Still Moving?

So, have you decided to move out of the city, after reading Monday’s blog post?

Only a handful of comments from the readers on this one, but I got a few emails, and chatted with a couple of real estate agents who read the post as well.  It seems as though I’m not the only one witnessing this exodus, but I’ll add that the conversation resulting from this topic is surrounding what somebody “should” do, or what the “correct” move is.

What most of us know, however, is that there is no “right” move.

As per the comments, the situations are different for everybody, and as some people give more weight to lifestyle than salary, we may continue to see people moving out of the city and into larger and/or cheaper houses, even if it means their salary, in a work-from-home world, reflects that.

The most interesting comments, in my mind, were those surrounding this giant “what if.”  What if, in three or four years down the line, employers start requiring all of these work-from-home employees to come into the physical office space?  What does that mean for the work-from-homers who bought a house in in Elmira?

Do you know of any businesses which have completely changed their business models, and gone completely work-from-home?  I’m told that Shopify did.  Any others?

And if we’re seeing businesses go digital, and leave their office space, what does this mean for commercial real estatate?

Well, that brings me to my second topic of discussion for today…

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Not The Flood You Expected…

There’s a flood in downtown Toronto right now, only it’s not in any way similar to the one we saw in 2013 when torrential rains resulted in memes of Torontonians swimming in the subway with sharks!

Instead, I give you the following flood, as told by BNN:

“Office Subleases Are Flooding The Market In Downtown Toronto”
BNN Bloomberg
July 16th, 2020

TORONTO — One commercial real estate company says it has seen a “spike” in vacant offices in downtown Toronto as businesses have struggled to sublet their expensive spaces.

Jones Lang LaSalle IP Inc. says in a report that only one large, new downtown lease was signed during the second quarter.

It estimates tenants, especially small businesses, put 169 office spaces on the market.

It reported the bulk of new leases on the market are subleases, although some departures were planned before COVID-19 shut down much of Bay Street.

While there are businesses lurking in the wings to rent space, JLL says tenants and landlords that work with it are “still waiting for stability to return in the office market and in everyday life.”

JLL saw downtown rents rise by more than 7 per cent.

The group says the GTA’s North East suburban office market could benefit from COVID-19 thanks to cheaper rents and lower density, which could aid physical distancing measures.

While most business leaders are putting suburban real estate decisions on hold, companies like Infosys Ltd., Capgemini, RBC Financial Group, Kruger Products, General Mills, Inc., Waste Connections of Canada and Amberson College have made big moves in the suburbs.

“Downtown Toronto remains a landlord’s market,” JLL said.

Here’s a case of the headline not really telling the full story.

The headline makes you think this “flood” could significantly impact the market, but the article itself explains that businesses are “lurking in the wings,” and that “downtown is still a landlord’s market.”

I have a friend who works in commercial real estate, and at one point in 2019, he told me that commercial real estate vacancy rates were at 0.2%.  This was mind-blowing, since residential vacancy rates were at 0.5%, and that was a number that folks outside the city couldn’t believe.  So imagine telling people in New York City, or Boston, or Dallas, or Chicago that our commercial vacancy rates are less than residential?

Business must be booming, right?

My friend also told me that a certain real estate corporation, who owns more commercial square footage than any other company in Canada, was looking for space to lease.  How is that for irony?

Fast-forward to 2020, post-COVID pandemic, and can we expect the commercial vacancy rates to climb?  If so, what does this do to rents?  And what’s the fallout, if any, for the residential real estate market in surrounding areas?

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Happy COVID Day!

What do you get when you combine an “offer night” with a complete and utter disregard for social distancing?

I mean, you might get COVID.

But in terms of my figurative tag, you get “COVID Night!”

“COVID Night” was held on Monday evening at an east-end real estate brokerage, and it did not disappoint!

With every single “offer night” being held virtually or digitally these days, as they should be, I was absolutely shocked to receive a rather (and unnecessarily…) lengthy email with “offer instructions” for a downtown condo on Monday, which contained, among other points, the following:

• We will begin the offer presentation today at 6:30pm at (Office Address)
• Please Text me when you get there and wait near the building. The reception staff will be gone before we start, leaving only us in the entire building and I will be the one letting you in.
• Due to COVID restrictions, only one buyer-side agent will be allowed in the building at a time and  The largest boardroom will be used with proper social distancing (2+ meters). Please bring a mask.
• Ideally, your buyers will be very closeby (parked near the office or at a restaurant patio nearby) or accessible via docusign (or other similar software) to help make any required changes to your offer as quick and as convenient as possible.

This is insane.

While I am not the woman pumping gas in a full hazmat suit, I am also not the real estate agent holding in-person offer presentations during a pandemic.

Disagree with me if you so choose, but this is unnecessary.

Since 2017, I have hosted almost all of my “offer nights” digitally.  I see almost zero reason to ever hold them in person again.  There are only three reasons why offers should or could be held in person:

1) The listing agent is an ego-maniac, loves playing God, and gets off on watching submissive agents come in to present their offers.
2) The sellers want to meet the agents, maybe even the buyers, and feel safer or more involved when it’s done in person.
3) The agent and/or the sellers feel there’s an advantage, which I don’t believe there is.

As I write this, I am hosting offers on a west-end listing.  It’s easier on myself, the sellers, the buyer agents, and the buyers.  I am at my desk, where I spend most of my time in life, and couldn’t possibly be any more in control than I am now.  Buyers are at ease, and near their computers.  So too are buyer agents.  I can speak on the phone without worrying that the walls in my office are too thin, or that a window is open and an agent can hear me from the parking lot, or that one set of buyers outside the building just saw another set of buyers throw a tantrum and leave, thus indicating there’s less competition.

There’s no reason to do offers in person, in a normal world.

But during a pandemic?  This is insane.

An agent called me yesterday and said, “I assume offers on Tuesday are through email?”  I jokingly said, “Nah, let’s do it in person, wear masks, and have our clients ‘nearby’ sitting at a patio.”  She immediately said, “Oh yeah, like the property downtown with offers tonight?” and knew the address.

This was the talk of the industry on Monday, and I still can’t get over it.

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Better Late Than Never!

Do you remember before “OREA Form 801: Offer Summary Document” came into effect in 2016?

I do.

Back then, you would register your offer by calling the listing brokerage and saying to the receptionist, “Hello, I’d like to register my offer, please.”  You would then provide the property address, your name and brokerage, and voila!

Ah, yes, simpler times.

Today, and with the advent of BrokerBay, which is gobbling up market-share among real estate brokerages like there’s no tomorrow,  offers are usually registered when the buyer has signed Form 801 (almost always along with the offer), and that means closer to the 7pm presentation time, rather than at, say, 11am.

As I write this, at 6:21pm on Tuesday night, I am expecting seven offers on a listing, but only two agents have registered thus far.

How does that impact the ability of buyers to make informed decisions on price?

Once upon a time, you’d know by 5pm that there were six offers registered, and the listing agent might say, “I expect 2-3 more, but check back with me at 7pm.”  Today, you won’t know if there are two offers or twenty offers until 7:10pm.

What a circle game.

Buyers often don’t register until they’ve signed Form 801, which they usually do once they’re ready to sign the offer.  But you can sign this document separately!  Few do, however.

So what ends up happening?  At 6:45pm, there’s one offer registered.  At 7:15pm, there are twelve offers registered.  Then every agent says, “I didn’t know there were twelve, and wants to resubmit.”

It’s so ironic that a new OREA document combined with a revolutionary new software to help agents, has resulted in even more confusion around offer time.

Quick update: it’s 7:06pm, and there are seven offers registered.  No, it didn’t take me forty-five minutes to write the last six lines, but I digress…

Here’s a prime example of how and where a buyer agent can cut through the confusion ahead of time.  Ask the listing agent, “How many offers are you expecting?”  And while some of you might suggest that the listing agent could exaggerate, and say twelve, when he or she is expecting three or four, keep in mind that this can backfire if too many offers means a buyer decides not to come forward.  I spoke to dozens of agents today, and I kept a short-list of who said they are “100% coming in,” who said “game-time decision,” and who said, “we’re not coming in.”  My list of eight people resulted in seven offers, which I had expected.

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Mea Culpa

For those of you who read my monthly “More MLS Musings” blog posts and think I’m a jerk for calling out the mistakes, oversights, and general lack of professionalism, skill, knowledge, and intelligence that speaks to anything close to average, I have to tell you the following.

This week, I was sending out offer instructions for a listing I had, for which we were reviewing offers that night.  I always copy-and-paste the offer instructions from a previous email, since 90% of it is boiler-plate.  The bullet-points often require an edit for the seller’s desired closing date, or rental items, or whether any offers are already registered.  In this case, I neglected to make a pretty important change: the property address.

The email subject line said, “Offers on 123 Fake Street Tonight @ 7:00pm.”

But the body said, “Dear Colleagues: thank you for showing our listing at 456 Smith Street….”

Colour me embarassed!

But do you know how many agents noted this?

Zero.

I even asked three agents who I know quite well, and they all laughed and said that they didn’t notice.

What’s the take-away here?  That I made a mistake or that nobody noticed?

So there.  I wanted to be honest.

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WE Wee Wee All The Way Home…

Last, but certainly not least, I didn’t want this to happen.

But it did.

I can’t stomach another ethics scandal, especially now.

To hear that “real estate is central” to this story is going to mean I can’t look away, even though I want to.

Whether it’s me coming home to find my wife watching a real estate television show, or me going to a dinner party where people only want to talk about the real estate market, it’s just unavoidable.  And now it’s mixed up in politics too.

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Happy Wednesday, folks!