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Tuesday, March 19, 2019

Order Up – Food Halls!

By Rand Stephens (Houston)

Not too long ago, the dominating trend in commercial real estate was co-working space, which was addressed in our September2018 blog. Lately, it seems to be raining food halls – the trendy, chef-driven, micro-restaurants that are quickly becoming the ultimate amenity. Since 2016, Houston has seen eight food halls either open or announce their upcoming opening. Most of them are located downtown, with others popping up in The Heights and Rice Village. Is the collaboration of landlord and restaurateur just another flavor of the month, or will this become a signature dish of the commercial real estate landscape?

H-Town undoubtedly serves up some of the best food in the country. In fact, the greater
metro area received 11 semifinalist nominations for the prestigious 2019 James Beard Chef and Restaurant Awards. So, it is no surprise to see the food hall craze take Houston by storm. Just as we saw the food truck rage give aspiring chefs the opportunity to sell their innovative dishes without the burdensome overhead costs, we are now seeing some of the once mobile, artisan food vendors put it into “park” inside commercial and residential buildings and set up shop in food halls. With almost guaranteed foot traffic and short-term leases, it’s no surprise that the concept appeals to chefs and restaurateurs.

Now, we all know that adding food to a meeting will draw a bigger turnout. So, add food
(really good food) to your office building or residential building and they will come. “They” being both tenants and consumers. The question is, will they come often enough to sustain a profitable business? Of course, that’s always the challenge for any business, but especially the restaurant business, where smaller startups with less than 20 employees have a higher failure rate than any other service business as reported by

Courtesy of Avison Young
Trends will always have winners and losers, and those who survive the food hall craze will be those who appeal to more than just your taste buds. They will have attractions that create an experience for the consumer and will be located in areas of large working and residential populations. Landlords, chefs and restaurateurs will eventually find the right balance for their locations, and the market will ultimately stick a fork in it and decide who is done and who will continue to serve it up to Houston.

(Rand Stephens is a Principal of Avison Young and Managing Director of the company’s Houston office.)

Tuesday, March 12, 2019

Avison Young maintains position as Canada’s Best Managed Companies Platinum Club member

By Mark E. Rose (Toronto)

On behalf of the board of directors of Avison Young, our employees, our clients and our partners, we are humbled to once again achieve Platinum status with the Canada’s Best Managed Companies program by retaining our Best Managed designation for eight consecutive years.

Sponsored by Deloitte Private, CIBC, Canadian Business, Smith School of Business and TMX Group, the Best Managed program recognizes the best-in-class of Canadian-owned and managed companies with revenues greater than $15 million demonstrating strategy, capability and commitment to achieve sustainable growth.

As a company that was founded in Canada and now operates in 20 countries, we couldn’t be more proud to receive this award, and we thank Deloitte and the other award administrators for recognizing Avison Young among a distinguished group of Platinum members.

This recognition not only highlights our company's success in our Principal-led growth strategy and management approach, but also the expertise and commitment of our employees, our collaborative culture, and our continued focus on pursuing innovation and investing in meeting the needs of our clients.

Now in its 26th year, Canada’s Best Managed Companies is one of the country’s leading business awards programs, recognizing Canadian-owned and managed companies for innovative, world-class business practices. Every year, hundreds of entrepreneurial companies compete for this designation in a rigorous and independent process that evaluates the calibre of their management abilities and practices.

You can read our full press release here:

Deloitte also officially announced the winners last week in Canadian Business and a feature story in MacLean’s magazine will hit newsstands later this week.

You can learn more here on Deloitte’s website: and on its social media pages;, as well as on Avison Young’s social media channels (hashtag is #BestManaged).

We celebrate this award with our clients, partners and employees who help us grow globally every day.

(Mark E. Rose is chair and CEO of Avison Young.)

Thursday, February 28, 2019

Toronto – A Development Retrospective

By Bill Argeropoulos (Toronto)

As I celebrate 10 years with Avison Young, I can’t help but reflect on the changes I’ve seen in the downtown Toronto office leasing market during my 31 years in commercial real estate.

Those who have joined the industry in the last 10 years – when we’ve seen continuous development in the downtown market – may not fully appreciate the extent of the peaks and valleys the market has endured over the decades, and how the current wave of development compares to the boom years of the 1970s, ‘80s and early ‘90s which shaped the downtown as we know it today.

These musings inspired me to create this chart, putting the past 50 years into perspective – along with what’s coming in the next five years.

A look back over the years inevitably leads to the question: does this ongoing construction cycle, which started in 2009, constitute a renaissance in the Toronto’s downtown office market?

With historic-low vacancy (1.8%) and a burgeoning development pipeline, the red-hot downtown market has attracted a lot of attention recently – and deservedly so. Supply constraints remained the market’s Achilles heel in 2018 and will be the primary brake on growth in 2019. This situation is set to persist until nearly 8 msf (out of a record wave of new development comprising almost 10 msf) is delivered to the market between 2020 and 2022. Consequently, rents are on the rise and although each deal is different, in many cases, space that would have leased for $35 per square foot (psf) net one year ago has risen to the range of $40 to $50 psf, with rates breaching the $50-psf mark for the best office space.

Although the building boom downtown continues to capture the headlines, a comparison with the city’s suburban markets paints a different picture. The results may surprise you!
Since 2000, cumulative new office completions in the suburbs outpaced downtown by a factor of nearly two to one. This gap is set to narrow, as almost 10 million square feet will be delivered downtown by 2024 – compared to just 1.3 million square feet now underway in the suburbs.

As of year-end 2018, suburban vacancy fell below 10% for the first time since 2011 (buoyed by a strong performance from Toronto West), as the suburbs posted notable quarterly and annual gains in occupancy, which lifted overall suburban absorption to 1.7 msf – an 11-year high.

Even though the downtown office market receives most of the attention, the suburbs appear to be turning the corner, supported by a greater emphasis on public transit infrastructure, transit-oriented development and urbanizing assets. For example, the Vaughan Metropolitan Centre has benefited from the TTC subway connection opened in 2017, while the GTAA’s Pearson Transit Hub project looks to bring connectivity to the surrounding Airport office nodes.

Though downtown is booming, could dwindling available sites and the rise of transit-oriented development favour the suburbs and actually help to sustain the longer-term development trend? Only time will tell.

For additional insights into the Greater Toronto Area office market click here:

(Bill Argeropoulos is an Avison Young Principal and the firm’s Canadian Research Practice Leader. He is based in the company’s global headquarters in Toronto.)

Tuesday, February 12, 2019

Astros Golf Foundation Hits a Homerun for Memorial Park

By Rand Stephens (Houston)
Once again, Houston collaborates to produce innovative results that benefit the community as a whole by making the connection between private and public partnerships. The Astro Golf Foundation’s $13.5 million proposal to renovate Memorial Park Golf Course was passed by Houston City Council on January 9. Renovations are well underway, teeing up Memorial Park to host the 2020 Houston Open.

Using private funds to renovate a public golf course benefits Houston on multiple levels – revenue for the city, money raised for charities, and a golf course face-lift designed by world-renowned golf course architect Tom Doak (with the collaboration of Brooks Koepka, current U.S. Open Champion) at zero cost to tax payers and zero course fee increases. Although local golfers and park goers will have to endure the inconveniences of construction over the next several months, the positives far outweigh the negatives.

Over the last 70 years, the tournament has bounced around many different golf courses in and around Houston, including BraeBurn Country Club, Quail Valley Country Club, Pine Forest Country Club, Champions Golf Club, Woodlands Country Club and Golf Club of Houston (formerly Redstone Country Club). The tournament was first hosted by River Oaks Country Club in 1946 and moved to Memorial Park the following year.

Memorial Park Golf Course was a hotbed for the city’s best golfers during the 40’s, 50’s and 60’s when they congregated and competed at the park to sharpen their skills.  The most notable player being golf hall of famer and Masters Champion, Jackie Burke, who was recently inducted into the Texas Sports Hall of Fame with George Forman, AJ Foyt and Dan Pastorini. Also, golf legend Arnold Palmer won the tournament at Memorial Park in 1957.

Bringing the event back to Memorial Park is a stroke of genius. Not only does one of the city’s crown jewels get restored, it’s an area that’s centrally located and easily accessible via Uber or Lyft and a putt away from Uptown Houston which is home to some of the most prominent energy, financial, real estate and professional services in the world. The renovations to Memorial Park and its golf course, coupled with the projected 2020 completion of the dedicated bus lane project will make Uptown-Galleria the ultimate live-work-play location.

Given the disruption that many retailers along Post Oak Blvd. have endured because of the bus project, having the Houston Open return to Memorial Park Golf Course may be just what is needed. Retailers in that area will undoubtedly benefit from the estimated $50 to $90 million economic impact that the tournament will bring to the city.

Renovations, improvements, construction will always bring temporary hassles, but that’s just par for the course. When the final outcome spurs prosperity for businesses, charities and the community, well that’s just a homerun for all.

Monday, February 11, 2019

Mission impossible: Selling a contaminated site for future use

By Janko Pahlitzsch (Berlin, Germany) 

For the past 15 years, I have been advising owners, banks and insolvency trustees on the sale of land and other real estate throughout Germany.

Often, the properties are no longer in demand and, therefore, new usage ideas have to be developed and implemented. Consequently, changes in use have to be approved by local authorities.

The process of seeking the approval of a new use for a former industrial site is particularly challenging and demanding. Often, sites are contaminated and disproportionately high disposal costs are added to the sale price, making the site’s sale and conversion even more difficult.

The future allowable use is usually unclear, and that raises the question for investors of whether the purchase and demolition are economically viable.

The above factors make the broker’s work significantly more difficult and force the seller and the buyer to spend a considerable amount of time reviewing a potential transaction that faces an uncertain outcome and risk of cancellation.

The solution to completing this type of difficult deal lies in getting a real estate broker and the local authorities involved early in the negotiation process. Without clear confirmation from the authorities on what is allowed and what is not, the seller and the buyer will have difficulty converting the site to a new use.

By dealing with authorities on a daily basis, the broker has knowledge and expertise that the seller and buyer often lack. Early advice and contact with the authories will make the everything proceed much more smoothly.

For example: Avison Young is currently representing a U.S.-based chemical company in the sale of a 700,000-square-foot site in Pirmasens, Germany. Chemical production at this location is no longer economically viable. Preliminary talks with local authorities revealed an attractive – and allowable – use of the property as a 24/7 logistics operation. The use of retail was categorically rejected. 

The authorities’ clear statements on the property’s allowable and unallowable uses enabled us to approach logistics real estate developers in a targeted manner and to enthuse about the location. The property’s sale is scheduled to close in May 2019. 

(Janko Pahlitzsch is an Associate Director in Avison Young’s Berlin office with 15 years of commercial real estate investment sales experience. He specializes in advising owners, banks and insolvency trustees on foreclosure/forced property sales throughout Germany.)

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