Toronto Under Construction – Episode 64 with Marlon Bray from Altus Group, Shane Kennedy from Atria Developments, and Nick Ainis from Fusioncorp 

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Episode 64 Guests

Marlon Bray – Altus Group

20 years of practical, hands-on construction advisory experience. With expertise which encompasses countless sectors of the industry with a focus on private sector developments including residential, office, and industrial projects over the past seven years. Many of the commissions have been on very complex and larger-scale projects, including numerous mixed-use developments in the GTA . Heading our pre-construction and contract administration services team for Eastern Canada – our Cost & Project Management Group provides independent advisory services on hundreds of projects per year (over 1,500 residential projects with a combined construction value in excess of $87B in our historical database alone). Altus Group’s Expert Services are supported by cutting edge technology and software solutions, including in-house data solutions which allows our experts to empower clients to analyze, gain market insight and recognize value on their real estate investments. 

Shane Kennedy – Atria Developments 

Shane Kennedy, Senior Vice President of Development and Planning, has 15 years of industry experience covering a broad range of asset classes and locations around Ontario and Canada. With a B. Sc. (Hons) in Construction Management, Shane initially worked for a large General Contractor in Dublin, Ireland, building rental apartments.

Shane brings extensive experience in capital and hard cost budgeting, tendering, contracting and procurement of residential condominiums, purpose built apartments and seniors housing.

Nick Ainis – Fusioncorp

Nick founded Fusioncorp from an innate desire to create a unique, innovative, and adaptive construction company. Nick has developed an expertise in the construction industry unmatched by others.  As principal, Nick provides support with design and construction related issues as well as overall project management. His extensive experience with the means and methods of construction contribute in the design development process by comparing Architects’ goals with the realities of the construction industry. Nick is fully involved in projects at all stages. His background is in architecture, project management, and environmental studies.

The Cost of Construction

Jumping right into episode 64, Ben mentions that the 2024 Altus Cost Guide was just recently published and shares some of the highlights stating that;

  • Concrete up to 12 storeys at $400 psf to build, up 43% since 2019
  • 13-39 storey concrete buildings at $440 psf, up 60% since 2019
  • 40-60 storey concrete buildings at $450 psf, up 61% since 2019
  • Stacked towns at $300 psf, up 33% since 2019
  • And 6-storey wood at $350 psf, up 32% since 2019

Starting with Marlon, Ben asks him to share a bit of the back story behind these rapid increases over the last five years? Laughing, Marlon states “There’s actually a section in the cost guide that says you’re not supposed to do what you just did… Please do not use these numbers for escalation,” he says. Tune it at 4:00 to hear Marlon share details on how the cost guide works and how it’s supposed to be used.

Next up, Ben says to Nick, you’ve worked on a number of more modestly-sized projects in the GTA, and asks are smaller developers able to achieve these average costs, or is it more difficult to secure trades and competitive pricing? Tune in at 7:30 to hear Nick’s response and hear the group discuss the amount of effort required to build mid size projects. “It doesn’t make any sense to do anything less than 8 storeys downtown,” says Nick.

As the guys discuss the cost to construct missing middle in Toronto, the group all agrees that bigger projects are the way to go. Speaking of a bigger project, Ben reads a press release stating, “Atria Development Corp. is proud to announce the start of construction on the first phase of Town Centre Place at 1680 Brimley Road in Scarborough, Ontario. This phase comprises a 38 story tower and a 40 storey tower, with a shared podium that will bring more than 900 apartments to market in 2027.

The project is the single largest purpose-built rental development to begin construction in the Greater Toronto Hamilton Area (GTHA) in 2023

The initial phase of construction involves the drilling of 190 bore holes, each reaching approximately 850 feet below ground. These will become one of the largest geothermal installations for a residential building in Canada, helping to achieve a 50% reduction in greenhouse gas emissions and a 40% reduction in annual energy consumption for the project*.

Town Centre Place will comprise nearly 1,600 units in 4 towers connected by enclosed bridges that incorporate indoor and outdoor amenity spaces.”  Ben asks Shane, has Atria owned this land for many years? From both a cost and revenue perspective, how did you get comfortable with starting construction on the project this year? Tune in at 13:40 to hear Shane’s response: “Over the last 5 years Scarborough has been a much more attractive market to build it, and then in the last 12 months, we’ve seen rents continue to increase, while costs have continued to fall and then you have the HST rebate, so it really did move the needle.” Shane mentions how he and Marlon have discussed that if you can make a project work, start! Don’t wait. Ben turns to Marlon and says rental developers are often concerned with the wear and tear in their buildings as tenants move in and out. He asks are rental developers spending more than condo developers in terms of construction costs? Tune in at 15:15 for Marlon’s response where he mentions that “it depends who the rental developer is, but generally yes, a little bit more. I would argue, there is more thought put into a rental building, than a condo”.  

The guys discuss the difference between building rental and condo as well as touch on rental management companies in the private and public space. “The minimum standard would apply to a private developer who owns a rental building, that same doesn’t seem to be applied to a government (TCHC) building, and it’s kind of odd,” says Marlon. The guys discuss how the government loves to harp on slum landlords, but never seem to look inward at what they are supplying to the market. “Now they want to build 10,000 units of their own in 5 years?” says Ben. “It might start off great, but fast forward 15 years and let’s see what happens,” says Marlon.

Affordable Housing

Keeping with the discussion on government and municipalities, Ben reads an excerpt from Ontario Construction News: “Municipal governments across Canada can help address the shortage of affordable housing by reducing red tape around residential construction, says the Canadian Federation of Independent Business in a new report.

More than half of small business owners in the construction sector find it difficult to obtain or renew permits and/or licenses, said the report based on surveys among the CFIB’s 97,000 members. Released as part of the CFIB’s Red Tape Awareness Week, the report found 80 per cent of businesses agreed that governments of all levels should make it a high priority to review the necessity of all business permits and licenses.

To cut unnecessary red tape, CFIB recommends municipalities:

  • Review permitting and approval processes.
  • Simplify and automate certain processes.
  • Establish publicly available service standards for permit processing.”

Ben says to Nick, I’d love to hear about what you think is a big impediment for you in terms of delivering your residential projects faster. Tune in at 22:58 where Nick discusses process, experience and attitude. As well as the fact that smaller municipalities usually work really well with developers. “They are fast and more efficient. The larger ones are a nightmare,” says Nick. Ben turns to Shane, mentioning that he’s recently completed projects in smaller communities like Peterborough and Oshawa, Ben asks are these areas easier to build in, is there more or less red tape? Tune in at 25:38 where Shane mentions that, “Smaller communities want developers who have a good track record, to come in and stay there” As the guys continue to discuss the difference approaches in different municipalities they all agree on the fact that Toronto is the worst place to do business when it comes to getting approvals, tune in at 29:35. 

Alternative Asset Classes

Citing another article from Ontario Construction News, Ben reads, “Post-secondary institutions will be able to apply for low-interest loans to build student housing starting this fall, Housing Minister Sean Fraser says.

The federal government is tweaking an existing program to make universities, colleges, non-profits and private developers eligible for low-cost financing to build residences on and off campus.

“Canada needs more student housing and we’re going to help build it,” Fraser said at a news conference Monday.

The Apartment Construction Loan Program was topped up with an additional $15 billion in the fall, bringing the total funding available to $40 billion.” Ben asks Marlon if programs like this one, or the GST rebates, or DC deferrals are enough to move the needle on the variability of developments? Tune in at 43:45 for Marlon’s response, “student housing has been a hot asset for a while.” As the guys discuss student housing, they also mention that it just seems like the governments have no plan and they are throwing darts at the wall to see what sticks. They continue saying that the government is just making announcement after announcement with no real plan to action these announcements and actually build more houses. Tune in at 50:00 to hear the guys discuss programs and incentives that actually are working.

Moving along to another asset class, Mass Timber, Ben reads an article stating that “Ontario’s mass timber building sector is in a position to play a major role in addressing the affordable housing crisis, advocates say, but to do so there needs to be significant upskilling, expansion and culture shift.

Leith Moore, principal at Assembly Corp, a mass timber housing practitioner, recently commented in an interview that the Doug Ford government has established a mandate of building 1.5 million homes by 2031, but homebuilders currently have the capacity to construct only a fraction of that. Affordable prefabricated mass timber homes can make up part of the difference.

“It’s really about adapting fabrication and industrial techniques to housing,” stated Moore, a speaker on one of two panels assembled for the day. “We can only build 100,000 a year at most in Ontario given the number of trades and the time it takes to build. So to deal with the housing supply issue, we need to build more every year.

“The only way we’re going to do that is by having a higher level of completion off site, brought onsite and tilted up. The more you can do off site, the faster you are onsite. We’re going to build another 50,000 using this tilt-up strategy.” Ben mentions that prefabrication and off-site building has been talked about and tried on and off for over 70 years. He asks Nick, “should we be aiming for more pre-fabrication, modular, or other non-traditional construction methods, or should we just try to make apartment buildings bigger and taller?” Tune in at 53:14 for Nick’s response. Shane provides some insight as well saying “you always have to understand what can give you an advantage or save you time, a dollar, or something that can provide a better product.”

Building Toronto’s Skyline

As the guys continue to discuss solutions to Toronto’s Housing market, Ben asks about Nick’s book Building Toronto’s Skyline and asks Nick what he thinks is the future of condominiums in Toronto. Tune in at 1:13:08 where Nick gives his insights on why “we can do a lot better. I’m disappointed in what people are getting for their money.” Ben asks Marlon, do you think today’s condos will hold up? Tune in at 1:21:05 for Marlon’s response.

As the episode begins to wrap up Ben asks Shane why more developers are trying to bring construction in-house? Tune in at 1:26:45.

The episode finishes with our famous Rapid Fire question and answer period with questions like; What is easier, steel or wood framing?, If Aliens came to earth to live, would they choose single-family houses or condos?, Do you purposefully look to bring in different architects on your projects, or do you find one you like and stick with them?, Why does so much of the public art outside of new condos suck?, Are green building requirements making housing less affordable?, What percentage of the projects you’re working on right now are 5% over budget? And more!

Tune in now to episode 64 of Toronto Under Construction!

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