CBRE is forecasting a “once in a generation” moment for CRE

Market conditions for Canada’s commercial real estate sector are lining up a “once in a generation” moment according to a new outlook.

CBRE makes its forecast based on record low vacancy rates, rising rents, waves of new construction, and an unprecedented bargaining position for landlords.

Canadian property market fundamentals remain incredibly strong, and technological change, tech business growth, and tech talent are the dominant factors driving demand across all commercial real estate sectors,” commented Paul Morassutti, Vice Chairman for CBRE Canada. “Growth is often synonymous with discomfort. In many Canadian cities, real estate will remain at the forefront in both regards.”

All sectors in demand

The office market – especially in Toronto – is one of the CRE highlights with the downtown vacancy rate remaining the lowest in North America since Q2 2016, currently at 2.7%. That means 10-year lease terms with top pricing are becoming standard.

Businesses are being forced to plan ahead and think about how they can make smarter use of existing workspaces.

Warehouse and distribution space is also in high demand, enabling landlords to increase prices and push for 15-year leases. Vancouver’s availability rate for this sector fell to 2.3% in 2018 and the region leads the world for rental growth rate.

For multi-family rentals, inventory remains tight in many markets including Vancouver, Toronto, Ottawa, Montreal, and Halifax which have overall apartment vacancy rates below 2.0%.

Construction rises, challenged by costs and red tape

Fears of overbuilding are being eased by high demand, leading to a surge in construction nationwide with 14.6 million sq. ft. of office and 18.5 million sq. ft. of industrial product under construction in 2019, most of it in Toronto and Vancouver.

However, CBRE says that developers are being constrained by record land prices, increasing development charges, rising material, and labour costs, plus a prolonged and more involved planning and approval process.

“Approval delays are the most problematic factor limiting much needed new construction,” commented Morassutti. “There is already a shortage of almost all types of quality commercial property, and rising costs and red tape threaten to create an even greater imbalance. Commercial developers are now facing similar bottlenecks to those experienced by the residential market, where the effects of demand outstripping supply over a prolonged period have been detrimental. Government and business interests need to align to ensure that the Canadian economy has the physical space required to grow and our cities can continue to prosper.”

Source: https://www.canadianrealestatemagazine.ca/market-update/cbre-is-forecasting-a-once-in-a-generation-moment-for-cre-254901.aspx

What is Weatherstripping?

Weatherstripping is essentially any material you use to close up gaps between two surfaces of building materials located on an outside wall (generally). The act of installing weatherstripping is also commonly known as “weatherstripping,” so it can get a little confusing.

Even though it may look like your house doesn’t have any gaps between, say your window trim and the wall or the upper and lower portions of your double-hung windows, the chances are good that there are lots of small cracks you’re just not seeing. As a result, you’ll end up leaking climate controlled indoor airout into the outdoors. Sometimes this is really obvious. You’ll feel the air temperature differential or you’ll literally see bright light shining through the gaps when the room is darkened.

More often, though, you’ll find some of the gaps and miss a lot more because they can be very hard to detect. Homeowners and pros alike handle this issue in a few different ways:

• They perform yearly maintenance on the weatherstripping. When you’re positive that your home isn’t leaking air, there’s not really any reason to refresh the weatherstripping or recaulk everything that is nailed to something else. But if you’re not sure of your leak status or you simply don’t think you will be able to tell where leaks are forming, spending a day laying down new beads with the caulk gun and replacing any worn weatherstripping will ensure your home is ready for the coldest and hottest days.
• They take advantage of infrared camera technology. Infrared cameras are really cool. Or, at least, they can show you where things that are really cool happen to be located. Although they’re not fool-proof, if you want to give this tech a try, you can pick up a model that will attach to your smartphone for a lot less than the units the pros tend to use. When an area turns up icy blue (or another color, depending on your camera settings), you can then manually inspect that area for unexpected air flow.
• They enlist the help of a energy specialist for an energy audit. Many utility companies have an energy specialist on hand to help with energy audits. Even those that don’t will keep a list of independent home pros that can perform the same service. They have all kinds of neat tools in their bags and will not only point out the drafts, but can help you deal with these and the other energy losers in your home.

You may be surprised (or even alarmed!) at how much of your home’s indoor air is leaking in from the outside and the other way around. But you can’t efficiently weatherstrip your home until you know where the leaks are, so it’s a painful, but necessary first step Again, if you’re just really in love with the caulk gun, a refresh never hurt anything, but you probably have other things you’d like to be doing.

Do You Need an Energy Audit?

While you can perform a sort of DIY energy audit on your own, if you want a detailed analysis of where the weather is getting in, plus all the other hints and tips for saving energy that come with a formal energy audit, you don’t have to look any further than your HomeKeepr community! Your real estate agent has already made the connections with the best home pros in the area, their experiences and recommendation can save you a lot of headaches in the long run.

Source: https://blog.homekeepr.com/weatherstripping-windows-and-doors-how-to-find-the-leaks?sharedby=roy-cleeves&utm_source=ActiveCampaign&utm_medium=email&utm_content=Your+branded+blog+post+%7C+Weatherstripping+Windows+and+Doors%3A+How+to+Find+the+Leaks&utm_campaign=2019_02_19_Shareable_Blog_Posts

NDP proposals on 30-year loans welcomed by MPC

The leader of the NDP has set out proposals to make homeownership more achievable for young Canadians, including the reintroduction of 20-year amortizations for insured mortgages.

Jagmeet Singh also said this week that his party plans to build 500,000 affordable homes over the next decade.

Mortgage Professionals Canada has responded to the leader’s proposal to reintroduce 30-year CMHC-backed loans saying that it’s top recommendation to policymakers is "that qualified first-time homebuyers be provided access to mortgage amortization periods of up to 30 years for insured mortgages."

In a statement, MPC president and CEO Paul Taylor said:

“We support a simple increase from the current 25 year maximum to 30 years because it helps aspiring homeowners in three key ways:

• It helps renters become owners, helping many younger Canadians nationwide move into housing more suitable for young families;
• It gives them flexibility to get the same size mortgage but with lower payments, allowing them greater capacity for saving, spending, and investing;
• It specifically targets assistance to first time buyers, allowing them to better compete financially against investor purchasers.

Aspiring Millennial and Generation Y homebuyers have been telling policymakers and our members that they are frustrated and that they want Housing Affordability brought front and center.

We have some technical concerns about the structure of Mr. Singh's pledge today, but we are very encouraged to see 30-year amortizations as a component of the NDP support plan for would-be first-time buyers.”

The issue of Housing Affordability is important, and it is multi-partisan. We are continuing our discussions with all parties and look forward to the March 19 Federal Budget and any support measures the sitting government will also recognize to help aspiring young middle-class Canadians.

Source: https://www.canadianrealestatemagazine.ca/market-update/ndp-proposals-on-30year-loans-welcomed-by-mpc-254728.aspx

Could Amazon bring HQ2 to Toronto after all?

The long saga of Amazon’s plans to open a second North American headquarters took an unexpected turn Thursday.

Having gone through a lengthy decision-making process which narrowed cities down to a shortlist that included Toronto, Amazon’s plan to open not one but two headquarters – in Virginia and New York – the firm announced that it was cancelling the New York deal.

It appears that Amazon bowed to pressure from some residents and politicians, who were opposed to the deal despite the promise of tens of thousands of well-paid jobs.

Questions over government subsidies of U$3 billion, along with concerns that rents and home prices would escalate, meant opposition was seen from the start.

However, while being located in an opportunity zone meant Amazon would qualify for the subsidies, an executive said that it was not planning to claim it.

“This is a stunning development, with Amazon essentially giving in to vocal critics,” Mark Hamrick, an analyst at Bankrate.com told Bloomberg. "For those who didn’t want Amazon to bring the promised 25,000 new jobs and added economic vitality to the area: Be careful what you wish for."

While nothing has been confirmed, some are speculating that Amazon will seek another location to replace New York, with those on the shortlist – including Toronto – potentially back in the running.

Source: https://www.canadianrealestatemagazine.ca/market-update/could-amazon-bring-hq2-to-toronto-after-all-254511.aspx

Wedding or home? The decision facing many young Canadians

Young Canadians are facing difficult financial decisions with the cost of living increasing and the cost of becoming first-time homebuyers is unaffordable for many.

That means that the high cost of a wedding – average $46,000 – may be the difference between homeownership as singles or married life as renters.

An analysis from RateSupermarket.ca found that an overwhelming 84% of respondents would rather spend their wedding fund on another major purchase with a home taking the joint top spot.

40% of respondents said they would rather spend their wedding fund on a down payment for a home; the same share would spend it on travel, 20% wished they’d invested it.

Janine White, Vice-President of Marketplaces and Strategy Development at RateSupermarket.ca says that spending thousands of dollars on an event doesn’t make the same sense to some Canadians today – at least for now.

“Shifts in real estate prices and rising interest rates are possibly pressuring more couples to get into the market sooner rather than later and deferring wedding plans,” she said. “Of course, financial goals will differ depending on the couple, but we are definitely starting to see a change in the environment, whereas, in the past, a wedding was traditionally the key priority for most couples – then maybe followed by buying a home, starting a family, and retirement.”

The economics of buying a home vs. having a lavish wedding do look sensible.

For those that qualify for a mortgage with a 5% down payment, they could buy the average-priced Canadian home ($472,000) with $23,600 down.; less than half the average cost of a wedding according to the study.

Source: https://www.canadianrealestatemagazine.ca/market-update/wedding-or-home-the-decision-facing-many-young-canadians-254187.aspx

The risks for an investor who ignores help

Real estate investors who think they can do everything are playing a very risky game. Whether it comes from an elevated sense of pride or a desire to save money, investors who refrain from educating themselves and finding mentors are seriously inhibiting their own chances of growing a successful portfolio.

“An investor who takes that approach is going to lose money; either the money they have invested or any capital they have raised,” says Nam Ratna of Go Get It Real Estate. “So many investors lose money because they didn’t have the proper skills to analyze a property, asses a budget, or to determine what the after repair value is going to be.”

Ratna encounters many real estate investors who are suffering from making some basic errors. A common consequence for investors without adequate knowledge is being stuck with a property they had intended to flip. A successful flip should be done in 3 – 4 months, but some investors are still holding their properties three years later.

“It generally happens because the investor didn’t analyze the property – they overvalued it and under-budgeted for their repairs,” Ratna says. “These are two of the biggest mistakes investors make and they can be mitigated by partnering with an experienced mentor, someone who has been there and done it. So many investors don’t know how to study comparables and then under budget their repairs because they are either trying to cut corners or trying to justify the deal because they were not able to negotiate the right price.”

In addition to the financial problems that arise from investing without the right guidance, those investors are also likely to suffer mental strife, which can be even more damaging.  When people get into the industry without mentorship and support and then lose money, they often lose faith in the opportunities that real estate investing presents when it’s done properly.

“Going about it the wrong way and having a bad experience can seriously halt someone’s ability to secure the life and retirement that they wanted,” Ratna says. “Having a mentor helps people find ways to avoid that happening. It helps them deal with obstacles and develop the right mindset.”

source: https://www.canadianrealestatemagazine.ca/infocus/real-estate-mentoring/the-risks-for-an-investor-who-ignores-help-250172.aspx

What wealthy Chinese buyers look for in real estate

A forthcoming global real estate auction will be actively targeting wealthy buyers from China and Southeast Asia.

Concierge Auctions together with The Wall Street Journal and Mansion Global is lining up its forthcoming auction of curated premier properties around the world and says Chinese buyers remain a key focus.

"We continue to see increased interest and activity from our collections in China and for the first time are expanding our efforts to Singapore, which is becoming a powerhouse investor in the US real estate market," states Concierge Auctions Chief Marketing Officer Krystal Aeby.

The firm is currently inviting property owners and their agents to submit properties to potentially be included in the March auction. The properties will be promoted to around 550,000 high-net-worth individuals.

What do wealthy Chinese buyers want?

The homes that typically appeal to wealthy Chinese buyers are in well-known destinations with ultra-luxury price points, with proximity to top-notch schools and easy access to China via direct flights.

They are looking for solid investments for future generations and want homes that are valued at a price in comparison to Chinese real estate.

They are also interested in financial security, a possibility for rental income, and visas that benefit Chinese tourists, investors, and migrants.

Chinese buyers also highly value characteristics that adhere to Feng Shui and numerology guidelines (a propensity for the numbers 6, 8 and 9).

Previous Concierge Auctions sales have attracted 130 bidders from 8 countries including China, Hong Kong, Russia, France, England, Ireland, Canada, Cyprus, and the Bahamas, with over $140 million in transactions.

Source: https://www.canadianrealestatemagazine.ca/market-update/what-wealthy-chinese-buyers-look-for-in-real-estate-253952.aspx