Search this blog:
Follow Avison Young:

Thursday, June 22, 2017

Interface Carolinas event provides interesting takeaways

By Beverly Keith (Raleigh, NC)

On June 1, I was pleased to attend and participate in the eighth annual InterFace Carolinas commercial real estate event produced by France Media.

The event attracted more than 250 participants, who listened to six panels of exceptionally informed commercial real estate experts discuss the state of the market across North Carolina and South Carolina.   Mark Vitner, Managing Director and Senior Economist at Wells Fargo, was the keynote speaker and presented a top-down view of current economic trends in the Carolinas.  A few interesting takeaways included:

  • ·         Employment statistics as reported by the U.S. government can be misleading. The government counts anyone employed for only one hour in the last 30- day period as employed;
  • ·         The significant economic impact of the HB2 law’s enactment and repeal will most likely not be fully realized for another two or three years; and 
  •            Vitner forecasted GDP growth in 2017 at 2.5%, not the 3.5% that the federal government is predicting.

Additional topics covered included the state of the market, capital markets and trends in the office, industrial, retail and multi-family markets.  Not only were the speakers well informed and actively involved in their designated segments, but the networking between panel discussions was exceptional.

On the heels of ICSC ReCon, which was held in May, the retail panel included David Kelly, CIO of Wheeler REIT; Matt Klump, Vice-President of Acquisitions for RCG Ventures; Jimmy Penman, Director of Leasing at Lat Purser & Associates, Drew Gorman SVP, Acquisitions & Development at ECHO Realty, and me.

The retail topic was grocery wars and how the influx of so many new grocers is fragmenting and disrupting business as usual in the Carolinas.  With everyone agreed that Wegman’s entry to the market is a game changer, there was significant discussion on which grocers may grow their market share, establish a foothold or lose market share.  The consensus is that, while the Carolinas continue to add population at an extremely fast clip, the grocer market cannot support so many grocery choices in the market.  Some will win and some will lose, but don’t count out the homegrown favorites of Harris Teeter and Food Lion, each of which has reinforced its brand with significant upgrades and, in some cases, new stores.  Shoppers are finicky; they’ll try the new player just to return to the tried and true.

I’d like to extend a special thank you to France Media’s Associate Publisher Ryan Nixon for his leadership in organizing this exceptional event. And thank you to the North Carolina chapter of CCIM for its diamond sponsorship and Avison Young for its silver sponsorship.


(Beverly Keith is a Senior Vice-President of Retail Services based in Avison Young’s Raleigh office.)

Thursday, June 1, 2017

Understanding the role of demographic data in commercial real estate

By Kieran Smith (Vancouver)

For the first time in its 150-year history, Canada has more seniors aged 65 and over than children under the age of 15.

Federal 2016 census data released in early May shows that seniors now account for a larger piece of the population (16.9%) than children 14 years old and under (16.6%). Meanwhile, younger demographics – especially millennials – are disrupting traditional ways of doing business and engaging in leisure activities.

These developments are not exactly surprising – but they will shape our nation for decades to come.

The question now is: As government policy makers adapt to the changes, how will the commercial real estate community react?

Census data identifies interesting trends

It is hard to predict the future but strategic census and demographic data analysis can be used to enhance the transaction process.

Federal 2016 census data, recently released in May 2017, has identified some interesting trends. Demographics are changing broadly as baby boomers reach retirement age and the younger age cohort decreases in size.

Simply put, Canadians are living longer, becoming increasingly urban and shifting away from the single-family home. Therefore, housing-related issues are receiving considerable public attention.

The federal population and household data released in February 2017 received an extensive amount of media coverage in Vancouver, particularly because the information relates to housing affordability. The coverage tended to focus on areas where populations are shrinking and identifying municipalities with large numbers of unoccupied dwellings – particularly in certain transit-oriented development areas of Metro Vancouver. Whilst these issues are related to residential real estate, there is an associated relationship with commercial real estate.

Recent government policy changes in Vancouver (and BC) have been implemented to assist housing affordability for locals. The lack of affordability and focus on empty dwellings contributed to new tax rules – a 15% foreign buyers tax (2016) and a 1% vacant home tax (introduced this year). Its knock-on effect will play out over the next few years. And although these changes are aimed at residential real estate (the 15% tax doesn’t apply to commercial property), there is uncertainty over what the effect of this tax would be from a commercial perspective, from suggestions that commercial investors will be put off, or that speculators will redirect investments from residential to commercial properties. It’s still too early to draw conclusions.

Data analysis can enhance transaction process

The demographic changes highlighted by the census will influence real estate in the years ahead because long-term planning and policy decisions are based on what the aforementioned types of data show. As such, the use of census and demographic information can enhance the transaction process. First of all, data analysis can provide insight that increases the value proposition. Secondly, the statistics can help validate a broker’s local knowledge.

Getting back to our aging population, governments (local and federal) will have to put increased resources into meeting the needs of an older population. From a commercial real estate perspective, this scenario might result in a greater need for residences, hospitals and care facilities, leisure centres and retail properties that cater to seniors. Personal services and senior-specific businesses are also likely to grow.

Seniors will be less inclined to commute to local services and amenities, preferring instead to reside in higher-density residential areas. This scenario could lead to an increase in senior-specific multi-family residences that cater to empty nesters, who are increasingly downsizing from single-family homes. These changes could affect brokers – and clients – across many sectors, including multi-family, investment, office and retail.

We also need to interpret the census data to know where these changes are happening at the local level. For example, proportionally more investment in services for seniors is likely to be required in BC and Atlantic Canada compared to Alberta, where there is a high discrepancy between the proportion of population aged 65 and older.

Incorporating broader demographic and lifestyle changes

Despite the headlines generated by the census data regarding older Canadians, younger generations have also driven change to our lives and lifestyles. Millennials’ non-traditional attitudes are evident in their preferences to live in central locations versus outlying areas, rent rather than own their homes, and reside near public transit in order to reduce their dependence on automobiles. These recent trends, driven in combination with technology and millennials’ non-traditional attitudes, have begun to influence real estate, both residential and commercial. Increased urbanization, revised lifestyle preferences, the growth of disruptive services such as online retail and Uber are just some ways in which things are changing. Shared office space is gaining ground within the office commercial sector.

Whilst millennial-related stories often generate continued media interest, census data are clearly important when it comes to understanding local market demographics. By using the data wisely, brokers will broaden their market knowledge and, ultimately, clients will remain highly confident throughout the transaction process.

Results of the 2016 Canada Census are being released throughout 2017 and can be accessed at Statistics Canada’s website (http://www12.statcan.gc.ca/census-recensement/index-eng.cfm).


(Kieran Smith is the Director of Geographic Information Systems (GIS) for Avison Young’s Vancouver office, where he assists brokers and clients with data analysis, demographics and mapping requirements related to transactions.)

The postings on this site are those of the bloggers and do not necessarily represent the views or opinions of Avison Young.