Trust In Me. (Communication and Transparency)

A pillar of any relationship, including your clients, is trust. If they don’t trust you, how can they rely on the advice or representation you give them. This trust is earned through your actions. There are three key ways to build and maintain this trust.

Communication. Trust is the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships together. Be respectful of your client. Listen more than you talk. In order to offer them the best possible service understand what their goals are. Once you know what the end game is, you are in a better position to help them achieve these goals. One way to help achieve those goals is to be a problem solver rather than throwing up road blocks. Listen to their concerns and find creative solutions to help your client get that deal they want.

Transparency. A wise person once said, when you make a mistake promptly admit it and correct it. It’s okay to say “I don’t know but let me do my homework and get back to you”. If you are careless with the truth in small matters how can they know to trust you with important matters. Your client will trust you more if you are open to admitting that you may not have all the answers or that you made an error but are taking steps to rectify it. Be accountable when you make a mistake. We’re all human and it will happen. It will build credibility and your client will respect and trust you more if you are honest.

Put your client first. Here is an example of this. Agents can caught up in the commission that will be paid at the end of the deal. When ego gets in the way, trust can be broken. Our job is to put the client’s needs above our own. Don’t be selfish, this is not about you. It’s about getting the desired result for your client. The pay day at the end of a transaction is the icing on the cake. Your client needs to trust that above all, you are looking after their needs.

Building and open, honest and trusting relationship with your client can solidify a long term working relationship. If they trust you, they will come back to you for their next purchase, dispositon or lease. Keep your promises and be consistent. Be the kind of person others can trust.

Big divide between YXE downtown & suburban office vacancy

This Saskatoon office vacancy graph illustrates it well.

We see the relative similarity between downtown and suburban office vacancy trends for the 12 years between 2008 and 2020; then, suddenly, in 2020, the divide begins to swell.

We currently have over a 10 per cent vacancy spread between the two submarkets.

Is Downtown Stigmatized?

Saskatoon Tribal Council’s Saweyihtotan Outreach Program and the Saskatoon Community Support Team, in partnership with the Saskatoon Police, have positively impacted those struggling with addiction and homelessness.

I see an unprecedented effort, evident at all levels of civic and provincial administrations, to provide solutions for a safe core area.

Progress is being made; however, we have a long way to go to dissolve the negative view of the downtown area.

Cost difference

Our most recent ICR Parking Survey indicates the average monthly rate for a paved downtown surface stall averages $200 per month.

Whether an employee or the employer is paying for that cost it’s a consideration when looking at office options. Typically there is no cost for suburban office parking.

Our 2Q22 Office Vacancy Report indicates the average occupancy cost for downtown office is $14.25 PSF.

The average of the eight other office submarkets is $9.74 PSF That’s a difference of $4.51 PSF. *

On a 5,000 SF office, that difference amounts to $22,500 per year.

When you factor in the additional parking costs, the attraction to suburban office becomes evident.

The Industrial Market is a Factor

The latest 2Q22 Industrial vacancy numbers show an average of 2.52 per cent vacancy.

I could generalize and say that while downtown tenants generally fall into the engineering, accounting, law, etc., business, the suburban office occupant can be closely aligned to the industrial sector.

Trends in Other Markets

My research indicates a similar trend towards this divide in other urban markets.

For unknown reasons, Saskatoon’s difference in numbers may have started a bit earlier than other cities.

However, one should not be quick to write off downtown areas.

With offices slowly resuming face-to-face operations, downtown spaces are expected to be back in demand.

Our 2Q22 Office Market Study Report states, “The Saskatoon office market is at the beginning of a seven-year reset cycle.”

“Businesses are returning to their spaces slowly and cautiously, while at the same time, employers are developing and implementing models for hybrid work. Both employers and Landlords must adapt to new models and experiences of office work categories.”

* It’s important to note that the cost of heating and electricity can often be included in downtown office occupancy costs. In contrast, they are more commonly paid separately by the tenant in a suburban office.

Can a grocery store in a district with too few residents work?

The downtown population is 3,106 according to eHealth Saskatchewan which is down from a high of 3,331 in 2020.

 

With this limited population base, Saskatoon has struggled to attract a downtown grocery store.

Long term problem compounded

Saskatoon has been without a downtown grocer since 2004.

It was early in Don Atchison mayoral role at the time and there was a focus on trying to lure residents into making downtown their home.

Unfortunately, Atchison and his councilors were unable to deliver any meaningful growth during their tenure.

Extra Foods on Broadway Ave closed officially last month; the City Park Shop Easy also closed in 2015.

Ingredient to success

I’ve heard many different estimates on the required minimum population for a grocery store to be viable. Obviously that estimate will be somewhat dependent upon the footprint of the store.

I believe there are three important elements that could make or break a grocery merchant in an underpopulated district and the proposed “Pitchfork Market and Kitchen” for Midtown Plaza checks all three boxes.

Pitchfork Market and Kitchen already has a proven track record in our market.

They opened in the Meadows neighbourhood, most often referred to as the home of the new Costco, in 2021.

Their concept is to bring farm to table on a larger grocery scale which is a unique concept that will draw customers from neighboring areas.

They carry national brands like other grocers, but their additional curated selection of local fare is what sets them apart.

Make or break components

Sufficient adjacent parking is critical for a grocery store’s success. That’s not easy to accommodate in a core area but Midtown Plaza has that to offer.

Successful merchants from many different retail sectors have proven that customers will travel out of their area to a new store design and an engaging shopping experience can draw customers.

If the outstanding negotiations can be successfully completed, I’m betting on this to a win for downtown Saskatoon.

Required steps to valuing development lands

As brokers, landowners engage us to provide an opinion of value on development land.

 

At the same time, those landowners often offer, what is believed to be, comparable land sales within close proximity to the subject property.

What they may not realize is that there could be a whole back story to that supposed comparable land sale that render it incompatible as a sale comp.

Building blocks to value

It’s wise to either engage a commercial real estate professional who is experienced in the particular asset class or to do your own research before too quickly jumping to conclusions on value.

So what influences value of land?

Size of parcel: The price per acre of a 160-acre parcel can vary significantly when compared to the value of a 10-acre parcel due to the considerable difference in prospective buyer profiles for each size.

Current Zoning: The specific asset class that is likely to be permitted and the density of the development will play a huge part in how the construction proforma pencils.

The Planning District : In Saskatoon this is referred to as the P4G and includes the greater trading area of Warman, Martensville, and the RM of Corman Park.

What is the current zoning? You’ll need to research the municipality (sector plan), neighborhood (OCP) and potential new zoning (FUD) plans.

A jurisdiction’s prediction of land absorption: Is the subject parcel likely to be absorbed within 5, 10 or 20 years?

This can be difficult to determine and may require some historical research to determine the past pace of new development.

Servicing: Is the site expected to have full services?

When are the services expected to be available for the site?

Who is controlling the surrounding lands? It’s not uncommon for a major developer to have considerable political influence over the timing of development and can sometimes interrupt extension of utility services if it’s in their best interests.

Who is the potential buyer? How many prospective purchasers might there be for the subject property

How long could it take to sell, and should that influence the asking price?

Does it require a sophisticated development plan: To determine the number of residential and/or commercial lots a parcel will accommodate, a full development plan will be required which include but not limited to site elevations, utility servicing plan, roadways and required green space.

Further to what I mentioned above, if you are contemplating involvement in any way in this sector, be sure to engage a professional who has a depth of experience to guide your decisions.

Face Your Fear and Do It! That was advice I received from a client

That was advice I received from a client many years ago when I was considering investing in my first commercial real estate property.

I took his advice, partnered with a colleague, bought the apartment building, and had no regrets.

It was the right message, delivered at the right time and have since repeated that same message to clients when the time was appropriate.

We’re only human
Fear is the human condition that limits most people from making bold moves that could impact their circumstances exponentially.

I’ve said before, when I truly believe a client should or should not go forward with a transaction, it is my job to pull together all of the persuasion skills I possess to convince them.

I have studied and practiced this skill all of my working career.

We invested a relatively small amount of capital into refurbishing that first property and sold it not long thereafter for considerably more than our total investment.

Keeping ourselves honest
It’s important to state here that due to ICR’s non-compete clause I can’t seek my own investments in Saskatoon.

Our company is proud that, “ICR registrants, partners/shareholders and employees shall not compete with ICR clients by virtue of the sale, lease, property management or development of commercial real estate within their primary market.”

Therefore, any commercial real estate investments we make are outside of our primary market.

Fear had me pinned
Some years later I had an opportunity to purchase a multi-tenant office building.

It was the right size of investment for my wife and I to acquire without a business partner.

I negotiated the purchase and proceeded with our due diligence.

This was at a time when there happened to be many storm clouds forming around the economy. Fear descended upon my judgement.

I remember stopping at a coffee shop on my way to the Listing Broker’s office to ponder the final decision.

We did not do the deal. Looking back on that day I realized it was absolute fear that overruled the decision.

I presented the opportunity to a good client and friend who did complete the purchase of the property.

He offered me an option to purchase a one third investment in the building based on the same price he acquired it for at any time within two years after his closing.

We exercised that option and held the property for several years.

A time arose when the right thing to do was sell it and we did; at just over three times the original acquisition price.

That entire capital gain coulda, shoulda been ours but instead, due only to my fear, we realized one third of that profit.

That was a very important life lesson for me.

When I find myself faced with a major business decision, I often look back on that experience to discern how much fear may be playing in my decision process.

Ask yourself honestly, how much does fear affect your life journey?