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Turner Drake & Partners Ltd.
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Tel.: (709) 722-1811

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Toronto, ON.
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# Monday, October 22, 2018

 Why Hire a Commercial Broker? How a Commercial Broker Adds Value in Real Estate Transactions

There are ample online and offline resources available at your fingertips to help you purchase or sell a commercial property on your own – so why hire a broker? If you have the time, negotiating skills, real estate market information, and understand your target market and how to reach them, you don’t!

However, unless you can say yes to all of the above, here is how a commercial Broker adds value to your transaction:

1. Your time is valuable.  Letting a Broker do the heavy lifting and deal with “tire kickers” allows you to focus on your business.

2. Brokers have the contacts and resources to market your listing or find you a suitable property, ensuring all opportunities are uncovered.

3. Brokers understand your target market and how to reach them.

4. Brokers do not have an emotional attachment to the property or transaction.

5. Brokers are often members of local real estate associations, which can provide you with access/exposure to the MLS system in addition to their own websites, social media platforms, and databases.

6. Brokers have the inside track on market data, sales transactions, planning considerations and players in the market who are looking to purchase or sell commercial properties. They can help you determine a reasonable price and can help maximise market exposure.

7. Brokers know how to properly measure a building and collect the property information required, such as any material latent defects that must be disclosed in a transaction, which can avoid future lawsuits.

8. Brokers prepare Purchase & Sale Agreements, Counter Offers, etc. on your behalf, saving you from hiring a lawyer to assist with these items.

So, once you’ve decided to hire a commercial broker, how do you choose which broker/brokerage to represent you? The short answer is to simply hire the broker with whom you feel most comfortable. There are many excellent commercial brokers locally, so meet with a few, ask them questions, and choose the broker you feel will best represent you, and who understands your wants and needs. Each commercial broker has their own strengths; it is up to you to determine which one is the best fit for your organisation. 


As Senior Manager of our Brokerage Division, Ashley Urquhart assists both landlords and tenants meet their space requirements, and vendors and purchasers optimise their property portfolios. For more real estate brokerage advice, you can reach her at aurquhart@turnerdrake.com or 1 (800) 567-3033.

Monday, October 22, 2018 10:44:48 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Brokerage | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island
# Tuesday, October 9, 2018

October 7th through 13th is Fire Prevention Week in Canada.  With firefighters in Nova Scotia responding to over 1,400 fire related incidents in 2016/2017, it is important to ensure that you have the resources in place to help tenants safely clear a property in the event of a fire.

The theme of this year’s Fire Prevention Week is “Look. Listen. Learn. Be aware. Fire can happen anywhere.”  The “learn” component of this year’s them refers to the need for everyone to learn two ways out of every room.  We can help.

Our LaserCAD® team is able to assist with “learning” by creating fire escape diagrams for your building.  We can add additional crucial details to your fire escape diagrams by including the locations of fire extinguishers, pull stations, hose cabinets, and emergency lighting, as well as clearly indicating escape routes.  These maps allow tenants to quickly identify an escape route and the location of fire safety equipment in the event of an emergency.  We can also customise the diagrams as needed, showing separate escape routes for each individual tenant space and noting any other relevant details, such as muster locations.

You may not be able to predict when a fire will occur, but you CAN plan for it.

For further information feel free to reach out to any one of our Lasercad® space measurement experts at (902)-429-1811 or toll free at 1-800-567-3033

Tuesday, October 9, 2018 11:24:57 AM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | Lasercad | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island
# Tuesday, October 2, 2018

Several blog posts (and a few years) ago, drawing on the experience amassed over my twenty-five year career at Turner Drake, I did some property tax myth-busting.  One bears repeating- particularly at this time of the year:

 

The Best Opportunity to Reduce Your Assessment (and Taxes) is NOT on Appeal

 

In every Province in which we operate, assessing authorities are willing to discuss assessments prior to their values being inserted onto the official assessment roll.  In our experience, such preliminary consultations often produce better results- at lower cost- than waiting to file formal appeals.

 

Nova Scotia’s assessing authority, the Property Valuation Services Corporation- the “PVSC”- and its predecessor, Service Nova Scotia and Municipal Relations, is a pioneer in this regard, and has been pre-publishing its assessments for over twenty years.

 

This year, 2019 pre-roll assessments for commercial property and apartments containing six or more units were pre-published on September 25th.  Proposed values can be accessed on the PVSC’s website at www.pvsc.ca, and the underlying valuations can be obtained by using the AAN and PIN from the top right- hand corner of 2018 assessment notices at:

 

 https://www.pvsc.ca/en/home/findanassessment/multiple-report-tool/default.aspx

 

Owners with concerns with their proposed assessments have about eight weeks to contact the PVSC: assessors have the ability to amend values until the last week in November. The 2019 roll officially closes on December 1st.

 

PVSC’s management embraces the opportunity to discuss assessments (and to make changes, where warranted) at the “pre-roll” stage.  Property owners are encouraged to avail themselves of this opportunity, and PVSC should be commended for publishing its proposed 2019 values.

 

Of course, it’s not always possible to engage in preliminary consultation, as not all values will be available with sufficient “lead time” in advance of the filing of the roll.  But where the opportunity presents itself, my advice is always to be proactive, and to address a problem before it becomes one.  A stitch in time saves nine.


Giselle Kakamousias is the Vice-President of Turner Drake’s Property Tax Division.  Her experience negotiating and appealing property assessments is extensive: it is a wise property owner who follows her advice.  If you’d like more of it, she can be reached at (902) 429-1811 ext. 333 or gkakamousias@turnerdrake.com.

Tuesday, October 2, 2018 2:34:17 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Nova Scotia | Property Tax | Turner Drake
# Tuesday, August 28, 2018

It is a common misconception that a piece of real estate has a single value.  This is simply not true.  Determining which value is appropriate likely has the biggest impact on property value.

 

The Royal Institution of Chartered Surveyors’ Global Valuation Standards, specify six types of real estate value (Market, Rental, Equitable, Investment, Synergistic, and Liquidation). The Appraisal Institute (of America) has identified ten distinct, and valid, property valuation bases in common use in North America. Legislation, case law, and the purpose of the real estate assignment, result in many variations of these property valuation bases. Any conversation about valuing your property has to start therefore with an understanding of the purpose of the valuation assignment or you can end up with a conclusion which is worthless at best, or seriously misleading at worst.

 

Let’s discuss the two most common types of value.

 

Market Value (Highest and Best Use) is typically quoted and understood by many (including appraisers) to be the only type of value.  It is the highest price you would get for your property on a specific date, if it was offered for sale, properly marketed, and exposed for a sufficient period of time to alert and allow all potential purchasers to submit offers.  It assumes that both seller and buyer are knowledgeable of property values, that neither are under pressure to sell or buy, are typically motivated, and are each acting in their best interest. It assumes a cash purchase, or typical mortgage financing, in Canadian dollars. It also anticipates that the purchaser will be able to put the property to its “Highest and Best” use, which may for example, include redevelopment, if this will create a higher value than the existing use of the property.

 

But beware, Market Value is not the price you could expect to get if the purchaser (1) was an adjoining owner, (2) was undertaking a land assembly, (3) was a relative or business associate, (4) knew something that the vendor should have known but did not, (5) did not know something known to the vendor of which the purchaser should have been aware, (6) wanted a “vendor take back” mortgage, (7) intended to lease back the property to the vendor, (8) enjoyed a negotiating advantage because, for example, the vendor was in dire financial straits, … and so on.

 

I was recently contacted by an existing client looking to secure financing for their property located on the Halifax Peninsula.  Their property was improved with an older, single storey commercial building.  The underlying land was worth considerably more than the building and property under its current use.  After discussing the purpose of the assignment with the client and their bank, it became clear that the bank was interested in more than just the Market Value (Highest and Best Use) of the property in this instance.  The bank’s goal was to determine if the income generated by the property, under its current use, was sufficient to keep the lights on and pay the existing mortgage.  However, the bank also wanted to know what they could expect to sell the property for if they ended up taking possession of it and selling it on the open market. Effectively, the bank had two different goals which gave rise to two different values.

 

We completed a thorough analysis of the property and provided the owner, and their bank with two values (1) Market Value (Highest and Best Use), which in this case was for redevelopment of the property, and (2) Market Value (Value in Use) as it currently exists without regard to redevelopment potential.  Market Value (Value in Use) is similar to Market Value (Highest and Best Use) but is based on the assumption that your property could only be utilised for its existing purpose.   

 

Difference in Value

 

In this instance the difference in value was significant: $1.5 million (Market Value - Value in Use) versus $2.3 million (Market Value – Highest and Best Use).  Both values were included and supported in the report, allowing the bank to make an informed decision on lending.

 

 

Looking for explanations on the different types of values listed above?  Visit our Valuation and Advisory Services site https://www.turnerdrake.org/WhichValue for more information on the various types of values.
 

Nigel Turner, Vice President of our Valuation Division, can be reached at nigelturner@turnerdrake.com
Tuesday, August 28, 2018 5:06:03 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Prince Edward Island | Turner Drake  | Valuation
# Wednesday, July 25, 2018

The Halifax Regional Municipality is in the throes of moving its long awaited Centre Plan from draft to reality.  With the first package of draft policy and regulation released in late February, it’s come a long way from the high-level guiding document that Turner Drake assisted with in 2016. However, there is still a ways to go. As one might imagine, when replacing multiple planning policy and development regulation documents for the most dynamic and complex urban environment in Atlantic Canada, the devil is truly in the details.

One of the biggest details being grappled with is the deployment of density bonusing, which is principally designed as an affordable housing tool. Depending on what you read, the current framework may actually backfire by delivering no affordable housing and even drive up market-rate housing prices by suppressing supply, or it may be perfectly fine and a good replacement for present ad hoc negotiations which are falling short of the Centre Plan’s achievable outcomes. Either way it provides an opportunity to highlight the perks and pitfalls of this increasingly common strategy.

What is Density Bonusing?

Density bonusing is a planning policy tool whereby new development projects can access higher regulatory limits on built area in return for provision of some public benefit. In other words, trade height for amenities. It is sound in concept. The value of urban land (but not the buildings on it) is primarily driven by where it is located, and what can be done on it. Thus, it is value created by our collective society through the infrastructure and services provided to it, the legal framework that governs it, and the surrounding public and private activities which would make one desire a particular location over another. When local governments “add density” by increasing regulatory limits over what is currently anticipated by the market (i.e. already reflected in its price), they literally create additional land value out of thin air. In requiring a developer to provide public benefits for this added density, local governments are recapturing the value they created in the first place.

There is an obvious tension here in terms of why this ‘bonus’ density was not permitted in the first place, but in the messy world of city-building, ideological purity will always lose to practicality. Density bonusing thus becomes something akin to racketeering: nice development application you’ve got there… what say you give us some art and affordable housing, and maybe that shadow ain’t so bad anymore.

How Does it Work?

While it’s a clear win-win in concept, it can be complex in practice. There are four important factors that determine whether or not density bonusing works on a given site:

·         the value of the property as it exists today

·         the value of the land if purchased for redevelopment

·         the value created by adding bonus density

·         the value captured through required public benefits

It is important to note that all but the last factor on this list are determined by the real estate market. The value captured is set by the municipality, and is typically based on an estimation of the value of the bonus density. In HRM, the tradeoff of density for benefits is structured under a predefined framework. Other municipalities negotiate these arrangements on a case-specific basis, but this approach it generally used in far larger centres due to the complexity and sophistication involved.

Roughly speaking, development projects are feasible in areas where the market price for land exceeds the value of properties as currently developed.  Adding a density bonusing program to the mix will increase the redevelopment value, but also add a new cost in the form of requisite public benefits. On net, this is usually a positive value; these programs are designed to recapture only a portion of the value they create.

It should be apparent that density bonusing is not, in principle, a drag on development. In fact, a properly designed program should improve the feasibility of existing projects and even increase the total pool of viable projects where the net positive addition of value (bonus density minus benefit cost) actually tips the balance of feasibility. For all intents and purposes, this is indistinguishable from a basic upzoning.

Where Can It Go Wrong?

There are plenty of opportunities for density bonusing programs to go awry, but most are the usual pitfalls of any public policy. There needs to be a logical and efficient administration process. The program needs to be supported by accurate data so that its function lives up to its intent. Appropriate buffers needs to be left to account for secondary costs and added overhead created by the program itself. There needs to be additional mechanisms in place to deal with the outputs (this is an important topic of conversation in the Centre Plan context, in which the majority of benefit is supposed to be in the form of affordable housing while the municipality has no formal jurisdiction or established programming).

However, the fundamental issue of whether a density bonusing program works is the value relationship between what is proposed, and what exists today. Most of the debate and discussion in HRM has been focussed on aspects of the former: what is the best value capture rate to use, what is the right threshold for triggering the bonus requirements, what are the correct value assumptions? Important questions, but their answers are all derived from the latter issue, not determined in a vacuum.

At the scale of a city, form follows finance. Whether density bonusing is implemented or ignored by the private sector will ultimately depend on whether the total value of entitled and bonus density, less the cost of delivering it (development costs plus public benefit), is a sweeter deal than exists today. If a profit incentive exists, a badly designed program will still deliver. If a perfectly designed program equates to a downzoning, don’t count on anything happening until prices rise, or losses are written off.

How to Get it Right?

As municipal planning increasingly makes use of economic and market-based tools (and it should) it also needs to expand its understanding of the principles and systems that underpin them. Weight does need to be placed on the market conditions of the present given their influence on the future (to say nothing of the municipality’s complicity in forming them).

The traditional approach would state planning policies cannot be captive to past practices and existing conditions, otherwise change would never be possible. While this is true, it is not justification for being willfully ignorant either. Understanding the basic value relationship between today's conditions and those proposed under new policy is the key to understanding whether density bonusing, or any planning policy for that matter, will deliver on its promise.

Neil Lovitt, our Senior Manager of Planning & Economic Intelligence can be reached at 429-1811 ext. 349 (HRM), 1 (800) 567-3033 (toll free), or nlovitt@turnerdrake.com.

Wednesday, July 25, 2018 3:00:58 PM (Atlantic Daylight Time, UTC-03:00)  #    -
Atlantic Canada | New Brunswick | Newfoundland & Labrador | Nova Scotia | Planning | Prince Edward Island