Industry Leaders Blog
Blog Home All Blogs
Our Industry Leaders Blog brings you news and commentary about the diverse forces that shape our industry.

 

Search all posts for:   

 

Top tags: #Retail #Canada #2020MarketUpdate  2020Trends  CECRA  ExpertPanel  OfficeMarket  REIT 

Key Trends at the Port of Vancouver

Posted By Kelley Ollinger, Wednesday, August 26, 2020
Updated: Tuesday, August 4, 2020

As part of the Lunch with NAIOP’s webinars series, Tom Corsie, Vice President of Real Estate, and Katherine Bamford, Director of Trade Development, from the Port of Vancouver offer an enriching discussion. Providing an overview of the Port of Vancouver’s role as the largest landlord of industrial real estate in the Lower Mainland, Tom and Katherine touch on the port’s real estate and how it’s been impacted through the pandemic. Below are some key insights from the webinar.


To learn more, you can watch the webinar in its entirety by following this link.

The Role of the Port of Vancouver

Put simply, the Vancouver Fraser Port Authority is an arms-length federal agency responsible for stewarding the lands and water of the Port of Vancouver. Mandated to facilitate Canada’s trade objectives while ensuring goods are moved safely, the port authority additionally keeps its focus on protecting the environment while giving consideration to the impact on local communities. Able to lease federal lands to terminal operators, much of the revenue generated by the port come from tenant rent and user fees. With a vision to be the most sustainable port, the Port of Vancouver describes such sustainability as one that delivers economic prosperity through trade, maintains a healthy environment and enables thriving communities.

Canada’s Largest Port    

The Port of Vancouver is Canada’s largest - even larger than the combined size of Canada’s next 5 largest ports. An economic driver, the port contributes upwards of 115,000 jobs across Canada and supports trade with over 170 countries. A complex landscape, the port borders 16 municipalities (when other ports commonly border only one), and it intersects with traditional territories and treaty lands of several Coast Salish First Nations. Required to be entirely financially self-sufficient, the port relies on tenant rents and user fees that it then reinvests in port infrastructure projects.

Real Estate at the Port of Vancouver

The port authority collects approximately 160 million dollars in rent annually, which accounts for roughly 60% of the port’s total revenue. As the largest landlord of industrial real estate in the lower mainland, their real estate portfolio includes land both above and below the water. Of the 3,700 acres above water, 2,800 acres are leased, and, of the 13,000 acres submerged, 3,300 acres are leased. With so much leased land, the port manages 1,400 property agreements at any given time. Contributing to 27% of jobs, and 40% of the GDP, the port is working hard to protect industrial land (currently only 4%) from being incrementally converted by local municipalities into non-industrial uses.

COVID-19’s Impact on the Port of Vancouver

The Port of Vancouver’s cargo mix offers resiliency in an otherwise challenging time. With primary cargo categories including bulk, containers, breakbulk (lumber, pulp, project cargo and steel), automobiles, and cruise, a downturn in one cargo type, has been buffered by an increase in another. The cruise industry as an example in down 100%, but, as of April 2020, bulk (including grain and coal exports) has risen 6%. As of April 2020 YTD, the total cargo was up 1% which may bode well for the remainder of the year.


For additional COVID-19 resources, NAIOP encourages members to refer to the NAIOP Vancouver website, follow along with the Lunch With NAIOP Webinar Events, and follow NAIOP on LinkedIn, Twitter, Instagram and YouTube.


This post has not been tagged.

Share |
Permalink
 

Beyond the New: Creating a Better Normal

Posted By Kelley Ollinger, Wednesday, August 19, 2020
Updated: Tuesday, August 4, 2020

As part of the Lunch with NAIOP’s webinars series, speaker, Sunny Ghataurah (of AES Engineering), offers trends and insights into tech as it pertains to our post-pandemic world. Helping to increase business efficiency, attract talent, and harness powerful data through analytics, Sunny shares his thoughts on how to embrace technology including several technological advancements. Below we’ve listed only some highlights from this interactive webinar which will help to uncover the potential for our ‘new normal’.  


You can learn more including watch the webinar in its entirety by following this link.

Technology in the Workplace

When it comes to Millenials, Sunny illustrated the importance of technology as employers look to attract talent. “What they’re looking for in the workplace is technology”, Sunny said, “and how we can add tech to places is being used as a driving factor as to whether they’d come to work at that place…”. Upon polling NAIOP’s audience, most respondents reflected this notion too when they reported that technology will be at the forefront, rather than an afterthought, of their future project design criteria. 

Moving Beyond Location, Location, Location

Location, location, location, the popular (and commonly accepted) mantra meant to reflect the most important consideration when procuring real estate, needs a little updating according to Sunny. Though still relevant, Sunny suggested three new real estate rules - location, analytics, and user experience. Identifying user experience as the most important, Sunny shared how a great experience allows a user to forget (or overlook) other potential downfalls - things like the elevators being too slow. 

The New Norm

Highlighting a graph containing data from IoT Analytics, Sunny outlined predictive research which suggests that connected buildings will be considered ‘the norm’, a standard similar to the acceptance of LEED Gold, by the year 2030. Technologies like 5G and Wi-Fi 6 are expected to eradicate bottlenecks like connectivity and battery issues. And, sensor technologies, will offer predictive maintenance, sending alerts in advance of mechanical failures. Rather than reacting to an ‘out of order’ elevator or heat pump, sensors will communicate parts needing replacement. “These predictive analytics,” Sunny said, “will help us in deploying our assets differently.”  

The Bottom Line

The rapid response to COVID-19, including work from home mandates, only highlighted the importance of workplace technology. Working to increase efficiency, preserve assets, and attract talent, technology must be top of mind as we evolve through the pandemic. To drive home this point, Sunny shared a relevant quote from his colleague, Andrew Elliott of Foleys Candies. “Businesses that wait for the return of yesterday will fail”.


For additional COVID-19 resources, NAIOP encourages members to refer to the NAIOP Vancouver website, follow along with the Lunch With NAIOP Webinar Events, and follow NAIOP on LinkedIn, Twitter, and Instagram.

This post has not been tagged.

Share |
Permalink
 

Perspectives on a Changing Business Environment

Posted By Kelley Ollinger, Wednesday, August 12, 2020
Updated: Tuesday, August 4, 2020

As part of the Lunch with NAIOP’s webinar series, NAIOP Vancouver President, Jason Kiselbach hosts NAIOP’s Corporate President and CEO, Tom Bisacquino, and the 2020 Director, Larry Lance. Sharing insights from their perspective as leaders of our 20,000 member-strong organization, Tom and Larry shed light on the impact of the current pandemic, their predictions for the future, and the strength of the NAIOP membership. Below are only some of the highlights from this compelling webinar.


You can learn more in addition to watching the webinar in its entirety by following this link.

We’ll Persevere Together

Though it’s tough to argue the unique nature of the current pandemic, Larry, a 33-year NAIOP member, has endured four previous downturns, COVID-19 being his fifth. “While this is severe,” Larry said, “I’m calm compared to my early experiences.” His goal for the upcoming year, though he wished it to be face-to-face, is for NAIOP’s senior professionals to give back by mentoring and encouraging the younger members. Watching NAIOP’s memberships ebb and flow over the years (7,000 members when he joined, a dramatic drop to 3,800 in the early ’90s), Tom says topping 20,000 members reflects the strength in our chapter. 

A Forecast for the Future

Acknowledging the impact on the economy as swift and dramatic, Larry identified the material and economic effects in not only North America but the world. Doing nearly everything possible to provide economic stimulus, Larry recounted the efforts of the federal reserve (in the United States) as they cut interest rates to zero while injecting trillions of dollars into the economy. Providing a brief difference between the catastrophic economic shock of the 2008 rescission (a time where banks had only 4 billion in capital), Larry shared that supply is in check (pointing to the chance for greater resilience) with banks having roughly 1 trillion available in capital. Although transaction volume is down a staggering 70% (a stat from April 2020), Larry feels there may be growth experienced in the latter part of this year carrying through to 2024. 

Adjusting Priorities

Upon being asked how NAIOP has adjusted priorities in response to COVID-19, Tom said, “we are built for this type of crisis because content and information is king.” Previously selling 100 to 150,  approximate 16-hour on-demand events for anywhere between $295 to $695, over the last few months, NAIOP opted to offer these programs to members for free. Thrilled by the response, Tom recounted the 6,000 members who’ve signed up for these programs. “It’s incredible,” he said, “It really is.” In response to COVID-19, NAIOP pivoted, and they did it quickly. According to Tom, NAIOP is digging deep into content and research, working on learning what’s happening with members, their day-to-day issues, and what it is they want to know.

 

For additional COVID-19 resources, NAIOP encourages members to refer to the NAIOP Vancouver website, follow along with the Lunch With NAIOP Webinar Events, and follow NAIOP on LinkedIn, Twitter, Instagram and YouTube.

This post has not been tagged.

Share |
Permalink
 

Insurance & COVID-19 | Navigating the Crisis

Posted By Kelley Ollinger, Wednesday, August 5, 2020
Updated: Tuesday, August 4, 2020

As part of Lunch with NAIOP’s webinars series, Moderator Rachel Hutton (from Stikeman Elliott) and James Clay (from JT Insurance) discussed insurance in the context of COVID-19. Rachel and James provided insight on what NAIOP members should be doing now and areas that may not yet be on our radar. Below we’ve listed only some highlights from the webinar which will help you to gain a deeper understanding of the current dynamic within the insurance industry.


You can watch the webinar in its entirety by following this link .

A Hard Market Amplified by COVID-19

Although COVID-19 has certainly amplified challenges to the insurance industry, James was quick to illustrate why the pandemic is far from the only reason the industry is facing challenges right now. In the last quarter of 2019, the market had already started to shift from what was considered a ‘soft’ market - one with competitive insurance premiums, lots of capacity, relaxed underwriter scrutiny and plenty of competition - to a ‘hard’ market. Factors like global losses (primarily weather) and construction costs (which aren’t increasing at the same pace) have challenged the industry. Perhaps the most ‘press-worthy’ struggle though has been the impact to residential realty. With strata corporations seeing 30 - 40% rise in premiums and deductibles rising from $250,000 to $500,000 and higher, underwriters are being more cautious. COVID-19 has only amplified the challenges faced by the industry.

The Application of Business Interruption Insurance

Typically insurable events include something with geographic limitations and/or defined timelines - something not necessarily present with the current pandemic. Pandemics as such are essentially uninsurable events which isn’t to say that pandemic coverages aren’t being offered. As an example, James pointed to Wimbleton, an organization that has paid 2 million dollars annually for the last 17 years (34 million dollars paid in premiums to date). Wimbledon will claim 141 million dollars for the cancellation of the tennis event this year. Although much of business interruption might be uninsurable, James suggests to his clients to report all claims for all lines of business regardless of their likelihood to collect.  The reason? Some relief programs, the federal relief program being one example, state that the landlord or tenant sought to receive any insurance proceeds available to it. In this case, James says, it’s important to have and keep denial letters from the insurer to maximize the chances of benefiting from other relief programs.

Common Types of Claims

Business interruption is the insurance getting the most attention in conversation as it relates to COVID-19, but coverages like Third Party Liability and Directors and Officers; Cyber Risk; and Vacant and Unoccupied Locations are important too. While it could be challenging to entirely prevent COVID-19 in your business or your building, proving that you have developed and implemented appropriate protocols and procedures is crucial in mitigating liability. Also at risk in this sense are claims against directors and officers seen to show an inadequate response to COVID-19 along with failing to accommodate ill or affected employees. Training and procedures that help with cybersecurity are an important focus as so many employees transition to home-office. James suggests reminding employees to be hyper-vigilant in watching for cyber threats like phishing scams and zoom bombing.

The Bottom Line

With such a dynamic challenging market, it’s never been so important to leverage the help of an insurance broker. Helping a broker to understand your business, will help you in mitigating risk wherever you can. Rather than using your insurance broker transactionally, use them as part of your overall risk mitigation strategy.


For additional COVID-19 resources, NAIOP encourages members to refer to the NAIOP Vancouver website, follow along with the Lunch With NAIOP Webinar Events , and follow NAIOP on LinkedIn , Twitter , and Instagram .

This post has not been tagged.

Share |
Permalink
 

Construction During and Post Covid-19

Posted By Kelley Ollinger, Tuesday, July 21, 2020

As part of NAIOP’s webinars series, Moderator Loren Bergmann (of Workplace Strategies & CBRE) hosts an engaging and interactive discussion with Bill Tucker (of Omicron). Gleaning insight from Tucker with polling from the live webinar audience, Bergmann poses timely questions that help to reveal construction’s current COVID impacted status along with its potential outcome. Outlining refined systems, agility, and strong management as the key to success in these difficult times, below are only some of the highlights from this May 21st webinar.


You can watch the webinar in its entirety by following this link.

What’s The Impact of COVID on Omicron

Describing the initial COVID period as the ‘honeymoon’, Tucker identified Omicron’s ability to remain fluid in helping to navigate the lockdown’s initial impact. With each construction site functioning like individual businesses, Tucker saw quickly that setting standards across sites will enable the industry to thrive. “If you’re going to thrive, you really need to set a standard - you need everyone signing off the same song sheet. As a general contractor or the developer on a particular project, we have to set that standard, we have to set that bar.”  While things have been manageable thus far, Tucker sees difficulties in the weeks and months ahead, “We will start to see challenges like trade failures and supplier issues. We’ll start to see companies really getting stretched.”

Where is Construction Pricing Headed?

According to Tucker, pricing is likely to decrease over the short period (the next six months). Downward pressure on construction pricing will result from the Canadian Dollar as its been negatively impacted by oil; imports being impacted between Canada and the US; and, overall delays in the supply chain. Over the longer term though, Tucker says “...the whole industry is going to fight to get prices back up because we want to pay our people, we want to keep our people. People need to earn a living wage in many parts of this province.”

Will Project Scheduling Lengthen, Shorten or Stay the Same?

When polled, NAIOP’s webinar audience generally felt that scheduling was most likely to lengthen with COVID challenges, an opinion echoed by Tucker. Referring to the need for continuous adaptations to minimize schedule slippage, Tucker says scheduling will be an ongoing challenge. “The quicker we complete a project, the more profitable that project is.  I think we’re going to see no more than a 10% slip if we’re really careful, but it’s going to be management-intensive and it’s going to rely on cities being timely with permits, with approvals, with reviews, inspections etc. - that’s an externality that we haven’t really explored. We’ll need the whole market working together to meet those timelines.”

Should the Industry Expect Future Lockdowns?

Omicron anticipates future lockdowns and will work to embrace them. “If sites shut down, we’ll try and use that to our advantage”, Tucker said. “We’ll be more nimble to adapt to the new normal.” With a globally integrated supply chain, a light fixture could be purchased somewhere like Toronto or Chicago, but the parts that make up the light fixture could include components sourced from other parts of the world, creating a delay in the entire system. Omicron looks to pre-order materials, acknowledging that things won’t be moving at a usual pace. Tucker pointed additionally to Canadian alternate products in helping to maintain Omicron’s scheduling, “We’re working to have as many Canadian alternates products available as possible,” he said. 


For additional COVID-19 resources, NAIOP encourages members to refer to the NAIOP Vancouver website, follow along with the Lunch With NAIOP Webinar Events, and follow NAIOP on LinkedIn, Twitter, and Instagram.


This post has not been tagged.

Share |
PermalinkComments (0)
 

Financial Crisis? How COVID-19 has affected the lending landscape in BC

Posted By Kelley Ollinger, Wednesday, July 15, 2020
Updated: Friday, July 10, 2020

NAIOP welcomed two active local lenders (representing two prominent Canadian lending institutions) to discuss COVID-19’s impact on the lending landscape. Moderator James Paleologos (of Realtech Capital) posed timely and relevant questions to panellists, A.J. Delisle (of RBC) and Martin Matusiak (of Coast Capital) where these uncovered many realities of lending during these uncertain times. Below are only some highlights from the lively discussion featured during NAIOP’s May 14th webinar.

The Evolution of Lending Amid COVID-19

RBC and Coast Capital have a similar focus during these uncertain times. Rather than chasing new business - moving from a perceptibly ‘aggressive’ approach - these lenders have become increasingly offensive. Turning inward, both institutions have highlighted their client-focused approach - working to see first, that their existing customers are supported as best they can. “Rather than chasing deals”, Delisle said, “we’re working to help our existing clients.” Matusiak shared a similar sentiment, “...we want to ensure our existing clients are taken care of.”


Of course, the focus of business is only one shifting aspect of lending amid COVID-19. The manner in which transactions are processed has faced a rapid evolution too. From face to face meetings all but abolished, and roadblocks like ‘original signatures only’, both Coast Capital and RBC have made (and are making) rapid adaptations. Although fairly mobile-ready, Matusiak shares that Coast Capital placed added focus on their ‘back office’ embracing new technologies which includes the use of e-signature software in addition to implementing new policies too.

Shifts in Underwriting

Formal underwriting and qualification requirements remain unchanged, according to Delisle and Matusiak, but even so, both lenders are increasingly conservative. Matusiak is giving special consideration to debt service coverages where he looks for a bigger buffer on income, evaluating the sensitivity analysis, reviewing the direction of cap rates and the possible pattern of the income. Additionally, he’s structuring deals with creative outcomes. For example, properties with limited rental capacity (now) might be structured with multiple tranches to existing borrowers providing increasing assurance that credit will be available in the future.


In regards to pre-sale deals, Delisle spoke to additional structures to help with qualification. Qualification is encouraged through lower pre-sale requirements paired with higher equity structures. As sales happen, the equity position is reduced. “What’s changed during COVID,” according to Delisle, “is that people aren’t really coming in with pre-sale deals anymore”.

Fixing Rates

With market factors shifting so quickly, “A quote today may not be good by tomorrow,” said Delise. Increased communication between teams is important in delivering accurate and timely numbers. Matusiak pointed to quick communication which results in “...having a finger on the pulse of the pricing of the market. Matusiak saw a rush of rate-fixing at the beginning of the pandemic with many borrowers holding off now. ” Although forward fixing options are available, according to Delisle, “we don’t fix until the loan application is approved.”


You can watch the webinar by following this link.


For additional COVID-19 resources, NAIOP encourages members to refer to the NAIOP Vancouver website, follow along with the Lunch With NAIOP Webinar Events, and follow NAIOP on LinkedIn, Twitter, and Instagram.


This post has not been tagged.

Share |
Permalink
 

Re-opening Business in BC: How can Landlords and Tenants Screen for Covid-19?

Posted By Kelley Ollinger, Monday, July 6, 2020

 

Welcome to the First Edition of the Lunch with NAIOP Webinar Series!

 

In this webinar, NAIOP welcomed an expert panel to discuss best practices for screening as businesses begin to reopen in BC. With Chuck We (of Hudson Pacific Properties) acting as moderator, Peter Tolensky and Ryan Berger of Lawson Lundell offer insights into relevant COVID guidelines along with screening considerations for both tenants and landlords.


You can listen to the webinar audio by following this link.

Protocols, Guidelines, & Orders

Moving forward, the new business norm will include adherence to protocols, guidelines and orders from the Province of BC, various ministries, and WorkSafe BC. The BC Restart Plan, as an example, offers guidance to individuals and businesses using a four-phased approach meant to mitigate the impacts of COVID-19. While orders like Ministerial Order No. M120 help in the avoidance of civil liability for those operating essential services (protection offered so long as the business is operating in accordance with all applicable emergency and public health guidance).  

Ministerial Order No. M120

Tolensky and Berger pointed out that Ministerial Order No. M120 does not name landlords as being a landlord doesn’t fall within the realm of being an ‘essential service’. Tolensky and Berger felt that the assumption could be made that landlords working to ensure overall compliance of their buildings - operating (and hopefully exceeding) compliance with public health and safety guidelines - have the best chance of being protected by M120. 


With M120 offering civil protection, WorkSafe BC provides tenants and landlords with a baseline (or minimum) requirements for COVID-19 exposure prevention. COVID-19 is now potentially considered a workplace injury. An outbreak in the workplace may result in an increase to WorkSafe BC premiums. 

Exceed the Minimum Requirements

Although WorkSafe BC provides baseline requirements, it’s best that tenants and landlords move beyond that which is minimally required. Screening measures are encouraged with careful consideration. Certainly unusual for most businesses to collect health data, such collection will be deemed reasonable (with special data collection considerations) up to the point the province shifts into Phase 4 of the BC Restart Plan.


Even though some level of health collection is reasonable, there’s still much to be considered here. Business operators must address privacy concerns by limiting their collection to that which is absolutely necessary, and they must ensure the security of the information they collect. The collection must be minimally intrusive and it’s additionally important to give thought to Human Rights issues too. For example, if it’s necessary to deny entry to an employee or patron due to a failed screening, it’s important to communicate such denial sensitively.

Screening

Landlords and tenants have employed (or are exploring) self-reporting, questionnaires, immunity certificates, and digital contact tracing. Temperature screening though seems to be increasingly popular. From handheld one-to-one devices to cameras (preventing entry bottlenecks) that are able to identify the temperature of 30 people at one time. As the reasonable collection of such health data is time-specific (likely expiring once the pandemic ends), landlords and tenants must give thought to the cost of screening along with the length such collection will be permitted.  

Best Practices

Tolensky and Lawson suggest the following Best Practices when it comes to temperature screening:


  • Implement a reliable system

  • Ensure appropriate staff training

  • Use precautions for front-line staff

  • Ensure clear notice/consent

  • Prepare procedures for ‘failed’ screening

  • When possible, screen in private

  • Limit collection and use: e.g. no names, entry/exit and delete

  • Individuals above 37.8℃ (100℉) return home


For additional COVID-19 resources, NAIOP encourages members to refer to the NAIOP Vancouver website, follow along with the Lunch With NAIOP Webinar Events, and follow NAIOP on LinkedIn, Twitter, and Instagram.

This post has not been tagged.

Share |
PermalinkComments (0)
 

Accomplished UBC students participated at the 2020 NAIOP Real Estate Challenge and are graduating!

Posted By NAIOP Vancouver, Thursday, June 18, 2020

The NAIOP Vancouver Chapter wants to congratulate Nic Economae, Winnie Fang, Evan Tong, Nabi Sarhadi, Iana Shakirova and Bryce Young, students of the UBC Sauder School of Business for participating in the NAIOP Real Estate Challenge and for their upcoming graduations! NAIOP Vancouver also wants to celebrate the support that these students received by its academic advisor and team lead, Mr. Tsur Somerville from the UBC Centre for Urban Economics and Real Estate; mentors Korbin da Silva from Ledingham McAllister, and Jaraad Marani from Colliers International; and architectural advisors Jim Aalders and John Scott from HDR Architecture Associates.       

At the NAIOP RE Challenge, the UBC team made excellent showing of The Aeda, a mixed-use development, an investment proposal for a well-located development site in the Bellevue CBD. The competition was held remotely due to public health concerns, but teams were able to present their proposals via video conference to a panel of judges from varying sectors of the western Washington (USA) commercial real estate industry.

NAIOP congratulates the UBC Team for their upcoming graduations! NAIOP Vancouver has its doors open for all of you, and we know that you will lead with professionalism and excellence the projects of the future. 

·         Graduating May 2020

o   Nic Economae  

o   Winnie Fang

·         Graduating Dec 2020

o   Evan Tong

o   Nabi Sarhadi

o   Iana Shakirova

·         Graduating May 2021

o   Bryce Young

Download File (MP4)

This post has not been tagged.

Share |
PermalinkComments (0)
 

CECRA Q&A With Finance Canada - June 7th, 2020

Posted By Administration, Thursday, June 18, 2020

Below is an informative series of questions and answers between Sheamus Murphy, Vice President, Federal Advocacy at Counsel Public Affairs Inc., and Justin To, former Deputy Chief of Staff & Director of Policy for the Department of Finance Canada.

Questions posed by Sheamus Murphy are answered by Justin To who is currently assisting Finance Canada with the COVID-19 crisis, including the CECRA

 

Question 1

Having heard this week that the 70% revenue threshold will be based on a 3-month average, can we apply for a tenant for only one or two months instead of 3 months?

  • This 3-month average provision will now likely disqualify many tenants across the country.
    • This will incentivize some business to remain closed for longer, so that they can ensure their revenues are below the appropriate threshold required for CECRA eligibility.
  • We and our tenants are now having to guess whether or not tenants are eligible
    • The majority of retailers will be unable to reasonably forecast what their June revenues look like given that most are in re-opening stage and consumer patterns are still highly unpredictable.
    • No Commercial Property Owner wants to willingly put themselves in a position to somehow default on the program. Many would rather wait for greater certainty. Meanwhile, the public message of the provincial premiers is that if a landlord doesn’t apply right away they are somehow being a poor corporate citizen. Commercial Property Owners are trapped in between the premiers and their tenants, while most are supporting their tenants while the CECRA details continue to unfold. It is perfectly reasonable for a property owner to wait to know the June results before applying for CECRA, which would take them into mid-to-late July before they apply. At the same time, this behaviour is being punished by many provincial premiers at the same time.
  • Recommendation: allow Commercial Property Owners to apply for only one or two months instead of only being able to apply based on the 3-month revenue average. Also allow up to 2 applications if June revenue end up being under the revenue threshold amounts.

Answer

It applies to all three months, cannot go month by month. The Tenant Attestation says that the Tenant must simply estimate “to the best of their knowledge” whether they are down an average 70% for the three months, including a projection on June. If they are wrong, they are wrong and CMHC will not come down hard on those who have made reasonable efforts to estimate the loss in revenue to the best of their knowledge. (as an example of that, a business that was shut 100% in April and May but even had 90% sales in June, would still be on average down 70%)

To be clear the Property Owners should be trusting their tenants and their attestations unless they have reason to believe the tenant is attesting to a falsehood. But they are not expected to, nor should they be undertaking investigations on their tenants. Specifically in the landlord attestation is the following language (underlined for emphasis), “The Property Owner has no knowledge, acting reasonably and without investigation, of any falsehood or misrepresentation contained in the Tenant Attestation(s) submitted by Impacted Tenant(s) in connection with the Agreement.”

Also, in the Loan Agreement it does say this, but it is within the context of “without investigation” – “If prior to any advance under the Loan, the Property Owner becomes aware that the Attestation of any Impacted Tenant is false or misleading in any material respect, the Property Owner must promptly report the same in reasonable detail to the Administrator and provide the Administrator with an updated Application removing such Impacted Tenant from the Loan Amount calculation”).

Should a tenant every be found to have falsely attested to the 70% decline, CMHC would work with the landlord so both the landlord and CMHC make reasonable efforts to recover the forgiven rent from the tenant – the 25% owed to the landlord and the 50% owed to GoC. We would not hold the landlord responsible for the 50%.

In my view, if the property owner wants to help their impacted tenants, then this should not be a material concern – they do not face a liability if their tenant is telling the truth to the best of their knowledge.


Question 2

Where a property has a mortgage, does the property owner’s lender need to approve our CECRA application per building? Our house banker (one of big 6 Schedule I banks) suggested this week that they have to sign off on every CECRA application, unbeknownst to us.

Answer

I can’t answer this question as it may be a covenant between a property owner and their bank. As far as I understand, there is no requirement by CMHC that a property owner must also provide a waiver from their financial institution as participation in the program.


Question 3

Further clarification and details on what the eligibility process looks like for subtenants would be appreciated.

Answer

I’m not sure I understand this question as subtenants are fully eligible for the program. In fact the Tenant Attestation is actually titled “Tenant’s and Sub-Tenant’s Attestation”

From the website:

Impacted small business tenants are businesses — including non-profit and charitable organizations — that:

  • pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement)
  • generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level)
  • have experienced at least a 70% decline in pre-COVID-19 revenues

NOTE: Eligible small business tenants who are in sub-tenancy arrangements are also eligible, if these lease structures meet program criteria.

Question 4

# 9 of the Rental Reduction Agreement states that if the 2020 CAM & Tax reconciliation of the actual hard, fixed maintenance costs results in a credit owing to the Landlord, the Landlord must allow a full 75% reduction of such credit, yet there is currently no mechanism for the Landlord to recover the 50% government commitment in the original arrangement at the time the 2020 reconciliation is completed (early 2021). Is this something that could be addressed? In other words, where a credit is found to be owing to the Landlord, and it is reduced by 75%, can the Landlord submit to the government for 50% of that credit owing? Alternatively, can the credit only be reduced by the 25% loss committed by the Landlord when agreeing to participate in the program? Also, there is no mention of what happens with a credit to the tenant – it should be adjusted the same way, reduced by 25%

Answer

Not sure how to answer this question other than to state it should all be reflected in section #4 of the Rental Reduction Agreement when the property owner submits the value of the “gross rent” submitted within the application. If the gross rent is accurate then this should be addressed. I’m not sure how any reconciliation would be corrected in the property owner or the tenant’s favour if an adjustment should occur. You’d have to talk to CMHC officials on that one.


Question 5

Whether the sales figures used to determine qualification are for the Tenant’s whole business (multiple locations), or just the sales for the location being applied for (our property)?

Answer

Sales for the location only, not consolidated business


Question 6

Omission in #11 of Tenant attestation the $20 million revenue max): should add “on a consolidated basis at the ultimate parent company level” which is what the portal indicates is the qualifier. 

Answer

I’ll check into that


Question 7

What if as part of a multi-tenant building application with multiple tenants applying for assistance one or more of the tenants is deemed not to qualify, how does that impact the balance of the application?   Would the loan still be approved for those that qualify in the same building or does that building owner need to re-apply?

Answer

The property owner should only be applying on behalf of their tenants that qualify, meaning there may be some tenants, the ones that do not qualify, are left out of the application. If the property owner applied for let's say 3 of its tenants in one building but one was later found to not qualify, then, as per the Property Owner Attestation and the Loan Agreement, the property owner should contact CMHC, the loan will be adjusted and reasonable efforts should be made to recover the rent from the tenant that did not qualify.


Question 8

Does the application need to be on behalf of the bare trustee given they will be reflected on title or can the beneficial owner make the application?

Answer

As I understand it, the application should be filed by the entity listed on the lease agreement.

Tags:  CECRA 

Share |
PermalinkComments (0)
 

Thriving Strategies - A Canadian Retail Market Update

Posted By NAIOP Vancouver, Tuesday, March 17, 2020

As part of a retail market update, moderator Lenora Gates (of Orange National Retail Group) facilitated an insightful panel discussion at NAIOP’s recent breakfast meeting. Led by the notion that ‘the only thing constant in retail is change,’ the panel delved into the ever-evolving landscape of the retail market. Here they share their wisdom regarding the importance of tenant/landlord agility, getting back to the basics of negotiations, and the trend of online retailers.

 

The Panelists

Graham Horton, Vice President at Shape Properties.

Chris Wood, Executive Vice-President at JLL.

David Knight, Vice-President in Colliers Vancouver Office.

 

The Importance of Agility

Agility, the ability to adapt quickly to the ever-evolving retail market, is cited as a critical characteristic of successful landlords and tenants. Helping to illustrate this point, Wood explained the shift in strategy by one big box retailer, Target. Where previously acting solely as a retail space, Target has spent a glut of money on not just their online presence but blending their retail space with their online fulfillment centre. And, outlining shorter lease terms, something offering tenants increased adaptation, Horton spoke of H&M. Where historically H&M might’ve written 10-year deals with 5-year options, they’re now writing 5-year contracts with 3-year options and looking to (in the not so distant future) writing 2-year deals with 1-year options. “Agility for companies like H&M,” Horton says, “is absolutely everything.”

 

When it Comes to Clauses, Let’s Get Back to Basics

The increase of restrictive clauses adds additional complexity to retail negotiations. Wood spoke of a cinema client who doesn’t allow other tenants to compete with the sale of pop, popcorn, or soda. Where large anchor tenants like T.J. Maxx (as an example) don’t necessarily compete with the tenant’s primary business, they do sell food. Instead of the need for numerous waivers, we should agree not to put a competitor in there. “I’m hoping,” Wood said, “we can just get back to the basics.”

 

While some retailers lean heavily on restrictive clauses--preventing duplication and unnecessary competition--Gates suggested that others welcome it. Capitalizing on increased traffic and ‘allowing the best man to win,’ some tenants intentionally source space near their direct competitors.

 

The Lesser Told Story: Online Retailers Looking for Physical Space

Discussed frequently is the notion that online retail is reducing the need for physical retail space. Less told though and increasingly common, are online retailers (like Casper, and Warby Parker) wanting to add a physical presence to their online strategy. Allowing them to interact with brand ambassadors, their incredible market-driven data leaves these online retailers with a high chance of success. Best tested in broader markets like New York and L.A., the panellists identified the double-edged nature of pop-ups. Allowing both the retailer and the landlord the chance to ‘prove the market,’ the landlord has the opportunity of a short-term commitment evolving into a longer-term, more lucrative commitment. Though beneficial for landlord and tenant, the pop-up often leaves the consumer confused. Where a consumer might purchase items at a Lululemon pop-up over the winter, they come back in January to facilitate a return, only to discover the pop-up is gone. 

 

To register for upcoming NAIOP Breakfast sessions please click here.

 

Tags:  #Retail #Canada #2020MarketUpdate 

Share |
PermalinkComments (0)
 
Page 1 of 16
1  |  2  |  3  |  4  |  5  |  6  >   >>   >| 

NAIOP Vancouver Chapter

301 - 750 West Pender Street, Vancouver, BC V6C 2T7
Tel: 604-601-5106 | Fax: 604-874-4378 | Email: office@naiopvcr.com

©2019 NAIOP Vancouver Chapter. All rights reserved.