Costas Kivelos: I’m ready, we’re live. Hi, everybody, Costas from First Access Condos, I’m one of the heads of the pre-construction division at Right At Home Realty, and today, I’m lucky enough to be invited by CentreCourt Developments to do a special presentation for the entire brokerage and I’m sitting next to a good friend of mine, VP of Sales and Marketing at CentreCourt, Jason Lam, who I call the “Surgeon of the Pre-Construction Industry.”
Jason Lam: <laughter> I love it! That’s very kind words, Costas, and I’m excited to be here, thank you for joining us, we’ve got a lot to talk about, about the market, about where 2021 is heading and what all of the viewers can expect when it comes to 8 Wellesley. For those of you that aren’t familiar, again, thank you for the intro, my name is Jason Lam, Vice President of Sales and Marketing at CentreCourt, you can follow me @jlamtoronto and you should also follow CentreCourt which is @CentreCourtInc where we’re going to have exclusive content. There’s a lot of topics and I want to get a lot of your feedback, I want to get a lot of your outlooks, again, you’re frontline, so there’s a lot of things that you can share with us that we don’t necessarily see every day and we are hopeful that we can share things with you that is going to prove to be insightful for everyone that’s tuning in today.
So just to gloss over a couple points before we really dive into our major topics, Yonge Street is the center, it’s the backbone, the lifeblood of the GTA, there really is nothing like it, in fact, there will never be anything like it, and the market has been remarkable, not just resale, but also in the pre-construction market, we’ve seen a huge number of projects come online, a tremendous absorption, again, with the mindset of mid to long-term, again, I’m going to get your feedback momentarily, and I really believe based on a lot of the stats that we’ve dug up, a lot of the new <silence>, I really believe that 2021 will be the year of condos and it starts with 8 Wellesley at Yonge, iconic location, downtown core, literally steps to everything, as is going to be the first launch coming out of 2021. Now, Costas, there’s a lot of things that I want to bring up. The market update, I want to talk about headlines because the headlines, a lot of the new news that’s been coming online has been really positive for people that are in real estate, so realtors, brokers, investors, developers, everyone in the marketplace stands to gain from a lot of the positive news, and I’m going to start sort of from, not the least interesting, but I’m going to go from least impactful to sort of most impactful. Not to say that none of these are impactful at all, but the first is interest rate, so tell me about how important interest rates are and how it impacts pricing.
Costas: Well, see, there’s a direct correlation with interest rates and what people can afford for obvious reasons and what we’ve seen is we’ve seen record lows experienced over the last 18 months and the Bank of Canada announced, they made an announcement a few months ago that they expect to keep interest rates at this record low for the next three years minimum, and this, of course, is to basically instigate and light a fire in the economy and keep it going through these dark times. See, what a lot of people don’t understand is pre the arrival of COVID, 2020 was supposed to be the year of the recession, and the world was scheduled to go into another major recession, usually, these things are almost cyclical, and then when COVID came in, the timing of COVID being at the same time of the recession was actually a bonus, so a silver lining on a storm cloud because they happened together as opposed to back to back. That would have been a big one-two punch to the global economy; that would have been devastating, not that this isn’t, but because of that, what a lot of central banks did is they dropped interest rates below record numbers to new record lows and this allows increased buying power for the consumer, and this affects everywhere: from the end user to the investor or what, and the lower the interest rate, the greater affordability that a product has, and as we’ve seen continual increases in our real estate prices in Toronto, and this, of course, has to do with immigration where it’s strictly supply and demand issue, no speculation here, okay? When you combine the new sub 2% interest rates which are quite common and the countereffect would be increase in prices so people can still afford.
Jason: That’s right.
Costas: So a lot of people who don’t think they can afford can actually and that’s why they need to contact someone like myself or someone like the agents that are viewing, and they could find out where they can get in.
Jason: And you make some really strong points and I just want us to wrap up that by saying, when these interest rates are as low as they are, I don’t know how low you’ve seen and I think that every day, it seems to get lower and lower for me. For those of you that are tuning in, I’m sure you’ve got clients that are telling you sort of stories about how cheap interest rates are. I’ve seen as low as 1.54% on a five-year fixed which is remarkable, but the impact of these little interest rates is the inflationary impact that we see in the real estate market. You’re right – people can afford more, they can buy more, you go from $900,000 to $1 million real quick when you shave off one point.
Costas: Essentially overnight.
Jason: Correct, and you’re seeing that firsthand. For those of you that do a lot of resale , it’s not cheap; the market has been thriving in the last eight months in a global pandemic: prices are higher, transaction numbers are higher. There’s a lot of reasons to be optimistic, so I’m glad you touched on all of those points.
Costas: I want to jump in for one sec. When people talk about Toronto real estate prices, they’re not cheap but they’re not expensive because when something is expensive, it doesn’t offer the value that it should for the price point, and I believe we have the best value on the planet, that’s why we and CentreCourt Inc. has a large part to do with that. We’ve sold more condos, pre-construction condos than any other city in the planet in the last few years.
Jason: Yes, and that’s just purely supply and demand like you said, no speculation here. We’re also learning about, one of the headlines that I’ve been reading a lot about is international students coming back to the country, and that’s a good sign. We are noticing a big uptick on rentals from just a volume perspective, that they’re tracking on MLS which is a good sign. I think Q3 was the strongest quarter in terms of volume we’ve seen in the last two years, and again, like, the headline is usually lots of volume, but the sub headline should be yes, but we’re also absorbing more rentals than we have ever in any other quarter.
Costas: And I think there’s been a really bad representation, a misrepresentation almost, in the media, and this usually happens with Toronto real estate.
Jason: Yeah, it’s clickbait, right?
Costas: It’s the glass is half-empty but it’s never half-full and it’s a matter of perspective, and what there’s been a failure to do is to actually explain and portray the real situation is that we had almost zero foreign students come back and we have over 20,000 foreign students per year in Toronto, so if you eliminate 20,000 renters from the renter pool, that will create some issues and you also couple the lack of tourism and all the AirBnb’s that came temporarily on the market. The simple fact that our market hasn’t crashed is a testament to the resilience and the strength, and the solid foundation that it has.
Jason: I couldn’t agree more, that’s, again, straight facts, no speculation, and that’s a good sign, right? I mean, I think, again, the headline is misleading, you’re right, the glass is never half-full but I do believe that the next point of sort of being on the one year line as they would say to a COVID vaccine. Over the last 48 hours, we just learned more about the progress that some of these companies have made, and I’m going to sort of tie this to pre-construction and having a mid to long-term outlook, is we know more today than we have in the last eight months of where we stand in the world of the COVID vaccine, and it’s never been more apparent that we are going to get past this. For those of you living at home right now dealing with clients, we’ve been in a world where we’re thinking day to day, week to week, month to month, we can’t even think beyond COVID, people are just so caught up in today’s world, but COVID is going to, we are going to surpass COVID, and then we have to adapt and find out how we are going to live our lives, but more importantly, you have to identify how you’re going to operate your business because we are going to get past COVID, the light at the end of the tunnel is right in front of us, and that’s probably been the most remarkable news that we have heard in the last week or so, right?
So now, we’ve gotten three great points, but the next big point, I mean, you already touched on this, is immigration. Immigration has been a superhighway for our GTA real estate to really pop off in terms of price appreciation because that’s what happens when you don’t have enough supply. Now, this year, we’ve seen over 125,000 new immigrants in the country and the government has recently announced that they are about to implement their most aggressive policy we’ve ever seen which is to introduce 1.2 million new highly qualified, highly educated immigrants into Canada and I would say a very large percentage are going to come to the GTA, and how that impacts the market, look, it’s the biggest benefactor. Real estate is the biggest winner in a massive amount of individuals coming in and creating a tremendous amount of supply. I know you’ve got something to say, I know you’re excited with this topic, so why don’t you go ahead?
Costas: Okay, well, what we need to do is look at your numbers and actual statistics. The last proper solid stat we had in immigration for Toronto and the greater Toronto area was 2018. We had 97,000 people come to Toronto proper and $137,000 come to the GTA. We were first as a city and second as a metropolitan area by 1,000 people only, so I’ll still say we are first to Dallas-Fort Worth. Now, if you look at those numbers and you see what’s going on in the south of the border, not just with COVID but with the civil unrest, and so forth, and the anti-immigration essential policies, it’s essentially an anti-immigration policy that will drive more people into Canada and we are the center of the Canadian universe. If Canada was your desert, we are the oasis here in Toronto, and of the 400,000 people that you touched on per year that the Trudeau government announced, okay, 240,000 of them, of every year is 400,000 are coming through the economic stream which means they are coming here with a lot of money, and the restrictions on where they can set their hat and lay their roots are not the same as if they were coming through humanitarian process, and the vast majority of them will come to Toronto, so when you have, say 240,000, we will cut it in half, but there will be more, if you have 120,000 people plus additional immigration, plus foreign students, imagine this, the potential and possibility of us hitting 250,000 new residents per year. It’s not a dream, it’s a reality in my opinion, and when I did my webinar talking about the state of the Toronto GTA market and COVID on April 3, three days later, Benjamin Tao echoed a lot of my points. Thank God he said it after me or people would’ve thought I copied him, thank God he did agree with me or I would’ve been crushed, but the fact of the matter is when we’re getting this many people, people need a place to live and this is why I’ve always been a proponent of real estate as your number one investment. It’s a tangible item that sits there and is only affected by one thing, supply and demand, and these numbers of immigrants that are coming to Toronto are going to catapult our real estate prices to the upper stratosphere, and quoting Benjamin Tao again, you still [00:11:35], if you think it’s expensive now, wait until later.
Jason: Absolutely, and just sort of to round off this topic, and you made some great points there, is it’s not happening over five years or 10 years, it’s literally right in front of you. We are on the horizon there, so it’s going to be a very quick, quick transition and it’s going to be remarkable how fast the market turns around, and I think that’s where a lot of people are going to be sitting on the sidelines waiting for the media to tell you it’s okay because if that’s what you’re going to do, you are three to six months behind, and I think, again, seeing this, knowing this information, knowing that there’s a COVID cure on the horizon, knowing that we’re going to have a huge influx of highly qualified new immigrants that are going to create just an outrageous amount of demand, the real estate market is going to be thriving in 2021. There is really no better news for those of us that are in real estate than to find out these two key things.
But let’s go back in time and look forward to the same time because prior to COVID and post-COVID, a lot of the drivers in our sort of pre-COVID life are really even more exaggerated, sort of leaving COVID and that’s aggressive immigration policies that drove our market through the roof. We had low interest rates of 1.9%, now, you can get 1.5%. You have the strongest economic engine in the country in the GTA and that’s not going to change. We are noticing a huge, almost alarmingly massive price gap between low-rise and condominiums which we are going to talk about momentarily and again just a lot of the themes that you’re discussing and you’re sharing with us is the long-term undersupply. You have no chance to compete with the amount of people coming into the country. You cannot build that fast if everyone went into a ratchet up and trying to move at lightning speed.
Costas: Let me touch on that for one second. In 2019, RBC said that we were short 24,000 new units in the city of Toronto. CMAC said we were for 32,000. If you take the mean between the two numbers, that’s 28,000 new units per year shortfall. We were on track to build, without COVID, 30,000 new units a year from the developers. Because of COVID, now, it blew away the norm or the standard that we have of 18 to 20, and now we’re going to be in the low 20s, so compounding, we are adding an additional thousands and thousands of units. That is why our market did not crash and weathered the storm really, really well.
Jason: Great point.
Costas: We cannot build them fast enough. Imagine, to put into perspective, a 50-story tower that you see downtown, on average, has 600 units. So if you are short 20,000 units, that’s over 30 towers. Where is the land for 30 towers? Not in Toronto.
Jason: You’re right, yeah, I mean, scarcity is a big, big, big thing and we are seeing a lot of expansions in the 905, and I am definitely going to have that conversation with you momentarily, but I want to change gears for one second for those of you that are in pre-construction and even for the ones that aren’t in pre-construction that are curious about where that market is. When COVID dropped, the market kind of went to sleep. It froze, it froze, March, April, we really sort of took a step back, and the world was thinking about other things, right? We weren’t necessarily thinking about how to trade in real estate, we weren’t thinking about trying to figure out our way and <overlap>.
Costas: I was still paying for marketing.
Jason: There you go. We were still plugging away, but we took a break in Q2 of this year and in Q3 which was July, we sort of tried to restart the market, we tried to sort of see and we tried to just test the market, so to speak, and we had 20, Easter when we had Distrikt Trailside 2, we had the Taylor, the Beverly, we’ve had a number of projects, the 199 Church to huge success. I mean, a lot of people were apprehensive and we didn’t know, no one knew how it was going to play out and we didn’t just do somewhat well, we broke a quarter record in terms of performance. We were really outperforming year-over-year Q3, 6,300 new home sales, and I think, again, I think there are two key drivers and again, share with me if you believe there are more, and I’m sure there are but I think the reason why we were so successful then and now is A, there’s a bunch of of pent-up demand, but two, more importantly, I think people understood that this is a mid to long-term outlook and that they knew that we would get past COVID, they knew that we were going to have a shortfall of inventory, they knew that there’s a lot of opportunities to make a lot of money because there’s just a huge disparity between supply and demand. Is there anything else that you want to chime in there?
Costas: I would like to tie this into the availability of the knowledge currently in the world that we live in with the introduction of the Internet and information at your fingertips, and I know it’s a cliché but it’s the reality of this. The average investor is much, much wiser and knowledgeable than what they were 10, 15, 20 years ago, even five years ago, and what happens is now that you have the world of information at your fingertips and it’s a click away, and you get to see different perspectives, and a lot of people realized that this is going to be temporary, it is not the apocalypse, it is not the end of the world, the vast majority of the workforce in Toronto could work from home, it’s very unfortunate what’s happening to the service industry but they account for the 8% of the total workforce and they were getting hit really hard, and that’s why we need to support local business as much as we can, but the rest of them, especially now, and this is a little-known fact and I don’t know why, but Toronto is the new tech powerhouse of North America. We’ve created more high-tech jobs in the last five years in the San Francisco Bay area, Washington, Seattle, Chicago combined, essentially, so when you have that and people can work from home and there are studies that say their productivity actually increases, the vast majority of our workforce was still getting paid, still making money. If you can work, your mindset stays somewhat positive, and then you are very susceptible and can absorb the reality of the matter that this is temporary, and when you buy one of your products, hopefully from me or one of my colleagues, it’s a locked-in long-term investment over the course of four or five years, and if our market is doing so well, and I’ll give everybody watching some inside information, although we didn’t work for four months, three months in the spring and essentially two months now, that’s five months, almost half of the year, the vast majority of the platinum agents , our productivity is only down about 15%, so the times that Jason was talking about, the pent-up demand that you mentioned, money needs to do something. It dies because it loses value sitting still. It came back in full force and a lot of people were investing, so I think it was a combination of those things but the foundation of that is that the people buying are knowledgeable. When you remove ignorance from an equation, this is what happens, a healthy economy.
Jason: Again, a lot of great points, and sort of just to cap off this topic because I know where you’re going with this, but right now today, I mean, if we had that much productivity in sort of July through September when we really didn’t know when we would have a cure, today, again, we are in the best position to time the market, to sort of see things happen where it happened. People didn’t have this confidence back then and they didn’t know what was going to happen. Now today, we have a lot more clarity and again, it’s all about timing the market. You want a product lining up with the market’s big meteoric jump.
Costas: Well, people say, and I try to explain to a first-time investor why there is such a necessity to answer that phone when I call you at 11:30 at night, why you need to buy in the first round, how there is essentially, if not an in-person physical, there is a lineup of people trying to get units, and everybody wants to buy first, and in every great recession and in every great period of chaos in the world, a certain small group of people made massive fortunes, and that’s because they went against the grain, didn’t follow the herd – they were leading the herd, and this is what you’re touching on. If we were so strong and dynamic when the tunnel was dark, imagine now that there’s light at the end.
Jason: Absolutely, and I think that sets us up for a really remarkable 2021 knowing that huge immigration numbers, COVID vaccine is literally on the horizon, low interest rates, these are all the right, this is everything we want to hear.
Costas: This is the perfect storm.
Jason: This is the perfect storm, this is the perfect opportunity.
So I want to again change gears one more time and I want to look at sort of the impact of low-rise and condominiums because they are very fluid, they are symbiotic with each other, they’re such a huge relationship. When I started to commit to pre-construction condos and condos in particular, there is always, look at low-rise, low-rise is the driver of our market and that’s where you can really see where condominiums can really, the potential condos, right? How low-rise moves gives you a clear indicator of how much money you can make, really, and so timing is everything. Like I said, this is the right time, this is the best time to consider a condominium, whether it’s something within the next year or a pre-construction purchase that’s going to be finished in four to five years.
Sorry, I just want to talk about timing the market right because the value in condominiums has never been more apparent today, and I’m going to talk about the price gaps, alright? Now, the price gap between a condominium and a semi-detached home and the price gap between a condominium and a detached house, because of the beginning of the year, as semi-detached was only $162,000 more in terms of on average, and that’s not a lot. I would buy semi-detached every day of the week, there’s a lot of value there, and when you get into the detached home, the premium is a little bit more substantial.
Costas: Current mortgage rates, it’s $500 a month.
Jason: It’s nothing, right? I’m glad you said that.
So 10 months later, a lot of the buyers, a lot of the people on the streets would probably think that nothing has changed, that the market went down, but the truth is what we’ve seen is condo prices stayed the same and everyone is now buying low-rise, creating this multiple offer scenario where you’re shooting in the dark and prices are literally flying through the roof.
Costas: Almost a déjà vu experience <overlap>.
Jason: We’ve seen this before, and we’re going to go on that path, I’m glad you said that. So semi-detached has doubled in terms of price gap. The detached home went up 43%. These are not small jobs, these are substantial jobs in a very short amount of time, and what that does is that sets us up for a very strong condo boom. There is a huge opportunity, this couldn’t be more obvious, I couldn’t make this more clear to you in terms of where our market is heading based on where the market has been, so let’s look at the past because the past data will tell us a lot about our behavior, about the market’s behavior, and what you can do to capitalize to make a lot more money, to build your wealth, and just share with your clients.
So this one is where we’re going to show you the difference in price between a detached home and a condo. I’m going to layer in the price of the average condominium price that sold in the GTA and you’re going to see that there is a really unique relationship here. So again, this might be a bit complicated but I hope you guys stick with me here. Again, this is the price gap between detached and condos. In 2016, in January, we start to see a really big meteoric rise in the price gap between a detached and a condo. That’s driven because of the demand in low-rise and it kind of doesn’t stop. There’s some minor values but we go straight up in ’17, and if you remember 2017, the hottest year in our market, we see a price gap north of $700,000, and the government had to step in and say, “You guys gotta cool your jets. It’s getting out of control.” Who knows what would’ve happened if they didn’t step in? And what that meant was it created a huge opportunity for condominium investors, and then actually paved the way for a ton of wealth going into 2017, 2018, 2019, but what I’m trying to tell you is that right now, we are seeing the exact same thing take place over the last six to eight months, and there’s a trend here and that is a lot of demand in low-rise driving up prices and condominiums being static, and this is the sharpest incline and the shortest amount of time that we have seen since 2016 and 2017, and so that is really unique data, and when we look at how that has impacted condominiums in the past and in particular price appreciation, this should tell us a lot.
So let’s take a step back and start really getting it. In 2016, we see a huge jump, lots of demand, and what happened with condos? They went up, they caught up, they have to catch up, so when the price of the condos go up, what happens to the gap is that it shrinks naturally and we start to hit a bit of an equilibrium where there’s a lot of value on both sides, the market is very healthy, and that’s a good sign but after that, we start to see condominiums take over. Transactionally, it dominated the market, people understood the lifestyle, the convenience, the amenities, and typically, this downtown was just really growing, huge immigration numbers, and the impact of that, of the prices going up, demand going up is the gap shrunk, and at one point, I think you even had a conversation when you look up low-rise and you say there is some value there, condominiums, we are getting to a price point that is high, just continuing to climb for many years and people were making a lot of money investing in condos.
Costas: See, that’s what it is, when you’re looking at real estate, you don’t have too many variables to look at. You just have different types of product and there’s only a handful of them, and you can see the correlations between the two, and once that gap, as we have talked about on the golf course, as that gap is a little, it goes a little too high between low-rise and high-rise, that’s the perfect time when you know they’re going to start going the other way, and if you can catch it just before the shift happens…
Jason: Which is right now.
Costas: Which is right now because again, I mentioned déjà vu a couple minutes ago, this is almost a direct imitation copy of what we saw a few years back, and life is cyclical, this is the opportunity that a lot of people, if they don’t see it, open your eyes and see it. This is when wealth is made.
Jason: Correct, and so again, now that we’ve seen economy and prices rise, today, I think the GTA has acknowledged that they want to go buy houses, part of it obviously is COVID but again, you look at the condominium prices, they stay very static, you didn’t see a very big jump up or down but you see a huge, literally the same time, hundreds of thousands of dollars in terms of average sold prices spiked up in the price gap, and so what the does that tell us? That tells us that when we look back ’16, ’17, and now 2020, you’re literally living this right now, you are in the middle of it, we are not talking about the past, you are literally in this scenario, you set yourself up for huge opportunity in the condo market. In particular, pre-construction because it’s all about timing. Again, this has never been laid out better because we have this data, we understand that immigration is going to absolutely be a huge monster for GTA real estate investors.
Costas: Back with a vengeance.
Jason: That’s right. Again, interest rates are driving up prices because of inflation. COVID vaccine is imminent, so that is the biggest new story that we’ve heard in a long time. Resale market, highest ever transactions year-over-year. Most expensive average sold price year-over-year. I mean, doesn’t get more exciting than this. Pre-construction selling, and you’re about to say something here.
Costas: If we had a checklist, this time, we check every single box.
Jason: Correct, again, don’t be afraid because all the stuff that we are sharing with you, it’s all stats, no flop, we are not here to speculate, a massive price gap between low-rise and condos. Well, maybe this is speculation right now. 2021 is going to be massive, I’m willing to say that right now, it’s a projection rather than a speculation, and I can tell you that all the stats, all the data that we’ve just dug up is very, this information doesn’t happen very often, there’s never been more clear, I’ve never been able to bring out so many statistics that clearly indicate that we are on the verge of a massive, massive boom and that is going to make 2021 in particular the year of the condos, and you heard it here first, and nobody knows condos better than CentreCourt Developments, we’ve been incredibly active. I know I can go on for days. Why don’t you take us away here?
Costas: Okay, well, listen, no other developer in the country, in I’d say the continent has sold more units in the past few years then CentreCourt Inc. and like I said…
Jason: Preach it.
Costas: Like I said, they have a great sales team, Norris and Shalini, they are two of the finest in the industry, they have, in my opinion, one of the best VPs if not the best, I don’t want to inflate as you go alittle too much, but he is the best. I call him a surgeon and I bug him about it because we’re friends but I call him a surgeon because no one executes with the skill, proficiency, and position as this team does, and you have sold out buildings in two weeks. I remember pre-COVID, but weeks pre-COVID, I think the market was close to 500 units sold in eight days at 55 Mercer.
Jason: Maybe even less, yeah.
Costas: Maybe less, and nobody else could sell a tower like 199 Church and to give all of us one week’s notice though in the midst of COVID.
Jason: The Dragon launch was a lot of fun, and I thank you. Again, it’s teamwork, it’s not one individual, it’s –
Costas: They also have a sense of humor.
Jason: Yeah, and I’d like to think we are a little bit humble too, great teamwork, construction, sales and marketing, the leadership across-the-board, execution is really the name of the game. We’ve been in business for 10 years and we’ve done 16, coming on 17 launches. I mean, most developers that I’ve worked with in the past, you are seeing two launches in 10 years, three launches in 10 years. This is no joke. We take this very seriously. Zero canceled projects which is paramount to trust and execution, zero days [00:30:18] which is a big priority of ours, making sure that the building is hotel-ready, the amenities are ready, the lobby is ready, there’s no construction happening for the most part when you’re doing your leases.
Costas: And that’s the number one complaint that I get from my clients once you take occupancy availability, and then they register and it’s still not fully finished and they’re constantly asking, they are constantly calling me saying, “Why isn’t this open? When is this going to open? Why do I still hear construction?” And it’s the nature of the beast but not when you deal with the CentreCourt. They do everything in-house. I’ve been asking for years, how do you guys do this? But the reality of the matter, what seems so complicated is quite simple, actually, they do everything in-house.
Jason: That’s right, everything –
Costas: And they’re in charge of everything.
Jason: Exactly, so when you can control everything and you’ve got incredible leadership, and again, you’re driven, you’re passionate, you take this very seriously, we are always trying to find ways to give you a better product, to give you better locations, to give you a better experience. I mean, we are far from our best. I’m proud to say that because we are continuously trying to improve and put together, put ourselves in the top of the, the upper echelon of GTA for –
Costas: That’s the word I was thinking.
Jason: Yeah, yeah, a real estate, so again, your trust, your clients’ trust in our brand, and our ability to execute is the biggest priority for us and for us, again, just delivering buildings on time, the most basic of basics, we do it better than everyone else, we do it faster than everyone else but those are the little things that I think, Costas, we always talk about in terms of how can the market get better, how can our peers get better and how can we get better? But I thank you for all of the kind words, we work really hard.
Sort of transitioning back into the key point, I want to start talking, I want to talk about Yonge Street right now because I think Yonge Street is, because we’ve seen so many launches in the 905, we’ve seen so many launches in the GTA, it’s been so long since we have seen sort of true downtown Yonge Street launches, you get like, one, maybe two a year at best, and it’s funny, like we had a survey asking realtors, what’s the most important street? Because when industry professionals unanimously tell you that it’s Yonge Street, it’s not hard to, it’s not <overlap>.
Costas: It has been and always will be Yonge Street. It’s the center of the universe as is Toronto, and what happens is because the cost to acquire land on that street is so high, now, we don’t see a lot of launches because you also have to put together and assemble the land which is in your possibility <overlap>.
Jason: One store at a time.
Costas: At a time and there’s always a hold up, okay, the hurdle that you need to overcome to build on Yonge Street is a mess, and a lot of developers, I don’t mean it in a bad way but lesser developers are not up to that task, and that’s why you don’t get a lot of launches. So quoting a rap song from the 90s, like everybody forgot about Dre, Eminem said, but everybody forgot about Yonge Street, okay? Because you don’t get a lot of launches just because they’re not possible, and in my opinion, this is one of the best addresses we’ve seen in years and we’ll see, 8 Wellesley at Young, and it’s a paramount location. The reason why you guys are so good at what you do, you pick only AAA locations.
Jason: Only.
Costas: There is no A, there’s no AA, it’s AAA or nothing, and the thing with this location is you’re minutes from three subway lines, you’re walking distance to Yonge and Bloor, okay, our version of the Golden Mile shopping, you’re minutes to Yorkville, you’re walking distance to the financial, walking distance to hospital alley, and you’re walking distance to U of T and Ryerson. Talking about checking all the boxes.
Jason: It almost, I’m going to get in that momentarily but we get so spoiled at CentreCourt, no one believes in the downtown more than we do. Why? Because of the things you talked about, subways don’t go away, you don’t build them overnight, U of T, the most widely recognized university in the country and on the world scale doesn’t go away. You don’t do these, you don’t find these in the market in Richmond Hills and 905’s, and just to sort of synthesize, there is nothing like Yonge Street and there will be nothing like Yonge Street ever again, and part of it is because you’re bordering some of the most iconic cross-sections of the city, and when you do, what do you get? You get Ryerson’s, you get the financial district, Yonge and Dundas Square Subway, like the lifeblood of our city, Yorkville, you don’t build these overnight, like you said. So when you compare that to other world-class cities, the New Yorks, the Parises, the Dubai, London, and Shanghai, Toronto is up there in that class along with a host of other cities, but what’s interesting is that those cities are much older and they depend on a couple of streets to cover a lot of the things that Yonge Street has the burden of carrying, but we depend on Yonge Street to do all of it, and that’s what makes it so iconic, again, you’ll never see it again.
But let’s see how rare. You were talking about land scarcity. You have a lot of things there that is very true. You’re right, we kind of forgot about Dre there, and we started trying to sell, as salespeople, we were trying to sell other communities as this next up-and-coming, and I gotta wait 10 years for the subway to get here, I gotta wait 30 years for the new financial district and I got to wait and I wait, there’s no waiting, and you almost get bored, like I don’t want to sound, it sounds weird but we get bored saying, “Oh, we are steps of financial district. Oh, we’re steps to Ryerson University, yeah, we are steps to the subway.”
Costas: It’s almost like a prerecorded recording.
Jason: It is, isn’t it? I feel like we are telling the same things and if you don’t really understand the importance of these things when it comes to spending your own money, what are you going to bet on, you’re going to bet on this 10 out of 10 times.
So again, let’s go back in time, the last five years, we’ve seen 579 launches in the GTA and we have only seen 22 launches south of Finch within 200 meters and I used Finch, why?
Costas: because Finch is where the subway ends.
Jason: That’s right, the subway is the lifeblood of our city. It is the most affordable way to move around but it’s also the world of possibilities, right? And that’s one in 26 launches, and let’s look at the downtown core because a lot of people say, downtown, what is downtown? To me, downtown core is Yonge Street, you cannot use the word downtown without associating with Yonge Street and that is south of Bloor.
Costas: That’s what downtown is.
Jason: That is true downtown core. There is Toronto proper and there’s all these different words, the annexes and all that stuff but downtown core is Yonge Street south of Bloor and we’ve only seen 12 in the last five years, and of the 12, four of them are no longer condo buildings. They are canceled or I don’t know what’s going on with them really today, so that’s really eight, like think about the limited opportunities. That’s one in 48 launches, that’s about one in every 10,000 units that you get to invest on Yonge Street.
Costas: So when you’re thinking about limited supply and you want to invest in something, you want to invest in something that everybody wants but not everybody can get, this is it?
Jason: Correct, there’s a reason why prices go up so rapidly in these areas, because they are hot, but what we’ve noticed in the 905, and I’m about to talk about 905 right now and the relationship to 416, we are seeing a much stronger market in 905. We are seeing a lot more development in the rural communities which is great. Our expansion, we are growing, a lot of people moving out of the city, and this is a good sign for the GTA, and we are seeing a decline, less properties, less availability in the 416 for a lot of the reasons you talked about. You are very knowledgeable about sort of like, it’s land scarcity, challenges to develop, cost for developers, it doesn’t make sense. Even though it’s a great site but I cannot acquire that, I cannot build, doesn’t make any sense I’m not going to build just for the sake of building, but we’ve seen 905 take over the market share compared to 416 for the first time this year, and the next slide is very, very evident because if you look at this, you don’t want to buy something where it’s very easy to just continue to build, build, build.
Costas: And that’s what we are seeing in the 905 in the outskirts of Toronto.
Jason: Master-planned communities.
Costas: We are seeing master-planned communities because they have the land and that’s a fantastic investment. Yes, traditionally and historically, they’ve outperformed single-building condos but I think about 17%, 18% over the course of 10 years. The reality is what stops another master-planned community –
Jason: Across the street.
Costas: <overlap> across the street and that’s what we are seeing up in Vaughan, right? Which is fantastic. Now, you gotta understand, when people ask me where do I invest, I ask how much money do you have? And that’s the root of the investment strategy. In my opinion, my own personal mantra for investing is if I can afford to buy in the center of the universe, that’s where I am.
Jason: Every time, because scarcity is really where you’re going to see the biggest return and you gotta ask yourself, again, 905 is great and there’s people that are close to home buying for their kids, that’s a whole different story but if you’re just trying to make money, you want to buy something that no one else can buy. You want to buy something where it’s becoming more and more challenging. So where is it harder to develop? It is in the downtown core, the land scarcity, the cost associated to build, to acquire, whereas in the 905, it’s truly unlimited. You can build for days, and there is no scarcity, it’s not a concern. So again, I love the 905, I think it’s great that we are really developing and growing and we are sprawling out, but downtown core, 8 Wellesley is exactly where you want to be if you’re trying to make money on a mid to long-term basis with little to no risk. Not to say that there isn’t any, and you talked about our locations AAA. When we say that this is the best location we’ve ever had, that’s a statement.
Costas: This is one of the best locations ever, and I’ve been telling people that. They’re like, What do you think? I said, one of the best ever.
Jason: It doesn’t come around often, and not many developers in their lifetime get a chance to develop in a location like this, and the truth is the downtown core is consolidated. You are having fewer developers play in the downtown core because of execution costs, whatever that is, and we are obviously the most bullish when it comes to that, so one of the things that I am fearful of is we may never get a set like this again. The truth is, once 8 Wellesley is sold and it’s built, you will never have an opportunity to get on the ground floor at this location again.
So now that we’ve talked about market themes and why you should be positive, let’s talk about the location itself in particular. Our location is 8 Wellesley West on the northwest corner, and directly across the street, Costas, is what?
Costas: The subway.
Jason: The subway, the lifeblood. When you enter that subway, you are entering a world of possibilities and opportunities, you can get anywhere in the city, you can get to work, you can get to school –
Costas: I’m going to interject for one second.
Jason: Please.
Costas: When people hear about the massive immigration that we’ve seen and we are going to see, what should be on the forefront of everybody’s mind and is not is traffic congestion and the inability to travel easily from one spot to the other.
Jason: That’s a good point.
Costas: And people forget about this: our cities were not designed to have, I think, we are at just over 3 million people now, in the next four or five years, we are going to be at 4 million. It was designed for 1.5 million, okay? So now that we’ve had four, five, six times, when we have, in a few years, a population that we were designed for and our infrastructure was built for, the only way that people will be able to transport themselves is by public transit.
Jason: What a brilliant point. I haven’t touched on this at all, I didn’t even occur to me. Actually, two points, the first –
Costas: Well, that’s the perfect slide for it.
Jason: The first is actually, yes, the congestion and the importance of public transportation but actually, another thing I’m thinking about is from the immigration perspective, people are going to gravitate towards downtown core by default.
Costas: Of course.
Jason: They’re going to see the skyscrapers and say, “That’s where I want to live,” because they don’t know the smaller communities.
Costas: I guarantee you, if you interview a hundred new immigrants in Toronto, 100 of them are going to say that they are coming to Toronto, and you say maybe 99, you might get the one that’s going to stay at their families and say, “I don’t know, Etobicoke or something.” But everybody comes to Toronto for Toronto. They come here automatically by default, and then if they fall in love, have kids, whatever reason it is, then they will move to the burbs, but initially, this is the mecca for immigration.
Jason: And it continues, it’s got this sort of roll over, this never-ending pool, and then so again, I talked about sort of being spoiled. You got the subway outside your door, you wake up in the morning, your headquarters is Yonge and Wellesley every day. You walk outside the door and suddenly, you’ve got the subway, then suddenly, you can walk to Yorkville. Suddenly, you can walk to the number 1 university in Canada which is U of T or Ryerson. I guess, huge, huge institutions that aren’t going anywhere that are continuing to grow, and plant their seeds. University health network, high income jobs, tech innovation, medical-related sciences, the big five. We’ve got Yonge and Dundas which is world-renowned, it is a landmark institution and it’s the lifeblood of our city, and then we’ve got the financial district all, like, you go to any other condominium launch, you go open any other brochure and this is what they wish they had. This is what they talk about, like how many minutes to get to the downtown or how many subway stops, how long, how many kilometers, we are talking meters in the downtown core. We talk about the walkability in the downtown core, you don’t need a car and Uber, you don’t need a bike.
Costas: These are city blocks, not country blocks.
Jason: These are city blocks, and again, these don’t go away. They only continue to grow and they only become more important, mainly employment, and institutions such as universities, those drive the real estate market like nothing else, right? So when you got a location like this, it’s important to put together a building that really personifies something that’s timeless, something that’s mature, something that is –
Costas: Complements the area.
Jason: Yeah, something that complements the area, like we are putting our best foot forward inside and out, and a lot of themes of Yorkville, we are really drawing a lot of that sort of, a lot of comparables, and we want something that people are proud of, nothing that is too midmarket, childish, we want something that’s mature, and bold and embodied as the community and nothing is better than –
Costas: Timeless and distinguished.
Jason: Exactly. A lobby that sets the tone. When you come home, when you have a friend that’s dropping by, when you were doing a resale showing for rental or resale, the lobby sets the tone because it tells you what to expect for the rest of the building, and that is one of the key themes in 8 Wellesley. It’s the best spec building CentreCourt has ever brought to market, and that goes, that carries through from the very second you enter this home into the amenities. Now that we are working from home, technology is playing a big part, you lead a shared co-working space that gives you that extension of your units. We’ve got 21,000 ft.² of indoor and outdoor amenities. For those of you that understand our gyms, I mean CentreCourt gyms are the best in the business. This is not your normal gym. The gym at 8 Wellesley is over 6,000 ft.². So think about the size of your house. Some people have 2,000 ft.², 4,000 ft.², this is 6,000 ft.² on one floor, 24 hours a day, I mean, you would enjoy that, right? Way more than I ever could.
Costas: Especially during these times of gym uncertainty.
Jason: Exactly, so interiors, like I said, interiors <overlap>.
Costas: I have to work out here.
Jason: You got to work out here, for those of you that don’t know, there are literally dumbbells on the floor. And so again, indoor, inside and outside, this building is giving you the best building CentreCourt has ever brought to market in the best location we have ever brought to market, and I want to show everyone at home, sitting at home that’s tuning in, maybe from the office, the floorplans because we are so proud of our plans, they are literally the most efficient, most functional layouts in the business and this represents of all inventory which means is easy to sell, you don’t sell this one floorplan, there’s only three of those, so I gotta move to the next one. This is here to make life easy for you and for us, and again, it’s going to be priced to sell coming out of 2021 or coming into, should I say?
And on the bottom right-hand side is where you see our legend, you’re going to be able to identify sort of whatever standard key play holds, and it starts with studios, right? I mean, Costas, tell me about the studios, why studios in this area are going to be incredibly popular? How it comes complements the area?
Costas: See, whatever we said, the studios are written unique to certain areas of the city where they are in high demand area that are not in any demand in other areas, and when you’re so close to universities and hospitals where people are basically out all day working, essentially, what they need is just somewhere to lay their hide at night, and they need a hotel with a kitchen and that is what a studio is. It’s no fluff, no wasted space, you have a pullout couch or a Murphy bed, you have a kitchen and a bathroom, and you’re in and out and you’re there to sleep and maybe grab a quick bite.
Jason: And that’s the lifestyle. Even tech, tech is similar lifestyle.
Costas: It’s the same thing and what this allows people is an entry-level product in an area where they might not be able to afford anything larger and this is a product that’s about the price point, so if you’re not sure if you can afford an area, this is the product that you will be able to afford and they’ll get your foot in the door.
Jason: And when we’ve developed these floorplans, it’s about understanding the community. We don’t just build what we want and think that and instill that in an area. I think the beauty about Yonge and Wellesley is the diversity. It’s the fact that it’s so, the demographics are all across-the-board, and such a AAA location, so I’m glad that you talked about the studios, we sort of transitioned into the one-bedrooms for those. Again, same sort of demographic but stepping up.
Costas: That’s the bread-and-butter, that’s the foundation of the investor platform and the investor scheme for any condo project, is the one-bed and what you guys have here, you have five one-bedrooms running the entire stack.
Jason: Exactly.
Costas: And it’s simple, it’s ABCDE.
Jason: Very efficient. Again, very efficient, all below 500 square feet, and then we transition in one-plus-dens where we sort of graduate now, we sort of get into the postgraduates, the young professionals, the people that are really, really developing roots and they’re establishing their lifestyle and their careers, and then we transition to the next two unit types that I think that I have personally done the best in from an investment standpoint and that’s two bedrooms and three bedrooms. So I’m going to rewind and go back to the two bedrooms. We’ve got qua two bedrooms, split beds, no interior bedrooms, we are not doing that here, split beds, two full baths, tons of glass, more glass, like just tons of glass, lots of natural light, beautiful views, and then we’ve transitioned to the three bedrooms and again, this is where I made the most the most money personally because no one builds three bedrooms, right?
Costas: I’m going to talk about the three bedroom. When people ask me, clients, investors, friends and family, anyone that will listen to me, when they ask me, what is the number one investment in a pre-construction condo? I answer, a small three bedroom, and the reason is it’s because it has three bedrooms, no wasted space, and you are maximizing for the least amount of expenditure. Now, imagine this: everybody talks about being cashflow-positive and rental returns year-over-year. Now, no one’s ever going to become rich from rent; the government loves to sink their teeth into your rental income, tax it to death, but the reality is if you want a positive cashflow, imagine this for one second, think outside the box. You’re steps from U of T, you have three international students, your rent a room to each of them, you’re not going to only be cashflow-positive but you could be generating north of $30,000 a year positive cashflow from that three-bed.
Jason: Correct, and the value on our end is naturally, when we price these buildings, that’s when we give the biggest amount of value, so when it’s built, you end up seeing the biggest jump.
Costas: Well, it’s all based, excuse me to interject, it’s all based on price per square foot and the three-bed traditionally has the lowest price per square foot, so when you’re going to make the most money, you want to be the lowest PSF of a high PSF building.
Jason: Correct, I couldn’t have said that better, and so yes, those are fair points, and as you sort of, again, just going back to the floorplans, really efficient. These are really just, again, it really doesn’t get better than this. I want to just take you to find out what do we need to know about 8 Wellesley today right here right now? The first thing is we are 8 Wellesley West on the northwest side, we’ve got 599 opportunities. Once these come and go, that’s it, you’ll never see a launch in Yonge Street for a while after that. We all know that, it’s over 55 stories, we’re going to be ready, coming in the market in early 2021, and what’s more important is that we are going to be complete finished, occupied in 2025, maybe even in 2026, and that is about timing the market. COVID will be a thing of the past. We will see more than 1.2 million new immigrants in the country and what do you want? Do you want an investment property at Yonge and Wellesley, to time the market, take advantage of the boom you’re going to see over the next decade, and we are fully zoned. Again, when you align with developers such as Brass and CentreCourt, we don’t play games here, we get straight to business and we make sure that our purchasers are in the best position and there’s very little risk.
For those of you that believe in this story, believe in our messaging, believe in the downtown core like we do, we still have opportunities, connect with Costas, 55 Mercer condos as well as 199 Church, we have very good incentives for you and even better incentives for your buyer, and again, follow us on Instagram if you haven’t already done so, @centrecourtinc, you’ll get exclusive content. You can always connect with Shalini and Norris, our sales team, you can contact Costas which is very important, our main point of contact to the Right at Home family.
In this world, this is important that we collaborate. We have discussions, we formulate our relationships, make sure that we continue to grow. So what can we do for you? I mean, the number one thing is at the bottom there which is where all the information is, but we are here to collaborate, we are here to do videos, we are here to do interviews, we’re here to talk to your clients on your behalf so that we can share with them the story, and what could you do? You can learn more about yourself, the business, the developer, the market, you can learn more about how to scale up your business because 2021 is going to be one of the biggest years we have seen on record. To be a part of this, download the information. Think about creative marketing strategies, you can sell internationally here. Those are a lot of things that, again, like leading up to a launch, you can be a part of this. I already told you guys, we are going to be in the market early 2021.
Before I sign off, I want to give you a chance, ask any questions, if there’s anything you want to say to your team, this is the time because I can’t be more excited than I am right now.
Costas: Well, I don’t think there is one stone that we left unturned, so I won’t ask any questions, but what I will say is this: there was ever a time in Toronto real estate history, now is the time to carpe diem, seize the day, people. For those of you that are agents, get on the phone, talk to your clients, knock on their doors from six feet away, tell them the story, okay? This is a unique time, you may never see again, like we’ve discussed, this is the perfect time in a déjà vu moment, we know what’s going to happen. The stars have aligned, this is when the agents would start sacrificing stuff because omens were about to happen. Everything is ready for fantastic, once-in-a-lifetime investment opportunities. Don’t be in the herd or behind the herd, be ahead of the herd. This is what you need to do: I’ll be keeping everybody up-to-date, I’m very active in the Right at Home social media, I’m going to do a seminar in December, another webinar where I’ll be talking about this and taking any, answering all questions, leading up to the launch of this product. I’ll know about it first, I’ll keep everybody in the loop, email me, [email protected] Call me, you all know my number, 416-662-5701. Take advantage of this unique time and get into the best address in the city that we’ve seen in years and you will see in years and probably the last opportunity for years to get right downtown in the heart of our city on Yonge Street.
Jason: Well plugged.
And so that’s sort of caps our interview, our presentation. I hope you learned something today, I hope you’re able to be able to see what we see and understand where we are heading as a market because your business is important to us, our success is your success as your success is ours, and we’re going to actually end this off with a video to share with you the architectural phenomenon that is 8 Wellesley, and I can’t wait to see all of you in the new year. I wish you well and we will see you very soon.
Costas: Thank you.