Canadian Economic Overview:

The Canadian economy has been sending mixed signals during recent months, with some current domestic indicators looking more positive while others are not so encouraging.  Most uplifting was the February employment report with the addition of just over 50,000 jobs.  Good news for the office sector was the increase of service sector jobs, many of which were full-time positions.  Overall retail sales were pretty flat, with auto sales excluded, following a drop in December.  The retail sales numbers may indicate a reduced appetite for spending during 2013 as household debt weighs heavily on many consumers.  A sobering trend becoming evident in the housing market is the downward trajectory of new home starts as the market seeks to find a sustainable level of starts.

WR Industrial Market:

Activity remains constrained by a lack of good quality supply in the market.  Despite a relatively high vacancy rate of 6.7%, only a fraction of this available space is Class A product.  Over half of the current market vacancy consists of functionally challenged space or inappropriately sized for current demand.  Waterloo Region’s legacy of old-order manufacturing facilities currently available on the market simply cannot fill user demand for more modern space.

Click on the image below for a copy of the report.

WR Office Market:

While Kitchener will continue to build on its current leasing momentum; new and different lease options in buildings will be brought to market.

With Uptown Waterloo’s historically low availability, very few buildings are benefiting from the new demand for urban office space.  Suburban Waterloo will see a divergence from the typical single-storey, large floor plate of the past as the influence of Blackberry’s relentless driving of the market has all but disappeared.

Click on the image below for a copy of the report.

Waterloo Region Office Market Statistics

Waterloo Region Industrial Market Statistics

Guelph Office Market Statistics

Guelph Industrial Market Statistics

Reblogged from the informed tenant's Blog:

The demand side of real estate is often glazed over by real estate companies.  We refer to economic conditions, historical statistics and past data sets not ever really being able to quantify the impact on demand.  For our 2013 Market Outlook Breakfast we took a hard look at a number of different influences on demand and I was fascinated to discover the extent to which demographics impact the office real estate market.

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Each year we carefully select our event venues.  As a good portion of our audience are from out-of-town, and perhaps unfamiliar with real estate activity in the Region, this event is a great opportunity to highlight the incredible growth that is underway.  The venues we select exemplify the current trends in the commercial real estate market and this year, The Breithaupt Block was no exception.  Many of our guests were seeing the space for the first time and were visibly impressed.

Ron Jansen discusses current trends in the Waterloo Region industrial market.

Our speakers, Karl Innanen, Ron Jansen and John Lind did an excellent job summarizing current market trends and opportunities in the industrial, office and investment markets in Waterloo Region.  The theme of “highest and best use” was woven throughout the presentation with each presenter walking the audience through current market supply and demand in their respective fields of expertise.  The planning and effort that goes into this event each year is considerable.  Our market specialists work closely with our research department to examine market statistics and extract insight from these numbers to help identify trends on the rise.  Once developed, their ideas are challenged and honed by our entire office resulting in truly “uncommon knowledge” that our clients can apply to their businesses today.

We received excellent feedback from our guests with regards to the content yesterday morning so thankfully, the long and arduous process of pulling this event together was well worth it.

We were happy to have CTV News cover our event, you can find the footage here.

Many were in attendance at our 4th annual Market Outlook Breakfast held at the Breithaupt Block in Kitchener.

Once again, thank you to those who were able to make it yesterday, we’re already looking forward to next year!

We see a key opportunity to facilitate the smart growth strategies being adopted by the Cities in changing the parking requirements for industrial properties. The current requirement of 2.5 spaces per 100 square metres leaves many unused spaces at the expense of land intensification, development potential and tax revenues.

This first came to my attention when I was asked for information on a “vacant” building. The inquirer was sure that there was space available because the parking lot seemed to be empty! When I drove by the property I was amazed to see that only 21 of 205 spaces were in use. As I drove around industrial parks I paid close attention to the parking lots and found the majority were at least half vacant. My first reaction was to note how much wasted land is tied up in unused asphalt.

Could adjusting the parking ratio requirements for industrial buildings help contain urban sprawl and increase urban intensification?

Our parking requirements made sense at one time – when most were for labour intensive operations that resulted in full parking lots. Many of these operations also had a high component of office space, so the need for ample parking was justified.

Industrial uses are changing. We see far more warehouse and light assembly operations, much smaller office requirements and fewer people per square foot. As a result we’re seeing far fewer cars in the lots.

There are many benefits to changing the parking requirements. More building per acre equals more effective land use and supports smart growth initiatives. It means more tax revenue per acre and better coverage and development potential for property owners. So much unused parking gives the impression of an under- performing company and ultimately reflects on the city and the Region. Mother Earth would appreciate less asphalt too.

On a side note, I ‘tapped’ this entire post on a BlackBerry Z10 and found the typing experience to be quite good. There is a bit of a learning curve but it’s easy to learn and the predictive text is really cool. It made the process very smooth.

Thanks, John

Why and how are the questions that keep pouring in – here’s the inside track.

The former Preston Springs Hotel was sold in December 2012 to Haastown Developments.

There are several attributes that make The Preston Springs site an attractive investment property.  These attributes, coupled with current market conditions, created significant pressure on investors to make a move. Listed below are four factors that contributed to creating the necessary pressure to achieve our goal of price, pressure and timing:

The building. First, it’s attractive due to its iconic position in the Region, the town and the public’s mind. A beautiful and historic building that fits well into the current re-development trend in commercial real estate. However, more than a typical conversion, Preston Springs offered a distinguished canvas for a developer to make their mark in the Region of Waterloo.

The lot. With 2.39 acres of land, Preston Springs has the capacity for more. More parking or more development.  Access from both Fountain and Abraham Streets allow for new possibilities in site accessibility and parking.  From a Regional perspective, the building is easily accessed from Highway 401 and upon completion of the Region’s light rail transit system (Phase 1 scheduled for 2017),  travel from within the Region will be simple even without a car.

The price. 50,000 square feet of space with a list price of $1,295,000 put Preston Springs in a large market of buyers. Potential return on the price per square foot could make sense for large and small developers alike.  Those with the skill set and vision for redevelopment were competing for this rare opportunity.

The market. We saw three major trends in real estate that would affect the sale of Preston Springs.

• First, the push for higher density development. Urban boundaries are closing in at the same time residents are seeking out urban lifestyles with walking access to amenities. For the first time in decades, we have several generations interested in and competing for the same urban space; it’s one that’s limited in supply.
• Second, many see Preston Springs highest and best use as a Senior residence. Cambridge vacancy rates in this market rank among the lowest in Waterloo Region and the Province. Southwest Ontario in general is underserved in this capacity and vacancy rates continue to tumble. Total supply in the senior market? The CMHC is expecting a 2.7% increase, the lowest since 2007.
• Finally, alternative investments. Many investors have been watching stock market returns evaporate over the past several years. With little ability to affect change on equity markets they have turned to tangible assets and real estate has become a preferred option. With the ability and willingness of ‘stock market refugees’ to pay more for ‘solid gold’ assets that require little work, real estate insiders and developers have been pushed to the fringe. Forced to search for diamonds in the rough, investors are seeking out assets that may require more vision more work and more risk for higher returns.

Preston Springs fit this market well; it slid into a perfect storm.  In recognizing the opportunity, understanding  the market and communicating a clear message, our team was able to deliver on our promises.  It was also great for us to play a part in the transformation of this local  landmark; we’re both looking forward to seeing Haastown Developments vision come to fruition!

If you’re interested in learning more about the former Preston Springs Hotel, below are some links to press coverage as well as an online photo album.

LINKS:

Flickr Album

PRESS:

Historic Preston Springs Hotel for Sale, Cambridge Times 11/21/2012

Landmark Prestons Springs in the Market for New Owner, KW Record 11/23/201

Preston Springs Considered Hot Property, Cambridge Times 11/26/2012

Preston’s Jewel Awaits New Owner, New Vision, KW Record 12/08/2012

Video Tour – Inside the Preston Springs Hotel, KW Record 12/08/2012

The majority of investors feel that conditions will remain the same during the next 6 – 12 months, with confidence rising over the five-year horizon.

To download the full report, please visit our global site here.

Market activity to date in 2012 indicates that the year is on track to meet or exceed transaction volumes last seen in 2007.

Canada is seen as an attractive destination for property investment.

The building sits on top of a natural sulphur spring that once attracted many European tourists to Cambridge with the promise of its remarkable curative powers. The hotel was later converted into a seniors’ residence and, for the past decade, has sat vacant at the intersection of King and Fountain Streets in Preston.

News of the sale will likely be met with relief given that public concern over vandalism and the continued dilapidation of the building have left many people wondering what will happen to the former Del Monte Hotel.
The building is being offered for sale at $1,295,000 and Colliers anticipates a strong response from the investor/developer community.

LINKS:

Online Listing

Flickr Album

PRESS:

Historic Preston Springs Hotel for Sale, Cambridge Times 11/21/2012
Landmark Prestons Springs in the Market for New Owner, KW Record 11/23/201
Preston Springs Considered Hot Property, Cambridge Times 11/26/2012
Preston’s Jewel Awaits New Owner, New Vision, KW Record 12/08/2012

Video Tour – Inside the Preston Springs Hotel, KW Record 12/08/2012

Reblogged from the informed tenant's Blog:

I was disappointed recently to read a disparaging comment on the internet regarding Downtown Kitchener. So much effort by so many has gone into revitalizing the downtown. It made me think about how invested Colliers is in the downtown and how many milestone projects Colliers has participated in over the years.

72 Victoria may not mean much to the casual observer but to a real estate person looking at the historical relevance, 72 Victoria is the fore-runner to the Tannery District.

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