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    RealDeals:

    Mississauga $10,407,500

    Halton $3,175,000

    Burlington $37,700,000

    Ajax $7,500,000

    Vaughan $27,000,000

    Innisfil $2,900,000

    Barrie $2,100,000

    Innisfil $3,400,000

    Essa $2,500,000

    Hamilton $12,400,000

    Cochrane $8,500,070

    Airdrie $2,200,000

    High River $1,450,000

    Calgary $2,500,000

    Calgary $4,560,000

    Maple Ridge $5,010,786

    Vancouver $38,471,460

    Vancouver $182,450,000

    Vancouver $92,500,000

    Vancouver $157,500,000

    Edmonton $1,325,000

    Edmonton $897,000

    Edmonton $1,577,500

    Edmonton $4,300,000

    Edmonton $1,056,900

    Previous
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    Real Insights feature curated content from industry leaders during the program formation of the Real Estate Forums and Conferences. Each report features on the Top 10 Real Insights focused on major trends. For more details on the performance of Canadian Apartment Investment Conference, click the following Insights.

    GROWTH IN DEMAND FOR RENTAL HOUSING CONTINUES TO PUSH RENTS HIGHER

    Average vacancy nears all time low while rents rise faster
    than inflation.


    In 2018, growth in demand for purpose-built rental apartment
    units outpaced the increase in supply across the country, causing
    the vacancy rate to drop to 2.4%— down significantly from 3.0%
    in 2017.


    CMHC cites increased international migration, an increase in
    youth employment, and an aging population as reasons for the
    declining vacancy.


    In addition, many millennials are choosing to rent over
    purchasing a home.


    “They like the flexibility to live wherever they want, to be able to
    move and not worry about selling,” said Ben Meyers of Bullpen
    Research & Consulting.


    However, Matt Danison, CEO of Rentals.ca, said the new
    mortgage stress test, higher interest rates and home prices have
    dramatically increased the number of people looking for rental
    accommodation this year.


    “With near record-high immigration in Canada and record-low
    unemployment, demand for housing is high, but flat or declining
    resale house prices due to current and expected future credit
    tightening has deterred many would-be first-time buyers from
    entering the ownership market. That demand overflow is being
    felt in the rental market, where very few Canadian markets are
    offsetting demand with new rental supply,” added Danison.


    Bob Dhillon, CEO of Mainstreet Equity, adds that rising interest
    rates and the new federal mortgage stress test have made it more
    difficult for prospective buyers to purchase homes, pushing them
    into the rental market instead.

    The average property listed on Rentals.ca in the first quarter of
    2019 was offered for $1,869 per month, an increase of 4.3% from
    Q4 2018. The median rental rate was $1,764 per month, which
    represents a more significant jump of 6.9% quarter-over-quarter.


    Per-square-foot rents for various housing types across Canada,
    according to Ben Myers, are: $3.33 for condo units; $1.83 for
    purpose-built rental units; $1.75 for basement apartments; $1.56
    for single-family homes; and $1.34 for townhomes.


    Average lease prices in purpose-built rental buildings completed
    since 2005 in Toronto grew 17% to $3.09 per sq. ft. as higher-rent
    properties were completed in the past year, Bloomberg reports.


    According to Urbanation, the growth in condo rents rose a recordbreaking 9.3% in 2018 in the GTA. The average rental rate of a
    condo in the GTA hit $2,310 in Q4. Average rents in the suburban
    areas of the City of Toronto at $2,192 were 13% lower than in
    Downtown Toronto ($2,520), Urbanation states.

    HOUSING SUB SECTORS ARE GAINING TRACTION

    Developers are finding that there is growing demand and big
    opportunities in niche markets.


    Co-living
    Co-living is a type of housing where two or more unrelated people
    live together. Each person signs their own lease for a private
    bedroom and often bathroom within a residence and share
    common living areas such as a family room, dining area, kitchen.
    Typically, co-living includes fully furnished apartments, down to
    bedding and kitchen utensils and may include such amenities as
    housekeeping, laundry, Wi-Fi and planned social activities.


    Co-living has become attractive, especially among young renters.
    As cities become denser and more expensive, co-living addresses
    some of the issues around urban living.


    This type of housing is attracting big names in real estate and
    big money.


    WeWork opened two locations under the shared-living brand
    WeLive in the United States. Its apartments in New York City range
    from studios to four-bedroom units, and typically cost less than
    similar buildings in the neighbourhood.


    In March 2019, Common announced a US $100 M expansion in
    southern California with Proper Development, an LA real estate
    development company, making the two companies the largest
    co-living operator and developer in Southern California. In 2017,
    Common raised US $40 M of series C venture funding, led by
    Norwest Venture Partners, a venture and growth equity investment
    firm, according to the Wall Street Journal.


    Medici Living Group raised US $300 M in January 2019, as part of
    a joint venture with investment firm W5 Group, to develop 1,500
    units across the US under its co-living brand, Quarters, according
    to The Real Deal.

     

    Ollie has raised US $15 M in financing from Aviva Investors
    Real Estate Capital Global Co-Investment Fund, according
    to TechCrunch.


    Homeshare has raised US $5.7 M led by Lightspeed Venture
    Partners in 2018, according to Axios.


    Roam, which has raised US $3.4 M in seed funding, is poised
    to open more locations this year in New York City and London.
    It already has spaces operating in Miami, San Francisco
    and Tokyo.


    ALTA LIC, a high rise development located in Queens, NY, opened
    in May 2018 with 466 apartments. Of those, Ollie is operating
    169 as furnished co-living suites with a total of 422 bedrooms.
    Rents range from US $1260 to $2200 per month. The cost of a
    bedroom also includes wi-fi and weekly housekeeping services,
    including bed linen, towels and toilet paper, along with shampoo
    and hand soap.


    According to Christopher Bledsoe, Co-Founder and CEO of Ollie,
    the company managing the ALTA’s co-living apartments, these
    co-living suites earn an average of 44% more income in rent per
    sq. ft. than the conventional 297 luxury apartments at the 43-story
    tower. The net operating income from these units is 30% more per
    sq. ft., even with the extra cost of co-living amenities.


    Student Housing

    Once considered a niche subset of the rental housing sector,
    purpose-built student housing has matured into an institutionally
    acceptable asset class. An increase in college enrolment and a
    lack of investment in on-campus housing have together created
    a housing shortage for college students in many markets, writes
    Paula Poskon, Founder, STOV Advisory Services. Developers
    have been seeking to fill this with off-campus student housing.

     

    The student housing sector has been attracting more interest
    and capital. Over 1.5 M students are enrolled in Canadian postsecondary institutions and generate a huge demand for housing.
    A recent report in the Economist revealed that student housing
    attracted US $16 B worldwide investment in 2016, as sovereign
    wealth funds increasingly target the sector.
    Since 2016, CPPIB along with its partners, GIC and The Scion
    Group LLC, have invested over US $40 B in student housing
    properties in the US. 

     

    “We are 10 to 15 years behind those markets, even though
    our student population is growing at a much higher rate fuelled
    by both domestic enrolment and our increasing share of
    international students.”


    ASH REIT, which focuses on student housing, launched in July
    2018. Since then, the private REIT has acquired seven properties
    across Ontario containing more than 3,300 beds. Included in this
    total is a four-building portfolio which was purchased at the end of
    Q1 of this year.


    Former professor Chris Galea, Founder and President of Micro
    Boutique Living, has two apartment buildings in Wolfville and
    Antigonish, with a third in Charlottetown under development.
    The buildings offer fully-furnished units that are 300 sq.ft. in size
    with a full kitchen and bathroom. Depending on the location, the
    apartments start at about $800 per month for a school-year lease,
    with a full-year lease starting at $695 per month.


    Seniors Housing
    An important factor in driving demand for facilities that cater to
    seniors’ needs is the growth in the population aged 85 and older.
    Canadians in this age group also show a strong tendency toward
    collective dwellings, with 31% living in this type of housing in 2017,
    according to the PwC Emerging Trends reports.


    In its May 2019 regional reports for the asset class, CMHC
    reported that the vacancy rate for seniors’ residences went up
    over the past year in British Columbia, Nova Scotia, Quebec, and
    Saskatchewan. Vacancy went down in Alberta, Manitoba, Ontario,
    New Brunswick, Prince Edward Island, and Newfoundland.
    In Ontario, the vacancy rate for standard spaces remained
    relatively unchanged, dropping to 10.3% from 10.4%. The average
    rent for a standard space increased by 3.9% to $3,759.
    The vacancy rate for standard spaces in Quebec stood at 7.2% in
    2019, compared to 6.9% last year. The average monthly rent for
    standard spaces was $1,788.


    The overall vacancy rate for independent living spaces in seniors’
    residence across British Columbia increased for the first time
    since 2012, from 3% in 2018 to 4.2% in 2019. Average rent for
    independent living space in BC increased by 5.4% to $3,275
    in 2019.


    At the end of 2018, Revera has announced a JV with Edmontonbased ONE Properties to develop new retirement communities in
    key Canadian urban markets.


    The first project the two companies will build together is Clifton
    Place, a 290-unit community in Edmonton with a range of agein-place options for independent living, assisted living and
    memory care.


    Ventas announced in June that it had acquired a Class A portfolio
    of 31 purpose-built seniors housing communities and four inprogress developments in the Quebec market by investing through
    an 85/15 percent equity partnership with Le Groupe Maurice.
    The portfolio is valued at C$2.4 B, including construction in progress. 

    THE CREATION OF AFFORDABLE HOUSING IS A TOP PRIORITY ACROSS ALL LEVELS OF GOVERNMENT

    Over 1.6 M Canadian households are considered in “core housing
    need,” meaning that people live in places that are too expensive
    or unsuitable.


    In November 2017, the federal government unveiled its
    10-year, $40 B National Housing Strategy (NHS), which is being
    administered by CMHC.


    Part of the National Housing Strategy (NHS), the Rental
    Construction Financing Initiative provides low-cost loans to
    encourage the construction of rental housing, which is affordable
    to middle-class Canadians across the country. The initiative has a
    total of $3.75 B in loans available to encourage the construction of
    more than 14,000 new rental housing units.


    The federal government has promised to pour more funds into its
    low-cost loan fund to support the construction of rental housing.
    A top-up was announced in the 2019 budget which would amount
    to $10 B over nine years.


    Regions across Canada have begun to unveil their latest initiatives
    aimed at boosting local affordable housing supplies.

    The new plan has received the endorsement of both BILD
    and REALPAC.


    As part of its Housing Vancouver strategy, the city has
    implemented the Moderate Income Rental Pilot Program as well
    as Rental 100 strategies to help it reach its goal of creating 20,000
    new units of market rental housing by 2027.

    The Moderate Income Rental Housing Pilot Program encourages
    development proposals for new buildings where:
    • 100% of the residential floor area is secured rental housing
    • At least 20% of the residential floor area is made available to
    moderate-income households earning $30,000 to $80,000 per
    year


    The pilot program will select up to 20 proposals for submission of
    rezoning applications between January 1, 2018 and July 1, 2019.
    Developer incentives include increased density, development
    charge waivers and expedited processing.


    Rental 100 encourages projects where 100% of the residential
    rental housing units are secured for 60 years or life of the building,
    whichever is greater. Similar incentives are provided and also
    include the relaxation of unit size to 320 sq. ft. (provided the
    design and location meet the city’s liveability criteria).


    The theory is that more market rental housing gives higher-earning
    residents more options to choose from, lowering the pressure on
    demand for lower-priced rental units.


    Action Ottawa is the city’s primary program for increasing the
    supply of low-income affordable housing in Ottawa. Action
    Ottawa combines city incentives with funding from all three
    levels of government to help private and non-profit developers
    build new affordable rental housing for moderate and
    low-income households.


    Ottawa Community Housing acquired 933 Gladstone Avenue
    along the O-Train corridor. The 7.4-acre site was bought from the
    Canada Lands Corp. for $7 M in May 2017. The OHC is planning
    a mixed-income community for the “Gladstone Village” made up of
    subsidized housing and market-value housing.


    Montreal will be tabling a bylaw in June requiring condo
    developers to build a certain number of off-market units for every
    new residential tower they build. In October of last year, the city
    announced a plan to create 12,000 social and affordable housing
    units on the island by 2021.


    As part of the plan, the city would also pass a bylaw approving
    a $50 M loan over 10 years to buy buildings or land that comes
    up for sale in order to develop community and social housing.
    Montreal is in the process of acquiring 3,000 housing units and
    has started building 300 homes.


    Edmonton is tackling the affordability by launching a ‘missing
    middle’ infill design competition. The ‘missing middle’ refers to low
    rise multi-unit housing which is the type of housing the city says
    is essential to creating complete communities with a variety of
    housing options for people at every stage of life and income level.


    The city is soliciting proposals to design a multi-unit, mediumdensity, or ‘missing middle’, housing development on five City of
    Edmonton owned parcels of land at the northeast corner of 112
    Avenue and 106 Street in the Spruce Avenue neighbourhood.
    The winning team will be given the opportunity to purchase the site
    and build their winning design. 

    CONSTRUCTION COSTS KEEP RISING

    Developers are shortening the time period between unit sales
    and construction start to minimize unforeseen construction
    cost increases.


    Real estate projects across Canada totalled $210 B in construction
    costs last year, led by $87 B in 1,550 residential projects.
    Approximately 210,000 new homes are expected for 2019, with an
    additional $85 B in residential renovations projects in the pipeline.


    Construction cost increases are projected to average 6% to 8% in
    2019, according to BTY Group’s annual Market Intelligence Report.


    A high-quality 2,000 sq. ft. detached house would cost up to
    $500,000 in hard construction costs to build in Vancouver. In
    Toronto, this house would cost $430,000 and in Ottawa, Calgary
    or Edmonton, the cost would run around $360,000, according to
    the Altus Group’s Canadian Construction Cost Guide 2019.


    Construction costs have jumped 23.6% since 2004 in the US,
    according to “What’s Up With Construction Costs?” a report by
    BuildZoom Economist Issi Romem. The housing cost spike that
    started in the mid-2000s at the tail end of the pre-Recession
    building boom was initially caused by increases in material costs;
    the continued rise is now mostly a factor of rising labour costs.


    Romem notes that the key drivers of construction costs are still
    “lots and local regulations,” the combination of high land prices
    and restrictive land-use policy. But in especially expensive metros,
    labour costs have also vastly accelerated the cost of construction.


    In fact, a study commissioned by Altus concluded that rising
    construction costs would be one of the biggest challenges facing
    developers globally over the next 5 years.


    Increasing construction costs are being felt most heavily in the
    high-rise sector in Toronto, says Paul De Berardis, Director of
    Building Science and Innovation for the Residential Construction
    Council of Ontario (RESCON).

     

    De Berardis points to the RLB Crane Index, which tracks the
    number of cranes towering above 13 cities across North America.
    The latest index counted more cranes in Toronto than in New York,
    LA and Chicago combined. With a limited pool of skilled trades
    and developers competing for both access to that labour as well
    as materials — including cranes — to get projects underway,
    contractors have been able to charge more and more.
    “Everyone’s competing for these limited resources,”
    De Berardis continues.


    Indeed, a skilled labour shortage in Ontario in the past three
    years has slowed the growth of construction companies,
    prompting some to turn down work and others to decline to bid on
    projects, according to the 2019 Contractor Survey, by the Ontario
    Construction Secretariat. Of those surveryed, 59% said the
    shortages led to significant increases in project costs.

     

    Labour shortages are expected to worsen. In the next 10 years,
    about 91,000 construction workers are expected to retire, 40,000
    of whom are in the GTA, says Katherine Jacobs, Director of
    Research at the Secretariat.


    The recently removed US tariff on Canadian steel and aluminum
    will provide some relief to costs, given that steel is a main
    structural component of condos. However, HVAC costs are up
    about 30% while rebar and glazing have jumped about 20% in the
    past three years, reports Phil Pavitt, Director, BTY Group.


    Niall Finnegan, co-founder of a cost consultancy company,
    Finnegan Marshall Inc., says that rising soft costs are a big factor
    in the highrise sector. Increases in city development charges,
    land costs, school board levies and commissions have all
    increased soft costs to about 75% of hard costs and all contribute
    to higher sales prices.


    According to BILD, government fees, taxes and charges have
    been adding as much as 25% the cost of an average new home
    in the region.

    AMENITY REQUIREMENTS SHIFTING ALONG WITH DEMOGRAPHICS

    The growth of the Boomer and Millennial age groups across North
    America is forcing landlords to pay closer attention to the demand
    of these cohorts.


    The millennial generation made up 22% of Canada’s population
    and surpassed 37 million as of July 1, 2018.


    The age group that now encompasses the boomer generation
    makes up 27% of the population, compared with 18% in that age
    group two decades ago.


    According to Environics Analytics, millennial households account
    for 19% of all households, approximately half the number of
    households headed by baby boomers. However, over the next 10
    years, as mortality shrinks the baby boom generation, the number
    of households headed by millennials will start to exceed those
    headed by baby boomers.


    These two divergent generations are primary drivers of demand
    in the apartment market. Millennials preferring the flexibility that
    renting affords while boomers are downsizing and are choosing
    the convenience of maintenance-free living.


    “The American dream has been redefined and ... I think it comes in
    that aspect of homeownership and the white picket fence ... I think
    that white picket fence moving forward might be a Starbucks and a
    gym,” Altus Group US Director of Research Chuck DiRocco said.

     

    An increasing number of baby boomers are choosing renting over
    buying because there are fewer financial strings attached and less
    hassle related to property upkeep. Moreover, renting puts people
    in prime locations, within walking distance to jobs, shops, and
    entertainment, which would perhaps be hard to get in otherwise,
    according to US rental search company RentCafé.


    Community and neighbourhood amenities are the focus of the
    latest trends. Having a recreational center on site and planned
    activities to engage in with neighbours are some of the most
    sought-after amenities for the Boomer age group. Living in a
    neighbourhood that provides easy access to public transportation
    or walkable communities that have grocery stores, restaurants,
    and healthcare facilities within walking distance is high on the list
    of demands.


    While smart apartments are resonating with millennials, technology
    is also appealing to older renters. In a recent US survey, 80%
    of Boomers are interested in new technologies to reduce their
    home expenses, such as smart thermostats or apps to control
    appliances. 76% are interested in technologies to monitor their
    health at home, such as sensors, alerts, or medication reminder
    apps, Multifamily Executive reports.

    Millennials are choosing to live in smaller units than boomers and
    with smaller apartment units come larger common areas. Bisnow
    reports that “having access to quality common areas and coworking spaces has become paramount for apartments built in the
    metros millennials are flocking to.”


    A recent survey of 1,000 US multifamily renters conducted by
    lock manufacturer Schlage and Wakefield Research shows
    that millennials are overwhelmingly willing to pay more for an
    apartment equipped with automated or connected devices.
    The survey indicated that millennials are even willing to
    sacrifice other amenities, such as a parking space, to live in a
    smart apartment.


    Landlords are discovering that today’s renters are looking for a
    community that offers more than a pool and a gym.


    “As technology gets more advanced, so do amenities,” says
    Caitlin Walter, Vice President of Research at the National
    Multifamily Housing Council. “The old fitness center with treadmills
    and weights isn’t going to cut it. Now, renters want a Peloton.”


    Developers are cautioned to look at overarching trends and
    determine how to apply them to their specific development.


    Some landlords are turning to companies like Amenify to assist
    them with providing amenities to the residents. Amenify is a
    resident experience platform which provides a turnkey solution for
    amenity services. Amenify handles all the work for services such
    as pet care, fitness, cleaning, ride sharing and concierge support.
    In March, Amenify raised US $2.7 M led by RET Ventures.

    REPOSITIONING OLDER ASSETS TO REMAIN COMPETITIVE

    Older buildings are vying for tenants against brand new builds
    and condos in Canada’s major cities.


    Older apartment buildings are competing for tenants alongside
    newly built apartments and condos. Landlords are finding ways
    to reposition their buildings to stay competitive by adding high
    demand amenities and by making cost-saving retrofits.


    Building owners are upgrading their amenity packages to include
    smart devices. The next generation of smart devices, such as
    energy-efficient lighting controls and intelligent thermostats gives
    tenants the ultimate control over their own environment. These
    amenities can generate substantial efficiencies in energy use that
    can help control operating costs while appealing to environmentally
    conscious and tech-savvy tenants.


    Redevelopment is also focused on creating collaborative group
    space, like gathering and community space in common areas.
    “Tenants are looking for gathering spaces and common areas that
    promote interaction, such as dog runs, outdoor grills and eating
    areas, and recreation spaces such as putting greens, nature
    trails, and bocce-ball courts,” says Tim Lee, Principal at Olive
    Hill Group. “It’s important to incorporate these spaces in modern
    multifamily renovations.”

    “We’ve started putting fitness centers into our older buildings,
    because people really do expect it,” said Laurie Zucker, the Vice
    Chair of Manhattan Skyline, which owns and manages several
    thousand apartments. The conversion from oil to gas heating
    freed up rooms that had housed mechanicals, enabling them to
    repurpose the space.


    Manhattan Skyline has also tweaked the offerings at West River
    House on West End Avenue at 81st Street, a 1983 apartment
    house where the “amenities floor” included three racquetball courts
    and a fitness center. Both to address the changing demographics
    of the building and to compete with new properties, two of
    the racquetball courts were sacrificed to expand the workout
    facility and to build a playroom for younger children, as well
    as a multipurpose room with a Ping-Pong table for teenagers,
    according to an article in the New York Times.

    Mike Mulqueen, Lead, CDM Business Development (MURB) at
    Toronto Hydro says that the most popular retrofit that apartment
    buildings are undergoing is lighting upgrades which accounts for
    70% of the projects that he sees.


    More apartment owners are making mechanical replacements
    and realizing significant savings. “Increasingly we’re starting to
    look at some of the smaller motors in buildings such as fan coil
    replacements,” said Mulqueen. “These are fractional horsepower
    motors but collectively consume a lot of energy. There are new,
    highly efficient Electronically Commutated Motors (ECM) in the
    market now that for a small increase in cost can save between
    30-40% of the energy consumed by these units.”


    To improve the efficiency of older buildings, the tightening of the
    building envelope during renovations is important in terms of
    energy efficiency and cost savings. In both older mid- and highrise residential buildings, replacing conventional double-glazed
    windows with triple-glazed units can improve various aspects
    of the building envelope’s performance, reports John Losak,
    Principal of Kasol Building Sciences Ltd.


    At the Harvard Business Review, Dell and Intel co-sponsored a
    piece that states “the rapid introduction of new IoT solutions allows
    building operators to make their properties smarter without having
    to undergo costly retrofits.”


    Wi-Fi is being used to bring intelligent building systems to
    older apartments. “We are looking more and more into wireless
    technologies and putting infrastructure into the cloud as much
    as possible for storage and data management,” said Anil Ahuja,
    President of CCJM. “Wireless technologies are also the key to
    making the built environment of ‘dumb buildings’ more smart
    [because] we don’t have to open up the floors and the walls [to
    update infrastructure].” 

    MANY NEW RESIDENTIAL DEVELOPMENTS ARE UNDERWAY ACROSS CANADA

    In response to huge demand, developers are building purposebuilt rentals at rates unseen in decades.


    With 1,849 new rental units beginning occupancy since in the
    first quarter of 2019, GTA rental completions have reached a 25
    year high according to a report from Urbanation. A total of 42,841
    purpose-built rental apartments were proposed for development
    but had not yet started construction as of Q1 2019. The number
    of purpose-built rentals under construction in Q1 2019 was 10,694.


    As part of the Well development, RioCan and Woodbourne have
    partnered to deliver more than 900 purpose-built rental suites
    in three buildings. “The residential apartments we’re building
    encompass a mix of one-, two- and much-needed three-bedroom
    suites,” said Woodbourne president Jake Herman. “The state-ofthe-art amenity space will include a fitness centre and wonderful
    outdoor living spaces.”


    Two new market rental buildings have been proposed for the
    site of Sunnybrook Plaza in Leaside. RioCan REIT has teamed
    up with Concert Properties and has revised the original plan
    and will include a 16 and 11 storey development containing a
    total of 417 rental units. The buildings will contain retail and
    office components.


    In February, Zahlco Developments announced it had purchased
    two Brantford properties for the development of a nine storey,
    205 unit rental apartment with ground floor retail space and
    adjacent townhomes. Brantford has one of the lowest vacancy
    rates in Canada.


    In October 2018, Habitations Trigone and its partner, Fonds
    immobilier de solidarité FTQ, broke ground on a new rental
    project, Viva-Cité Saint-Constant. Phase 1 will consist of 154
    apartments and construction on Phase 2, which will consist of
    174 units, will begin in the summer. The apartments are geared to
    the over 55 age group and will feature many condo-like amenities.


    Groupe Mach’s redevelopment of the CBC tower and the land
    located west of the site is a 4.5 M sq. ft. mixed-use project that
    will see the construction of approximately 15 new buildings. The
    Quartier des Lumières will include more than 3,000 residential
    units comprised of condos and rental apartments. Construction is
    expected to begin in 2020.

    Brivia Group plans to build Montreal’s tallest residential tower,
    the $400 M, 61-storey 1 Phillips Square, as part of a phased
    billion-dollar development in the city’s downtown. The first tower
    will contain more than 500 units. Amenities include about 10,000
    sq. ft. of common areas on the 50th floor, including an outdoor patio.
    There will be lockers for Amazon-type parcels (some refrigerated), a
    pool, water features, spa, gym, yoga studio, lounge and juice bar.

     

    In Ottawa, this fall, Timberbank will deliver three midrise rental
    buildings containing almost 350 units as part of its Heron Gate
    multi-billion dollar development. The development, once fully built
    out, will contain approximately 5,500 units in 57 buildings. Up to
    20% of the units will be deemed affordable.


    At the beginning of the year, Colliers reported that in Edmonton
    alone, there were seven residential projects underway, which were
    slated to add approximately 1,540 units to the downtown market.
    An additional seven residential projects with a total of 3,200 units
    were in preliminary stages. CMHC estimates that 38% of condos
    are investor-owned in Edmonton.


    Battistella Developments is building a 19-storey tower in Calgary’s
    Beltline. The 177 condos are being marketed to the investor
    market. The building “Nude” sold 20 condos in the first month of
    marketing. It is slated for completion in 2021.


    “We are bullish on the Calgary rental market,” Chris Pollen,
    Battistella’s Director of Sales and Marketing, told Western Investor
    in November. He explained that the rental vacancy rate in the
    Beltline is closer to 3% and that recent new concrete rental towers
    in the zone are fully tenanted. Unlike BC, Alberta has no foreignbuyer tax, no speculation tax and no rent controls.


    Early this year, GWL Realty Advisors broke ground on a 21-storey
    market rental tower at 1500 Robson Street in Vancouver’s West
    End. One-third of the building will be made up of 2 & 3 bedroom
    units suitable for families.


    The building has both indoor and outdoor amenities such as
    fitness, yoga and lounge rooms as well as a rooftop patio with
    an outdoor fireplace, seating area and dining space being
    incorporated into the building’s design. The penthouse floor of the
    tower has been set aside as a common area for all tenants, and
    the building will be pet and cyclist friendly.

    LRTS = TODS

    Major transit investment in Canada’s largest cities is presenting
    new opportunities for developers.


    Ottawa’s new LRT is set to open sometime in 2019 and
    development has started to sprout up around the new lines.
    Trinity Group Inc. is building a group of three towers ranging
    in height from 50 to 59 storeys near the planned Bayview light
    rail station.


    Developments in Lebreton Flats and in Little Italy will also benefit
    from the new light rail transit system.


    “With the graduation of transit service to rail, you’re seeing a new
    generation of buildings that are a notch up in sophistication,” says
    Alain Miguelez, a Project Manager for Community Planning with
    the City of Ottawa. An example is the newly built 45 storey Icon
    development located at the Carling Station.

     

    In Toronto, thousands of residential units are in various stages
    of development along the Eglinton Crosstown, which is still
    under construction.


    Contributing to this number will be the redevelopment of
    Celestica’s 60.5-acre campus at Don Mills. Aspen Ridge acquired
    the site for $347 M earlier this year.


    The master plan for the site includes 18 condominium buildings,
    30 townhome buildings, 300,000 sq. ft. of office space and retail,
    more than five acres of parks and playgrounds, and a large
    community centre complete with two hockey rinks, a basketball
    court and a full gym.

    Brookfield, InterRent REIT and CLV Group have entered into a
    JV to develop three sites totalling 8.5 acres at the Burlington GO
    station. The three parcels are located on Fairview Street and were
    acquired for approximately $65 M.


    The multi-phase mixed-use development features access to the
    GO train and the 403/QEW highways.


    A significant mixed-use redevelopment is coming to a 5.1-acre
    property at the southwest corner of No. 3 Road and Alderbridge
    Way in Richmond BC – across the street from the Canada Line’s
    Lansdowne Station. The ‘Atmosphere’ complex will contain seven
    buildings totalling 932,000 sq. ft., including 650,000 sq. ft. of
    residential space, with a mix of market, rental, and affordable
    housing options. Over 600 residential units will be built.


    Owners Westbank and QuadReal are planning a multi-phased
    redevelopment of Oakridge Centre located at West 41 Street and
    Cambie. The 29-acre redevelopment will include a renovated
    Oakridge Centre Shopping mall and once complete will contain
    a million sq. ft. of retail space, 500,000 sq. ft. of office and
    approximately 2,600 homes. It is located by Canada Line’s
    Oakridge - 41st Avenue Station, which is getting major upgrades.

     

    Cadillac Fairview will be developing a new suburban downtown
    area around its CF Fairview Pointe-Claire mall in Pointe-Claire,
    on Montreal’s West Island.


    The project will include a mix of condos, townhomes, hotels and
    other uses on land surrounding CF Fairview Pointe-Claire. A new
    REM LRT station will service the site.


    In Edmonton, the City has partnered with Brookfield to prepare
    a 7.5-acre former lumberyard for sale to developers. The site is
    located along the northeastern light rail line.

    GOVERNMENT POLICIES HELPING TO GET APARTMENTS BUILT

    Despite slow approval processes, new government initiatives appear
    to be aiding in the construction of new apartment buildings.


    A new white paper published by the Ontario Building
    Officials Association reports that current approval processes
    hamper the development of affordable housing in Ontario.
    The paper estimates that 

    “Premier Ford announced $1 B in funding for affordable housing
    last month, and the Prime Minister committed another $1.3 B
    before that, but cumbersome processes are going to delay making
    that housing available to the people who so desperately need it,”
    says OBOA President, Matt Farrell. “We applaud this commitment
    to funding and are encouraged by current efforts to review the
    development process for efficiencies that can save government,
    businesses and residents, time and money.”


    As part of its National Housing Strategy, the federal government
    envisions 42,500 units of new rental supply will be built Canadawide for tenants with modest to low incomes, leveraging the Rental
    Construction Financing Initiative. Almost two years since the
    program was launched, only five projects encompassing 500 units
    have been approved under the program launched in 2017, but the
    2019 budget reports “more than 50 projects have been prioritized to
    receive a loan.”


    A massive LPAT appeals backlog is holding up the construction of as
    many as 28,000 housing units in Toronto, according to the Toronto
    Region Board of Trade.

    Despite these delays, Urbanation reports that 10,694 apartments
    units were under construction at the end of the first quarter.
    In addition, Greenwin Inc. and Choice Properties REIT completed
    the acquisition of the 0.9-acre parcel of land located at 26 Grenville
    St. and 27 Grosvenor St. in downtown Toronto, in April of this year.
    The two-tower development will contain 700 purpose-built rental
    units, 30% of which will be maintained as affordable rental housing
    for a period of 40 years.

     


    The purchasers acquired the property as part of the Provincial
    Affordable Housing Lands Program, established to leverage
    provincial land assets for development of market and affordable
    housing across Ontario.

     

    In Vancouver, the Moderate Income Rental Housing Pilot Program
    aimed to approve up to 20 projects by its closing date of July 1. So
    far, applications have included proposals for 14-storey high-rises on
    East Hastings St. and five-storey low-rise projects in Kitsilano and at
    Renfrew and Broadway, Postmedia reported in May. In total, 7 of the
    20 proposals have begun the rezoning process.


    Under this program, PCI Developments has proposed two buildings
    on East Hastings that would produce 212 rental apartments, 43 of
    which would be rented at non-market rental rates.


    In Coquitlam alone, there are three new non-market rental projects
    are about to break ground, with help from provincial funds, money
    from the city’s affordable housing reserve and incentives, such as
    reduced parking and higher density.

    • The Concert Properties will get $10 M in provincial funding for
      their 551 Emerson Street development. The rental project will
      see the construction of 100 affordable units in a 200 unit tower,
      with rents tied to income for seniors, families and people with
      disabilities. The remaining units will be rented at market rates.

    • At 2905 Glen Dr., the Community Land Trust, the real estate
      arm of the Co-operative Housing Federation of B.C., will receive
      $13.1 M to build 131 units for families at the site of the Hoy
      Creek Housing Co-op.

    • At 3100 Ozada Ave., the Affordable Housing Societies has
      received $7 M to build 70 units of affordable housing in an
      apartment building on the side of the site, which has a number of
      rental townhomes on the property.

    • Coquitlam has 4,000 purpose-built rental units in the
      works, approximately a quarter of which are earmarked as
      non-market rentals.

    CANNABIS LEGALIZATION - LANDLORDS NAVIGATE NEW TERRITORY

    In Year One of the legalization of pot, balancing the rights of
    tenants has become a challenge for some landlords.


    The Smoke Free Ontario Act says that you may not smoke in
    elevators, stairwells, hallways, parking garages, laundry facilities,
    lobbies, exercise areas and party or entertainment rooms. This
    applies to both condos and apartment buildings.


    The Act restricts cannabis smoking to wherever tobacco smoking
    is allowed, and this can be further limited by municipalities or
    property owners. Landlords can also add terms to new lease
    agreements prohibiting cannabis use in rental units. However,
    landlords generally cannot change the terms of existing leases.


    Apartment owners and condo corporations are free to set
    restrictions in rental agreements, leases and bylaws, including
    making individual apartment units, wings, or entire buildings
    smoke-free.

    Condos must amend their by-laws if they want to create nonsmoking buildings.


    Apartment buildings can include provisions in their leases to
    restrict smoking, however, it is not entirely clear whether this will
    be upheld by the Landlord and Tenant Board, Shira Kalfa of Kalfa
    Law writes.


    Whether a tenant can have a disability-related right to grow
    medical cannabis in a rental unit is still an unanswered question.
    Home cultivation is a concern for many landlords because the
    best conditions for cannabis growth include warm temperatures,
    extensive lighting and high humidity, thus creating the potential for
    property damage or fire risks.


    The right to consume medical cannabis is protected by provincial
    human rights legislation, but this may not be the case for
    cannabis growth. 

    An amendment to the Residential Tenancy Act, Bill 30, which was
    introduced by the BC government in April 2018 now grants landlords
    the right to retroactively prohibit both smoking and growing cannabis
    in all residential units. This means landlords can update current
    leases to ensure their “smoke-free” designation isn’t just limited to
    tobacco. Tenancies with agreements that do not address the smoking
    of tobacco will also be considered cannabis-friendly.

     

    In Ontario, the province’s tenancy laws currently make it illegal
    to modify a rental lease before that lease comes due. Landlords
    will be unable to regulate cannabis consumption in their apartment
    buildings with existing tenants—only with those who apply for
    tenancy after legalization takes effect.


    Similarly, in Alberta, renters living in multi-family dwellings may
    be restricted from smoking and growing cannabis based on
    rules established in rental agreements moving forward, but
    not retroactively.


    According to a new survey of BC multi-unit housing residents
    commissioned by the Clean Air Coalition of BC, the majority
    of residents said they would support government measures to
    increase BC’s stock of 100% smoke-free multi-unit housing.


    David Hutniak, CEO of LandlordBC, states, “second-hand smoke
    grievances are a key source of tenant complaints.”


    This Summer, non-profit developer Options for Homes is launching
    its latest development, The Humber. It will be Toronto’s first
    smoke-free condo building, limiting the consumption of tobacco
    and cannabis to vaporizers. As well as being family-friendly, this
    eliminates the problem of smoke pollution, smoke transfer between
    suites and balcony fires in multi-unit residences.


    The Humber, which will be located in Toronto’s west end will rise
    22 storeys and feature 232 suites in a mix sizes, including five
    townhome-style suites, with two-thirds of suites in two- and threebedroom configurations suitable for families.

     

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    Real Insights is powered by Altus Group’s Investment Transactions research. For more information, please visit altusgroup.com.

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