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

Posted By NAIOP Vancouver, 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.


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.

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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)

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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.


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.


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.


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%


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)?


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. 


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?


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?


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

Tags:  CECRA 

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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 

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Office Market Trends and Predictions for 2020

Posted By Kelley Olinger, Friday, February 14, 2020
Updated: Friday, February 14, 2020

NAIOP welcomed insights on office market trends and predictions for 2020 from an expert panel during its January breakfast meeting. Providing lively discussion, Matt Carlson moderated the panel that included Maureen Neilly, Peter Jenkins, and Glenn Gardner. Bringing decades of wisdom and experience, the panellists shared their expectations through to 2024 with a particular focus on inventory, demand, and economic influences.

The Panelists

Maureen Neilly, the Director of Commercial Leasing with QuadReal Property Group, is responsible for both office and industrial space and has completed over 600,000 square feet of new deals and renewals.


Peter Jenkins, the Director of Leasing at Great West Life, is responsible for all leasing and marketing initiatives of a 2.5 million square foot office portfolio including the pre-leasing of Vancouver Centre II.


Glenn Gardner, a Principal of Avison Young, has developed long-term corporate relationships and in doing so has successfully completed over five million square feet of leasing.

Backfilling Office Space

Companies like B2Gold, DLA Piper, and PI Financial are quickly moving into new office space, leaving their current spaces vacant. The panellists weighed in on whom they expect will backfill these spaces, and just how quickly. Jenkins felt there will be a good list of groups. He pointed out that spaces coming up soon will likely have quicker lease-up because of the existing demand on the market. Gardner, who pointed out the likelihood of growth from existing tenants, was quick to illustrate the beneficial state of the properties being left behind. “The spaces that they’re getting back aren’t terrible spaces, they’re pretty nicely improved. Someone could potentially go in there without having to spend a tremendous amount of money.” Neilly agreed with the strong sense of demand suggesting that prospective tenants might be those looking to rightsize, or tech firms looking to expand or relocate from either the US or elsewhere in Canada.

Remaining Competitive with Rising Rates

With increasing demand and limited space, new buildings have continually increased their rates to match the market, yet, in some cases, still haven’t found tenants. Rather than decreasing rates, the panellists shared creative strategies for attracting tenants. Jenkins spoke to the need for “future-proofing” assets which he feels “grabs people’s attention”. The panellists listed off desired amenities including nap pods, dog pods, yoga studios, fitness centres and rooftop decks. Instead of impressing the employer, “...the employer is looking to impress their employees”, according to Gardner. QuadReal, Neilly suggested, is “upping our game…” as it relates to tenant amenities. She spoke of an onsite refrigeration space allowing employees to have their household groceries delivered to work, lessening the need for post-work grocery shopping trips.

Forecasting Lease Rates

Looking towards 2023 and 2024 the panellists provided an ‘it depends’ answer when asked to forecast lease rates. Considering larger tenants, Gardner felt the introduction of one more Amazon and a few more Shopify-type-tenants could leave rates the same or cause them to climb. Sadly though, he illustrated the lack of sustainability for smaller firms. “An increase for a small firm,” Gardner said, “could be the difference between hiring two or three people.” Suggesting industry shock with the historical 40-dollar rent at Telus Gardens, now, according to Jenkins, “... you’re hearing rumours of rents with a seven in the front”. Though rent is heading in the direction of big cities like San Francisco and New York, Gardner isn’t so sure our market has the necessary depth (or diversity in our inventory) to reach those numbers. 

Tags:  2020Trends  ExpertPanel  OfficeMarket 

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The Global Economic Downdraft and B.C.’s Prospects

Posted By Kelley Olinger, Monday, January 27, 2020

At a recent breakfast meeting, NAIOP members received an economic update from Bryan Yu, Central 1 Credit Union’s, Deputy Chief Economist. Yu offered a host of statistics reflecting the macro and microeconomic conditions impacting global, provincial and regional growth. In addition to outlining overall economic drag, Yu shared his thoughts on an impending recession while also speaking to some strong economic sectors.

The Global Economy

Stemming largely from the approximately 300-billion dollars imposed on Chinese goods, there is, according to Yu, an overall drag in economic growth. In what’s been described as The U.S.-China Trade War, the tariffs, applied to goods exported from China, ultimately increase the cost for producers, importers, and then ultimately, the consumer. Describing goods and services as synchronous, this drag, described by Yu, is seen not just in goods, but in services too. Though growth is sluggish, the International Monetary Fund (or IMF) suggests global growth will rise from 2.9% in 2019, to 3.3% in 2020.

With a slower growth profile, Yu is often asked his thoughts on an impending U.S. recession. Describing the country’s momentum as slow, Yu doesn’t see evidence of a recession at this time.

The Provincial Economy

Forestry and Mining
Yu spoke of weakness in sectors like forestry and mining. Though rural, Yu suggested, it’s important to note the tight linkage these industries have to the professional services (in places like Vancouver) that support them. With a decline in overall exports, he went on to note a 30% decline in forestry product dollar volume year to date. The forestry revenue decline is multi-faceted resulting from situational factors like declining prices, sawmill production diving, and the long-term impacts of the mountain pine beetle epidemic. The Ministry of Forests, Lands, Natural Resource Operations and Rural Development share that more than 4,000 jobs were lost just this year, with five mills closed and many communities left devastated.

Moving to industries like retail, Yu noted weakness in brick and mortar - only 0.5% growth compared to 9-10% growth in previous years. That being said, Canadian online sales (which have grown 30% year over year) have the potential to further mask the weakness in brick and mortar. Though many weaknesses were illustrated in the provincial economy, Yu shared the strength reflected in B.C.’s tourism, population growth, non-residential construction, and offered positive insights from the labour market.

With a strong labour market, among the lowest unemployment rates in the country (roughly 4%), and the highest jobs vacancy rate (4%), Yu says that if a person needs a job, there’s a good chance they’ll find it in B.C. Wages are increasing, due to a significant shortage of skilled labour. Though many factors point to B.C.’s slowdown, Yu feels wages (what people are earning) and social contribution (what people are paying) are a good “bellwether” signalling strength in consumer demand, leaving B.C. with one of the strongest growth profiles in the country.

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The Ever Changing World of Technology in the Workplace

Posted By Kelley Olinger, Thursday, December 5, 2019

Outlining the acceleration and disruption of technology, Sunny Ghataurah, President of AES Engineering, offered a compelling presentation at NAIOP’s October breakfast meeting. With the belief that “If you don’t understand technology, you will be replaced by it,'' Ghataurah shared impressive tech-related advancements in a variety of industries. Below is a brief recap of the key messages from Ghataurah’s presentation including the speed of growth in tech, industry-specific tech advancements, and the tech advancements specific to building and infrastructure.

The Pace of Tech

Technology, previously thought to double every two years (a feature known as Moore’s Law), is as it exists today considered to be the 4th industrial revolution. Using timely examples, while explaining the differences between linear and exponential growth, Ghataurah shared that the current tech growth estimates say the industry doubles every six months, and, in some cases, doubling in only a matter of weeks. Where linear growth is predictable, exponential growth seems predictable, but then, without notice, industries are radically revolutionized overnight. 

As an example, Ghataurah shared how Uber previously known for upsetting the ground transportation industry, is quickly (and perhaps unpredictably) going head-to-head with companies like GM in the driverless car space. Additionally, Uber announced in early January its plan to provide an on-demand aerial taxi service known as Uber Air. Now, Uber is racing head-to-head with Boeing in an effort to launch the first-ever flying cars.

Incredible Advancements 
Touching on only a few of the endless revolutionary developments, Ghataurah explained how tech is impacting industries like health care, agriculture, and retail. Healthcare, as an example, is just beginning to see the emergence of nanotechnology, a process that uses nanoparticles to deliver, detect and treat specific cells. Agriculture, as another example, is quickly embracing vertical growth, providing opportunities in challenging climates, and requiring (in some cases) only one-tenth of the space previously necessary. In retail, Amazon is beginning to toy with anticipatory shipping, where they’ll ship an item anticipating, in advance, you’re likely to purchase it. 
Technology for Building and Infrastructure
Allowing builders to see their projects before they exist, or offering the ability to document every step of the construction process are only some of the ways new software platforms aim to increase efficiency while providing real-time problem-solving opportunities.  HoloBuilder, a technology and software platform, aims to document construction site progress. Working to reduce photo documentation time, eliminate the need for regular site visits, and ultimately reducing labour costs, Holobuilder provides 360-degree photo capture covering every phase of a project’s life cycle. Microsoft’s HoloLens, on the other hand, places holographic images in a user’s physical environment. The software provides construction teams and architects with the chance to explore design flaws before they exist in real life.

The Bottom Line
Though Ghataurah acknowledges likely job loss, he also sees an inverse correlation between labour hours and required manpower. Where, historically, fewer people were required to complete a task with more time, now, (and moving forward) more people will be required but for less time. Moving forward, Ghataurah feels, “it’s crucial to understand what work is changing and what jobs are changing.”

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Real Estate Investment Market Update

Posted By Kelley Olinger, Friday, November 15, 2019

Gleaning insight into the trends and future of commercial real estate investment, NAIOP welcomed an expert panel to its September breakfast meeting. Moderated by Tony Quattrin of CBRE, Greg Spafford, Andrew Tong, and Darren Wong brought decades of wisdom and experience to the discussion. Here, they discuss their approach moving forward, the future of REITS, and their outlook on office space.

The Panelists

Greg Spafford is the Managing Director and Senior Portfolio Manager for Manulife Canadian Real Estate Funds responsible for strategy, acquisitions, execution and overall portfolio management.

Andrew Tong is the Senior Vice President of Investments for Concert Properties and is responsible for leading the strategic planning and key operational activities of Concert’s income portfolio across Canada.

Darren Wong is the Director of Investments with Peterson Investments and is responsible for their real estate investment strategy and acquisition process, including income property and development land.

Using Past Investment Success to Predict the Future

Whether bullish or bearish when it comes to commercial real estate investing, each panellist spoke to their experience, providing a measure of assured success. Spafford, acknowledging the challenge that is real estate investing, wouldn’t consider himself ‘bullish’ per se, but recognized that real estate that’s “well-managed” will provide good steady returns. Tong, quick to say he’s ‘bullish’ on the ”right” real estate, shared, “We exist to know the difference between what will make money and what won’t. So, yes, we are bullish, but on the right real estate.” And, Wong, who operates in private equity isn’t bullish when it comes to Vancouver, but is bullish when it comes to the right product. “To be competitive, we might look for deals that are a bit more complicated or have bit more hair on them, or we’ll look for off-market opportunities like Toronto, Dallas, LA, Chicago, Denver.”

The Future of the REIT

Offering a potentially ominous sign for the future of REITs, Tony Quattrin, asked the panel their thoughts on headlines like the sale of Michael Coopers Global REIT. Seeing an opportunity for private equity, Wong views selling opportunities as potential buying opportunities, noting, “ they sell off some of their real estate, private equity can move in.” Tong, acknowledging the cyclical nature of REITs and their 25-year longevity, shared, “I don’t see them disappearing, but they may consolidate and internalize.” Since REITs are more like equities, their nature is equally volatile, according to Spafford, “REITs will be back...they’ll get stability again.”

With Vacancy Rates Less Than 3%, Is Office A Good Choice?

Sharing the consensus that not all office space is necessarily good office space, Tong shared the strength of “patient capital,” and waiting for opportunities. “If the building is changing or the area is changing, for us, that’s winner,'' he said. Wong, considering opportunities outside of Vancouver, is buying in Toronto and Orange County, where Spafford evaluates the ways he can compete with new buildings. “We consider how to compete with new buildings that are coming up, and one way to do that is by looking for historic character - places that can be edgy co-working space. We like office, but we do need to have that angle to make money.”

Tags:  REIT 

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May Breakfast Meeting with Vaughn Palmer (2019-06-20)

Posted By Kelley Olinger, Thursday, November 14, 2019

With his eyes and ears tied to the dynamics of Canadian politics, award-winning Vancouver Sun political journalist, Vaughn Palmer, spoke at a recent NAIOP breakfast meeting. Spanning ten Premiers over 35 years, Vaughn has covered extensive issues impacting BC politics. On some top-of-mind topics, Vaughn shared his perspective and insight on the recent gasoline inquiry, The Non-Financial Severance Arrangement, BC’s credit status, and another reminder that every vote counts.

The Gasoline Inquiry

With rising gas prices, the BC Utilities Commission launched a public inquiry into gas prices. Through this inquiry, the Utilities Commission is allowed to call the executives of the gas companies and ask them to explain ‘gouging,’ a term noted within the terms of reference. Vaughn pointed out that the Utilities Commission is paradoxically not allowed to look at any decision made by the provincial government, or any policy (provincial), or any tax or regulation (provincial) that might contribute to gasoline prices. Calling the inquiry a “farce,” he also noted the expected timing of the report, August 30th and said, “By the time we get the answers from this inquiry, it’ll be beside the point, and, maybe that’s the point of the entire inquiry.”

The Non-Financial Severance Arrangement

Following allegations of misconduct by the Clerk of the Legislature and the Sergeant at Arms, Beverly McLachlin (the retired Chief Justice of Canada), found the Clerk guilty on four of eight counts. Upon presentation of the findings, she further announced the Clerk’s retirement - effective that very day. Vaughn shared the ironic details of the non-financial arrangement reached that day. The Clerk received six-months pay for the six months he was on suspension. He’d keep $5,000 worth of luggage he acquired at the taxpayers’ expense. And, resulting from a retirement scheme terminated some 25 years earlier, he’d keep $259,000 from a retirement allowance program paid out in 2012 even though he hadn’t retired.

BC’s Credit Rating

BC’s current credit rating, according to Vaughn, is AAA, a measure determined by comparing BC’s financial position to other jurisdictions. So while the government enjoys a strong credit rating and a balanced budget, the surplus inherited from the previous government is rapidly shrinking. Currently at two-to-three hundred million dollars according to Vaughn, he reminds us that there’s still plenty of promises which have yet to be paid for. Over two to three years, $1.8 billion will pay for three years of raises for public sector workers - a figure which doesn’t account for any new workers. Vaughn feels the Community Benefit Agreements, which force hiring from a hiring hall, will increase labour costs, further pressuring the budget. Also, there’s work to be completed on a 2 KM stretch of the Trans Canada Highway near Revelstoke - something projected to cost $85 million (a 35% increase from its original estimate). In this case, the federal government elected to cap their contribution, leaving the entire 22 million dollar overrun on the shoulders of British Columbians. The best way to cope according to Vaughn is to scale down the number of projects, or increase debt.

Every Vote Counts

Referring back to May 24th, 2017, Vaughn detailed the single vote in Courtenay/Comox which resulted in the NDP’s not only winning an additional seat but costing the Liberals their majority. Vaughn reminisced about a similar 1979 election outcome in the riding of Atlin. The vote, decided by one vote on a recount, was increasingly significant when the losing candidate and his wife admitted they neglected to vote themselves. Vaughn used these examples as a reminder that BC elections are often close - every vote does count.


Vaughn feels these are uncertain times in the world for any incumbent government - especially those in Canada. Following the credit crisis in 2008, most governments that faced an election were returned with a majority. The significance, according to Vaughn, is that in times of heightened insecurity, there’s an unwillingness to take a risk on something new. Since 2015 though, the opposite has happened. Of the ten governments sent to the polls, only two have emerged with a majority. Vaughn says, “Trudeau is right to be worried. He should be.”

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Retail Market Update (2019-06-06)

Posted By Kelley Olinger, Thursday, November 14, 2019

Retail is in a constant state of hyper-evolution. Facing economic and market-based headwinds like rising rent and online shopping, retailers have become increasingly creative and adaptable. Working closely with marketing teams, research teams, landlords, and leasing agents, retailers seek to improve the consumer experience while increasing revenue in an ever shifting marketplace.

During a recent NAIOP breakfast meeting facilitated by Mike Hodge of Avison Young, three experts, Stephen Knight, CEO and Managing Partner of Sitings; Emilie Lok, Leasing Manager for Westbank; and Derick Fluker, co-founder of Form, explored trends in the retail market while forecasting what lies ahead in 2019.

The Reality of Retail

Retail, like so many industries, is in a perpetual state of ebb and flow. Certain segments of the market become weak while others prove stronger. As storefronts are consistently opening and closing (something that’s historically never changed), Fluker noted how street-front retailers, who used to struggle in years past, are strong with larger power centres in weaker positions.

Retailers are highly aware of their need to adapt and evolve along with the shifting consumer experience.  Artizia, as Lok pointed out, are looking to have fewer stores, instead having more flagship stores - some with cafes inside. She highlighted that brands are looking to become experiential rather than transactional.  “Large anchor tenants,'' she said, “are finding small format concepts so they can have more variety while paying less rent.”

While it’s easy to think retailers parallel their American counterparts, Knight made clear that players like big box retailers do better in Canada.  “We have less competition,'' he said. “If you’re in the office products category in the states, you’ve got two or three competitors. Here, it’s down to staples and a few smaller players. We don’t face the same pressures as the Americans.”

Working with the Unknown of ‘What Lies Ahead’

Since no one, even the best, can predict what’s to come in an exponentially evolving retail market, how does one set themselves up for success?

In regards to trends to follow, it’s helpful to look to countries ahead of us, like Asia, and model those trends, according to Lok. She feels that being adaptable and flexible with one’s vision becomes crucial to succeeding in the current market. In Lok’s experience, doing your best to future proof plans will help, but some decisions are left to instinct. Sometimes you have to “follow your gut,” she said.

Balancing Loyalty and Business

Landlords and sellers have a tough balancing act. While leasing available space allows landlords control over the tenants in mixed use developments - protecting the interests of residents and fellow businesses, sadly, is not always the most lucrative choice.  More and more often, commercial spaces are being sold, rather than leased by developer and landlords.

Fluker points to the wide gap between strata values and lease rates, who he feels have little correlation to one another. Because strata values are more lucrative, Fluker shared that 25 to 45% of developers are selling their strata lots. Knight echoed this sentiment by saying that developers have the need to maximize their return.

The Bottom Line

While the retail space is forever evolving, it still remains strong. Similar to other markets, certain segments of retail strengthen while others lose steam - something unlikely to change. Landlords, developers and leasing agents are best armed by being ‘up’ on trends, diligently forecasting what lies ahead, and working to become increasingly adaptable.  

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