Before you sign ...

A bank is a place that will lend you money if you can prove you don’t need it. – Bob Hope

The Agreement for Sale strategy (Seller holds title and mortgage in their name – you control the property) may appear like a dream come true when you are trying to purchase real estate without banks. It may be the right tool for your situation, but it comes with its own set of dangers as well.

Before you sign on the line, make it a rule to ask these two questions, which were born out of situations I’ve recently encountered when the Seller is offering to sell via the Agreement for Sale:

1. Would a bank mortgage the property? Just because you do not want bank financing on it at this moment, it is likely you will need it at some point down the road when the Seller’s financing expires.  Is there a latent defect that makes this property ineligible for financing? There is a long list of reasons a bank won’t touch a property that may not be easily discerned without professional due diligence; from the economic life of the property to environmental contamination. Talk to your banker about the prospective purchase, and have them point out any concerns they may have with the property.
2. Future Encumbrances – do you have a mechanism in place to protect yourself against the Seller encumbering the title in the future?  You probably do not want the Seller utilizing the property as security in their other dealings while you are under the assumption you control the property. Bring it up with your lawyer and understand what your risks, and ways to mitigate this are.

If you want to get more familiar with the Agreement for Sale strategy, you may enjoy spending a day learning the ropes with lawyer Barry McGuire here. What are your rules when utilizing the Agreement for Sale? Drop them in the comments.

(Photo credit: jk5854)

Let me get my cheque book, if you look closely at the General Description, apparently this one is a “great investment“.  But that is all we know.

I don’t know the address, the zoning, the size of the building, or the rental income, but I’m sure it will be worth the effort of trying to gather all this information.

Let me know if you have other examples of How to Not Sell … @cafehaven suggested we have a top 10 contest!

Names blurred to protect the guilty.

Time for a Face Lift?

The City of Edmonton has currently identified seven areas in need of redevelopment, and provides financial incentive for building owners and real estate developers to do so.

Due to the number of building owners and developers that seem to be unaware of these programs, or confused about them, here’s a quick run-down (run down – get it?), and reminder to check it out further.

If your project is located in one of the seven BRZ’s (Business Revitalization Zones), the City will give you cash to:

• Improve the storefront/facade – up to 50% of the cost, up to $60,000 for a corner building, $30,000 for otherwise.
• Develop a mixed-use market housing project (dwellings located above retail/commercial use) – reimbursement of up to $12,000 per new dwelling.
• Develop a multi-unit market housing project – reimbursement of up to $7,000 per new dwelling
• Improve the interior of your retail/commercial building – reimbursement of up to 50% of construction costs, to a maximum of  $15,000 per building.
• Develop a new retail or commercial building – reimbursement of 5% of total construction costs, to a maximum of $40,000.

Obviously, there are restrictions, and a firm procedure that needs to be followed before eligibility can be ensured, so read the fine print.

The program is in effect for these Edmonton neighborhoods (maps of the exact areas can be downloaded here):

1. Alberta Avenue
2. Beverly
3. Chinatown / Little Italy
4. Inglewood
5. North Edge
6. Old Strathcona
7. Stony Plain Road & Area

Get the full info straight from the horses mouth:

• City of Edmonton Development Incentive Program
• Facade and Storefront Improvement Program

Is the program enough? The financial incentive is probably not substantial enough to actually spur new development, and going through the eligibility processes can be time consuming (time being money in the world of the developer). For those who were already considering a project like this in one of these areas, it may provide a helpful nudge to move forward.

There are telling before and after pictures of past participants in the facade improvement program here. I think you’ll agree that whatever the cause was, these improvements make our city a more enjoyable place to live and work.

Photo credit to Cliph.

Since my 2009 nomination, Cafe Haven has not only sharply improved sales volume, it has become further recognized by the Sherwood Park and Edmonton-area community, and been the subject of numerous accolades & glowing reviews.

These recognitions include but are not limited to Vue Weekly’s Golden Fork Awards, and an Edmonton Journal review declaring their cinnamon buns to be 2nd best in the Edmonton area. Reviews like this, and the numerous other informal reviews (like this one, this one, these ones, and this one) by the general public, have resulted in Cafe Haven becoming a “destination” in itself, with customers traveling to Sherwood Park specifically to frequent it.

Also notable among their accomplishments is that one of their barista’s, Alix Osinchuk, competed at this year’s Regional Prairies Barista Competition in Calgary; a challenging competition respected in the high-end coffee community.

The three reasons I have nominated Cafe Haven in the past, and do so again are:

1. Dedication to Superior Product
A cafe of this genre has two products; Food/Beverage, and Cafe Experience. There are times I have entered the Cafe to be excitedly greeted by a sleep-less Michael.  He’s been “dialing in” his coffee brewer a good chunk of the night, and can’t wait for some feedback on the new brew. He shows me his charts, where he has painstakingly adjusted the variables in tiny increments – grind, water temperature, brew time, etc. – until arriving at the taste he’s searching for.

There are many reason why Cafe Haven offers the best coffee in the Park:

1. They have chosen to source their beans from local roaster Transcend Coffee, who’s approach to roasting involves small batches carefully monitored and assessed.
2. Your coffee is not ground until you’ve ordered it, and they never hold a grind for longer than 5 minutes due to the rapid oxidization of coffee.
3. The coffee is never more than one week off the roast and is placed in vacuum one-way valve bags ensuring that your coffee has the minimum amount of contact with the air – the killer of fresh coffee.
4. The twice former South Australian Barista Champion and current Prairies Barista Champion, has trained Cafe Haven to follow a meticulous process for making espresso and adhere to strict standards that ensure every drink is of the highest quality.
5. They warm your cup.
6. They won’t allow you to add Pina Colada syrup to your latte, because they love you.

The menu does not feature items you can find anywhere else within driving distance. It has been inspired by Michael & Julie’s travels around the globe, infused with Julie’s dedication to out-of-the-box experimentation, and crafted from scratch.  Fresh, with your health in mind. Where else can you find a pumpkin, pesto and feta cheese ciabatta with arugula?

The sought after Cafe “Experience” is not something that can be purchased out of a box.  It’s an intangible combination of lighting, music, colors, temperature, smells, furniture, and tastes.  Couches to slouch on and read a book, nooks for private conversations, or tables to set up a laptop, connect to the Wi-Fi and get to work.  A hard-to-resist retail display stocked with the even harder to find coffee-geek gear essential to making high quality beverages at home. Highly-trained baristas who remember you don’t need room for cream in your Americano. Cafe Haven has this.

2. Dedication to the Local Economy
The coffees, food ingredients, beers, wines & desserts have not been purchased from the lowest cost providers.  Wherever feasible, they have made a commitment to supporting the local economy and are sourced from nearby farmers, grocers, brewers, roasters, and bakers.  Not only does this reduce the environmental footprint due to reduced shipping and transportation, but helps ensure the livelihood of the independent entrepreneurs who are contributing to the charm and character of the area.  Items, such as coffee beans which are not reputed to grow so well here, are ethically sourced with concern for our international neighbors: as fair or fairer than Fair Trade.

Further demonstrating this commitment, Cafe Have is a proud member of Original Fare, a “select group of independent restaurants committed to Promoting, Preserving and Protecting Culinary Diversity.  Original Fare restaurants are independently owned and operated and offer original, diverse, authentic dining experiences you just can not get anywhere else.”

The Cafe has also proven itself to be an ideal venue for local artists, musicians, and story-tellers to share their talents with the community on Story Slam and Music Night. The walls proudly promote incredible local painters and photographers.  In addition, their well-attended music nights have raised thousands of dollars for worthy charities and provides an intimate environment for friends and family to enjoy great live acts.

3. Dedication to Environmental Sustainability
Aside from significantly reducing their footprint by shopping local, Cafe Haven has a religious recycling system that recycles all plastics, paper, tins and glass; and composts between spring and fall. They provide incentives for customers to bring their own to-go mugs, and in the unfortunate event you have forgotten your mug they will provide you with their own compost-able ecotainers – sans judgement. Greener, safe alternatives to harsh cleaning chemicals are sought out and used where possible, and they have a long-term goal of being 100% green-powered.

That is all.
My only complaint is that I have been spoilt. Forever ruined for ordinary coffee and ordinary cafe’s. These commitments I have highlighted here are likely only the tip of the iceberg – what has become visible to me as a loyal customer.  No doubt there are many other activities behind the scenes that lend further support, however these activities I bring to your attention, alone, make Cafe Haven the primary choice for the 2009  2010 Sherwood Park & District Chamber of Commerce New Small Business Award.

Cafe Haven: Website , Twitter, Facebook

Archimedes Lever

Not only do I believe that Business is a tool capable of creating positive change in the world – I believe it is one of the most powerful tools.  In fact, the only other tool that I can imagine with similar potential is Art.

Vital Engineering Corp. is one of those businesses that is quietly changing the world for the better, and I am proud to note that they are located mere blocks from my home as well as my office in Sherwood Park, Alberta.  I’ve mentioned them in a previous post, but I would like to draw further attention to what they do:

We guide our clients through the process of sustainable development, from efficient traditional design to innovative alternative energy systems.  We hear your needs and offer a balanced approach.

Vital Engineering works with individuals, developers, architects, communities, businesses, and municipalities. Our knowledge of available funding mechanisms and our inherently conservative designs can bring anyone closer to living and working with less waste and energy. This integrated design process results in the lowest building life cycle cost and the healthiest interiors for occupants.  We believe that sustainable development comes through changes that enhance quality of life.

Our business is building relationships based on trust.

Their work is achieving recognition in wider circles, with President & Founder Dean Turgeron being awarded the ASET Technologist of the Year and a 2010 Emerald Award Finalist for “Individual Contribution to Alternative Energy Development in Alberta”.

If you are planning a building project, be sure to consult with Vital to find out what they can do for you. The earlier in the process you talk to these guys, the more they can do for you.

They’ve recently produced with short video to present their vision of how to strike a balance between economic stability and environmental sustainability. Featuring voiceover by Tricia Helfer, I think you’ll enjoy it.

The future of the office?

The office is dying. Or, maybe its already dead?

Seth Godin has said “Goodbye to the office.”

Jeff Rubin says the pump prices will end (at least shorten) your commute.

One of my clients (a retired, savvy investor), has recently decided they would no longer be looking at adding office buildings to their portfolio – for similar reasons cited by Seth Godin & Jeff Rubin above.

Questions for you:

• In Edmonton & Calgary office vacancy is growing.  Yes, there will be upswings/fluctuations but the long-term demand will likely diminish. How long do you have to safely reduce your exposure? Do you really need to?
• New home builders: are you building cutting-edge home office spaces into your new projects? If not, home buyer’s will be buying from your competitor who does. Simply closing the door doesn’t keep out the ruckus my kids can strum up.
• What does the new office solution look like? Can you picture a pay-per-hour meetup space next to every Starbucks? Planners featured in the Canadian movie “Radiant City” suggest that home-owners may build attached office spaces in their front yards; a traditionally unused space. Is this plausible?
• Are you investing in video conferencing tools/technologies?
• What other sectors are losing relevance? How big of a threat is online shopping to Retail?
• What sectors are becoming more relevant? It seems to me demand will continue to increase for medium-high density multi-family & condo’s, as well as industrial warehouse & manufacturing spaces.

If we were starting this whole office thing today, it’s inconceivable we’d pay the rent/time/commuting cost to get what we get. I think in ten years the TV show ‘the Office’ will be seen as a quaint antique.

- Seth Godin

To watch the trend grow, follow Work Shifting.com

Your thoughts?

Photo Credit: Fabio Bruna

2224 Square Foot Standalone Office & Shop with Yard

This standalone property is well suited for commercial/industrial businesses requiring a professional front end with some shop and yard storage.  It’s a well-cared for building that features an attractive facade and office buildout, functional shop space and secured yard storage.

DC (Direct Control) Zoning allows for a wide variety of uses from industrial business, office, and retail. Check out the full information package at http://HighPrairieCommercial.com

What if prospective purchasers and tenants of our buildings were quickly & easily able to discern if we had cut corners, or gone the extra mile, as it pertains to the energy efficiency of our buildings? What if the energy efficiency of our properties was one of the first pieces of information at their fingertips, and it was as easy to comprehend as a Grade 1 report card? Would this change how we play the real estate game?

It would, and it will.  And here is what the new system may look like, as envisioned by ASHRAE (American Society of Heating, Refrigerating, and Air-Conditioning Engineers).

ASHRAE has the credibility and the reach to implement such a program, it is already in pilot phase in select areas of the USA and hopefully coming soon to a building near you. Energy ratings are not just for choosing appliances and vehicles anymore; it is only  a matter of time before the BEQ Grade (Building Energy Quotient), or equivalent, will be on every listing sheet across the country.

Smart developers who can read the signs of the times have been catering to the green-demand shift for years, and for them business will carry on as usual, albeit with greater market share.  Developers steeped in quick-profit business strategies which traditionally cuts corners on the latent items (ie: energy efficiency) will be in for a surprise as they discover that the marketplace has changed. New terminology has been added to the real estate lexicon, and their prospective tenants/buyers are using an oh-so-handy energy rating as part of their decision making processes. They will be approaching their agents, requesting them to locate “lease properties in SE Edmonton, 20,000 SF, grade loading overhead doors, ample parking, and an energy rating of B- or better.” An energy rating provides the missing tool for this to happen, a spotlight on an area that has historically been harder to ascertain. Think of the stigma that has become affixed to gas guzzling vehicles as a picture of how this can impact real estate.

This is not a threat, it is an opportunity to turn this growing interest in sustainability into a competitive advantage. An energy rating can be worn as a badge of honor and has the potential to become one of our most effective marketing tools.

Special thanks goes out to the award winning Vital Engineering Corporation, who introduced me to the BEQ grade. They are also the guys who can show you how to design a project that earns top grades, and how sustainable design can increase your ROI.

Twitter

Twitter can unfortunately be dismissed as a chat tool for youngsters who spend too much time in front of the blue screen. I say unfortunately because there is a powerful engine hidden underneath its impotent, cupcake name. An engine that a 1966 Pontiac GTO would happily trade for (sorry,its the most masculine metaphor I could think of …).

It may be an attempt to nobel-ize my social media investment, but I believe a strong case could be made to back up my belief that, Benjamin Franklin, if he only had the opportunity, would be found on Twitter. And I don’t mean this one.

A lengthy resume for the man, that does not fit on this post can be found on wikipedia. To quickly refresh you on some of the highlights:

Benjamin Franklin (January 17, 1706 [O.S. January 6, 1705[1]] – April 17, 1790) was one of the Founding Fathers of the United States of America. A noted polymath, Franklin was a leading author and printer, satirist, political theorist, politician, scientist, inventor, civic activist, statesman, soldier,[2] and diplomat. As a scientist, he was a major figure in the Enlightenment and the history of physics for his discoveries and theories regarding electricity. He invented the lightning rod, bifocals, the Franklin stove, a carriage odometer, and the glass ‘armonica’. He formed both the first public lending library in America and the first fire department in Pennsylvania. He was an early proponent of colonial unity, and as a political writer and activist, he supported the idea of an American nation.

Benjamin Franklin was passionate about communication technology and the spread of ideas. (For a fresh take on the stories behind the stories happening in this era, read (please) Steven Berlin Johnson’s book, “The Invention of Air.“) This statement is evidenced by his efforts in organizing the first “subscription library”, his career dedicated to expediting news service through his printing presses, and his position as the first Postmaster General. It was this Postmaster position that allowed Mr. Franklin to dramatically increase the speed of the information flow across the pond, which he accomplished by charting the Gulf Stream. This information flow happened to hold the revolutionary ideas regarding politics, science, and religion, that was giving birth to a new nation of independents.

Now, we have a new stream of information fueling new revolutions, and it is far faster and more secure than Ben would ever have imagined sailing on the Gulf currents, on the lookout for pirates (they still exist on this new stream). Here’s a quote I pulled from The Invention of Air, from the man himself, and I think you’ll agree that there would have been an affection for our 140 character idea publisher, regrettably known as Twitter:

These thoughts my dear friend, are many of them crude & hasty, and if I were merely ambitious of acquiring some reputation in philosophy, I ought to keep them by me till corrected by time or farther experience. But since even short hints . . . being communicated have often times had good effect . . . it being of more importance that knowledge should increase, than that your friend should be thought an accurate philosopher.

I bring this to your attention because I believe many of my clients, business owners in Edmonton’s industrial scene, have unintentionally dismissed social media as purely “social”, and I’m afraid you may have written it off too soon. As business owners, it is critical to manage time, and if not properly researched social media will give the appearance of a time-waster. Especially with names like “Twitter”. But these activities are a far cry from afternoon soaps, and if you are not using social media tools, I hope it has been a purposeful choice after fully examining the potential – not a dismissive one.

If you look to achieve an ROI simply based on increased sales, these tools may or may not be the ticket. For myself, the greatest value is in the exchange of ideas that occurs. They are simple tools that allow me to subscribe to the thoughts and actions of folks far smarter than I, ideas that I can implement, and in turn provide feedback to give back to the community.

Take a couple minutes to watch this video put out by Erik Qualman, author of “Socialnomics: How Social Media Transforms the way we live, and do business,” and make sure your decision to abstain is an educated one.

I’d love to hear, what has your experience been with Social Media? How has it worked, how has it not? How do you measure your ROI? If you could rename Twitter, would you? And what would it be?!

The market is turning ...

(Read time: 2 min.)

The economists continue to stand on sandy soil with their predictions of the future and interpretations of the market indicators. Whether you find yourself a pessimist, optimist, or a realist, by now you have found an expert to confirm it!

A few market research groups have released their Q4 2009 numbers for Edmonton’s industrial sector, if you fancy wading through the all the metaphors, they are available for download below (if you want to choose one, Colliers is your best bet). I’ve read them all; here are the major stories affecting your decisions in the market. More than ever, it is important to look deeper into trends in specific sub-markets within and around Edmonton, and specific types of industrial product. Large statistics that pertain to all of Canada, or Alberta, or even city-wide may not be relevant to your property.

• City-wide industrial price/square foot numbers have dropped as much as 20% since the peak. This is a great headline, but this number is skewed by the super-sized projects that have taken the biggest hit.  Smaller properties in the higher demand areas have only seen softening in the area of 5-10%.
• As I predicted last year, city-wide industrial vacancy cracked the 4% mark, up to 4.41% This is up from 4.02 in Q3, and 3.17% at the end of 2008.
• The most important story related to industrial vacancy is the switch that occurred between the Northwest market and the Southeast market. The Northwest, which has been had the highest vacancy the past few quarters, was able to lease some of its large pockets and turned out to stay fairly stable at 4.65%.  The Southeast however, jumped up from 2.85% at the end of 2008, to 5.19%! The Nisku industrial market, which like the Southeast sector is home to many oil & gas businesses, jumped from 1.16% in 2008 to 4.13%!
• Important to note about the vacancy rates – yes, this has brought average lease rates down, but mostly in large bays.  Smaller bays, depending on the location, have held fairly steady.  Landlords of course have had to be more friendly in the negotiations across all bay sizes.
• The sublease market has more square feet available right now than anytime in the previous 20 years – it tripled in 2009 as businesses continue to right-size.
• Land sales . . . you won’t find this realtor knocking on doors to convince you to list your industrial land.  In greater Edmonton area, 1,170 acres sold in 2007.  In 2008, 401 acres. In 2009?  192.
• Maybe I take that last statement back, if you have a parcel(s) between .5-2 acres, let’s talk. There is demand from user-owners for small parcels in certain neighborhoods.

So this is our 6th consecutive quarter of softening in the Edmonton industrial market. Vacancy up, absorption down, prices trending downward. Compared to the rest of the world, we’re doing fine.  It is unfortunate that many local business owners are feeling the stress of this transition period – it affects their sleep, their families, and Alberta health care costs. On the plus side, the corrections have many unsung benefits, and Edmonton is regaining its competitive edge in the world.  2010 has started on a positive note, and the players in the industrial market are becoming more confident in their decision making. Deal cycle continues to be longer, with abundant choices leading to indecision on the buyer’s and tenant’s behalf.  There is a such thing as too much choice.

Colliers Q4 2009 Edmonton Industrial Report
Q4 2009 Marketbeat – Edmonton Industrial Cushman Wakefield
CBRE Q4 2009 Edmonton Industrial Market