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The Toronto Under Construction podcast is excited to welcome Samuel Frum from Metropia and guest co-host Robert Baron from BCGI Group to episode 67 of the show! Samuel’s journey with Metropia is a testament to his unwavering dedication and visionary leadership in the realm of real estate development. Rising from the ranks of Financial Analyst to Vice President of Investments, Samuel has played a pivotal role in shaping the Metropia’s trajectory over the past six years. With a BA in Economics from Harvard University, Samuel brought a unique blend of analytical prowess and strategic foresight to his role, doubling the size of Metropia’s internal team and spearheading the successful launch of eight projects across the Greater Toronto Area.
On April 10, 2024, Samuel ascended to the position of President, a milestone moment coinciding with the groundbreaking event of Metropia’s Union City Community in Markham. Under his guidance, the company achieved remarkable feats, including the sale of over 1,200 units in just three months during the summer of 2023. Samuel’s innovative approach to urban development and his acute understanding of market trends have been instrumental in driving Metropia’s recent successes, setting the stage for a new era of innovation and growth as he leads the company forward. Samuel shares a little bit of his experience at Harvard, how he got his start in investment banking and his foray into real estate. Tune in at 4:47.
Ben’s first question is a quote from an article he wrote in RENx in 2019 stating that “The high-rise industry managed to survive the bubble-like price growth of 2017. However, despite the resilience and creativity shown by developers over the past 10 years, history suggests it won’t survive the next bubble.” Ben comments on the fact that the only recent high-rise launches in downtown Toronto have been relatively high-end, citing Freed’s Hotel & Residences project, and Devron’s 101 Spadina. Ben asks Samuel whether he believes 2021/2022 was a bubble, and asks him what he thinks the evolution of the industry will be over the next few years. Tune in at 9:01 for Sam’s response.
Robert continues the conversation noting that the new condo market has seen a notable decrease in sales this year, with Bullpen Research & Consulting forecasting about 10,500 sales this year for the GTA, which is about half of the 10-year average. He asks Samuel whether Metropia’s strategy or business plans have changed over the last 18 months? Tune in at 10:58.
Ben mentions that he has discussed the success of Union City on several podcast episodes, and says that Metropia also tested the market on another project and the response was not as robust, he asks Sam what he attributes to the different acceptance between the sites? Tune in at 12:44 to hear Sam share the details of Union City and its success. As the group discusses the market, Ben asks Sam how Metropia is currently assessing market value in their underwriting. Tune in at 20:23 where Sam shares Metropia’s nuanced approach to underwriting.
Switching gears, Robert mentions that Metropia recently made a big hire, adding a top sales and marketing executive to the company. He asks Sam whether the company benefits from getting fresh ideas or is turnover just a disruption? Tune in at 24:03 where Sam says “we are making a big investment in our company at Metropia, because we believe deeply in the future of the GTA”. The guys continue to discuss the market, sales strategies and what to expect over the next few years.
As the discussion continues, Robert comments that Metropia has a number of partners from other developers on its projects. He asks Sam whether he keeps his circle of relationships tight, or whether he pro-actively seeks new partners? Tune in at 31:52 for Sam’s response.
Going back to the market, Ben mentions that he had Marlon Bray as a guest on the podcast to discuss the latest Altus costing figures. Ben states that there is a significant cost disparity between constructing tall downtown high-rise buildings and suburban townhouses, with Altus’ data suggesting hard costs are 55% higher cost for high-rise projects. He goes on, saying that this underscores the increased replacement cost and risk associated with delivering new housing compared to two decades ago, when low-density housing accounted for the majority of new housing being delivered. Ben asks Sam, how do you think about housing supply and affordability of the GTA overall as we demonize sprawl and low-density as the “bad” type of new housing, while at the same time allow NIMBYs to further drive up the costs of high-rise housing, a built form that is already the most expensive way to delivery new housing supply? Tune in at 34:50 where Sam shares his thoughts on housing supply and affordability and discusses Metropia’s diversified portfolio of housing from tall towers, to detached, to back to backs, etc.
As the group discuss housing supply, Robert mentions that he is a fan of living in a full-service condo. He asks Sam, do you think the next generation is looking at embracing high-rise living as a permanent solution or is it just a stepping stone to buying a 4 bedroom home an hour drive away? Tune in at 43:34 where Sam says “in his view it comes down to market factors”. The guys discuss family friendly units, the lack of demand for them and the challenge of the city mandating that 10% of the project be 3-bedroom units.
Ben switches the discussion back to Metropia, mentioning that they have a big assembly in the Dundas East area. He asks Sam whether they are still adding properties to it, and asks him to share the latest details on the project? Tune in at 49:31. Robert chimes in and asks between a state-of-the-art rental building versus a state-of-the-art condo building, is there a difference from an amenities or design standpoint? Tune in at 51:26 where Sam says yes!
Going back to investors, Ben says there is a lot of confusion and biases regarding investor-owned properties versus those owned by end-users. The development industry has pretty much ignored the subject, and not properly explained the key role investors play in providing the necessary sales for developers to qualify for construction financing. He asks Sam, do you think developers could do more to show the value of the investors out there? Tune in at 54:17 where Sam explains that yes, investors are integral to getting more units built, and it’s important that the public sees investors as a good thing. The guys discuss construction costs, development charges, HST and some ways the government can alleviate pressure on the new condo market.
The guys wrap up with a discussion on innovation before moving on to the Rapid Fire question and answer period where Sam answers questions like, “In a properly functioning housing market, what percentage of completions should be government owned non-market housing units?” “We get a lot of op-eds on housing in the mainstream media from academics and people outside the development industry, are they making things better or worse for you?” “Do you think social media is negatively influencing public perception of high-rise condominiums?” “Should developers prioritize affordable housing initiatives in their projects?” and more!
Tune in now to episode 67 of the Toronto Under Construction podcast!
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