Tariffs dominate conversation at UCalgary breakfast

Real estate construction contract law may not be your typical topic of breakfast conversation.

For the people packing a room at the Fairmont Palliser early on June 24, it was more than a welcome topic, it was essential. Buffeted by the impact of tariffs on all aspects of real estate decisions, attendees at the Future of Real Estate, hosted by Haskayne’s Westman Centre for Real Estate Studies, were eager to hear from expert keynote speakers and panelists.

With generous funding from the Alberta Real Estate Foundation, the event drew an attentive crowd and delivered timely and practical information for anyone with a stake in Canada’s turbulent real estate market. The bi-annual breakfast series, moderated by economics professor Dr. Alex Whalley, PhD, is a popular way to share research, education and expert insights to strengthen Alberta’s real estate industry. 

Keynote speakers talked about tariff impacts on essential materials

Keynote speakers Bill Woodhead and Theron Davis, partners at Borden Ladner Gervais LLP, outlined the current state of tariffs in the ongoing trade war with the U.S. as it applies to the materials which feed the real estate development industry, and highlighted government programs available to offer relief. 

Those relief programs differ depending on what kind of contracts companies have in place, prompting Woodhead to wryly acknowledge, “Unfortunately, that means you do have to actually open the contracts that we [Woodhead and Davis] spend all this time drafting.” 

While the comment drew knowing chuckles from the crowd, it also revealed an important truth: in this period of uncertainty, clauses once relegated to the shadows of contractual fine print are now in the spotlight. 

Woodman went on to provide details of what clauses project owners and contractors should look for when it comes to accessing financial and/or non-financial relief. (Pro Tip: start with Change in Law, Force Majeure and Cost Escalation clauses.)

Will it squash the camel?

How tariffs will influence real estate development over the long term is understandably difficult to predict. With new policies, diplomatic negotiations, implementation and retaliatory measures making fresh headlines almost daily, anticipating the full scope of the effects remains uncertain.

“Is this the straw that breaks the camel’s back?” panelist Jackson Cornelius asked the assembled group. “What level of impact will it have? Will it absolutely squash the camel?”

The lead economist at M3 Development Management Ltd. continued, “It seems like every 12 to 18 months we’re living through a generational crisis.”

Resiliency in the face of such disruption and uncertainty is a hallmark of Canadian businesses. The presenters indicated such circumstances tend to force efficiency and promote genuinely productive investments.

A positive perspective

With project owners inundated with daily cost adjustments on the products they need, it can be difficult to find a silver lining. But as noted by panelist Jessica Harland, senior vice-president, debt and structured finance at CBRE Capital (Canada) Inc.: “It’s opportunity and chaos for us here.”

Acknowledging the chaos, the speakers and panelists also identified a number of opportunities. 

They offered evidence of project owners and contractors who are planning ahead and purchasing products before more tariffs are applied and sharing the storage costs. Others are sourcing their materials from new markets sometimes finding significant cost savings in the process. Some have even been able to reimagine their projects, finding ways to incorporate different items or products into their plans.

Open and honest communication

Whether evaluating the impact of existing contracts or negotiating new ones, one message was clear throughout the morning. 

“Open and honest communication is the best course of action in all these circumstances.” Woodman’s statement was echoed often over the next hour.

With so many variables in motion, project owners and contractors must maintain transparency. As the discussion around the future of real estate came to a close, that uncertain future was looking a little bit brighter. 

Perhaps real estate contract law conversations should find a place around the (breakfast) table more often. 

The Alberta Real Estate Foundation invests in real estate policy, research, practices, and education that strengthen Alberta’s communities. The Foundation’s revenues come from the interest earned on trust deposits from real estate transactions across the province. Learn more at www.aref.ab.ca.

The vision of the Westman Centre for Real Estate Studies is to be a catalyst for the development of real estate industry professionals and a leading centre of excellence for real estate studies. The Westman Centre is focused on developing the next generation of leaders for Calgary’s entrepreneurial real estate industry through its teaching, research and community engagement activities.