BMO sees strength in commercial real estate through 2013

TORONTO -- BMO Economics says the commercial real estate market -- which has been characterized by cautious growth since a severe market downturn in the 1990s -- will become a draw for investors into next year, thanks to a strong real estate market and low interest rates.

Earl Sweet, senior economist and managing director at BMO Capital Markets, said vacancy rates in the commercial real estate sector are lower than historical norms in many Canadian cities.

"The commercial real estate industry benefits from the healthy condition of Canada's financial institutions, the participation of large, well-funded operators and institutional investors, whose long-term objectives reduce volatility during downturns," Sweet said in a report.

"Higher occupancy -- spurred by steady growth in employment, manufacturing, wholesaling, and retailing -- is reducing office, industrial, and retail vacancies, while lease rates are edging upward."

But the market is likely to grow at a more tempered pace this year and next, noted Sweet, as Canada's economic growth slows to two per cent.

The eurozone crisis and slowing momentum in the U.S. are also expected to dampen investors' appetites in the short term, he said.

In Toronto, a healthy financial services sector, stable consumer and business confidence and an increase in manufacturing helped the commercial real estate sector recover last year.

In Montreal, softer employment in the business and professional services industry helped push vacancies up to 9.2 per cent during the first quarter of 2012, from 8.2 per cent at the end of 2011.

But BMO predicts that recovery in the professional services industry, continued growth in financial services and limited space should stabilize the market.

In Vancouver, the lack of supply has kept commercial property prices high. That, along with low bond yields and volatile stock markets, is driving more investors toward commercial real estate.

Toronto-based real estate owner Brookfield Canada Office Properties (TSX:BOX.UN) says it has seen stability across all of the markets it operates in, especially Toronto, Calgary, Ottawa and Vancouver.

The company, which reported second-quarter earnings on Monday that nearly tripled compared to the same year-earlier period, says it expects that rental rates in downtown Toronto will continue to steadily increase.

"The outlook for future demand of office space remains positive," said Jan Sucharda, president and CEO, during a conference call on Tuesday.

"While uncertainties resulting from the European debt crisis and slowing global economies could impact the future direction of the Toronto market, today we haven't seen any fallout."

The company says its Calgary portfolio is 100 per cent occupied, thanks to a strong oil sector that has created demand for office space there.

The real estate owner is boosting its annual dividend by eight per cent as it reports earnings of $134.4 million, or $1.44 per unit, nearly tripling the $47.5 million, or 51 cents per unit it earned in the same quarter a year-earlier.

The latest quarterly results included a $100-million fair value gain, reflecting a change in the value of its buildings, compared to a gain of $15 million in the same period of 2011.

Source: http://www.ctvnews.ca/business/bmo-sees-strength-in-commercial-real-estate-through-2013-1.891142

Canadian Real Estate Posing Risks To Economy, OECD Says

Canada’s growing household indebtedness and rising real-estate prices are posing risks to the world’s 10th-largest economy that may require additional measures to rein in the market, the Organization for Economic Cooperation and Development said.

The Paris-based group of developed nations, in a report on Canada released today in Ottawa, said there are signs of “imbalances” in the Vancouver and Toronto real-estate markets as well as the condominium segment. The report said steps by Finance Minister Jim Flaherty to tighten mortgage insurance rules in recent years have helped.

Historically high levels of indebtedness are “making households vulnerable to a possible decline in real-estate prices,” according to the report. “Further measures may be needed, possibly targeted on certain market segments, if imbalances persist.” Flaherty has shortened amortization rules for government- insured mortgages twice since 2008, lowering the limit to 30 years in January 2011. He’s also cut the maximum amount homeowners can borrow against the value of their homes, withdrawn government insurance on home-equity lines of credit, and introduced legislation that prevents lenders from using government-insured mortgages as collateral for debt known as covered bonds.

The absence of a real-estate collapse in the country is one reason Canada has had relatively good economic performance, according to the OECD, which estimates growth of 2.2 percent this year and 2.6 percent in 2013.

Low Rates

Still, a “prolonged period” of low interest rates that have helped fuel the recovery may have increased risks to the financial system, the OECD said. While the central bank can afford to keep “highly accommodative” rates given moderate inflation, it will have to consider raising borrowing costs if “downside risks fail to materialize.”

Bank of Canada Governor Mark Carney has kept the benchmark rate unchanged at 1 percent for 21 months, even amid signs the economy is approaching full capacity. The OECD also said the government’s plan to erase its budget deficit by 2015 is “reasonable,” while the country’s strong fiscal outlook gives it scope to respond to any deterioration in the economy.

“Canada’s low indebtedness and well-earned reputation for fiscal probity allow it room to respond by slowing the pace of consolidation as needed,” it said. To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

Source: http://www.bloomberg.com/news/2012-06-13/canadian-real-estate-posing-risks-to-economy-oecd-says.html

Local QR Real Estate Usage Grows Slowly

First seen in Japan in the mid-1990s, quick response codes could add momentous efficiency in the residential real estate world, allowing virtual tours of houses to take place on mobile devices.

But only 14 million American mobile device users have interacted with a QR code, according to recent study by digital business analytics firm comScore Inc. That means less than 5 percent of the American public has scanned a QR code.

The QR code technology was invented by the Toyota subsidiary Denso Wave in 1994 to track vehicles during the manufacturing process, according to independent digital news website Mashable. The two-dimensional barcode was designed to allow its contents to be decoded at high speed.

QR usage is growing fastest in Canada and Hong Kong, but the codes are also used frequently in the United Kingdom and the United States. That’s because Americans are often relatively slow adopters to new technology, said Joe Spake, broker with InCity Realty in Midtown.

“Japan is much more mobile than we are,” Spake said. “I think what people really don’t get about QR is that it’s a totally mobile technology. The thing that really bothers me the most is when you scan one and it doesn’t resolve to a mobile page. Or the link will be dead. Or the link won’t work. There seems to be more problems with them then them working right.”

A 15-year real estate agent, Spake is also a consultant, blogger, and self-proclaimed “techie” and social media junkie. He said because real estate has always had such a strong “push-marketing” aspect – with advertising, listings and so on – agents don’t always grasp the interaction.

“Some marketing person will say, ‘You need to be using QR codes!’ and they do,” Spake said. “They just place the QR wherever they want to and don’t bother to have the landing part of it optimized to mobile. They don’t know any better or they’re not checking. You can optimize any website to be optimized for mobile, to come up on a phone in that kind of format.”

One of the platforms on WordPress.com offers a plug-in where “it does it for you, you don’t even have to think about it,” Spake said.

For his property listings, Spake goes through a company called SinglePropertySites.com, for which he pays a monthly fee to pull information from the Multiple Listing Service. The service also allows him to upload unlimited pictures and “all of the embellishments.”

“They have in their software built in to mobilize it,” Spake said. “It actually takes the elements of the website and simplifies them and puts them down to where it’s mobile-optimized. It’s got a bunch of the information, it’s got links to the other information, but if you went back to your computer or laptop and pulled up that same URL, you get a 1,200-pixel, full Web page with bells and whistles.”

But there are also security risks related to QR codes, Spake said.

“You’re scanning stuff that you have no idea what it is,” Spake said. “They could probably run some code that would suck all of your contacts and everything away.”

Which is why he sees more Mobile Visual Searches (MVS) on the horizon in the future, such as Google Goggles.

“It’s basically an app that you take a picture of just about anything and Google will figure out what it is,” Spake said. “One of the coolest things it’ll do is Sudoko puzzles; it’ll solve the very hardest one in seconds.”

While both QR and MVS technology is slow to take hold in Memphis, Spake estimates that within five years, real estate flyer boxes will be completely obsolete.

But for now, many local residential real estate firms are banking on prospective homebuyers driving around on Sunday afternoons and are equipping flyers with QR codes, whether they have practical usages or not.

One of the first residential real estate firms to adopt QR codes in Memphis was Prudential Collins-Maury Inc. In June 2010, the company launched a new advertising campaign that packaged email blasts, social media and traditional print advertising in newspapers and postcards, both of which featured QR codes.

“We’re trying to stay on cutting edge of the latest technologies that are out there and Prudential, on a national level, has a great platform that supports QR codes, so we’ve tried to introduce it into the local market,” Prudential Collins-Maury vice president Neil Hubbard recently told The Daily News. “It’s a great way for being to see video tours of homes, photos of the homes and get in contact with our agents on a mobile platform.”

Prudential’s marketing strategy goes back to the company’s philosophy to capitalize in areas where the competition chooses not to, said relocation director Angie Ware, adding that in the dour housing market, it’s important to implement a multi-platform tool to reach one’s audience.

“We’re not targeting one type of buyer,” Ware said. “We’re targeting Internet-savvy buyers or people who have never been on the Internet, so you’ve got to be everywhere.”

Source: http://www.memphisdailynews.com/news/2012/feb/21/local-qr-real-estate-usage-grows-slowly/