NEWS FRONT
What you need to know in key markets around the globe
Jobs Return in Canada but Investment Exits
TORONTO—Investment that had been focused
on Canada before the global economic
downturn has since turned away, leaving a
shortage of quality buyers in the country and
many now-distressed properties, according
to local real estate experts. However, because
job growth has returned sooner than
expected, the country’s office market may
rebound faster than that of the US.
Martin Emmons, a real estate attorney
with locally based Fasken Martineau, says
investors should view Canadian commercial
real estate opportunities with both caution
and optimism. He says both US and
Canadian investment has turned away from
the country, looking instead to others,
including South America or the US.
With the global economic downturn,
Emmons says investors placed Canadian
development plans on hold to focus on
home-based investment issues. “As a result,
there’s a shortage of quality investment
properties on the market here,” he says.
Many of the assets are on the market at a
loss, according to Emmons. It’s a strange
situation, he says, where investors have
funds available, but there’s too much local
risk to try to boost Canadian investment.
“Everyone has money to spend, but there’s
nothing worth spending it on,” he relates.
Executive Moves
HONG KONG—In its latest move to establish divisions in Asia Pacific, the Middle East and
Africa, Marriott International Inc. has added
two new executives. In
Hong Kong Simon F.
Cooper will serve as
president & managing
director, Asia Pacific,
responsible for the operating performance and
growth of the region.
Meanwhile, Edwin D.
Fuller will head up operations and growth in the
Middle East and Africa
in his continued role as
president and managing director, Lodging
International. He will
also provide counsel on
the firm’s global growth
strategy.
For more executive moves, please visit
www.globest.com/executivewatch.
Cooper
Fuller
US Healthcare Reform May Benefit Foreign Capital
The impact of the Patient Protection and Affordable Care Act of
2010 on the real estate industry might not be obvious. However,
the reform may present a unique opportunity for growth and
innovation for distressed retail and office assets, one that international investors may overlook since healthcare reform was bigger
news in the US than abroad.
Early estimates suggest an additional 32 million Americans may have insurance coverage by
The savvy investor could capitalize on this demand for an alternative
medical service model and a larger pool of insured individuals by
utilizing ever-growing retail and office vacancies to house retail and
walk-in healthcare clinics, ambulatory care centers and other ways of
delivering medical and healthcare services.
While office space has historically held a small portion of medical offices, using retail space for this use is a newer concept. A 2008
Deloitte report stated that retail clinics, which can be found in
pharmacies, grocery stores and big box retailers “…are not a fad—
By Robert T. O’Brien
they are a disruptive innovation with a sustainable value proposition (price, quality, service) that is welcomed by consumers.” As a
cheaper alternative to doctors’ offices and hospitals, these walk-in
clinics may become even more popular as a result of the legislation.
The lower costs associated with these options may be attractive to
newly insured patients who could face difficulty finding a primary-care physician willing to accept their form of insurance.
There is a second component to the retail strategy. Not only
does it leverage available space in retail outlets, but the increased
visibility and the established audience that can be found in malls
and shopping centers adds to the potential for success.
Foreign investors may be uniquely positioned to analyze and
capitalize on reform-driven opportunities in the US. Based on 2006
data from the World Health Organization, government healthcare
expenditures as a proportion of total healthcare expenditure in
countries such as Canada, France, Germany, Italy, Japan and the
United Kingdom ranged from 70% to 87%. The US was 46%, and
this figure is expected to grow significantly. Foreign investors may be
better able to anticipate these changes and identify the healthcare-related real estate opportunities in the distressed US marketplace.
Robert T. O’Brien is a Chicago-based vice chairman and head of
the US real estate practice at Deloitte LLP. He may be contacted at
robrien@deloitte.com. The views expressed here are the author’s own.
