PERMIT TO SOAR

Calgary building permit values soar in July
Up 43 per cent from a year ago
By Mario Toneguzzi
August 8, 2011

CALGARY — The estimated construction value of building permit applications in Calgary soared in July compared with a year ago.

The City of Calgary says the value ballooned to $328 million for the month, up 43 per cent from July 2010’s $229 million.

It is also up three per cent compared with the five-year average of $318 million and an increase of 15 per cent compared with the 10-year average of $284 million.

In July, residential values were up 41 per cent from a year ago to $189 million while non-residential values were up 47 per cent to $139 million.

“The residential increase for July building permits goes across all sectors – single family, garage, two family, apartment and townhouse,” said David Watson, general manager of planning, development and assessment, said in a news release. “In the non-residential categories, values were highest in the commercial sector whereas there was a marked decrease in the government and institutional sectors for new construction.”

Year-to-date ending July 31, total values across all categories are up 44 per cent over the previous year to $2.7 billion compared with $1.8 billion in 2010, said the city, with the residential category up eight per cent to $1.2 billion and the non-residential category up 96 per cent to $1.5 billion.

The non-residential values are significantly higher than 2010 due to a major airport terminal improvement project valued at $600 million from January.

Major projects for July included three new apartment projects valued over $10 million (St. John’s Tenth Street at $26 million; Mikkelsen House Phase 1 at $14 million; Panorama West at $11 million), a $18 million senior citizen home improvement (Bow view Manor) and two new warehouse/storage facilities (HCP Phase II Building ‘A’ at $18 million; Canada Post at $10 million).

LOOK TO THE SKIES!

Spectacular aurora activity near Calgary

Dr. Robert Berdan, Calgary nature photographer and U of C assistant professor, took these remarkable photos about 2 a.m. on Aug. 6. At about 7 p.m. the evening before, an aurora alert was issued by the University of Alberta indicating there was a 70% chance of auroral activity in the southern prairies including Calgary. Berdan says, "I headed out at 10:30 p.m. to photograph the aurora and local thunderstorms and stopped on Township Road 252 near Cochrane and photographed the aurora until 2 a.m. Getting bright auroras this far south is a relatively rare event. However, the Aurora is nearing its 11 solar max."

Source: Calgary Herald

WANT TO GO STEADY?

Canada property results improve on deals, leasing
Reuters August 5, 2011
By Ka Yan Ng and Amruta Sabnis

TORONTO/BANGALORE — Canada’s biggest office and retail landlords reported strong quarterly results on Friday, boosted by acquisitions and long-term leasing renewals.

Brookfield Office Properties and RioCan Real Estate Investment Trust REI said funds from operations, the most closely watched performance measure for REITs, rose in the three months to the end of June.

Even so, activity for the Canadian companies could slow if a flagging global economy makes it more difficult to raise capital and complete deals. “We’ve had a ton of acquisition activity and capital raising going on over the last two years,” said Karine Macindoe, an analyst at BMO Capital Markets.

“This market environment is probably going to slow some of that down because … share prices are far more volatile and declining.”

Canada’s resilient economy, rising rents and easy borrowing are fueling a buying spree among real estate investment trusts, highlighted last month by the largest office property deal ever by a Canadian REIT.

STEADY EXPANSION

The second quarter revealed few signs of weakness. Brookfield, a major office landlord in Manhattan and other North American cities, reported a 23 percent jump in leasing activity. It leased 1.6 million square feet of space, compared with 1.3 million square feet leased a year earlier.

FFO rose to $166 million, or 30 Canadian cents a unit, from $156 million, or 30 Canadian cents, a year earlier. FFO strips out the effects of depreciation and other factors from the earnings of property companies, giving a more telling quarterly reading. RioCan REIT, Canada’s largest landlord of retail space, also turned in a strong performance.

FFO rose 12 percent to $93-million, or 36 Canadian cents a unit, from $83-million, or 34 Canadian cents, a year earlier. RioCan has steadily expanded its portfolio in Canada, while looking for opportunities for growth in the United States for more than a year. “RioCan’s acquisition platform remains on track to meet our objectives for the year,” Chief Executive Edward Sonshine said in a statement.

“RioCan has been able to take advantage of historically low interest rates to generate solid growth through acquisitions, development, and increased occupancy and rents.” It renewed 1 million square feet during the quarter at an average rent increase of 13.9 percent, or $1.99-per square foot. It also added five properties in the quarter. In July, Dundee Real Estate Investment Trust said it is buying 29 properties from U.S. private equity giant Blackstone Group for $831.8-million. It was the largest deal ever for a Canadian REIT.

RioCan’s units were up 0.6 percent at $25.05 on the Toronto Stock Exchange. Brookfield shares were off 0.3 percent at $16.80 on the Toronto Stock Exchange, but its New York-listed shares were up 1.35 percent to $17.26.

Photo By: mb17chung

CHECK IT OUT!

CALGARY FOLK MUSIC FESTIVAL
JULY 21- JULY 24, 2011

GIDDY UP!

MARKET BLOOMS

City's housing market blooms in June
Condo market posts first gain of the year
By Mario Toneguzzi, Calgary Herald
July 5, 2011

Calgary's residential real estate market experienced a significant late spring upswing.

Single-family MLS sales last month finished up 32 per cent, to 1,398 homes, from June 2010's 1,059 transactions, according to data released Monday by the Calgary Real Estate Board.

Condo sales -up almost 31 per cent -were up year-overyear for the first time since April 2010. The real estate board recorded 581 sales last month, compared to 445 in June 2010.

While sale prices continue to lag and 2011 sales are up only two per cent over the first six months of 2010, the late spring swoon has brought tempered optimism of a continued turnaround.

"We had a late spring maret this year. It's all starting to come together in June," said Sano Stante, president of the Calgary Real Estate Board.

"Last year we had an exuberant market early on and it died in June.

"So to draw comparisons year-to-year for that month shows an exaggeration of the trend."

The average sale price for a single-family home in June remained almost flat, falling to $479,580 from $481,960 a year ago.

Condominium prices, on average, rose to $296,501, the highest since May 2010, from $292,182.

On a year-to-date basis, single-family home sales for the first six months are up more than 5.5 per cent, while condo sales are down almost five per cent.

"Strong monthly increases does not imply a housing boom, as it is important to put into perspective that sales activity remains below longterm averages," the real estate board said in a statement.

However, there are signs the local housing market is starting to find its footing, said Stante.

"This gradual levelling has been fuelled by growth in employment, and in particular growth in full-time jobs," he said.

Improved job prospects, combined with an increase in the number of people moving to Calgary, will give lift to our housing market for the remainder of this year and into the next."

Dan Sumner, an economist with ATB Financial in Calgary, said a year-over-year comparison may be misleading as to the strength of the Calgary housing market given that June is often one of the busiest months for sales, even though the same month last year was abnormally slow.

"Fuelling sales is a stronger economy specifically in Alberta, which feeds through into consumer confidence and that's making Albertans more comfortable with home purchases again," he said, adding low interest rates are also luring buyers.

THE LOW DOWN ON LOW FEES

The common cents of strata fees
Keeping costs low may put future building maintenance, repairs at risk
By Tony Gioventu, The Province
June 19, 2011

Q: Our strata council is under a lot of pressure from our owners to keep our strata fees down, but it means we are going to have to reduce maintenance and services to our building.

We have been checking out strata fees in the Abbotsford area, and while we are a bit on the higher side, we do have some additional services that other apartment complexes do not.

Is there some way to compare our strata fee rates in a 61-unit woodframe building with other regions of the province? It would be helpful if there was some way of knowing whether our fees are in line or not.

We had a real estate agent at our AGM in May who recommended we keep our fees low and simply have special levies when we needed them for repairs, but that appears to us to be self-serving for the agents and not realistic for the strata corporations to be able to operate; and if we maintain strata fees at exactly the same rate as last year, we will likely be facing a

A: Comparing your fees to another strata corporation will only establish a comparison of the amount, but will not take into consideration any of the services, amenities, maintenance or operational functions, geographic variations, landscaping functions, or even the basic building construction and durability of each of the properties.

Strata fees are set by approving the annual budget. The annual budget is proposed by the strata council to the owners at the annual general meeting, and based upon the amount approved in the annual budget and the contribution to the contingency reserve fund, that amount is used to calculate the monthly contribution of each strata lot.

We did a research comparison in 2008 between two almost identical properties in Richmond and Nanaimo.

Both were approximately the same age, design, number of units, basic construction, and offered the same services. Both had central heating and hot water which were included in the monthly strata fees and had a comparable history of operations. The one main difference was that strata fees were almost 50-per-cent higher historically in the Nanaimo strata, and the main influence was an integrated maintenance and operations plan in their annual budget.

At the time, the Nanaimo strata was not facing any special levies for major repairs, while the Richmond strata was facing two levies for roofing and balconies.

The process of annual budgeting really has little benefit if a strata corporation has not created a maintenance and operations plan and simply agrees that last year's budget seemed to work because it balanced at year end.

What you should really assess is: "What did we leave out last year?" A basic inventory of your major building components and an understanding of the maintenance and inspection requirements each year will have an overwhelming benefit to your strata corporation if you provide enough funding to meet those obligations.

With an aging strata inventory, the grim reality of neglected maintenance and repairs is rapidly setting in. Much of that problem is caused by underfunded budgets and low strata fees, the genesis of which was often created by the development industry showing artificially low budgets to make new housing more affordable and attractive.

Consumers are now faced with rising special levies for the replacement and renewal of major building systems that have not served out their full life expectancy, often due to neglect; and that neglect is usually linked to lack of funding with no planned maintenance and operations plan.

In addition, rising energy costs are absorbing the desperately needed increases for maintenance and renewals.

If you show a simple graph of a building aging and the costs to operate, both lines should run on a rising parallel.

For every year a property increases in age, the life of the roof, windows, balconies, plumbing, elevators, proportionally decreases until they are renewed. The more important question ever yone should ask: " Are our strata fees high enough?"

Tony Gioventu is executive director of the Condominium Home Owners' Association.