Rechercher dans la communauté

In past recessions, city's developers learned the effects of overbuilding the hard way. Caution is paying off this time around ELEANOR BEATON Globe and Mail Update Two years ago, Yves-André Godon was scouring Montreal for an anchor tenant for his company's proposed 400,000-square-foot downtown office tower. At the time, Montreal's office market was looking rosy. The vacancy rate was a healthy 9.3 per cent and 6 per cent of the city's available office space was being leased each quarter – a record absorption rate, Mr. Godon says. The time looked ripe for the managing director of SITQ Canada, an international real estate investment company based in Montreal, to forge ahead with the development. But Mr. Godon hesitated. Even though it had been years since the city had seen new Class A office space built, he says many large-scale tenants seemed content to stay put; SITQ was having trouble attracting an anchor tenant quickly enough. “We didn't want to do anything on a speculative basis,” he says. Given the economy's subsequent downturn, Mr. Godon's instincts appear to have been right. It's a cautionary stance that was learned the hard way. During past recessions, overbuilding caused Montreal's office market to suffer more than in other parts of the country. But today, as other major cities contend with rising vacancy rates and the simultaneous delivery of millions of square feet of new office space, the kind of discipline that Mr. Godon displayed is helping to shield Montreal from the same drastic effects of the downturn. Montreal developers “lived through a lot of pain,” says Jean Laurin, president and chief executive officer of real estate advisory Devencore Ltd. “Few developers are going ahead until they find tenants.” As a result, “we have not had any exposure to overbuilding,” adds Robert Mercier, president of real estate services firm DTZ Barnicke (Quebec). The dearth of new developments is not the only factor. Also contributing is continued strong demand from tenants who are not players in the industries hit hardest by the downturn, such as energy, experts say. The combination means that Montreal now has one of the most stable office markets in the country. Even though at 9.7 per cent, Montreal's vacancy rate is higher than Toronto's (8.4 per cent) or Vancouver's (7.8 per cent), according to second-quarter figures from real estate firm CB Richard Ellis, downtown office vacancy rates in Montreal have risen less than in other major Canadian cities. Montreal's sublet space as a percentage of overall vacancy – a leading indicator of the health of the office leasing market – is, at 11 per cent, far lower than in other major cities, a sign that most tenants are holding onto their space, rather than putting it back on the market. The city is contending with a much smaller rise in sublet space than other cities. Insiders estimate that 10,000 to 15,000 square feet of sublease space comes back on the market each week. Unlike Calgary and Toronto, what little sublet space Montreal does put back into the market isn't competing for tenants with a glut of brand-new supply. Other than a recently constructed 840,000-square-foot Bell Canada Campus, the city has seen virtually no new office construction in recent years. In contrast, Toronto's central business district is facing the delivery of up to 3.1 million square feet of new office space, according to CB Richard Ellis. With little new development in the downtown in recent years, large-scale tenants in Montreal have few rental options, and therefore tend to stay put, further stabilizing the market. “Leasing is very strong on the renewal front,” Mr. Laurin says. Montreal also benefits from a diverse user base, says Brett Miller, executive vice-president of CB Richard Ellis in Quebec. He points out that the city's major employers represent solidly performing industries from the engineering, IT and video gaming industries. While Montreal may be performing well in comparison to other major cities, industry veterans aren't forgetting the lessons learned from the past. Developers such as Mr. Godon aren't planning any new developments until the economy recovers. “We're back to Real Estate 101,” he says. “That means focusing on serving the tenants we have, rather than looking for new projects.”

Architect Koolhaas sees economic woes blunting excess SEOUL (Reuters Life!) – Architect Rem Koolhaas, renowned for his striking designs and musings on cities, believes the global economic downturn will lead to less ostentatious, more "socially responsible" buildings that better serve the public. The Dutch architect, whose firm designed the gravity-defying CCTV Headquarters in Beijing, Casa de Musica in Portugal and the Seattle Central Library, said more emphasis will now be placed on the efficient use of space during these lean times. "The last 10 years have been noteworthy for the excess in the private sector," Koolhaas told Reuters at the opening of a sleek temporary exhibit hall he and his Office for Metropolitan Architecture designed for fashion house Prada in Seoul. "What we are going to see is a return to the public sector. This is a healthy thing," he said on Wednesday. The Prada Transformer structure, located next to an ancient palace in central Seoul, will open on Saturday with a fashion display. The tetrahedron-shaped steel building, covered in a translucent white skin, is designed to be lifted by cranes and rotated so that it can best use each of its differently designed sides to show movies, host fashion shows or hold art exhibits. Koolhaas said the building provides a bit of lightness -- constructed at a reasonable costs -- that is needed during an economic downturn. Prada would not provide the amount it paid to construct the building. (Editing by Miral Fahmy)

Cooling housing market exposed to crash Prices, demand drop after record growth Alia McMullen, Financial Post; Canwest News Service Published: Friday, August 08, 2008 Edmonton's housing market is estimated to be more than 10 per cent overvalued.Ed Kaiser, The Journal, FileEdmonton's housing market is estimated to be more than 10 per cent overvalued. TORONTO - A big decline in commodity prices could spell disaster for Canada's housing market, which already appears to have entered a "sustained downturn," David Wolf, an economist at Merrill Lynch Canada, warned on Thursday. He said while the risk of a housing market crash was small, an "outright bust" in commodity prices would make the scenario "a rather more serious threat." The recent trickle of data has shown a significant slowdown in the country's housing market, following its record pace of growth. Demand has eased, supply continues to creep up, credit conditions remain tight, and house-price growth has turned flat, with declines in some regions. The value of building permits in June fell a seasonally adjusted 5.3 per cent from the previous month, indicating that construction activity in the coming months would likely be lower, Statistics Canada figures showed Thursday. The data is notoriously volatile, but the trend rate of growth for residential building has declined since the beginning of the year. "Canada's housing market is entering a sustained downturn, in our view," Wolf said. "It does look like Canadian houses finally got too expensive, and builders too aggressive, for the underlying demand environment." He estimated that markets with the strongest price growth in recent years, such as Regina, Saskatoon, Vancouver, Victoria, Calgary, Edmonton, Sudbury, and Montreal, were all more than 10 per cent overvalued. On a national basis, Wolf predicts house price growth to remain flat. Merrill Lynch expects commodity prices to moderate over the medium term, a scenario that would aid in the housing market downturn but not cause an outright bust. Others, such as CIBC, have a more bullish forecast for commodities, namely oil, expecting prices to continue to rise. This would continue to support Canada's terms of trade by bringing in higher export revenue relative to the amount spent on imports. But Wolf said the risk of a housing crash would become "a serious threat" if the recent correction in commodities continued because it could cause the terms of trade to deteriorate. The price of light crude has fallen about 18 per cent since peaking at a record high of $147.27 US a barrel on July 11 continued. Light crude for September delivery settled at $120.02 US a barrel in New York on Thursday. "The takeoff in commodity prices since 2002 has driven an enormous improvement in Canada's terms of trade, accounting for much of the strong growth in Canadian national income that has, in turn, provided the fundamental underpinning for the housing market boom," Wolf said. A Bank of Canada working paper by senior analyst Hajime Tomura released earlier this year argued that a decline in the terms of trade would likely cause house prices to fall. It said that "if households are uncertain about the duration of an improvement in the terms of trade, then house prices will abruptly drop when the terms of trade stop improving."

Housing market seen following commodities Value of building permits drops. Homes in Montreal, elsewhere overvalued by 10%, Merrill Lynch economist says ALIA MCMULLEN, Canwest News Service Published: 8 hours ago An outright decline in commodity prices could spell disaster for Canada's housing market, which already appears to have entered a "sustained downturn," David Wolf, an economist at Merrill Lynch Canada, warned yesterday. He said while the risk of a housing market crash was small, an "outright bust" in commodity prices would make the scenario "a rather more serious threat." The recent trickle of data has shown a significant slowdown in the country's housing market, following its record pace of growth. Demand has eased, supply continues to creep up, credit conditions remain tight, and house-price growth has turned flat with declines in some regions. The value of building permits in June fell a seasonally adjusted 5.3 per cent from the previous month, indicating that construction activity in the coming months probably will be lower, Statistics Canada figures showed yesterday. The data is notoriously volatile, but the trend rate of growth for residential building has declined since the beginning of the year. "Canada's housing market is entering a sustained downturn, in our view," Wolf said. "It does look like Canadian houses finally got too expensive, and builders too aggressive, for the underlying demand environment." He estimated that markets with the strongest price growth in recent years, such as Regina, Saskatoon, Vancouver, Victoria, Calgary, Edmonton, Sudbury, Ont., and Montreal, were all more than 10 per cent overvalued. On a national basis, Wolf predicts house price growth to remain flat. Merrill Lynch expects commodity prices to moderate over the medium term, a scenario that would aid in the housing market downturn but not cause an outright bust. Others, such as the CIBC, have a more bullish forecast for commodities, namely oil, expecting prices to continue to rise. This would continue to support Canada's terms of trade by bringing in higher export revenue relative to the amount spent on imports. But Wolf said the risk of a housing crash would become "a serious threat" if the recent correction in commodities continued because it could cause the terms of trade to deteriorate. The price of light crude has fallen about 18 per cent since peaking at a record high of $147.27 U.S. a barrel on July 11. Light crude for September delivery settled at $120.02 U.S. a barrel in New York yesterday. "The takeoff in commodity prices since 2002 has driven an enormous improvement in Canada's terms of trade, accounting for much of the strong growth in Canadian national income that has, in turn, provided the fundamental underpinning for the housing market boom," Wolf said. A Bank of Canada working paper by senior analyst Hajime Tomura earlier this year argued that a decline in the terms of trade would likely cause house prices to fall. It said "if households are uncertain about the duration of an improvement in the terms of trade, then house prices will abruptly drop when the terms of trade stop improving."