 12-year period, he and business partner Sandy Acchione assembled 400 acres of land for their industrial park in the north end of the city.

Over the past two years, Intermarket sold a significant portion of its 400-acre IP site to various developers, including the Healthcare of Ontario Pension Plan, Montreal-based Broccolini, and First Gulf, of Toronto. Intermarket retained 85 acres to develop and lease buildings for smaller-scale industrial users, not planning further property sales.

However, Angstrom purchased five acres in IP Park because Mr. Kindrachuk saw a fit with his plans for an amenities-rich industrial campus for high-tech and related firms. Those amenities include green space, walking trails and bike trails integrated into existing woodlots and creeks, key features of a master plan developed by Intermarket and the city of Cambridge.

“Our position is that if you can attract the best talent to the area, you will attract very good corporations,” Mr. Kindrachuk says. “That war for talent has come to the industrial marketplace, especially in advanced manufacturing.”

Given low vacancy rates, Mr. Kindrachuk is so confident he can bring in the firms he wants that his company will begin construction in May on a 100,000-square-foot building, possibly for a data centre, without signed tenants yet. Other buildings are scheduled for construction later this year.

Meanwhile, the pandemic-fuelled land squeeze led some companies to modify their acquisition strategies.

Eclipse Automation, based in Cambridge but also with operations in the United States and Europe, designs and builds complex automated systems for a variety of medical, transportation and clean-energy products.

Land was readily available when Eclipse opened in 2001, says president and co-founder Steve Mai, who made regular purchases in the Cambridge area to keep pace with company growth.

But escalating land prices over the past three years made it difficult to buy or lease the right buildings in a timely manner. “We have to fight for our real estate now,” says Mr. Mai, whose new strategy is to buy property well head of immediate needs.

“I have to entertain whatever comes available in the market at an inappropriate time for my business but appropriate for my [company’s] future,” he says.

The supply-demand pressure comes as municipalities no longer buy land for industrial parks. Cambridge, for example, sold its last inventory of industrial lands two years ago with no plans to acquire new supply, says economic development director James Goodram.

“The private sector is doing that now and they have really come in [to the region],” he says.

Mr. Goodram says municipalities now play a supporting role by installing water, waste and other services for privately held industrial lands, recouping those costs through development charges.

Currently, the city is assisting in the development of 400 acres of employment lands in north Cambridge and in Waterloo. Half of the developer-owned acreage is already serviced, with the other half expected to be ready later this year, says Mr. Goodram.

For Angstrom’s Mr. Pitts, relief is in sight. “We are looking forward to getting into the new space that is purpose-built for us.”

Source The Globe And Mail. Click here to read a full story

Core Development Group Proposes Rental at Queen East and Leslie

A mid-rise, mixed-use, mostly residential rental building could replace vacant industrial buildings at 1233 Queen Street East and Leslie Street in the Toronto neighbourhood of Leslieville. Core Development Group has submitted OPA, ZBA and SPA applications to the City for a proposed development that knits into the largely low-scale residential built fabric of the area. The brick-clad corner structure features step-backs, vertical articulation, and a recessed POPS (Privately Owned Publicly accessible Space) in the northwest corner of the site.

The half-acre lot is located on the southeast corner of the Queen and Leslie intersection. The two low-rise buildings that currently exist on the site are vacant, and until 2020 contained production facilities for Lee’s Food Products, a manufacturer of soya sauce. They were built in 1921 and converted into a factory in 1947, with additions built between 1948 and 1970. According to ERA Architects’ reports, there are no significant physical heritage resources on the site, and the buildings are not included on the City of Toronto’s Heritage Register.

The low-rise primarily residential neighbourhood also has a mix of commercial and industrial buildings. Across the street to the north is a 4-storey retirement home, and to the west, across Leslie Street, is the Duke of York Hotel, an historic Italianate-style hotel built in 1870. Several existing, proposed, and under construction mixed-use buildings will bring +6-storey developments to the nearby properties.

For this corner lot, Studio JCI has designed a stepped 8-storey purpose-built rental building in keeping with the emerging character along Queen Street and reflects the future planned features for “main street”. The total GFA of 8,906m²  represents a density of 4.2 times the area of the lot.

A POPS is proposed to enhance the northwest corner in the form of a covered through-way for pedestrians on the ground floor, protecting the residential entrance and showcasing a feature wall and canopy. Adjacent to it, and fronting onto Queen Street East, is a 250m²  space for retail. Directly behind that, an internal amenity courtyard serves as an extension of the ground floor commons and brings natural light to the units above.

The proposed eight-storey height with varied step-backs at the fifth and sixth floors is designed to reflect, and be compatible with, the one to five storey building heights in the general context. The use of step-backs, fenestration, and different cladding on the principle facades facing Queen and Leslie streets is meant to visually break the structure into narrower components to be compatible with the fine grained character of Queen East.

The total 132 apartments are broken down into 84 studios (64%), 1 two-bedroom (1%), 12 three-bedrooms (9%), and 35 four-bedrooms (27%), the latter a rarity in Toronto residential buildings.

Outdoor amenity space is provided through a courtyard on the ground floor, a terrace on the second floor, and a larger terrace space on the rooftop. Indoor amenity space is provided contiguous to the exterior spaces.

Vehicular access to the building is at the rear of the building, to/from Memory Lane which is oriented in the east-west direction. Ground floor vehicular parking accommodates 10 spaces, which include 2 car-share and 8 visitor parking spaces. A total of 160 bicycle parking spaces (144 long-term, 16 short-term), are also proposed. Queen is served by a TTC streetcar line; Riverside-Leslieville station on the Ontario Line subway is targeted for opening nearby in 2030.

Overall, the proposal seeks to redevelop and intensify a portion of the south side of Queen Street East, while integrating with the existing and planned developments in the surrounding area. The potential impact of the proposed development on adjacent heritage resources is mitigated through various urban design elements: brick cladding that is compatible with the adjacent heritage resources; building step-backs to reduce visual impact; maintaining a low-rise streetwall through massing and design; and, detailing that references the area’s historic context, including vermillion red building accents that pay homage to the China Lily factory.

Source Urban Toronto. Click here to read a full story

The Rush Is On For Industrial Land, And Space, In SW Ontario

Industrial land acquisitions and development continue at nearly breakneck speed in Southwestern Ontario as prices and rents keep rising and pushing investors farther west from the Greater Toronto Area (GTA).

“Volumes are very, very high relative to historical numbers,” Joe Benninger, vice-president with CBRE’s Southern Ontario investment team, told RENX. “It’s extremely tight out there. In 2021, the vast majority of opportunities, both large and small, were gobbled up.”

According to CBRE, 12,496 acres of industrial, commercial and investment (ICI) and agricultural land worth $837 million traded hands in Waterloo Region, Wellington County and Brant County last year. That’s 95 per cent more than in 2020.

Benninger said in Waterloo Region, lands came on stream after a long period of no new serviced land being available, a major reason for the dramatic jump.

“There are lands that have come on stream in the Sportsworld/Maple Grove area of Kitchener and Cambridge that were a very long time coming. There are more lands downstream that are in the official plan. The planners need to figure out a way to accelerate getting those serviced.”

Waterloo Region industrial land deals

Major industrial land deals that took place in Waterloo Region last year included:

– Broccolini purchasing an aggregate of 105 acres on Old Mill Road and Allendale Road in Cambridge for $55.24 million from different sellers;

– Crestpoint Real Estate Investments Ltd., in partnership with Perimeter Development Corporation, purchasing a 38-acre site that was part of the former Budd Automotive lands at Homer Watson Boulevard and Bleams Road in Kitchener for $21.15 million;

– office and health-care furniture designer and manufacturer Krug acquiring a 23.7-acre site on Pearson Street, which was also part of the former Budd Automotive lands, for $14 million;

– and Dream Industrial REIT acquiring a 28.5-acre site on Maple Grove Road for $26 million.

Benninger said numerous potential tenants are competing to land space in Crestpoint and Perimeter’s project, where existing buildings were torn down to make way for new construction.

“That’s indicative of most of these planned developments. They’re leased up before a shovel ever hits the ground.”

The price for the Dream acquisition was almost $1 million an acre.

“Those are lands that could have been bought at any time over the last decade or so, probably for about $500,000 an acre,” said Benninger. “They certainly had interest, but no one stepped up to the plate to meet the seller’s expectations. In 2021, the seller ran a marketing process and ended up with five or six bids and achieved just under $1 million (an acre) for them.

“I think you’ll see Dream service those lands and move forward with some development there. That site’s a little bit challenged in terms of its shape. It’s not the perfect shape and size, so it probably would have gone for more than that if it was.

“There are (also) other parcels in that area where you’ll see some other groups move forward with development.”

Land prices and rents continue to climb

The price of ICI land in Southwestern Ontario has traditionally been a bargain compared to the GTA, but it’s been rising quickly as a result of surging demand.

While industrial land prices drop west of Toronto, Benninger said properties have still sold for more than $2 million an acre in Milton and for $1 million-plus further west. He expects prices will continue to rise.

“Institutional industrial developers are buying for both short- and longer-term pipelines for construction,” said Benninger. “The underlying fundamentals for industrial throughout Southwestern Ontario really make it favourable for industrial development and construction.”

Waterloo Region’s construction pipeline is expanding and new buildings are slated for development, including iPort Cambridge, a 300-acre logistics and industrial campus which will deliver more than four million square feet across several phases.

Brantford, which offers good accessibility to the GTA and Hamilton, has seen considerable industrial development activity as well.

Two Fiera Real Estate funds acquired five industrial buildings comprising about 940,000 square feet of space in Brantford for about $118 million from local developer and property manager Vicano Construction Ltd. last spring.

The properties ranged in size from about 12,000 square feet to a 530,000-square-foot, one-tenant distribution centre completed in 2020.

Vicano continues to build industrial facilities in Brantford and has more land in the city and elsewhere in Southwestern Ontario where it can construct future projects.

All of this new development activity still isn’t enough to meet demand, however, and very low availability rates in Southwestern Ontario continue to drive industrial rents up.

“We’re seeing industrial rents right now of $12 (a square foot) and even higher,” said Benninger. “Given the lack of trading space, I think there’s still upward pressure on rents and they’ll continue to increase.”

Source Real Estate News EXchange. Click here to read a full story

Mixed-Use Change To Commercial Lands. Cambridge Councillor Behind Task Force’s

The provincial government has an answer to housing issues, including those in Cambridge, and it just needs to pull the trigger, according to Coun. Nicholas Ermeta.

The Ward 8 representative pointed to the recent Ontario Housing Affordability Task Force report recommendation of permitting the “as of right” conversion of underutilized commercial properties to mixed use. The recommendation would “limit exclusionary zoning,” states the report, and bring a wider variety of residences.

“This to me is a no-brainer, can be done swiftly and isn’t overly controversial,” Ermeta said.

“It would open up a lot of land right away and in areas that need an upgrade where servicing already exists.”

Ermeta said the issue with current zoning in many municipalities is they haven’t updated its bylaws. While cities encourage mixed-use zoning, lands along arterial roads are only zoned commercial. He said getting land rezoned can sometimes take up to two years.

“As of right mixed-use zoning would significantly reduce the time frame and could see housing built much sooner. A builder would only have to go through site plan approval, which is a much shorter time frame than a rezoning,” he said.

Sections of Cambridge that would benefit from the change would be Hespeler Road and Dundas Street, Ermeta said. He can envision the same returns in the areas of King, Weber and Victoria streets in Kitchener, as well as Barton and Upper James streets in Hamilton.

“We need to embrace the missing middle, which creates more housing variety and more unique developments, taking the pressure off of detached homes,” he said.

One of the parameters perceived for the change would be allowing up to four units and up to four storeys on a residential lot.

“Market research also states that people overwhelmingly want to live in low-rise and mid-rise forms of housing over high-rise any day.”

Ermeta feels this change can avoid a mess of towering buildings in town. One of those developments he cites as an example is the Georgian Square Condominiums, on Wellington Street between Commonwealth Lane and Bruce Street. That type of medium density should “win the day” and would preserve the character in the city, he said.

While the provincial recommendations would bypass municipal approval, Ermeta wants cities to retain the ability to determine the amount of density and number of units that would be most appropriate for their community.

He felt a good starting point was four to six storeys.

Some of the other provincial recommendations include permitting “as of right” for secondary suites and multi-tenant housing, as well as allowing unlimited height and density for “as of right” zoning in “immediate proximity” of transit stations and no minimum parking requirements for six to 11 storeys.

Also, to rezone all land along transit corridors as mixed use and encourage municipalities to increase density in areas with excess school capacity.

Val Brooks, president of the Cambridge Association of Realtors, agreed with Ermeta that rolling back exclusionary zoning would “go a long way in in providing more affordable choices for families.”

“As of right zoning also allows more type of housing that is accessible to a larger group of people. This makes neighbourhoods stronger, richer and fairer and most importantly, allows housing to be built more quickly to alleviate the current supply issue,” she said.

“Far too much time and unnecessary expenses are spent reviewing and holding consultations for large projects which conform with the city’s official plan or zoning bylaws and small projects which would cause minimal disruption.”

Brooks noted with Cambridge’s core areas filled with businesses and commercial real estate, and the LRT on the horizon to provide a major transit corridor through the city, it is important to ensure people live close to those areas.

“Increasing density within Cambridge and around major transit routes would help reduce commute times, thus, reduce emissions, encourage tourism, support the economy and, most importantly, provide housing options for the large group of real estate clients wanting to enter the housing market,” Brooks said.

While Ermeta believes the recommendations could easily be implemented for the provincial election in June, he’s not dismissing the idea of putting a resolution forward to city council asking the province to work with the cities in implementing the recommendations.

“A major benefit to having mixed-use development across many commercial corridors is that spreading the growth in different areas might keep land costs in check,” Ermeta said.

“If you have too much development at once in one area, land values there will rise exponentially, which hinders affordability. So, by having other areas to choose from, investors can rotate throughout the city keeping the cost of future development land at a more reasonable price.”

Source The Record. Click here to read a full story