Oilpatch woes boost Calgary's office vacancy rates to record levels

Calgary vacancies soar

Vacancies in Calgary's downtown office towers have risen to record levels and there's no landlord relief in sight with almost one in three offices sitting empty and sublets accounting for a quarter of available spaces on the market.

The city's glut of empty office space has previously been linked to overbuilding but two commercial real estate reports released this past week show that downtown vacancy rates in Canada's oil and gas capital are the highest in the country and growing — despite no major new towers opening in the past two years.

Vacancies are likely to go even higher, both reports note, driven by short-term factors including layoffs resulting from the takeover of Husky Energy Inc. by Cenovus Energy Inc. and longer-term job losses from cost-cutting and mergers in the oil and gas sector.

In its report released Thursday, real estate firm CBRE says the equivalent of four CFL football fields in downtown office space was emptied in the last quarter of 2020.

The net reduction of 355,000 square feet (32,000 square metres) took the vacancy rate to a record high of 29.5 per cent compared with 27.2 per cent in the fourth quarter of 2019.

"The negative absorption is due to the oilpatch, not COVID-19," said Greg Kwong, Calgary-based regional managing director for CBRE.

"People may not be going back to work because of the lockdowns but these companies still have leases in place and have to pay the rent. It's not considered vacated space."

CBRE found that 23.7 per cent of the available downtown office space in Calgary is being sublet by the lease holder.

In a separate report using different calculation methods, Avison Young pegged the downtown office vacancy rate at a record 26.9 per cent in the fourth quarter, up from 24.2 per cent in the year-earlier period.

Under an optimistic scenario, Avison Young predicts the vacancy rate will rise to 28.6 per cent by the end of 2023; in its pessimistic forecast, it foresees a rate of 32.9 per cent.

The merger of Cenovus and Husky offices in 2021 is projected to result in between 36,000 and 54,000 square metres of downtown space being vacated later this year, said Todd Throndson, managing director for Avison Young's Calgary office. That's around one per cent of the total inventory of 4.16 million square metres.

"We have a very difficult marketplace and there's no quick solutions to solving that problem," he said. "The next 12 to 24 months are going to be a challenging time for there to be any growth in our marketplace."

Cenovus and Husky have said their merger will result in a reduction of between 20 and 25 per cent of the 8,600 combined employees and contractors — potentially more than 2,000 workers.

The two companies have about 300,000 square metres of lease commitments in Calgary, with some of it already being sublet to other tenants, said Cenovus spokesman Reg Curren. More space is expected to be sublet going forward, he said, declining to give specifics.

"Once COVID-19 restrictions are lifted and we determine our plan to return to the workplace, Brookfield Place will be the head office of the combined company," he said, referring to the 56-storey glass and steel tower opened in 2017 that Cenovus calls home.

Husky's head office is a few blocks west in the much older Western Canadian Place.

It's not hard to find other Calgary companies reducing staff and their need for office space.

Suncor Energy Inc. announced in October it would reduce total staff by 10 to 15 per cent over 18 months, cutting as many as 1,930 jobs. Those cuts will be offset by the relocation of its Petro-Canada head office and most of its 700 jobs from Ontario to Calgary.

Imperial Oil Ltd. announced in November it would lay off 200 staff.

Meanwhile, office space held by Equinor Canada at Jamieson Place in downtown Calgary is on the sublet market after the Norwegian oil company decided to consolidate its Canadian operations in St. John's, N.L.

Lower staff counts are also expected with the close of a handful of smaller oil and gas producer corporate mergers announced late last year.

Calgary's office buildings have lost an overall 13 per cent of value, about $2.3 billion, over the past year due to higher vacancy rates and lower rents, the city said Thursday as it issued its 2021 property assessment notices.

Declines in recent years have pushed more of the municipal tax burden to residential and other business ratepayers.

Economic Development Calgary is using the city's abundance of discounted office space as a "huge selling feature" in attracting Calgary employers in new sectors like technology and renewable energy, said CEO Mary Moran, but she concedes those new tenants haven't replaced the oil and gas losses.

"I think, long-term, we know that the energy industry is not going to be the job creator," she said. "It's a jobless recovery in oil and gas."

Tentative GM deal to spend $1B on electric vehicle plant on Ontario

Tentative $1B GM deal

A tentative deal that could see General Motors Canada pour a billion dollars into Ontario's beleaguered automotive sector could bring the province one step closer to modernizing its economy and keeping local production afloat, according to a prominent Canadian manufacturing association.

GM and national union Unifor announced the deal on Friday night, saying the two sides had reached a preliminary agreement to transform the CAMI plant in Ingersoll, Ont. into a hub for commercial electric vehicle manufacturing. The deal, valued at $1 billion, is still subject to ratification by union members later this weekend.

Canadian Manufacturers and Exporters hailed the announcement as a breath of fresh air for a sector that has struggled to retain jobs and fend off other North American competitors for years.

"It is good news for Ontario, for those employees in the auto sector, and for the businesses and employees in the supply chain that supports auto assembly in Ontario," association President Dennis Darby said in an email to The Canadian Press.

GM dealt Ontario a blow when the last pickup trucks rolled down the line at its Oshawa assembly plant just before Christmas in 2019. The shutdown led to layoffs for the roughly 2,600 people employed at the plant, which had been in operation since 1953 and had nearly ten times as many workers on its assembly lines during its 1980's hay day.

Unifor, politicians and even U.K. singer Sting fought the decision to close the plant. GM eventually relented and saved 300 jobs with a $170 million investment to turn a portion of the operation into a auto parts plant.

Experts have since predicted a pivot towards electric and self-driving cars and trucks would help Canada contend with competition from the southern U.S. and Mexico.

While both regions' auto sectors flourished, Unifor estimated Canada dropped to the No. 10 auto manufacturing country in the world in 2017, down from No. 4 in 1999.

"Over the past few years the province has lost production to other jurisdictions, and this (new GM) announcement like some previous ones in the past year by other manufacturers helps provide some much needed stability and hope for the future continued viability of this sub-sector of manufacturing," said Darby.

GM said it intends to use the Ingersoll plant for the production of delivery vans dubbed BrightDrop EV 600s, a new venture the company touted at the Consumer Electronics Show this week.

The GM deal, if approved, would mark the latest in a string of negotiation triumphs for Unifor as it seeks to bolster Canada's automotive industry.

The union struck deals with General Motors, Ford and Fiat Chrysler last year that included support from the federal and Ontario governments.

A Ford deal reached in September included $1.95 billion to bring battery electric vehicle production to Oakville, Ont., and a new engine derivative to the southwestern Ontario city of Windsor.

The Fiat Chrysler agreement included more than $1.5 billion to build plug-in hybrid vehicles and battery electric vehicles.

General Motors agreed in November to a $1.3 billion dollar investment to bring 1,700 jobs to Oshawa plus more than $109 million to in-source new transmission work for the Corvette and support continued V8 engine production in St. Catharines, Ont.

If the latest GM deal is ratified, Unifor said recent negotiations would have helped pump $6 billion into the provincial auto sector.

Ontario Premier Doug Ford and Economic Development Minister Vic Fedeli issued the statement celebrating the most recent announcement.

"This announcement is an important signal that Ontario’s economy remains competitive even in these difficult times," they said.

BlackBerry, Facebook resolve patent fight in private deal

BlackBerry, Facebook settle

BlackBerry says it has resolved its disputes with Facebook, after both companies had taken aim at each other's patents.

In 2018, BlackBerry alleged in California court that Facebook and its WhatsApp and Instagram platforms were infringing on seven of its inventions.

BlackBerry accused Facebook and its subsidiaries of using BlackBerry's technology in messaging apps, methods for photo-tagging, and a tool that enables use of a device's contact list while a game is being played, in order to exchange messages and game data.

Later that year, Facebook filed a suit of its own over six patents, claiming BlackBerry was infringing on Facebook's patented voice instant messaging and use of global positioning systems.

Now, a BlackBerry spokeswoman says that BlackBerry and Facebook reached a confidential agreement.

BlackBerry's spokeswoman declined to comment further on the agreement. A spokesman for Facebook Canada also declined to comment.

Traffic down more than 60% at Prince George Airport in 2020

PG airport takes big hit

With travel concerns increasing due to COVID-19, it's no surprise the Prince George Airport Authority saw a major drop in 2020 passenger numbers.

The authority says passenger numbers dropped by 64 per cent last year compared to 2019, with April, May and June being the hardest hit months.

All three months saw declines of at least 91 per cent compared to those same months in 2019.

“It was an unprecedented year for all as COVID-19 turned our world upside down," PGAA President and CEO Gordon Duke said in a release.

“The aviation industry has been hit incredibly hard as travel restrictions and limitations were in place for the majority of the year.

"The number of flights cancelled and airlines who temporarily suspended operations out of YXS forced our management team to pivot and look at other revenue opportunities."

Duke says there was an estimated 42 per cent drop in operating revenues in 2020 compared to the previous year. There was also a 65 per cent decline in Airport Improvement Fees, a primary source of capital funding.

“We started off the year with so much hope as we prepared to welcome the world for the Women’s World Curling Championships, as teams were landing at YXS, they were learning the tournament had been cancelled due to COVID," spokesperson Lindsay Cotter added.

"Locally, that was one of the first indications at how serious this new virus was.

“By the end of March travel restrictions were in place and we were installing plexi-glass barriers and physical distancing decals throughout the terminal in an effort to keep those travelling for essential reasons, safe.”

As a result of the pandemic, the authority applied for the Federal Government Wage Subsidy Program and was approved, which helped keep employees working and mitigate operational losses in 2020.

Harvest Meats recalls sausages over undercooking

Harvest recalls sausages

Harvest Meats is recalling a brand of Polish sausages due to undercooking that may make them unsafe to eat.

The Canadian Food Inspection Agency says the recall affects customers in Alberta, British Columbia, Manitoba, Northwest Territories, Ontario and Saskatchewan.

It covers Harvest brand Polish sausages in 675-gram packages with a March 15 best before date.

Customers are advised to throw away or return the product.

The agency says no illnesses have been reported.

A food safety investigation is ongoing.

International students frustrated by federal work limits during pandemic

Frustrated by work limits

Pooria Behrouzy was honoured to be offered a full-time job as a COVID-19 vaccine support worker at Trillium Health Partners last month.

The international student in health informatics at George Brown College was already on staff at the Mississauga, Ont., hospital network after working on an IT project, and he was eager to contribute to the rollout of the vaccine that’s brought hope during the pandemic’s increasingly grim second wave.

But a roadblock stopped Behrouzy from accepting the full-time shifts offered: as an international student, he can only work a maximum of 20 hours per week while classes are in session or he risks losing his study permit and legal status in Canada.

Behrouzy, who is now working part time at the hospital, said it’s disappointing that he can’t contribute fully.

“I can work and I can help against this COVID ... why (am I) not able to do that?” said the 42-year-old, who is from Iran. “It's very sad that I'm not fully available.”

His colleague Passang Yugyel Tenzin had a similar experience.

Tenzin, a 26-year-old graduate of health informatics currently studying in another IT program, was working on the same project at the hospital as Behrouzy before he received an offer to work on the vaccine support team as well.

The non-medical role involves providing scheduling support to ensure all available doses are administered and other administrative tasks that keep the process running smoothly.

Tenzin, who is from Bhutan, signed on for the job in a part-time capacity but noted that the 20-hour limit would make scheduling 12-hour shifts a challenge.

Working full time would be beneficial for his own education and for the health-care system that's struggling to keep up with skyrocketing COVID-19 infections, vaccinations and other important services, he said.

“We can learn more and on top of that, we can contribute more to this situation currently, because they actually need a lot of people,” Tenzin said in a phone interview.

“We can contribute a lot if we were given the opportunity to work full time.”

Ottawa temporarily lifted the restriction on international students’ work hours last April, saying the change was aimed at easing the staffing crunch in health care and other essential workplaces.

The measure expired on Aug. 31, 2020, and has not been reinstated.

The press secretary for the office of the federal immigration minister said the government is grateful for the role newcomers have played in Canada's pandemic response.

"As more students returned to regular studies in the fall of 2020, the work hour restriction was reinstated at the request of provinces, territories and educational institutions, due to concerns about students working full time while also completing a full course load," Alexander Cohen said in a statement.

Behrouzy said he doesn't understand why the limit on work hours was reinstated while the pandemic is still ongoing and hospitals need more support than ever.

“I'm available to work and all the schools, the universities and colleges are remote now, so why not extend this exception again?” he said. “It’s really disappointing.”

Xi asks Starbucks' Schultz to help repair US-China ties

Asked to help US-China ties

President Xi Jinping is asking former CEO Howard Schultz of Starbucks to help repair U.S.-Chinese relations that have plunged to their lowest level in decades amid a tariff war and tension over technology and security.

A letter from Xi to Schultz reported Friday by the official Xinhua News Agency was a rare direct communication from China's paramount leader to a foreign business figure. Schultz opened Starbucks' first China outlet in 1999 and is a frequent visitor.

Xi wrote to Schultz “to encourage him and Starbucks to continue to play an active role in promoting Chinese-U.S. economic and trade co-operation and the development of bilateral relations,” Xinhua reported. No text of the letter was released.

Xinhua gave no indication whether the letter reflected an initiative to ask American corporate leaders to help change policy after President-elect Joe Biden takes office next week.

Economists and political analysts say Biden is likely to try to revive co-operation with Beijing over North Korea and other political issues. But few changes on trade are expected due to widespread frustration in Washington over China's human rights record and accusations of technology theft.

The Cabinet press office didn’t immediately respond to questions about what Xi wanted Schultz to do and whether he contacted other American business leaders.

Schultz, who was Starbucks CEO until 2017 and chairman until 2018, led an aggressive expansion that made China its biggest market outside the United States. Starbucks says it has more than 4,700 stores and 58,000 employees in almost 190 Chinese cities.

Schultz said in 2019 that he was considering running for president as an independent but later dropped that.

Xinhua said Xi was responding to a letter from Schultz that congratulated the Chinese leader on “the completion of a well-off society” under his leadership, Xinhua said.

Home sales hit record in 2020, Canadian Real Estate Association reports

Home sales hit record

The Canadian Real Estate Association says home sales in December hit an all-time record for the month to end what was also a record year.

It says December sales were up 47.2 per cent compared with December 2019, the largest year-over-year gain in monthly sales in 11 years.

Sales for the month were also up 7.2 per cent compared with November.

For 2020 as a whole, CREA says some 551,392 homes were sold, up 12.6 per cent from 2019, and a new annual record.

The actual national average home price was a record $607,280 in December, up 17.1 per cent from the final month of 2019.

CREA says excluding Greater Vancouver and the Greater Toronto Area, two of the most active and expensive markets, lowers the national average price by almost $130,000.

New UV-lit office fan can kill COVID-19 virus

This fan kills COVID-19

A new fan that uses ultraviolet (UV) light can kill 99.9 per cent of the SARS-CoV-2, the pathogen that causes COVID-19, according to the Canadian distributor and independent test results.

The Haiku-UV-C fan, manufactured by Big Ass Fans of Kentucky and distributed in Canada by Big Ass Fans of Oakville, Ontario, are being eyed as a potential cost-saving and effective method to help make workplaces safer for those returning to the office after nearly a year of working from home.

The near-silent ceiling-mounted fans use disinfecting ultraviolet (UV) lights built into the base and aimed up at the ceiling. As the fan circulates air throughout the room, the UV lights kill airborne pathogens that cross their path, Big Ass spokesman Nick Georgescu told Western Investor.

UV light can be dangerous to eyes if viewed directly, which explains why the fans direct light to the ceiling.

Compared to conventional fans, the Big Ass versions are expensive, starting at around $2,000 for a units large enough to clean a 1,000-square-foot space, but the cost is much less than retrofitting advanced ventilation into the HVAC systems for older Class A or Class B or C buildings, Georgescu explained.

Big Ass released results of a study from Innovative Bioanalysis, a California lab that tested the fan against the coronavirus this April.

A cover letter to the testing report ,written by Kevin Noble, COO of Innovative Bioanalysis, states, “It can be concluded that between 10 and 20 minutes there was an overall [pathogen] reduction of 99.99 per cent or greater.”

Intertek, an international testing lab with offices in Western Canada, tested Big Ass’ Haiku-UV-C last April in a 1,000-cubic-foot test chamber, which was exposed to a bacteriophage commonly used as a stand-in for deadlier pathogens. Results showed a 99.9 per cent kill rate on the pathogen within 10 minutes.

Georgescu said that ability to independently remove the COVID-19 pathogens from a single space could negate the cost of new or retrofitted ventilation into an entire office building.

Big Ass has also developed a Clean Air System that uses “bipolar ionization” and much bigger fans – up to 24 feet wide – that Georgescu said could clean pathogens from large 30-foot-high industrial warehouses or other big workspaces. Test results have shown this system is also effective as a COVID-19 killer.

Susan Bazak, president of Bazak Consulting of Vancouver, who helped develop the BOMA Canada Pathway Back to Work Guide, Commercial Real Estate, Coronavirus and Re-Entry, with the Building Owners and Managers Association of BC., did not endorse the Big Ass fans, but referred instead to industry ventilation standards.

In the BOMA Pathway Back to Work Guide, for example, office owners are encouraged to add high-efficiency particulate air (HEPA) filters, which can theoretically remove at least 99.97 per cent of dust, pollen, mold, bacteria, and any airborne particles from ventilation systems. The HEPA filters must be replaced regularly and disposed of safely to avoid virus contamination.

BOMA notes, however, that some ventilation systems, such as those in older buildings not constructed to Leadership in Energy and Environmental Design (LEED) standards, may not be designed for the higher rated filters.

Ask about COVID-19 return policies as you shop to avoid disappointment later

Return policies and COVID

Canadians who weren’t happy with some of their holiday gifts or who changed their mind after making purchases might face trouble when trying to get their money back.

Scores of retailers across the country have changed their return policies to quell the spread of COVID-19, making it trickier to get an exchange or refund, depending on the store.

"It is absolutely a patchwork of all kinds of policies that are constantly changing … and you have no control" said Joanne McNeish, a Ryerson University professor specializing in marketing.

"This is truly customer beware territory."

Shoppers who took a close look at fine print and store signage might have discovered that in recent months Walmart Canada temporarily stopped accepting returns of three or more of the same items and won’t process returns for any items purchased after June 1 without a receipt.

The retailer is also not allowing returns for a slew of items including swimwear, earphones, air mattresses, sleeping bags and trading cards, and has adjusted the return period for many electronics.

Costco Canada shoppers have posted photos on social media of store signage revealing the company has stopped accepting toilet paper, paper towels, sanitizing wipes, water, rice and Lysol products for returns in some provinces.

Canadian Tire said in an email to The Canadian Press that during lockdown its Ontario stores are not accepting returns and those in Quebec will only process returns for essential goods.

For purchases where the 90-day returns window expires during the lockdown period, the retailer will offer a 15-day extension to return items when stores reopen.

And if you picked up the wrong bottle of wine at the LCBO, drink up. The Ontario alcohol purveyor has stopped taking returns during COVID-19 shutdowns.

"It's all very difficult to figure out because websites are not necessarily clear and I started looking at the back of paper receipts it's not necessarily printed there," said McNeish.

Stores switched up policies because COVID-19 has been a burden for retailers, she said. They have had to purchase hand sanitizer and Plexiglas shields and are grappling with the demand and high costs associated with delivery.

To avoid being disappointed later, she recommends customers get as much information as they can about returns during the purchase process.

Snap a photo of the policy if it's on a store wall or print a copy of the fine print because sometimes employees can misunderstand their own company's policy and their word won't be worth much later, she said.

If you buy something you later decide you don't want or that you have a problem with, she urges people not to wait to return it because policies could change in that time.

"Returns policies are going to continue to tighten up, especially over the next couple of years, while stores recover from the huge expense they've incurred," she said.

It's also important for customers to know what they're entitled to, she said.

Canada has no laws requiring retailers to accept returns, but provincial and territorial legislation gives consumers some rights.

For example, under the Consumer Protection Act in Ontario, products ordered for delivery must be dropped off within 30 days of the promised date or shoppers can request a refund. However, if the item arrives late and you keep it, you lose your right to a refund.

While companies are not obligated to offer returns and the Alberta government has discouraged it during the pandemic, many businesses offer them anyway as a sign of goodwill and a way to build consumer trust.

To avoid confusion, Ken Whitehurst, the executive director of the Consumers Council of Canada, has simple advice: “always ask about exchange and return policies.”

If customers feel wronged by a return policy they can always take the company to court, although that is less likely to succeed unless the retailer has agreed to liberal return terms., Whitehurst said in an email.

If they're trying to return phone or internet equipment, Whitehurst said they can turn to the Commissioner for Complaints in Telecom-Television Services. Car return troubles may be arbitrated by bodies like the Ontario Motor Vehicle Industry Council, he added.

If there is no industry association or council to take concerns to, he said, “It never hurts to report the nature of return problems to provincial consumer protection offices.”

North American stock markets up in early trading, loonie climbs higher

Markets, loonie climb

Strength in the technology and metals and mining sectors helped lift Canada's main stock index in early trading, while the health care sector, which includes the big cannabis companies, also climbed higher.

The S&P/TSX composite index was up 44.55 points at 17,979.29.

In New York, the Dow Jones industrial average was up 137.56 points at 31,198.03. The S&P 500 index was up 7.58 points at 3,817.42, while the Nasdaq composite was up 47.74 points at 13,176.69.

The Canadian dollar traded for 78.83 cents US compared with 78.68 cents US on Wednesday.

The February crude oil contract was down 22 cents at US$52.69 per barrel and the February natural gas contract was up a penny at US$2.74 per mmBTU.

The February gold contract was down US$6.90 at US$1,848.00 an ounce and the March copper contract was up four cents at US$3.66 a pound.

Twitter CEO defends Trump ban, warns of dangerous precedent

Twitter defends Trump ban

Twitter CEO Jack Dorsey defended his company’s ban of President Donald Trump in a philosophical Twitter thread that is his first public statement on the subject.

When Trump incited his followers to storm the U.S. Capitol last week, then continued to tweet potentially ominous messages, Dorsey said the resulting risk to public safety created an “extraordinary and untenable circumstance” for the company. Having already briefly suspended Trump's account the day of the Capitol riot, Twitter on Friday banned Trump entirely, then smacked down the president's attempts to tweet using other accounts.

“I do not celebrate or feel pride in our having to ban @realDonaldTrump from Twitter,“ Dorsey wrote. But he added: ”I believe this was the right decision for Twitter.”

Dorsey acknowledged that shows of strength like the Trump ban could set dangerous precedents, even calling them a sign of “failure.” Although not in so many words, Dorsey suggested that Twitter needs to find ways to avoid having to make such decisions in the first place. Exactly how that would work isn't clear, although it could range from earlier and more effective moderation to a fundamental restructuring of social networks.

In Dorsey-speak, that means Twitter needs to work harder to “promote healthy conversation.”

Extreme measures such as banning Trump also highlight the extraordinary power that Twitter and other Big Tech companies can wield without accountability or recourse, Dorsey wrote.

While Twitter was grappling with the problem of Trump, for instance, Apple, Google and Amazon were effectively shutting down the right-wing site Parler by denying it access to app stores and cloud-hosting services. The companies charged that Parler wasn't aggressive enough about removing calls to violence, which Parler has denied.

Dorsey declined to criticize his Big Tech counterparts directly, even noting that “this moment in time might call for this dynamic.” Over the long term, however, he suggested that aggressive and domineering behaviour could threaten the “noble purpose and ideals” of the open internet by entrenching the power of a few organizations over a commons that should be accessible to everyone.

The Twitter co-founder, however, had little specific to say about how his platform or other Big Tech companies could avoid such choices in the future. Instead, he touched on an idea that, taken literally, sounds a bit like the end of Twitter itself — a long-term project to develop a technological “standard” that could liberate social networks from centralized control by the likes of Facebook and Twitter.

But for the moment, Dorsey wrote, Twitter's goal “is to disarm as much as we can, and ensure we are all building towards a greater common understanding, and a more peaceful existence on earth.”

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