Industrial Report

https://www.avisonyoung.ca/documents/95750/17687307/FraserValleyBCIndustrialReport_Summer2018

Commercial News

Timbercreek buying Wynn family’s $1B portfolio

Wynn Group of Companies, one of Toronto’s largest multi-family property owners, has agreed to sell more than $1 billion worth of assets to Timbercreek Asset Management. Sources confirmed Timbercreek, a Toronto-based asset management firm, has been in negotiations for months with the family-owned Wynn Group, which has more than 4,500 residential units and three million square feet of commercial space, according to the company’s website.

CoStar GroupProperty Biz Canada

Amazon unveils plans to expand Vancouver tech hub

Amazon(AMZN-Q) today announced plans to expand its Vancouver Tech Hub and create an additional 3,000 jobs in fields including e-commerce technology, cloud computing, and machine learning. Amazon welcomed PM Justin Trudeau to an event with its Vancouver employees, at the site of its future 416,000-square-foot Development Centre in Vancouver. Today’s announcement is the latest milestone in the company’s ongoing job creation in Canada, where it already employs more than  6,000.

Canada NewswireReuters

Crestpoint, partners acquire $600M worth of urban properties

Crestpoint Real Estate Investments Ltd. and its investment partners have been busy thus far in 2018, acquiring office and industrial properties worth more than $600 million in three major Canadian cities. The acquisitions in Greater Vancouver, Montreal and Toronto bring Crestpoint’s total gross asset value to approximately $3.5 billion and approximately 20 million square feet of office, industrial and retail space.

Property Biz

CF plans Toronto, N.B. shopping centre redevelopments

Cadillac Fairview is embarking on two major shopping centre redevelopment projects; the restoration and expansion of 2 Queen St., West in Toronto, part of the CF Toronto Eaton Centre complex, and the creation of a TD corporate office at CF Champlain in Dieppe, N.B., near Moncton. At CF Champlain, TD will take over a former Sears Canada location which closed in January.

Property Biz Canada

DELMA Group acquires Dorval office building, land

DELMA Real Estate Corporation, a subsidiary of DELMA Group Inc., today announced the acquisition of a 56,000-square-foot six-storey office building located at 185, Dorval Avenue, in the heart of downtown Dorval, a transaction valued at $ 10.4 million. DELMA Group plans to move its head office there in July 2018. The building includes a vacant lot that will allow DELMA Real Estate Corporation to develop a new mixed commercial and multi-residential complex.

Globe Newswire

Winnipeg’s new industrial park underway

Sewer and water pipes are being installed and roads built in the first new, fully serviced industrial park constructed inside the Perimeter Highway in many years. And it helps the 89-acre Brookside Industrial Park Phase III already has an anchor tenant conditionally locked up. “We received several offers as soon as we started accepting offers,” said Heidi Spletzer of Crystal Properties, the project developer.

Winnipeg Free Press

Stability, growth predicted for London CRE

London, Ont., will see a $283 million in investment largely in industrial and commercial real estate this year, up 12.3 per cent from last year, as the city posted solid economic growth, says a commercial realty report released Thursday. CBRE, the commercial real estate firm, released its 2018 Southwestern Ontario Market Outlook report and looming investment highlighted the London-area totals, said vice-president Peter Whatmore.

London Press

Farm Boy’s Jeff York talks automation and real estate

Farm Boy’s co-CEO Jeff York shared some of the secrets to the company’s success with Michael LeBlanc, senior retail advisor for the Retail Council of Canada, during a keynote session at the organization’s Retail Marketing Conference in Toronto earlier this month. Here’s an edited version of their conversation:

Canadian Grocer

Ste-Catherine St. getting facelift for the 21st century: Mayor

Montreal’s iconic Ste-Catherine St. will be getting a 21st-century facelift that includes slashing the number of driving lanes and parking spaces in order to make more room for pedestrians, the city announced Thursday. The plan will reduce a 670-metre stretch of the artery from two driving lanes to one, plus a shoulder for deliveries, while increasing the width of sidewalks by 60 per cent.

Toronto StarMontreal Gazette

Surrey’s city building plays catch-up as people move east

Michael Heeney sits in a booth in an old diner on King George Boulevard in Surrey, B.C. It’s the kind of place with a pie stand on the counter and linoleum on the floor. In his new position as president of the Surrey City Development Corp., it is where he takes visitors “from out of town” – by which he means Vancouver.

Globe and Mail (Subscription required)

Unitholder seeks to replace all Pure Multi-Family directors

The strategic review being conducted by a special committee of Pure Multi-Family REIT LP  (RUF-UN-X) – a decision prompted by a proposal from a Florida-based private apartment owner to acquire the company – has become more complicated. The Vancouver-based issuer has received a notice from unitholder K2 Principal Fund L.P. indicating it would be putting forward the names of seven people to be directors at the upcoming annual meeting.

Financial PostProperty Biz Canada

Prologis to acquire DCT Industrial for $8.4B

For Prologis Inc. (PLD-N), the world’s largest warehouse owner, the biggest challenge to growth has been acquiring land in the markets most important to its e-commerce tenants. The solution: buy a rival. The REIT agreed to acquire DCT Industrial Trust Inc. (DCT-N) for $8.4 billion in stock and assumed debt.

BloombergReutersCoStar GroupIPE Real Assets

Sainsbury’s to buy Asda from Walmart for $13B

Sainsbury’s has agreed to buy Walmart’s (WMT-N) U.K. unit, Asda, for  $13 billion Cdn in cash and stock in a deal that would create Britain’s largest supermarket chain and marks a profound shift in the country’s grocery market. The deal combines Britain’s second- and third-largest supermarket chains, giving the combined company 31.4 per cent of the market and putting it ahead of the current leader, Tesco, which has 27.6%.

Canadian GrocerIPE Real AssetsReuters

RECENT NEWSLETTERS

Two JV developments to build 2,200 apartments in TorontoCommercial | Apr. 27, 2018

Crestpoint, partners acquire $600M worth of urban propertiesProperty Biz Canada | Apr. 26, 2018

Times Group pays $122M for Yonge St. redevelopment siteCommercial | Apr. 25, 2018

MasterBUILT Hotels rapidly expands Microtel brandProperty Biz Canada | Apr. 24, 2018

Global luxury hotel market expected to reach $115.8B by 2025

The global luxury hotel market size is expected to reach $115.80 billion US by 2025, according to a new report by Grand View Research, Inc., registering a 4.3% CAGR during the forecast period. The market is expected to grow significantly over the forecast period owing to increasing purchasing power of consumers and rising number of international as well as domestic tourists on business or leisure trips.

PR Newswire

How Blackstone became China’s RE connection

In February 2017, Stephen Schwarzman toasted Wang Jian, co-chairman of HNA Group, at a charity event at Manhattan’s Park Avenue Armory. Wang lauded the billionaire Schwarzman as a “god of fortune” and a man with the “key to opening up the chest of treasures.” Fourteen months later, Schwarzman and his Blackstone Group LP (BX-N) may be uniquely placed to unlock some of HNA’s real estate treasures.

BloombergSouth China Morning Post

Market Trends and Research

T-Mobile/Sprint could reshuffle millions of square feet of CRE space

The leaders of T-Mobile US and Sprint Corp. are likely to reshuffle their retail line-ups and cell tower networks while keeping headquarters operations in both Seattle and Kansas City should they win approval for a $26.5-billion merger announced Sunday. The new company, to be called T-Mobile, would be headquartered in Bellevue, Wash., with a second headquarters in Overland Park, Kan, according to the companies.

CoStar Group

Large corporations turn to co-working providers

Co-working options – offered by shared office space providers such as WeWork, Axis and Quest – are on the rise in Miami. The Miami Downtown Development Authority (DDA) reports at least 30 co-working spaces have popped up in downtown Miami alone and have attracted a number of large corporations as tenants. Twitter, Spotify, TripAdvisor, Microsoft and Wix have all taken shared office space there in the last few years.

CoStar GroupOttawa Business JournalGlobe and MailChain Store Age

Rich turn to crowdfunding for properties

Real estate fund managers Michael Episcope and David Scherer had Georgia on their minds—specifically, Atlanta. The city, part of the third-largest-gaining metro area in the U.S. last year, according to Census Bureau data, was only getting hotter. So when the co-founders of real estate investment company Origin Investments spotted an opportunity last year to purchase a 125-unit apartment complex, they jumped on it.

Bloomberg

Real Estate Companies

Brookfield nears $10B final close for global fund

Fundraising for Brookfield Asset Management’s (BAM-A-T) $10-billion US global opportunity fund is 90 per cent complete and is expected to reach a final close next month, according to sources that track capital raising. Brookfield did not respond to a request for comment. Filings with the SEC in March revealed Brookfield Strategic Real Estate Partners III had raised $9.04 billion.

IPE Real Assets

Marriott Vacations Worldwide to acquire ILG

Marriott Vacations Worldwide Corporation (VAC-N) will buy fellow timeshare company ILG (ILG-Q) in a cash-and-stock deal worth $4.7 billion, to expand in Mexico and other holiday hotspots, the companies said on Monday. The combined company will together own licenses to seven upscale brands including Marriott Vacation Club, the Ritz-Carlton Destination Club and the Sheraton Vacation Club.

ReutersPR Newswire

ProMedica, Welltower acquire HCR/Quality Care for $2.2B

Health care provider ProMedica Health and health care property owner Welltower have jumped into salvage the operations of bankrupt nursing home operator HCR ManorCare. As part of the agreement, the buyers will also acquire the properties of HCR’s largest landlord, Quality Care Properties. The total transaction is valued at about $2.2 billion at $20.75 per share in an all-cash transaction.

CoStar Group

Real Estate Investment Trusts

To be or not to be a U.S. REIT?

Should the reliable REIT abandon its tax-free structure to meet pressing capital needs, using the new U.S. tax law as a stepping stone? Or hang on to a status that gives it access to its very own set of investors? Third Avenue Real Estate Value Fund portfolio managers Jason Wolf and Ryan Dobratz argue some U.S. REITs should consider converting to a regular corporation, known as a C corp.

Bloomberg

Retail

Solutions offered to prevent empty Vancouver storefronts

Restaurateur Pepe Barajas’ experience with the City of Vancouver highlights the need for streamlined City Hall processes to approve tenant-improvement permits. It also illustrates why so many arterial streets in the city are peppered with for-lease signs in storefront windows or retail units papered up to show that new tenants plan to move in.

Business In Vancouver

Roots announces opening of two Washington locations

Roots (ROOT-T), an iconic lifestyle brand with a rich Canadian heritage, today announced it is opening two U.S. retail locations in the Greater Washington, D.C., area in August 2018. Roots is bringing its premium lifestyle brand (consisting of apparel, leather goods, footwear and accessories) to Washington D.C. by opening a 3,550-square-foot store on M Street, the pinnacle of high street retail located in the Georgetown neighbourhood.

Canada Newswire

Bed-in-a-box maker Casper coming to Canada

Casper helped to define a new business model for online mattress retail with the debut and meteoric rise of its foam bed-in-a-box four years ago. Now, like Amazon.com Inc., Warby Parker and Frank and Oak, the New York-based company is looking to further cement its place in the market with bricks and mortar stores — a strategy that seems antithetical to the model it helped create, but one CEO Philip Krim believes is important to reach even more new customers.

Financial Post

Restaurants and Eateries

McDonald’s global same-restaurant sales tops estimates

McDonald’s Corp (MCD-N) reported a better-than-expected rise in quarterly sales at its restaurants on Monday, helped by strong international sales, especially in the U.K. and Germany, sending its shares up 3.6 per cent. Global sales at stores open at least 13 months rose 5.5 per vent, easily topping the average analyst estimate of 3.94 per cent, according to Thomson Reuters I/B/E/S.

ReutersToronto Star

New Development

Feds prequalify construction consortiums for P3 archives

The federal government is inviting three teams of architects, financiers and contractors to formally submit bids to construct a new archival facility that’s expected to remain standing for the next 500 years. Last week, Public Services and Procurement Canada released the names of the companies it’s prequalified to move onto the next stage of the P3 procurement process.

Ottawa Business Journal

Sports Venues

Watch Wrigley Field’s most recent renovations

Chicago’s Wrigley Field, the second-oldest ballpark in Major League Baseball, has been undergoing a series of renovations in recent years to update and improve the fan and player experiences. The most recent round of updates took place between Oct 2017.

Multiple Listing Service® (MLS®) residential sales in the province are estimated to reach 102,350 units this year, a decline of nearly 9 per cent from a record 112,200 unit sales in 2016. MLS® residential sales are forecast to decrease a further 10 per cent to 91,750 units in 2018. Housing demand is expected to remain above the ten-year average of approximately 85,000 units through 2018. The BC housing market is being supported by a strong-performing economy and corresponding employment growth, as well as associated consumer confidence. The BC economy is forecast to expand by 3.8 per cent this year, the fourth consecutive year of 3 per cent or more real GDP growth. The cumulative effect has fueled employment growth to its strongest performance in almost 20 years. Since January 2015, the province has added nearly 180,000 jobs. This has bolstered consumer confidence, with retail sales in BC expected to increase by an extraordinary 9 per cent this year. While provincial economic conditions appear to be on a sound footing, the housing market will face increasing headwinds in 2018.

A rising interest rate environment will certainly erode affordability in the new year, while tougher mortgage qualifications for conventional mortgagors will reduce their purchasing power by up to 20 per cent. In addition, the high level of net migration from other provinces, especially Alberta, over the past few years is expected to wane, which will slow overall population growth. These factors will likely be exacerbated by home prices that are already elevated after several years of significant rates of growth. The supply of homes for sale is now trending at or near decade lows in most BC regions. The imbalance between supply and demand has been largely responsible for rapidly rising home prices.

While slowing demand will help alleviate these conditions, the expansion of the housing stock is necessary to slow the ascent of home prices. There are now over 56,000 units under construction in the province, up 54 per cent over the last 24 months. Many of these units will be completed in 2018, adding much-needed supply to the market. The combination of slowing housing demand and a rising inventory of homes for sale is expected to move the market toward balanced conditions next year, and lead to less upward pressure on home prices.

Download Full Copy

The BCREA Commercial Leading Indicator (CLI) increased for the ninth consecutive quarter, rising 2 points in the third quarter of 2017 to 135.3. That increase represents a 1.7 per cent rise over the second quarter and a 7.3 per cent increase from one year ago. The sustained rise in the CLI has been driven by several years of strong growth in the BC economy, particularly in sectors beneficial to commercial real estate activity. While we expect that the almost unprecedented cycle of above trend growth in the BC economy will end next year, the overall economic environment remains very supportive of growth in investment, leasing and other commercial real estate activity over the next two to four quarters. Growth in the BC economy was propelled higher in the third quarter by continued strength in the retail and wholesale trade sector, as well as rising manufacturing sales. Retail sales are on pace to grow more than 9 per cent this year, the highest growth since 1994 and the fourth consecutive year that retail sales have risen more than 6 per cent. Employment growth in the provincial economy is at a more than two-decade high, approaching 4 per cent through the first nine months of the year. Key commercial real estate sectors have been prominent among those industries posting job growth. The CLI’s measure of office employment rose by 7,100 jobs in the third quarter, while manufacturing payrolls expanded by 8,400 jobs to their highest level since 2008. While the economic activity and employment components have propelled the CLI higher, the financial component has been a modest drag on the index. Rising interest rates, widening credit spreads and a slight decline in the benchmark REIT index translated to slightly less favourable financial conditions for commercial real estate in the third quarter.

Variation in the Commercial Leading Indicator can be broken out into three distinct components: » The economic activity component of the CLI follows the overall trend in BC’s economy and reflects changes in economic variables shown to lead commercial real estate activity. » The employment component reflects changes in the commercial real estate environment, due to changes in the overall business cycle. » The financial component acts as an early-warning indicator from financial markets that could signal turning points in the commercial real estate market.

Download Full Copy

89 percent of back-to-school shoppers will make their purchases in-person

As back-to-school shopping gears up, 89 percent of consumers plan to take to shopping centers and malls looking for the latest deals, offerings and experiences related to their school supply purchases. The International Council of Shopping Centers (ICSC) released its annual Back-To-School Spending survey today and found that the average back-to-school shopper is expected to spend $353.20. Those making purchases for children in grades K-12 expect to spend $309.60 on average, while those buying for college/post-secondary plan to spend $437.80 on average.

Shoppers looking to make back-to-school related purchases are in search of the best deals and promotions being offered. Two-fifths (40 percent) will wait to start back-to-school shopping until they see advertisements or sale prices in stores. Nearly 90 percent say they are influenced by promotions in terms of the amount they spend and the items they purchase.

“Back-to-school is one of the shopping seasons where we really find people looking for specific items at the best price,” said Tom McGee, President and CEO of ICSC. “Consumers are more informed than ever and research prices and products prior to making a purchase so it isn’t surprising that so many shoppers are waiting for sales and discounts before buying their back-to-school items.”

Discount stores continue to be the most popular venue for back-to-school shoppers with about 69 percent of them shopping those retailers. Office supply stores (37 percent) and department stores (32 percent) will also see strong activity during this back-to-school season.

Additionally, back-to-school shoppers will utilize their mobile devices while in-store shopping for merchandise. Of the 81 percent who will do so, 58 percent will compare prices, 39 percent will download digital coupons, 38 percent will check availability/inventory, and 30 percent will take pictures of items that might be purchased.

When it comes to shopping online, 30% of consumers intend to order items online from retailers with a physical store presence and pick them up at these locations. Already, among shoppers who have used the click-and-collect method, 81% have made an additional purchase(s) at other stores or establishments when picking up their online order.

Other key findings from the survey include:

Physical interaction with goods is the top reason for back-to-school shoppers to visit stores

  • 46% of those shoppers who will visit stores cited the “ability to see, touch, or try on the merchandise”
  • 36% of those shoppers who will visit stores cited the “ability to browse/ease of buying specific items”
  • 35% of those shoppers who will visit stores cited the “convenience of one-stop shopping”
  • 34% of those shoppers who will visit stores cited “avoiding shipping fees”

For many shoppers, bringing their children increases overall expenditures

  • 68% of back-to-school shoppers say that when shopping with their children, they tend to spend more than if they had shopped on their own
  • 28% of back-to-school shoppers were driven to the store by their children

METHODOLOGY

The ICSC Back-to-School Spending survey was conducted online by Opinion Research Corporation on behalf of ICSC from July 6-9, 2017. The survey represents a demographically representative sample of 1,010 U.S. adults 18 years of age and older.