Thursday, December 22, 2016

Dear Santa: Our Real Estate Wish List for 2017



Can you believe it's Christmas this weekend already? Wow, the fall really flew by. Hopefully you are staying warm out there as our area has really gotten an unseasonably cold and snowy start to the winter.  Anyways, in honour of everyone’s favourite present-bearing, cookie-eating jolly fellow, we present our real estate wish list for a prosperous 2017.

Continued Economic Growth
2016 was a great year for our local economy.  A strong economy is the backbone of a healthy real estate market.  Things look primed to continue in 2017 and hopefully that rings true.

Continued Migration To The Windsor Area
Without a doubt, the local real estate market has gotten a boost from retirees moving here for the low real estate prices and warmer climate.  We are also seeing a return of people who went out west (Alberta) for jobs and are returning after our local economy is creating jobs again.  More immigrants are also choosing the area as opposed to the large centres (GTA, Calgary) for the same reasons.  Hopefully this trend continues for 2017 and beyond.

More Industrial Inventory
The industrial market started 2016 very tight and only got tighter as the year went along.  Everyone seems to need more space for the contracts they have and they’ll have to start turning away work due to not having the space to produce.  The area seems ripe now for new construction of industrial buildings.  This ties into our next wish…

More Serviced Industrial Land
Continuing the theme of industrial space shortage, the only way to meet the current demand seems to be to build more buildings.  The problem is we don’t have much in the way of serviced industrial land that is “shovel ready”.  This is a complicated problem that involves city zoning, planning, servicing, etc and needs to be discussed.  Companies could start skipping over the area as a potential destination for their plant due to not being able to get the facilities they need.

Local Employers Successfully Filling More Open Positions
Everyday we deal with business owners.  The most common complaint we hear is, “I can’t find or keep staff”.  Across all industries and all sizes, this seems to be a consistent problem.  This, like the previous wish, is a complicated problem. We need to do a better job producing workers as a city and country that matches the needs of employers.  Some of this could be solved by wish number two, but not entirely.  This isn’t a problem specific to this area but seems to be striking in an area that went through a long period of high unemployment.  The future of our economy depends on this getting figured out.

Well, that does it for our posts for the year.  Hopefully you’ve been good! What’s on your wish list for Santa?



Monday, December 19, 2016

2016 Local Real Estate Stats Examined


Last week we made a few general observations about our local real estate market from 2016.  This week we are going to dive a little deeper and look into some relevant statistics.  Note: Some of these statistics are based on the first 11 months of the year, as we still have a couple weeks left in December.  Also, these stats refer to our home market of Windsor, Ontario.

Units Sold Increased 10% Year Over Year
The headline is pretty self explanatory.  The number of units (houses) sold are on pace to top last year by 10%.  This is generally positive as more transactions are taking place so the market is more active.  Obviously this is a great thing for sellers.

Listings Increased 2% Year Over Year
Again a pretty straightforward headline.  The number of houses listed for sale are on track to increase by 2% compared to last year.  All other things being equal, this is positive for buyers as there is more inventory for sale and negative for sellers as there is more competition when selling your home.  When comparing the increase in listings with the increase in sales, sales have increased significantly more than listings, so one should expect to see an increase in prices during this period.

Average Sales Price Increased 13% Year Over Year
Good news for sellers!  Average Prices increased from $200,823 to $226,193.  After seeing sales up 10% and listings up only 2%, there was not enough supply to meet demand and there was upward pressure on prices.  Some of this gain can also be attributed to a higher share of high priced homes being sold this year compared to last year.  Obviously this is not so good for first time home buyers, or people who have been renting for the last year as it will be more expensive for them to find a home.

Housing Starts Increased 30% Year Over Year
This is great news all around.  Sales of new construction houses have really boomed this year.  This is also great for the local economy as the builders hire skilled trades which boosts local employment, the city or town expands its tax base, and additional services must be added (retail) to service this additional density and demography.  Hopefully this continues.

The Rental Vacancy Rate Decreased from 3.9% to 2.9% Year Over Year
This is another overwhelmingly positive statistic.  On a percentage basis this means there are 25.6% less vacant apartments in the area.  This continues the improving trend from 2009 when vacancy rates were 12%+.  Vacancy rate declines are generally indicative of economic growth and population growth (both province migration ie Alberta to Ontario, and immigration).  With an improving economy, robust sales activity and a tight rental market, it is clear people are moving to the area.  The area now seems ripe for new construction of rental units.

So after reviewing the stats it's clear to see that 2016 was a pretty healthy year for the real estate market.  Those are our takeaways from the stats.  What are yours?


*Sources WECAR & CMHC


Friday, December 9, 2016

2016 Year End Real Estate & Related Observations



 As the holidays draw closer we are going to do a few posts wrapping up the year.  And what a year it has been for our real estate market and many other markets in Canada and the US.  Today we are going to discuss some observations we’ve made throughout the year.

The Year of Multiple Offers
Multiple offers seemed to be a way of life this year.  Bidding wars were everywhere, in all parts of town and all price ranges.  This even spread to the commercial market as some retail, multifamily, and industrial buildings had multiple offers.

New Construction Is Back In A Big Way
New construction was a bit of a tough business since the recession of 2008 in our market.  That changed in a big way as sales of new construction boomed all over the area.  Clearly there was some pent up demand from the last several years and that translated into huge numbers.

The Local Economy Is Finally A Tailwind
We deal with lots of business owners, and so many of them talk about having way more business than they can handle.  This applies across all industries.  The local unemployment rate has plummeted from being one of the worst in Canada to below average.  This bodes well for a continued buoyant, local real estate market.

We Need to Build More Condos
There are not enough condos out there to meet demand.  With an aging demographic, mixed with the  acceptance of condo living by Millennials, the once stagnant demand for condos locally is long gone.  We expect to see more new condos being constructed in the next few years with brisk demand to meet them.

Downtown Is Still A Sore Spot
The downtown hasn’t really been able ride the coattails of the improvements in the local economy and real estate market as much as it was hoped for.  We still need more people living down there to change the demographics to support more retail and attractions that people like to speak about.  Hopefully the University opening in the near future will be a catalyst, but time will tell.
Those are some of our observations from 2016.  What were yours?


Friday, December 2, 2016

Real Estate & Related Terms Explained: First Right of Refusal















As  we wrap up this series on leasing terms for the year, another confusing term/subject is on deck.  Although the definition is pretty literal, the application of it in the commercial leasing world isn’t so straightforward.

What Exactly Is A First Right of Refusal (FROR)?
A right of first refusal is a contractual right of an entity to be given the opportunity to enter into a business transaction with a person or company before anyone else can. If the entity with the first right of refusal declines to enter into a transaction, the owner of the asset is free to open the bidding up to other interested parties.  In the real estate world, this business transaction refers to the real estate premises in subject, be it commercial space, land, etc.

When Would A First Right of Refusal Apply?
The most common time when you see a first right of refusal applicable would be when a tenant is leasing a space, the landlord decides to sell, and the tenant has a first right of refusal to purchase the property.  Another common application would be when a tenant in a building is growing and as a neighbouring space becomes vacant, the tenant would have a first right of refusal to lease the additional space before the landlord can lease it to another tenant.

What Else Should I Know About A First Right of Refusal?
A first right of refusal is a term of a lease agreement that should be negotiated along with other terms at time of lease negotiations.  It usually states a date that relates to the first right and the mechanism for administering it.  The more thoroughly stated the better, so there are no disagreements later.  

To use an example: if a tenant has a first right of refusal on the building they occupy that states that should the landlord get a bonafide offer to purchase from a third party, the tenant will have seven days to match the terms of that offer.

The actual clause in the lease agreement will be more detailed but that covers the basis of it.

Obviously, a first right of refusal is a benefit to a tenant if they desire to own the building they are in someday.  It is a nice perk.  It is also a benefit to have a first right on neighbouring space, as being able to expand without moving is attractive.

On the landlord’s side, it is sometimes a detriment to have a first right of refusal when selling their building.  If a third party buyer knows that the tenant has a first right of refusal to match their offer, they might decide to not bother.  It really depends on the situation though.


As always, make sure to hire an experienced commercial realtor to negotiate terms in your lease, including first right of refusals!  Once again, this wraps up our series on explaining leasing terms for the year.  Hope it was informative.  If you ever have questions don’t hesitate to drop us a line.