Peterborough This Week Asks: Does Peterborough have the infrastructure it needs to grow?

In this article yesterday in Peterborough This Week,  Joel Wiebe explores a recent report on projected growth for the city and county of Peterborough.  One of the main themes of the piece is the need for improved traffic movement in the city and the debate that just won't die: The Parkway.

Facing a 13 per cent population growth and only a four per cent employment growth, he (Jeff Leal, MPP) says reflects the City's demographics, with many retired residents here and more on the way.

MPP Leal points out it also shows increased commuters using services like the Go buses.

The City's director of Utility Services, Wayne Jackson, says it is up to councillors to determine what is too congested for a road. Is an extra 15 minutes in a commute acceptable?

"Time is money for businesses," he says of possible economic impacts.

He highlighted Mayor Ayotte's comments about people heading down residential side streets if the roads get too busy. This leads, he explains, to angry residents.

Good alternatives need to be found, he adds, whether it means expanding or altering current roads to allow more traffic to be handled or to entice people use different roads.

I can't believe I agree with Coucillor Peeters, but:

Councillor Patti Peeters has a simple answer -- build The Parkway.

"Why are we still talking about The Parkway?" she asks. "Because we need one."

This is something I've been vocal about in the past.  Click here for my letter to the editor, and here for a response to that letter about the Parkway.  Councillor Peeters is absolutely right, we need the Parkway and it should have been built 50-odd years ago when the land was assembled.  Roads identified in the print edition of the paper as congested or in danger of congestion included: Monaghan Road, Parkhill Road, and Fairbairn Street.  Sounds suspiciously like the route one would take if the Parkway existed...

Route taken by many city residents today.

Parkway Route as envisioned by city planners 50 years ago.

Of note is that the route most people take today, along Clonsilla, up Monaghan, across Parkhill and then north on Fairbairn, is primarily through residential areas.  I know, because I regularly use this route because there is no alternative.  These are mostly two lane roads built 50 - 70+ years ago when average traffic counts were likely less than a third of the volume seen today.  The people that live on those streets must curse those politicians of the past who didn't have the will to see this road built. 

Not one of those streets was designed to handle the volume of traffic that they see every day.  As a result of driving so much traffic through those residential streets, there are far too many lighted intersections.  The amount of stop and go traffic in a city the size of Peterborough is inexcusable.  Where are the environmentalists on this issue?  I thought that constantly starting and stopping your car was terrible for the environment?  I thought sitting in an idling car was bad for the environment; did I miss something?

I've said it before, I'm saying it again:

Build the Parkway. Now.

Update: There was a really good letter to the editor in Peterborough This Week on February 9, 2010 that supports what I've been saying: Build The Parkway

Nicely put Mr. Bayly!

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Inexcusable Behaviour From Commercial Broker

Found via www.squarefeetblog.com. Square Feet is a commercial real estate blog providing information, market data, as well as commentary on news and happenings which have an impact on the Silicon Valley commercial real estate market.

2 Men Arrested In Pleasanton Cab Driver Assault Full story from CBS Channel 5.

Pleasanton police have arrested two men suspected of verbally and physically assaulting a taxicab driver Thursday.

Units responded to report of a battery in progress at a 7-Eleven store on Valley Avenue at around 1:10 a.m., according to the Pleasanton Police Department. Jaswinder Bangar, a local taxi driver, was found suffering facial lacerations and a broken tooth.

Bangar told police he had picked up two men at the Redcoats British Pub and Restaurant in Pleasanton who, on the way to Danville, began calling Bangar derogatory names and punched him in back of the head.

Bangar said he pulled into the parking lot at 7-Eleven to call police, but the two men, later identified as Jacob Billingsley, of Alamo, and Danville resident Michael Goldstein, grabbed the cell phone and broke it.

A subsequent investigation into leads led officers to Goldstein's home in Danville, where both men were found hiding.

How is this a real estate story?

Goldstein was managing director Collier's Stockton office in California. According to squarefeetblog, his profile has been removed from the Collier's site. I guess after this kind of alleged behaviour, his company thought the better of being associated with him.

My Reaction

It's strange...I felt personally affronted by this guy's alleged actions. Normally, we're so insulated from and inundated by stories of reprehensible behaviour like this that we don't take notice of them. And that's a shame because these are all people with real lives being affected; but they're just so far away we don't feel any real emotion attached to them other than to say, "That's awful!" and then we go about our day and forget all about it.

This time however, I guess because one of the accused is a commercial broker, I think I felt a little ashamed. I shouldn't - I didn't attack the poor driver - but I did all the same. This guy has besmirched all of us in the commercial real estate industry by his actions and yet I felt somehow responsible (?) for him when I read this. One of our own has fallen and crossed a line that should not be crossed. Ever.

Shame on him!

We need to hold ourselves to a higher standard than this. We have a difficult time as it is in this business battling negative press and negative bias every day; we don't need this kind of heat. I hope, if found guilty, he gets the maximum penalty allowed and that his state registrar pulls his license. Permanently.

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Invest Like Joe and Don't Look Back

NYT - Inland Real Estate Dives Into Troubled Commercial Market

G. Joseph Cosenza, president of Inland Real Estate Acquisitions of Oak Brook, Illinois, is on the right track. At a time when the majority of property investors either have their heads in the sand waiting for the storm to blow out or are standing around with bewildered looks on their faces, muttering to themselves about cap rates and falling values, Mr. Cosenza is buying.

He's buying a LOT of real estate. Since early in 2008 he's been on a buying spree, spending about $4 billion on acquisitions across the US.

He is happy to be swimming against the tide — buying while others watch from the sidelines. “I say to them, thank goodness and just get out of my way,” Mr. Cosenza said. “We’re not looking for trophies; we’re buying solid income-producing real estate that is not in default.”

Some observers say that Mr. Cosenza and other intrepid investors stand to profit handsomely. “For the opportunity fund with the resources, it’s time to make a killing,” said David L. Funk, director of the Cornell University Program in Real Estate, a master’s degree curriculum. “In 10 years, people will look back at 2009 as the year fortunes were made.”

He (Mr. Cosenza) says he intends to keep buying. “I have another six to eight months when people will be frozen in their tracks,” he said, “and I’ll have a clear field.”

The smart money is getting back in the game now - when will you?

Photo credit: Sally Ryan, NYT

Update August 31/09: He's at it again! Inland is setting up a new $5B fund.

Inland Diversified intends to use the proceeds from this offering primarily to acquire a diversified portfolio of commercial real estate. Potential commercial real estate assets will include: retail, office, multi- family, student housing, industrial/distribution warehouse, lodging, medical office/healthcare related facilities, public infrastructure assets and triple- net single use properties.

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Reality Check on Car Dealer Site Redevelopment Anyone?

On Monday, June 15th, an article appeared on thestar.com titled, "Un-pave car dealer's lots to put up paradise" On the surface of it, this sounds like a glorious idea. Who isn't sick of all the pavement? Who wouldn't love to see more green space in our cities? Why shouldn't these sites, many of which are likely contaminated, be turned into something friendlier and nicer and greener than a vast flat parking lot with old ugly service shops on them?

While no one has any clear idea – most dealers aren't talking – some, including local architects and urban planners, are drooling over the possibilities of turning parking lots back into paradise.

"For planners, car dealerships are always opportunity sites," says Jennifer Keesmaat, of the Office for Urbanism, an urban planning and design firm, working on large-scale planning projects across Canada.

Community markets. Community gardens. A place for local festivals and celebrations.

Well, let's take a look at the reality of these sites. I can think of a few hundred people who might be very upset about turning property that has been generating very large rates of income over the last few decades into sites with little or no economic value; the property owners themselves! Put yourself in their shoes - these aren't big bad corporations - they're hard working business owners who have employed thousands of Canadians for decades! Unless they really have a desire to give these sites away, or municipalities would like to buy these sites for market value (your money at work by the way), then these sites will have to be redeveloped under other car brands, as used car lots, or some other economic model that returns money on that money already invested in them.

I just heard of one GM dealer near Ottawa that put $11M into the showroom and service facility just last year and is now being shut down. (Can't seem to find the reference anywhere - so if anyone finds it, please post it in the comments.) That's a pretty hard reality pill to have to swallow. Now to be asked to redevelop the property into a craft markets or artisan shops is like a slap upside the head when the dealer just doesn't need it or can likely afford it.

For those property owners who'd get a warm fuzzy out of these ideas or, better yet, come up with a business model that makes sense under one of these schemes I say go for it! If such a clean, friendly use doesn't cut it in terms of their expected investment returns though, we'll all have to get used to the idea that these sites will likely continue to be commercial in nature.

In fact, if the Province of Ontario has their say under new intensification legislation, these sites will be required to be redeveloped into even more dense uses than they are currently being used for.

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Cheap Commercial Real Estate Fish Stories

Got $100,000? Buy a Skyscraper | NBC New York

This article on NBC's New York News beta site would have you believe that things are so bad in the US right now, that you could buy a Sixth Avenue skyscraper for $100,000 US. While prices are getting very low on these kinds of assets and Real Capital Analytics claims that there is as much as $86B US worth of at risk property, I did a little digging and found some details on this particular transaction.

I was intrigued because a Canadian Pension Fund unit was the purchaser of a landmark location in the Manhattan, and the patriot in me wanted to know the details of how they managed to pull this coup off.

Turns out that magante, Harry Macklowe bought the building, located at 1330 Avenue of the Americas, two years ago for an estimated $498M. When a loan secured by the property for $130M was defaulted upon, the bank seized the property and sold it to Cadim.

The loan was sold to Cadim, Canada's largest pension fund, and transferred to the subsidiary Otera Capital. Otera took over the loan and the tower's $240 million mortgage. The building, in the middle of the country's most lucrative commercial district, is two-thirds leased; its most prominent tenant is the Financial Times newspaper, sporting a pink `FT' logo on its rooftop.

"We had some confidence that the building is a good building, and with patience we would be OK," said Marie Giguera, an Otera vice president.

Entire news article here.

So, while this is definitely a great move for Cadim and Otera, it wasn't the $100,000 fire sale some would have you believe.

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Tax Harmonization in Ontario - The Big Grab

Boy, have I got a bone to pick with the Ontario government this week! Several, actually. Yesterday was my rant about proposed energy audits. Today I'm going to write about Sales Tax Harmonization, or as I like to call it, The Big Grab.

The Ontario Government has put up a page explaining their position and the 'benefits' of making this move, you can read it here. Pure propaganda, if I've ever seen it. What really ticks me off is that they have the nerve to use terms like: transparency, fairness, job creation, and economic growth. Hogwash.

So what's it all about? They're proposing a change to sales taxes in Ontario a la the maritime provinces. No more separate PST and GST, both would be rolled into one tax, the HST. A 13% tax on just about everything you buy, including services that aren't currently taxable provincially - like real estate commissions. On the surface it doesn't look that bad as there are some exemptions that will be continued. Things like books, children’s clothing and footwear, children’s car seats and car booster seats, diapers and feminine hygiene products will still be exempt. What they don't offer, though, is the things that will now be taxable at a higher rate. Things like new homes and real estate commissions.

Firstly, new homes. Now I don't sell new homes and I have absolutely no desire to get into the market, but many of you do buy these properties or broker them on behalf of clients. Did you know that the sale of some new homes will cost tens of thousands of dollars more under this new tax scheme? I can hear the arguments already, "There's a rebate up to $400,000 and a reduced rebate for homes between $400,000 and $500,000. What about that? Doesn't that make up for it?"

Not really, no. According to the Ontario Home Builders Association (OHBA), in a recently released leaflet, fully 41% of new homes sold in centers with populations over 50,000 people will be subjected to tens of thousands of dollars in NEW taxes. That has the potential to, dare I say will certainly, impact new home sales and construction activity in this Province. At a time when the economy is suffering, should one of our main economic drivers be hamstrung in this manner?

Now you might be tempted to think, "That's just NEW homes though; there won't be any other negative effects on the housing market." How wrong you'd be! If your house sells for $300,000 and you negotiated a commission of 5.5% with your REALTOR®, then the fee would be $16,500 plus taxes. Today that tax amount is just 5% or $825 - after the HST comes into effect your new tax burden will be $2,145! That's an increase of $1,320 or a 160% increase! And just where is that money supposed to come from? I feel for you, dear consumer, but my kids still have to eat - I can't justify just dropping my fees because the government passed a new tax.

The McGuinty government claims that the impact to most families shouldn't be more than $70 per year in increased costs. But don't worry, they're going to give you your own money back in the form of a $1,000 pay off. The McGuinty government claims that businesses will benefit because they'll now be able to more affordably buy new equipment to keep people employed manufacturing goods. There might be some truth in this one, and I applaud them for thinking about how to keep Ontarians working.

Just a few questions though, and feel free to comment below - I'd like to hear what you have to say:

1. If sales tax harmonization (STH) will 'only' cost $70 per year in new taxes, why are they willing to 'give' families $1,000 each? Could it be to buy them off? Could it be a bit of a carrot so that people don't complain? Who couldn't use a little extra money right now? I could. Baaaa.
   
2. If STH will benefit business so much, why are they providing $4.5B in tax relief to businesses to offset the cost of new taxes? Could it be to buy them off? Could it be to provide the illusion of doing more for our manufacturers?
3. They claim that consumer prices dropped in the maritime provinces by something just short of 2% after STH was introduced. Why then, do they estimate that it will cost consumers an extra $70 per year?
4. What extra benefit does the hard working Ontarian get from this extra $70 per year in increased taxes? And don't tell me it's the $1,000 pay off! That's already your money! You just gave it to them in April when you did your taxes!

When has this government EVER given us something with one hand without taking more back with the other? EVER?

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"The Downturn, Then and Now"

globeandmail.com: The downturn, then and now

This article from the Globe and Mail on January 20th comes across as a cautiously optimistic piece on the state of commercial real estate in Canada.  Ever the optimist, I tend to agree with most of the points generated in the interviews.  The fundamentals in the marketplace are very different during this downturn vs. that last in the early '90s.  Interest rates are lower, vacancy rates are lower and speculative building was more tightly controlled (in the small markets like Peterborough it was non-existent over the last decade).

While we can be hopeful that these differences, along with some outside factors like a new President in the US and a new budget soon to be released in Canada will have an ameliorating affect on the markets in general, perception is still king. 

At Avison Young (Canada) Inc., chairman and CEO Mark Rose says that if there is a single factor that characterizes the current situation, it is a lack of insight into what happens next. “There is a crisis of confidence, which is paralyzing decision makers. They don't know where the economy is heading and as a result they can't make decisions.”

A sure sign of that paralysis is in the gap between what sellers are asking for commercial properties and what buyers are willing to pay, he says. “The result is a gap between bid and ask on properties that is the largest in memory. With a gap that wide there just is no room to manoeuvre in deals.”

Paralysis is what I'm seeing in the market right now. Very few players are willing to get off the fence and start doing deals again. The collective breath and gentle sigh we expected has turned into a blue faced breath holding competition. Don't get me wrong, buyers are looking, but they're hesitating for longer and longer periods of time; overanalyzing and being overly critical of the product that is available.

He who hesitates is lost - isn't that how it goes?

There are some opportunities out there now that need to be taken advantage of. Who'll be brave enough to step up? Ideas anyone?

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Response to My Letter to the Editor

I guess I'm not crazy after all! I got a bit of a friendly back slapping from a fellow citizen; thanks Dan!

Parkway land an asset - use it
Editorial - Saturday, May 19, 2007 - Peterborough Examiner

Re "No surprise: Parkway a good plan for 50 years" (Letter, May 17)

Three cheers for Doug Lytle's letter. He has said what I have been saying for years about people lobbying for non-use of those lands designated for the purpose that they were collected 50 years ago, to build a Parkway.

I too get annoyed by people who purchase property adjacent to vacant land and then complain when the land is developed. Just like people who buy a home adjacent to a school then complain about the noise the children make as they play. This "Parkway land" was one of the reasons I purchased my home where I did, believing that city council would eventually follow through on the plans to complete The Parkway.

DAN STUBBS
Fairmount Boulevard

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