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On this episode of Toronto Under Construction, Ben and Steve are joined by Gavin Cheung from CentreCourt Developments. They begin the discussion with Gavin’s early years education; he attended and excelled at Upper Canada College and Duke University, and then went on to attend law school at The University of Toronto; but ultimately decided to go into investment banking. After three years, Gavin started his own business, but ultimately decided it wasn’t the right opportunity, and set his sights on real estate development.
Searching for this next opportunity, Gavin met Andrew Hoffman and Shamez Virani, who’s vision aligned with his criteria and he quickly joined the team. To give some timing context, in 2016, CentreCourt had only just completed their first project. He was initially brought on to assist with legal and acquisitions, but today, he spends very little time on those sides of the business.
The summer that Gavin joined the CentreCourt team was slow. But late in the year, the developer went firm on three new deals within the span of one month – Zen, the Transit City Partnerships with SmartCentres and Prime (just launched).
In discussing the opportunities and projects within CentreCourt’s portfolio, Ben, Steve and Gavin dive a little deeper on the team dynamics at the organization, it’s successes and the unconventional hiring style that Gavin is proof of. Real estate industry experience isn’t a prerequisite for working at CentreCourt. The team hires individuals that are “heavy on drive and heavy on other skills.” CentreCourt may be unconventional in the way that they hire, but Gavin goes on to explain the trend of people betting on themselves when they join CentreCourt. This topic leads to the announcement of Gavin becoming the *new* President of CentreCourt. “The company is just built in a really unique way… it’s the type of culture and environment that is so rewarding and exciting over time,” Gavin says as he graciously accepts Ben and Steve’s recognition and congratulatory comments.
The CentreCourt Secret Sauce
The future’s looking bright for CentreCourt and the employees that work there. There is room for both generalists and more specialized talent to join Gavin at CentreCourt as the organization promotes growth and allows room for learning. The CentreCourt culture is the secret sauce; the organization allows for a day-one employee to come in with a good idea (or poke holes in Gavin’s ideas) and it’s totally ok and welcome. The belief is that, as long as the team gets to the right answer in the end, that’s what matters. Gavin goes on to explain that CentreCourt’s success has come from not only making good big decisions but making “… a thousand good small decisions, and you do it in a way that is logical and predictable or a reliable way, and you track everything.”
Sales Model Discussion
As they chat through the different sales models, Steve and Ben bring up the two different models they discuss frequently on the podcast: The Brad J. Lamb style, where the first 65%-75% of the project is sold quite quickly, but the remaining inventory is held back and sold later at a higher price point, vs. the CentreCourt model, which blows out all the inventory in a couple of weekends to get 100% sold as quickly as possible. Gavin explains the blow out model and the reasoning behind it: a) CentreCourt wants and likes when their purchasers do well and are successful, b) Projects that are 100% sold are easier to underwrite, c) Ability for corporate to shift from Sales to everything else that comes after that. Gavin wraps up the topic by saying “…you don’t want to get too greedy. We’ll make money if we price our projects properly and lock in our hard costs quickly.”
Ben and Steve both jump on Gavin’s first point and note that it’s a really important piece of the puzzle that they feel not every developer has in mind. “The investors and buyers are the most important partner a developer will ever have.”
The guys prompt Gavin to look to the future and share a bit about what is next for him and the CentreCourt team. They talk about the recent project launches during the Covid-19 pandemic starting from 55 Mercer (Feb 2020), 199 Church (July 2020), and most recently 8 Wellesley (Feb 2021). Gavin shares some details about how the team monitored the market and implemented innovative pre-sale events, like the first ever Drive-In launch event. All launches were very successful and specifically the success around 8 Wellesley, in such an uncertain and dark time, helped re-instill confidence in the market and specifically in Gavin and the CentreCourt team.
CentreCourt has a successful track record of projects and providing great returns for investors. The guys ask Gavin what kind of key learnings he’s taken from his previous work experience. Gavin shares that CentreCourt takes a strong stance on projects and would never greenlight a deal that the whole team didn’t believe in. During the initial stages of acquiring a project or piece of land, the group gets together and talks pros, cons and risks; the approach is very intellectual, Gavin says. Specific to Gavin, he says it is his personal discipline that helps him fit in and be successful at CentreCourt.
As usual, the guys jump into the rapid-fire question and answer portion of the podcast and insist that Gavin answer in as few words as possible. Gavin answers questions like: “do you see any major changes in the way high-rise buildings are built?”, “would you do a purpose-built rental or stick to condos?”, “name the dumbest city council member you’ve dealt with”, “will your kids go to public or private school?”, “should the government protect the equity of homeowners?”, “is cheating at a charity poker tournament frowned upon?” and more!
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