By Hartley Witten, Carleton University Student
On January 23rd, the Urban Land Institute and PricewaterhouseCoopers (PwC) hosted a highly informative breakfast presentation at the offices of PwC Ottawa. The presentation and panel discussion event, which was attended by both ULI members and members of the local urban planning and real estate industries, was held to explore the 2018 edition of the annual ULI/PwC “Emerging Trends in Real Estate” report.
Jamison Young, President of the Ottawa ULI chapter kicked off the morning, providing a warm welcome to all before handing things off to PwC Ottawa Assurance Partner, Nick Ethier, who introduced the “Emerging Trends in Real Estate” report. The 2018 edition of the report, regarded as “the industry’s most predictive forecast”, was its 39th annual edition, and 11th annual in Canada. PwC conducted over 1000 interviews across Canada and the United States for the report.
Following his introduction, Young invited his colleague Chris Potter to the podium. The leader of PwC’s Canadian real estate tax practice and GTA private company services real estate practice, Potter presented the reports main findings.
While the report’s 2017 version encouraged cautious optimism in the Canadian real estate market, the 2018 edition carried a theme of defensive optimism. While not greatly different, this year’s report noted that while there may be no storms ahead, there aren’t any blue skies either.
For the coming year, PwC predicted a wide range of trends in the real estate and planning fields. For planners, PwC’s prediction and encouragement of a new, made-in-Canada approach to the concept of the 18-hour city was notable, as was the prediction of a rise in placemaking, and the use of transit to transform cities.
Stemming from the current state of real estate markets in cities like Toronto and Vancouver, rethinking how to address affordability was a hot topic in the report for those in the real estate business community. Potter also pointed to a need for rebalancing in real estate portfolios, and a reinvention of real estate through the use of technology.
Headlined by companies such as Amazon, PwC has predicted technology would be a pervasive force in the coming year’s real estate market. E-commerce, where Canadians are expected to spend $50 billion a year by 2020, is the primary influence on this force. From this shift, a great need has grown for warehousing, including smaller spaces for last mile deliveries. As such, PwC described warehouses as a best bet in real estate for 2018.
Outside of warehousing, office real estate is predicted to be changed by technology. Thanks to the rise of co-working and companies such as WeWork, office real estate will be forced to become more flexible.
PwC also found Canada’s office stock to be old, with most offices today being between 25-30 years old. Potter said the aging office stock across the country is driving construction of new offices, and creating new centres in CBD’s, such as Union Station in Toronto. Given this rise in construction, and with Toronto being the centre of Canadian business, PwC also described Toronto offices as a best bet in real estate for 2018. In the same vein, PwC also suggests selling underutilized, demolishable office stock.
When speaking of the need for flexibility in office stock, Potter floated the possibility of repurposing offices for use as homes. As Potter said, the affordability issues in Vancouver and Toronto are a matter of supply and demand, and this demand is merely a result of growth.
However, it must also be noted that the affordability crisis is not an issue across the country. Ottawa, namely, is home to large amounts of new product, with many in the real estate industry trying to find ways to create more demand.
One tactic discussed to drive more demand is increasing desirability. According to PwC, this includes access to transit and placemaking. As Millennials begin to take the real estate market by storm, placemaking is becoming increasingly important, said Potter. This means an effort by planners and developers to build vibrancy, with minimal congestion and ease of movement for residents.
Alongside Millennials aging into the housing market, Canada’s 75-plus senior population is also growing, making seniors housing another best bet for 2018, according to PwC.
Following Potter’s informative presentation, Hugh Gorman of Colonnade Bridgeport helped moderate a lively panel discussion with a unique focus on Ottawa, alongside Canada as a whole.
Sitting on the panel were Mary Jarvis of Canada Lands Company, Shawn Hamilton of CBRE, and Erin O’Connor of The Regional Group of Companies in Ottawa. The range of panelists provided a unique range of perspectives from the public market, leasing market, and residential market, respectively.
Each panelist made multiple intriguing contributions. Overall, the group agreed that as an affordable city, there is ample opportunity to be had in Ottawa. Somewhat unique to Ottawa, according to O’Connor, is the homebuyer’s ability to move into a home if they wish, and not have to live in a condo, as is the case in Vancouver.
Also topical in the discussion of Ottawa were Lebreton Flats and Tunney’s Pasture, both big spaces for future opportunity and placemaking needs, said Jarvis. This includes schools, parks, and commercial districts.
Technological innovations, such as autonomous cars, were also seen by the panel as possibly having a unique impact on Ottawa. Hamilton, interestingly, questioned whether autonomous vehicles would spur development of parking spaces, which could soon be deemed unprofitable.
Ben Giani, an associate professor of architecture at Carleton University, was the last speaker of the jam-packed morning, thanking the many people involved in the event’s planning, and inviting everyone to maintain involvement in the Ottawa ULI chapter.