By Michael Iannone

Architectural and Design firms dedicated to best practices embrace the latest technologies. Their client’s best interests are the basis of design rather than promoting self-ingratiating or simplistic rote solutions for a paycheque.  This perspective yields vibrant and successful work environments regardless of the building context. With thoughtful design, nimble creativity and use of contemporary systems, even an old warehouse can become “class A” office space. Yet this methodology is utilized in less than 2% of North America’s Tenant Improvement’s, a disappointing statistic in an economy longing for value.

At its core a commercial TI is a critical business tool, not just a pretty place that simply contains stuff. It must be designed as a technology delivery platform and a support environment to encourage productive behaviours of the specific business at hand.  Yet too often the focus seems to be a tug-o-war between a grand expression and lowest cost with little thought to functional performance requirements. This continuum ignores the objective of architecture if not the project itself where the ultimate goal should be delivering a space to improve productivity in a place where employees want to work.

Establishing a budget without first identifying the function and performance you expect is inherently flawed. It does no good to buy something within budget that doesn’t fulfill its intended function. That is the basis for buyer’s remorse.

If cost reduction is required, it is better to buy less of the appropriate tools than more of the wrong ones.  Old school Value Engineering sessions often lower construction costs by removing present and future value, a process sometimes referred to as CATNAP; Cheapest Available Technology Narrowly Avoiding Prosecution. Lack of awareness is no excuse as it is a design professional’s responsibility to assure that this does not happen.

Whenever drywall in particular and conventional construction in general is the default basis of design, recent advances in high performance modular construction are lost. Modularity has dramatically improved every industry that adopted and now depends on it.  Widely accepted in structural and exterior systems, it is virtually nonexistent in the tenant improvement environment, a significant forfeiture of value for tenants and building owners. Until recent innovations, this was chiefly due to the inability to customize the modular elements to suit the building itself or integrate design and technology.

Cutting edge modular interior systems now excel in aesthetics, function, technology accommodation and acoustics. They include walls, power and data systems and even modular millwork. This is a major enhancement over their ancestors, the demountable walls of the ‘80s and ‘90s. Those products have their basis in furniture behavior”, i.e. tall cubicle walls.

A successful interior workspace relies on the most common design priorities which include aesthetics, quality and longevity, current and future technology support, minimized cost of ownership, speed of completion and environmental concerns.  If good design is the embodiment of these priorities then comparing how conventional and modular construction each accommodates these categories will demonstrate why the paradigm shift from conventional to modular is imminent and necessary.

• Aesthetics – Advanced modular solutions have a precise fit and finish that conventional can’t match and are frequently chosen for their beauty alone.
• Quality & Longevity – Modular is more damage resistant, provides a ten year warranty with an even longer life expectancy while conventional is quickly marred, easily damaged and has a short life span.
• Technology support – Modular has removable faces to access the wall’s interior to add, change and even embed technology and infrastructure. Augmented with modular power and data systems and millwork, this “Lego” behavior stays relevant for decades.
• Universal hang on capabilities allow any technology to be wall mounted without damage or the pre-planning of structural blocking.
• Cost of ownership – with the behaviors listed above the cost of maintaining and upgrading modular is much lower. Modular sub components can be replaced and changed to keep up with change in function, context, even aesthetics while advanced software tracks every piece.
  • Modular installs significantly faster than conventional, and yes that time is money.
  • Environmentally, conventional construction has focused on LEED guidelines aimed at water and energy conservation which misses the point on the most basic of issues; minimizing the creation of waste, a final product that remains useful and relevant over time (i.e. the definition of “sustain”) and the use of non- toxic materials. Modular construction produces NO waste to deal with. Gyp walls are “use once and throw away” entities, the antithesis of sustainability.  And finally sheet rock dust is toxic which is why code requires physically and mechanically segregating areas being modified, a costly accommodation.

To maximize the return on investment of your Tenant Improvement project, hire a design firm that understands, embraces and promotes this valuable industry advancement.  Select a general contractor who wants to be part of a team infusing value, quality, and longevity in their deliverables. There are many and that number is growing. It’s your investment.

Michael Iannone works for DIRTT Environmental Solutions. His background is in Architectural Psychology.

By Christopher Seepe

In part 1 of this article, I provided a summary of the kinds and amounts of costs you might incur when purchasing a multi-residential building, using an 11-plex outside of Toronto as an example. I discussed land transfer tax, CMHC insurance and building insurance. Look for a separate article that I have written that details how much you should insure your building for.

Here is the remainder of my discussion on the closing costs for buying a multi-residential property.

Note 4 – Incorporation

There differing expert opinions on whether or not to incorporate. This is something you have to investigate for your particular situation. I decided to do it for the following reasons:

• Separate legal entity that distances you from personal liability in the event of a claim against you by a tenant or supplier
• Keeps your property and personal finances separate; a big issue with Canada Revenue Agency
• Land transfer tax benefit (see earlier note)
• Set up an estate trust for your family
• Change owners of company is easier than changing owners on title
• Pay yourself a reasonable salary, on which the company uses its pre-tax profits to pay certain payroll- and benefits-related expenses, and salary deductions (to be written off)
• Certain of your reasonable expenses can be written off in the company to reduce your overall taxable income – travel, vehicle operation/maintenance, etc.

This topic is one where a real estate accountant and a commercial real estate lawyer can help you immeasurably.

Note; while you can save money by incorporating a company online by yourself, there are a slew of minutes and other documents that need to be prepared as part of closing the sale of a property. Unless you are intimately familiar with the process, let your real estate lawyer incorporate for you. They will likely have a junior person on staff that does this kind of work all day long and will charge a reasonable fee for the service.

Note 5 – Phase I Environmental Assessment

Most commercial property loans by traditional lenders in Ontario (plus CMHC) require you to obtain a Phase I Environmental Assessment. Depending on the outcome, a Phase II or (heaven forbid) a Phase III might be required. This is a lengthy topic on its own so you should do some research on this item.

My advice:

• If selling, know what you’re getting into before you list the property. You could be setting yourself up for a bucket of grief.
• If buying, make your purchase conditional, at your sole discretion, upon your acceptance of a Phase I report. If there’s anything that crops up that you don’t like, you have a quick and inexpensive way out of the deal.
• Shop around. I received quotes ranging from $1,500 (plus hidden costs) to $3,480 – for more or less the same service. The lender likely also has an approved supplier list or may require that your chosen vendor passes the lender’s qualification process.
• As earlier mentioned, make sure you know all the costs; minimize the variable expenses which some Phase I suppliers charge.

Note 6 – Lender’s Fees

If you don’t know it by now, you’re in for a rude awakening. Financial lender’s don’t pay for anything, and charge you for everything. Identify all the fees up front and don’t be afraid to negotiate with the lender for charges that are downright unreasonable or not even warranted.

However, you will almost assuredly have to pay the lender’s legal fees, using their lawyer (sometimes they’ll let you use your own). And their fees will be substantially higher than yours and you don’t have much of an option to negotiate them.

Note 7 – Mortgage Commission

Mortgage commission can be all over the map but self-respecting, proven mortgage brokers are worth their weight in gold. I find that 1% of the loan amount (excluding rolled-in fees like CMHC premiums) seems to be reasonable.

Like Realtors®, there are literally thousands of mortgage brokers, but, also like realtors, the really good ones are much less common.

Even with a good one, be aware that, while they may have a fiduciary obligation to you, the truth is they will probably work with you once (or perhaps a few times) but they work with lenders’ representatives every day. Mortgage brokers do not shop your opportunity around. They usually have preferred suppliers and will present you to that small group (perhaps 3 lenders). Find out who their suppliers are and continue to do your own homework. I found one top-notch mortgage broker that I came to respect highly but I continued to do my own research and actually found a lender that was 150 basis points below the best offer my broker had. Of course, he now also has a new preferred supplier.

Note 8 – Title Insurance – you gotta have it

Title insurance has a great many benefits and you should definitely obtain it. In fact, I think just about all real estate lawyers will tell you to do so. The price varies according to the size and type of property. From First Canadian Title’s website, title insurance benefits include:

• Protects against not being able to sell your property in the future, or not being able to obtain financing against your home, as a result of defects that would have been disclosed on an up to date survey, Real Property Report or Location Certificate
• Protection against fraudulently registered mortgages against your title
• Legal fees associated with resolving insured title issues will be covered
• Coverage for renovations completed without a building permit that result in a loss
• Protection should a property not meet municipal zoning requirements
• Protection in the case of someone claiming an interest in your land; for example, an easement for a driveway or a builder’s lien
• Problem solving/facilitates closings—frequently provides coverage for known defects such as encroachments, delays in registration and zoning violations.

Note 8 – Utilities Deposit

As a new account holder, you may also be required to make a deposit with a utility company, which can be notable (eg. electricity $3,000).

The cost of purchasing a multi-residential property can be substantial, and like most things, can be negotiated. Applying yourself to the research and process can save your thousands of dollars.

Christopher Seepe is a commercial realtor, and maintains www.multiresidentialexpert.com, a website dedicated to providing expert advice and sharing his personal investment and ownership experiences to those investing, or looking to invest, in multi-unit residential, income generating properties in southern Ontario, Canada. You can contact him directly at cseepe@multiresidentialexpert.com

By Brian Burton

Adaptive Building Enclosures + Systems

Virtually every component contained within modern building enclosures, including fenestration elements, is being revisited by manufacturers, designers and owners in on-going efforts to reduce operating costs, increase energy efficiency and improve the level of occupant comfort.

These efforts have been intensified over recent years partly as a result of the rapid increase in energy costs and the gradual recognition that the annual solar energy received on the building envelope surfaces is very close to being equal to the energy needed to operate the building. (This is true in all 4 Canadian climate zones.)

In theory at least, with improved techniques and technologies used to “capture” and then utilize this energy, we should be able to design buildings that are self-sufficient when it comes to energy.

As a result a great deal of attention has been focused on what are commonly referred to as “adaptive” or responsive building envelope systems.

These adaptive systems have the potential make it possible to effectively utilize more of this available energy for heating, ventilation, cooling, lighting and electricity supply.

One example of such an adaptive building envelope is a double façade* which incorporates natural ventilation systems. (*A curtainwall construction comprising an outer skin of glass and an inner wall constructed as a curtainwall that together with the outer skin provide a full function wall.)

An initial heat-insulated façade made up of folding wood and glass doors envelopes the space. In front of this a frameless, floor-to-ceiling slide-and-turn system is used as a non insulated glass layer. Both façades can be opened independently to varying degrees and may even be folded back fully, thus allowing staff to individually determine their preferred ambient room temperature.

Prototypes of adaptive façade systems have been developed to act as modular systems that combine six primary principals applied in various combinations:

• Decentralization of ventilation systems.
• Incorporation of flush integrated opening elements.
• Automated daylighting control systems.
• High-performance UV protection*.

(*Currently there are 3 technologies that make this light control possible: liquid crystal (LC), electrochromic (EC) and suspended particle device (SPD). These smart glass technologies enable control of the light that is transmitted into the building from 100% transmittance down to zero. This has a direct bearing on the temperature and heat build up inside the built environment and consequently on heating and cooling bills.)

• Solar energy production using modern thin-film technology.
• Modular/moveable interior insulated panels to minimize heat loss or gain.

These systems are moving away from the “centrally controlled” HVAC systems we have been accustomed to installing in the past to create systems that is more localised.

Instead of controlling heat loss and/or gain by moving warm air around the interior of the building using a central system, which is not really that efficient, the concept involves creating a system where at least some of these functions work together to adapt locally to exterior and interior environmental conditions.

The concept actually involves giving each area of the building what amounts to its own independent HVAC system (instead of a “one size fits all” approach).

The idea does however present a challenge not only because of the complexities involved but also because of the need to consider and balance moisture transport and movement within the system which is considered one of primary concerns in the industry.

If these types of systems can be effectively introduced and proven they could offer designers more flexibility and have considerable potential when it comes to reducing energy costs and improving building performance.

We’re not at the point yet where we can call these systems “intelligent” primarily because they don’t have the ability to learn from past experience. However we are moving quickly in that direction and I won’t be surprised in the least it some agency like the National Research Council comes up with a computerized mock-up that would qualify as “intelligent”

We also know that improving comfort levels and effectively controlling daylighting are important factors that affect occupant productivity in commercial buildings. Typically the financial impact regarding improved productivity is underestimated. In fact a 1% improvement can offset a company’s entire energy costs.

Effective use of daylighting and automated lighting controls improve energy use and employee comfort.

Another fact we have learned from experience in the field is that occupant’s usually insist on some form of “override” for daylighting controls and the number one complaint regarding these systems involves the inability to modify daylighting controls to meet specific needs.

Challenges

At the same time when it comes to assessing adaptive façades we still need to be able to reliably predict thermal and optical performance of components and systems.

We also have to consider the impact of increased cooling loads and cooling energy use for larger buildings and the potential for increased visual discomfort from sun penetration for people working at computer systems in daylighted offices.

It is very likely we will continue to see innovations of this nature as building professionals continue their efforts to focus on sustainability.

Brian Burton is the author of Fenestration Forum © and a member of the CSA’s Fenestration Installation Technician Certification Program Committee and NRC’s Standing Committee Task Group for Energy Efficiency in Buildings. Brian is an R & D Specialist for exp. and can be reached at brian.burton@exp.com or visit www.exp.com (*the new identity of Trow Associates Inc.)

Office Lease Use Clause

Many office leases simply provide that the premises are to be used solely for “general office purposes”.

Is that a problem?

Absolutely.

The landlord may have given one office tenant a restrictive covenant for a particular use (such as an insurance office) and then discover that another office tenant is using its premises for the same use (as the other office premises may simply have in their lease that their office premises can be used for “general office purposes”).

What should a landlord do to avoid this?

A landlord should insert a specific use in each office lease.

For example, if it is an insurance office, the landlord should provide that the offices premises will be used only for the purpose of insurance administration.

In that way, the landlord can avoid a law suit by being specific as to what any other office premises are not to be used for.

Shell Company

A landlord should make the necessary searches to determine whether the tenant is financially viable or merely a “shell” company. If it is a “shell” company, without any assets, this will inevitably leave a problem to the landlord if the tenant subsequently defaults under the lease.

A tenant should make the necessary searches to determine whether the landlord is financially viable or merely a “shell” company. If it is a “shell” company, without any assets, this will inevitably leave a problem to the tenant if the landlord subsequently defaults under the lease, or under any mortgage on the property.

Always Ask

A tenant should always ask the landlord what the annual taxes and operating costs are (in addition, of course, to asking what the basic rent, and, if applicable, what the percentage rent is).

Why?

Because the tenant wants to determine its annual budget using relevant figures.

Harvey Haber, Q.C., J.D., LSM, DSA, C. MED., C. ARB., B.A.  – He is senior partner at Goldman Sloan Nash & Haber LLP in Toronto. He specializes in Retail, Office & Industrial Leasing, Mediation and Arbitration and can be reached at haber@gsnh.com or by phone 416-597-3392.

Hearst, Ontario – Inconsistent ice conditions have become a thing of the past at the Hearst Community Curling Club in Northeastern Ontario thanks to the geothermal technology installed in the club’s new building. The four-sheet curling rink is quickly realizing the benefits of this renewable energy alternative over conventional heating and cooling systems in a community characterized by winter temperatures of -40C.

“In our old building, we could have as much as a 16 degree swing in temperature from one section of the ice to another making for less than optimum curling conditions,” says Larry Wesley, the club’s ice technician. “Now, we’re able to keep the ice temperature on all four sheets at a relatively constant -5C, with never more than a two degree fluctuation, making the surfaces ideal for curling.”

Maintaining a consistent temperature across the entire ice surface contributes to consistent rock speed and curl.

When the curling club’s aging facilities lead to plans to construct a new building, the club turned to GeoSmart Energy, and local GeoSmart dealers Canadian Geo and Greenviro Engineering to explore the feasibility of using geothermal technology to heat and cool the building and to help maintain consistent ice conditions. Cal Delorey from Gagnon & Associates was instrumental in bringing the parties to the table and championing the benefits of geo as a renewable energy solution. What started out as a simple diagram on a napkin in a Hearst, Ontario restaurant blossomed into one of the most efficient curling rinks in the province.

George Njegovan of Greenviro Engineering took that napkin and transformed the diagram into a geothermal blueprint for success.

More than 30,000 feet of horizontally looped ¾” polyethylene pipe was buried in the ground outside the building, where it is tapping into the earth’s natural heating and cooling properties to consistently and evenly distribute warm or cool air throughout the curling club during the year. The system features five separate 10-tonne headers each of which runs separately into the building.

The loop system feeds into 17 circulating heat pumps inside the building. Six 5-tonne GeoSmart Premium H water to water units are being utilized to freeze the four curling sheets. Six 3-tonne GeoSmart Premium G forced air units, each featuring a secondary compressor for dehumidification, have been installed around the four sheets to help maintain the ice at -5C. Low humidity is an important factor in preventing the condensation of water on the ice. Two 4-tonne GeoSmart Premium G forced air units are located at the front of the building on the first and second floors which feature a banquet hall, viewing area and office space and are used to help maintain a comfortable temperature in these areas.

A series of ¾” pipes is buried about 1 ¼” below the 60’ x 120’ concrete floors that make up each sheet of ice. A water solution from an 850 gallon cold tank circulates through the pipes beneath the ice during the freezing of the ice and to help maintain the ice temperature.

“While the system was expected to generate an ice freeze of 1 ¼” on top of each rink’s concrete floor,” says Jay Labbe of Canadian Geo whose company completed the installation, “it has far exceeded expectations, generating a 3” base instead.”

One of the by-products when freezing the ice is extracting heat. While the Premium H water to water is used to circulate water from the 850 gallon cold tank to freeze the ice, it also needs to get rid of excess heat. This excess heat is transferred into an 850 gallon hot water tank, essentially providing the club with free hot water. When the hot water tank gets hot, the forced air units extract the heat to heat the remainder of the building.

The configuration of the forced air units in the rink area allows for quality air circulation by forcing the air into a circular motion which also contributes to maintaining a more consistent temperature at ice level.

“The forced air units are all on tri-thermostats,” notes Steve Marco, Operations Manager, GeoSmart Energy. “This means the club can monitor the system electronically from remote locations pretty much anywhere in the world, including the ability to turn the system on and off.”

The system was also designed to give the club the flexibility to maintain the ice on the rinks all year round or to run just one or two rinks at a time, allowing for maximum cooling and heating efficiency.

“We run four sheets five nights a week during the winter,” says Larry Wesley. “That means we have 32 people in here curling every night, so it’s important that we are able to provide the best possible curling conditions, and with this new geothermal technology, we’re able to do just that. The ambient temperature is perfect.”

For more information on GeoSmart geothermal renewable energy systems visit www.geosmartenergy.com

In keeping with the design intent, an advanced, centrally managed lighting control system was desired to take advantage of all available energy saving opportunities and provide customizable lighting conditions. The system was required to control over 100 different types of fixtures, many of them unique and custom designed. To meet these challenges and the need to adapt to a constantly changing environment, a Fifth Light system was chosen as the solution.

Fifth Light Technology’s line of dimmable electronic ballasts provide continuous dimming control and networked connectivity in order to conserve energy, simplify maintenance and personalize lighting conditions. The Digital Addressable Lighting Interface (DALI) protocol is employed to adjust light levels, program lighting scenes and to detect when a tube needs to be replaced.

Project Objectives

The DALI lighting control system was designed to be flexible, adaptable, and scalable, while ensuring that the facility’s power quality was maintained for the protection of the sensitive radio and television broadcasting equipment in use. The use of an open standard protocol ensured that the client would have a variety of upgrade options to meet their changing needs in the future.

Solution Overview

This Solution consisted of the following components:

• 2,402 DALI dimmable linear fluorescent ballasts
• 552 DALI dimmable compact fluorescent ballasts
• 390 DALI field relays
• 146 DALI field dimming modules
• 14 DALI relay panels
• 21 Touchscreen control interfaces
• 380 low voltage switches & keypads
• 660 low voltage occupancy sensors
• 120 low voltage daylight sensors
• 35 Lighting Control Panels
• 1 multi-user web based Lighting Management 
Software application

Fifth Light's innovative software applications are customized to simplify building management and reduce devices. Whether displaying data from various integrated systems, controlling lighting and shades from a VOIP phone, or remotely from a mobile device, Fifth Light puts control in the hands of the user. Smart buildings are connected buildings, and Fifth Light is at the forefront of intelligent systems integration for more than just lighting.

The key lighting management capabilities provided in this project include:

1 Adaptability. With such a wide variety of unique fixtures, the solution accommodates dimming and on/off control for linear fluorescent, compact fluorescent, LED, and incandescent sources, often mixed within the same fixture. All of the DALI devices worked together to provide seamless control over all the lighting.

2 Efficiency. By controlling all lighting in the facility, the system is able to capitalize on all potential energy saving opportunities. Through ballast factor tuning the maximum light level has been reduced, which has resulted in 35% power savings. In addition, advanced scheduling, continuous daylight harvesting and a network of occupancy sensors ensure that energy is used only when and where it is needed. With unpredictable and non-stop occupancy patterns, the installed solution is estimated to reduce overall lighting energy consumption by over 54% when compared against a non-dimming scheduled relay system.

3 Easy to Operate. Moving beyond the typical switch, the system is controlled by multiple users via touch screen controllers, desktop VOIP telephones, mobile phone applications, and a web-based control software. Access restrictions ensure each user can only affect the lighting in their area. The floor plan based graphical software makes visualizing all changes simple, and faults with lamps or ballasts are automatically detected with notifications sent to the facility management team.

4 Simplified Installation. The use of field mounted DALI dimming modules and relays dramatically simplified the installation, as all control devices were tied directly to a common DALI bus. Low voltage devices were minimized by the use of VOIP telephones for switching, and a distributed network of 35 Lighting Control Panels ensured minimal wiring. The installation of the roughly 3,000 DALI ballasts was coordinated with the various fixture manufactures, and Fifth Light Technology’s team of experienced technicians were responsible for all DALI design, commissioning and startup services – included as part of the purchased turn-key solution.

5 Integration. Designed to be a smart building, the lighting system was required to integrate seamlessly with other building systems. Integration was successfully implemented between the Fifth Light DALI system and the VOIP telephone system, A/V components in conference rooms, security and fire alarm signals, and even the “on-air” lights for live radio broadcasts.

6 Personalization. Corus Entertainment’s facility was envisioned to provide a comfortable and creative working environment for their employees in one of the world’s largest radio, television, and animation production facilities. The ability to easily customize lighting conditions based on usage, time of day, and personal preference was a primary goal and has proven to greatly enhance user satisfaction.

Project Highlights

Lighting energy consumption reduced by 
54%

A centralized lighting control system with over 4,670 control devices DALI control through centralized Web-based Software Personalized lighting control through
VOIP Phone Integration

Results

Since a successful launch in early 2011, the ongoing benefits of the Fifth Light DALI solution are just starting to be realized.
The system has achieved greater than expected energy savings, undergone streamlined changes and expansion, and simplified management functions – resulting in a significant reduction in cost and creating a harmonious balance between form and function.

For more information on Fifth Light Technology visit www.fifthlight.com

What Is a Tenant Representative?

A tenant representative provides an outstanding service opportunity for a business where location is critical. This professional is a commercial real estate agent who works exclusively for a tenant. In business, having the right location can make or break the company’s success. A tenant representative works to ensure that your business avoids pitfalls and improves on its economic opportunities. He or she does this by ensuring the business is in the right location for optimum profit potential.

Space Selection for Your Business

One of the key things this professional does is to help the business to find the best location for a commercial lease. There are several reasons that the business may need to relocate.

1. The business that is struggling may need to relocate into a better economic situation to increase revenue. The tenant rep can help to find this location and help ensure that the business’s location is not a downfall to profit potential.

1. The tenant representative may be able to point out specific locations where the business could profit better, even if the business is doing well right now. The tenant representative may provide recommendations prior to obtaining a new lease.

Finding the right space for operations is important because it affects how customers find the business, how they enter and exit it and how prominent the business is to the street. The goal with choosing the right space is to ensure the business gets the customer traffic it needs and a space that is adequate for business functions.

Negotiation at Its Best

Another way in which the tenant representative can help the business is to represent the business in negotiations for a commercial lease. If you wish to move into an office building, before signing an office space lease, the tenant representative will negotiate things like the following on your behalf.

• The location of the business

• The cost of leasing the space

• The onsite amenities and features of the space provided

• Parking for the business

• Frontage and signage options for the business

• Free rents

• Landlord’s incentives

The goal here is to get the best bottom line for the business. This ensures the business owner has the optimal space and is paying the least amount possible to be in that space.

Why It’s Critical

While most business owners are excellent at running their business, most do not have experience in picking a commercial location that is ideal for the type of business that it is. The tenant representative helps to find suitable office space or other space for the business. This professional commercial real estate agent works on behalf of the tenant to locate, negotiate and to create a lease specifically designed for the business’s needs.

By using this service, the business reduces costs while increasing its potential for saving a significant amount of money.

Jean Louis Racine is a Commercial Lease Negotiator, accredited as a lawyer by the Québec Bar, Québec, Canada, in 1978, and as a real estate broker.  If you would like more information on his new book, you may contact him at http://commercial-lease-expert.com/about-the-author/.

By Christopher Seepe

If you have not purchased a multi-residential property before, especially in Toronto and especially if the number of units is greater than six, you may be surprised by the myriad costs involved.

In southern Ontario, traditional lenders generally consider a four-plex or smaller to be a residential transaction, while six or more units in a property is considered to be a commercial transaction, the latter usually bearing more expenses.

Here is a list of some of the types of closing costs you could expect to pay. The prices are approximate and will vary wherever you are. This list is for a purchase of an 11-unit apartment building in a city outside Toronto (hence no Toronto Land Transfer Tax). The zero-dollar values are costs that might arise, depending on the deal structure and commercial mortgage or financing.

Note 1: Land Transfer Tax – incorporate a company

Land transfer tax is a significant expense and is triggered whenever there is a change in title ownership at the Land Registry Office (LRO). An additional land transfer tax is also triggered if the real estate transaction occurs in Toronto.

If you incorporate a company and the company’s only asset is the commercial investment property, when you decide to sell it, you can sell the company with all its assets (and liabilities), not the property itself. Since title ownership is still held by the company, no land transfer tax is triggered. This can be a notable advantage to the buyer, which the seller can leverage in its negotiations.

Note 2: CMHC Insurance – do it but be aware of the ‘money-grab’

Canada Housing and Mortgage (CMHC) offers mortgage insurance to traditional lending institutions to cover the loss if a mortgagor defaults.

Lenders generally consider multi-unit financing to be much less risky when it’s insured by CMHC so they offer lower interest rates, sometimes 200 basis points (2%) or more. The amount of interest saved over the term of the loan can be more than CMHC’s heavy insurance premium. Do the math.

For example, on a $500,000 mortgage, a 2% lower 5-year rate would save about $34,000, after accounting for CMHC’s $11,250 premium and $750 application fee (currently $150 per unit).  Moreover, the property enjoys a 16% better cash flow because of the lower mortgage payment.

This is one of those cases where the adages, “pay to save” and “penny-wise, dollar-foolish” are appropriate.

CMHC’s premium varies according to the amount of the deposit applied against the value of the property being purchased (loan-to-value or LTV); the higher the LTV ratio, the higher the premium. CMHC will insure up to 80% LTV. However, CMHC does not use the appraised value of the property as determined by independent appraisers or market comparables. CMHC sends its own appraiser and their appraised property value is very often much lower than the purchase price. This forces the buyer to either:

(a) Put in a higher deposit than was originally planned;

(b) Pay the additional CMHC premium for an 80% LTV that is actually perhaps 70% of the market value LTV.

On a more positive note, the CMHC premium (and certain other expenses) can be rolled into your property’s mortgage amount but does not count as part of the LTV ratio calculation. PST (Provincial Sales Tax) on the premium amount is due upon closing and cannot be rolled into the mortgage.

The majority of multi-residential mortgages (excluding perhaps purchases by corporations) are CMHC-insured. Therefore, it is possible that you may come across a multi-residential property for sale that is already CMHC-insured, which is a bonus. CMHC’s insurance premium is a one-time fee for the life of the mortgage. You may want to explore whether to take over the existing mortgage, with a new CMHC insurance premium but possibly without having to go through another appraisal. Consequently, there may be a CMHC credit.

Note 3 – Building Insurance

A lender will sometimes require you to have an independent insurance consultant review your building insurance, which you must have in place before closing, to determine whether you have enough and appropriate insurance for your property.

Insure your building for the replacement value, not the purchase price or appraised value. Otherwise, you could find your investment completely wiped out if your building has been destroyed.

Part 2 of 2 of this article discusses why you should put title of the property into a company you incorporate, and what you should know about the necessary environmental assessment, lender’s fees, mortgage commission, and title insurance.

Christopher Seepe is a commercial realtor, and maintains www.multiresidentialexpert.com, a website dedicated to providing expert advice and sharing his personal investment and ownership experiences to those investing, or looking to invest, in multi-unit residential, income generating properties in southern Ontario, Canada. You can contact him directly at cseepe@multiresidentialexpert.com

By Maurice Benatar

Attraction and retention of talent has taken on new challenges since the economic downturn that irreparably changed the way companies acquire skilled resources. The flux in the job market, rise of contingent workers, outsourcing of support staff, and the generational shift ushering in technology enabled Milliennials have all spawned new workplace behaviours. The separation of work and home life is a traditionalist relic now blurred by social media, alternative work strategies and tethered expectations facilitated by smartphones and an increasingly global economy.

So how as a company do you retain good talent? The short answer is that retention is no longer the prime directive. Engagement is by and large the mandate providing flexible work strategies that align with the expectations of a fickle labour force, enticed by Google cultural complexes, fitness facility options, and generally warm and friendly environments. Of course there are other less tangible factors that come into play including commitments to sustainability, good corporate citizenship and brand profile.

With workforce trends changing employee behaviour, the evolution of the office has in many cases lagged behind as evidenced by the preponderance of empty desks. Progressive organizations have recognized the need to provide collaborative workspaces and tools to induce productivity. The lack of suitable meeting rooms and absence of appropriate work settings means employees are not engaged at the workplace and that the office does not have the ‘stickiness’ to act as the cultural work center of that organization. People need to have a sense of participation in the collective enterprise and the best place to do this is in the office.

The office is under pressure to exert itself in the face of competition. That competition can be alternative work spaces like the home office, co-working environments and companies who provide a range of work options and tools which foster collaboration and team interaction. Steelcase, a global furniture manufacturer, refers to this as palette of choice. Engagement is in part driven by the autonomy to choose the spaces, technology and tools to get work done. By providing a selection of workplace settings, meeting rooms and more lifestyle driven environments which foster cultural interaction, even those employees who have work outside options prefer the office as their go-to workplace. A recent study by Steelcase and Corenet Global showed that 86 percent of companies offer alternative work strategies yet few workers are taking advantage of the flexible approach. Nearly half the companies reported that 10% or less of their employees routinely work remotely  and more than 70% of workers still see the office as the best space to collaborate with colleagues and access tools and technology.

What is clear is that organizations that provide choice and leverage their workspace to meet the changing needs of the workforce will have a competitive advantage. Through smart design and planning, these companies can empower their employees to be more productive and reaffirm the cultural glue that sets it apart as a desirable place to work.

Maurice Benatar is Vice President, Business Development and Marketing at Mayhew, a Thornhill, Ontario company specializing in workplace design and solutions.

By Scott Brooker

Unfortunately, not every building today is a “green” building. While numbers continue to increase they still only represent a fraction of the market. In Ottawa, for example, certified green buildings represent 25-30% of the overall office market. The problem that many organizations face is that while “green” is a criterion that is considered when selecting a location, it is only one of many.  It can be very discouraging when your sustainability goals are sidelined in favour of other real estate considerations.  However, if there isn’t a green building in the location, price range, or of the type that fits your organization, it doesn’t mean that you have to abandon achieving your green objectives.

Remember, when you are negotiating a lease or renewal, you are doing just that, negotiating. If you have identified a location that is, unfortunately, not a green building, that doesn’t necessarily mean it has to stay that way. Building renovations and greening initiatives can all be negotiated into your lease. For example, our Green Real Estate Practice recently worked on behalf of an environmental consultancy located in a B-class office building. The building met many of the firm’s criteria (save that it was not a green building), and given various factors, renewal was the preferred option. However, because the tenant was an environmental consultant, there was a corporate mandate to occupy sustainable office space. While negotiating the renewal  (in addition to securing an advantageous rental rate) we were able to negotiate with the Landlord to commit to various environmental initiatives including green cleaning practices, use of low-voc products in the building common areas, pursuing environmental certification for the building, and ultimately allowing the tenant to achieve its sustainability objectives for the office.

Just because the building you have identified for your organization isn’t “green” today, that doesn’t mean you can’t make it “green” and achieve your sustainability objectives, along with your geographical and financial ones. If creating a sustainable productive environment is important to your organization, contact a green real estate expert to assist you in finding and negotiating the right deal to meet all of your real estate objectives.

Scott Brooker is a leading Green Real Estate expert and commercial real estate agent. He is a founding member of the Cushman & Wakefield Ottawa Green Real Estate Practice Group, and a founding member and regular presenter of the Better Buildings Breakfast Series. He sits on the Canada Green Building Council – Ottawa Region Chapter Existing Buildings Committee. He works as a commercial real estate agent, integrating sustainability into the traditional corporate real estate process, for Cushman & Wakefield Ottawa.