As a salient characteristic of supply and demand trends in markets for real estate is a local setting, the economic ramifications of investment tend to devolve to specific communities and regions of the country. Where there is expenditure on development and redevelopment, long-term transactions frequently involve local contractors and construction firms, tradespeople, service providers and input suppliers, and the community is the recipient of new or improved housing stock or business infrastructure.
The property-holding of pension funds, and development activity supported directly or indirectly by their assets, are also local in context. Furthermore, diversification by geography, as indicated in several of the case profiles above (e.g., Morguard Investments) contributes to fairly wide distribution of potential effects.
With respect to total assets allocated, the chief beneficiaries are probably major Canadian urban centres where most existing commercial, industrial and retail properties and high-yield development opportunities reside, though a few funds and their market agents sometimes cast the net wider. For the most part, collateral benefits realized in a local or regional economy are incidental and undocumented - though no less valid. Only in pension-backed mechanisms for real estate investing, where a collateral impact is calculated are outcomes of individual projects are recorded.
This is amply illustrated by Greystone Properties and Mortgage Fund One and their mandates to strategically target gaps in residential and non-residential stock and employ residents in urban and rural communities of British Columbia, among other objectives. The former's tally of hours of local work generated since inception, for instance, is over 4 million. Greystone's latest venture - designing and building new recreational, trade and portside transportation facilities at Vancouver's Canada Place - is expected to create over 11,000 jobs.Endnote 127
There is also evidence of a substantial impact on housing in Vancouver. In the early 1990s, the Canada Mortgage and Housing Corporation credited Greystone for a pivotal role in addressing chronic supply shortages of new and affordable rental accomodation in the city.Endnote 128
Comparable syndications in the United States (see Their American Cousins) also suggest distinctive local results. A 1997 study conducted by the University of California examined the micro-level impact of financing development by two small jointly-trusted pension plans in the state. Both plans tapped into established pools, including the Housing and Business Investment Trusts of the AFL-CIO. Along with solid returns, measured against conventional market indices, the efforts of these plans were found to produce new jobs, favouring local union members. Moreover, investment activity led to meaningful improvements to the quality and quantity of local housing stock, especially for low and middle-income residents in the northern California community of Los Lirios.Endnote 129
Several Canadian public sector pension funds are also attentive to targeting economic and social benefits close- to-home, where financially feasible. This is readily apparent in the operations of the Caisse Real Estate Group. Even where the Caisse invests globally, there is promotion of Quebec enterprises exporting realty goods and services or having them used in overseas co-investments.Endnote 130
British Columbia public sector funds are similarly motivated. In 1997, the OCIO reported that 47 percent of its property holdings were province-based. In addition, over 60 percent of its mortgage program is invested in local real estate development, close to half of which supported construction of apartments, condominiums and townhouses. A key advisor to OCIO is Penreal Capital Management (Vancouver, British Columbia), itself capitalized by up to sixty-five pension funds.Endnote 131