Toronto Under Construction – Episode 68 with Brendan Whitsitt from Imprint Developments, Alan Leela from Vantage Developments, and Mathieu Fleury from Leader Lane Developments

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For the first time ever, the Toronto Under Construction Podcast welcomes 3 new developers to episode 68 of the show. Kicking off the episode, Ben asks each guest to introduce themselves and share a little about how they got started in the industry. Meet our guests:

Brendan Whitsitt – Imprint Developments

Brendan Whitsitt is the founder of Imprint Development, a boutique real estate development and investment firm headquartered in Toronto, Ontario. Brendan is the co-founder of Urban Progress, a magazine which focuses on urbanism, growth, and prosperity.

Prior to founding his companies, Brendan was Senior Vice President of Development for Tricon Residential, where he led execution of Tricon’s Canadian multifamily portfolio. Before joining Tricon, Brendan was a Partner at Insight Property Group in Washington, DC.

Brendan is a real estate developer and investor with a track record of delivering exceptional apartment communities, on time and under budget. He has a background in architecture, investment, consulting, and entrepreneurship, and is known for leading large, multidisciplinary teams toward a common vision, and creating value through best-in-class execution and innovative partnerships.

Alan Leela – Vantage Developments

Alan is a seasoned real estate investor and finance executive with nearly 15 years of investing and development experience. Alan is responsible for the oversight and management of all business areas at Vantage with a focus on corporate strategy, land acquisitions, capital raising and investor relations. Prior to co-founding Vantage, Alan held senior positions at notable development and real estate private equity firms. Alan spent 10 years at Tricon Residential leading the investment function for the Canadian purpose-built rental platform, a business division he helped launch in 2014. Alan started his career in the investment banking division of Credit Suisse, working in the Los Angeles and Toronto offices.

Alan holds an Honors Business Administration degree with Distinction from the Richard Ivey School of Business at the University of Western Ontario.

Mathieu Fleury – Leader Lane Developments

Mathieu holds a Masters in Real Estate Finance from The University of Cambridge in England and is a proven and highly respected industry leader. With firms such as Loblaw Properties Limited, Great Gulf, and Dream Unlimited over the last 12 years, Mathieu has been responsible for the financial forecasting and budgeting of over 15,000 residential units and over 7 million square feet of commercial development across Canada. Managing teams of financial analysts, he has developed complex financial models and produces analytics without comparison.

Risky Business

After learning about our guests, Ben jumps right in reading one of Brendan’s recent substack newsletters saying: “There is a lot of risk involved [in being a developer], the process is very unpredictable, and many people — neighbours, resident associations, local government, politicians — are actively trying to delay, prevent, or otherwise influence your project. The path to completion is never smooth, never straight, and lots of people go bankrupt trying it out.”

Ben asks Alan the first question saying, “now that you’re on your own, tell us about a risk or unexpected occurrence that you’ve encountered that you hadn’t when you worked for other people?” Tune in at 22:38 to hear Alan share his thoughts on risk from an entrepreneurial and macro perspective.

Ben then asks Mathieu a similar question, “what is something you wish you knew before starting your development company, is there anything specific that comes to mind?” Tune in at 24:37 to hear Mathieu discuss some of the challenges he’s facing at this time in real estate.

Going back to Brendan’s substick, Ben says that Brandon mentions the lack of rental apartment completions in the GTA has resulted in a lack of rental real estate professionals. He asks him “what is the biggest learning curve or misconception about rental development and is it harder to be a rental developer or a condo developer?” Tune in at 28:01 to hear Brandon’s thoughts on being a purpose built rental developer.

  1. Market Research

Ben continues the discussion on what developers wish they knew before starting, and mentions that he asked CHAT GPT to make a list of the 10 most important things someone should know before becoming a residential apartment developer. He says not surprisingly, the 1st thing on the list was Market Research.

The AI wrote: Understand the local real estate market, the demand for properties, and target demographics. Turning to Mathieu, Ben says “I’ve done a number of studies for Leader Lane via my firm Bullpen Consulting, and the Baker Insights Group. I’d say less than 10% of the studies I do at Bullpen are during the underwriting phase. What are you doing from a market perspective to get comfortable closing on property these days?” Tune in at 33:40 for Mathieu’s response about how they rely on private, public and their own data to make decisions and create very detailed proformas and budgets.

Next, Ben says to Brendan, “you’re coming to the Toronto market after spending a few years in Washington DC, what is the biggest difference between the two real estate markets from your perspective?” Tune in at 35:42 for Brendan’s insights into the many differences between the US and Canadian rental markets specifically focusing on the complexity of the approvals process.

  1. Financial Planning

The second thing on the AI list for developers to know, says Ben, is Financial Planning: Develop a comprehensive financial plan, including funding sources, budgeting, and cash flow management. Ben turns to Alan and says “The Vantage website says you’re going to take a “private equity approach to real estate development”  and asks him, “what do you mean by that?” Tune in at 38:43 to hear Alan discuss how Vantage uses data in every decision they make.

Ben mentions that Mathieu has moved from the financial side of the industry into development, and asks him “do you think that gives you an advantage, or is the learning curve bigger for other parts of the development process?” Tune in at 41:39 where Mathieu shares how it’s more important than ever to have multiple skills across all areas of development to be successful.

  1. Regulations and Permits

The next thing on the list, says Ben, is Regulations and Permits: Familiarize yourself with zoning laws, building codes, and other regulatory requirements in your area. He asks Brandon “How important do you think it is for a developer to have intimate knowledge of the entitlement process, or do you think hiring a planner or relying on outside planning opinions is sufficient to get by?” Tune in at 44:40, where Brandon reiterates Alan and Mathieu’s point of needing to know a lot of different things across development. “You can’t be a master of everything… so to really be a master of the entitlement process, you need to be doing a lot of entitlements and get to know the process,” says Brandon. “You have to know enough to challenge or support your consultants and tap your network.” The group discusses the business decisions surrounding pricing and developing a building.

  1. Site Selection

Next up, on the CHAT GPT list, Ben says is site selection: choose a suitable location that offers potential for growth and meets the needs of your target tenants. He says to Alan, “when you were at Emblem, your firm bet big on Hamilton, seeing new condo prices rise from $700 psf to $1,000 psf in three years. Is Vantage looking for the next Hamilton, or are you looking to develop in already established condo markets with a more proven track record?” Tune in at 53:56 where Alan says, “it’s a little bit of both!” and shares his top down approach to choosing a location.

Ben asks Mathieu, “how are you thinking about the scale and size of property acquisitions these days?” Ben cites the latest GTA High-Rise Land Insights Report showing the average high-density property sold in Q1-2024 was nearly half of the size of the long-run average, as developers are shying away from multi-tower sites. He mentioned Mathieu has a couple small projects, but also one big one and asks him to give us his two cents on site selection today. Tune in at 55:48 where Mathieu says “there are less and less sites to choose from, and we only have a certain amount of capital which dictates the size of the project we can do”. He shares details on the types of projects he’s doing and how he chooses his sites.

  1. Design and Amenities

Next up, Design and Amenities: plan appealing apartment designs and amenities that attract tenants and enhance the living experience. Ben says we appear to be having an amenities war right now, with developers of multi-family rental offering significant shared spaces: co-working offices, party rooms, dog wash stations, theater rooms, rooftop pools, community gardens, video games rooms, gyms with saunas, hot tubs, yoga studios, cycling or spinning classrooms, etc. Ben goes on to say that he’s heard American rental developers say they want to reduce those spaces, to maximize revenue generating GFA, and cut upfront costs. He asks Brandon, “what’s your outlook these days on common amenity uses in the new development space?” Tune in at 1:00:07 where Brandon says “it depends on the market. In Toronto we have a sub 2% rental vacancy, so you are going to fill a building regardless of amenities.” The guys discuss amenities and their importance to a new condo or apartment building.

  1. Construction Management

Moving along, the next thing CHAT GPT suggests is construction management: learn about construction processes, contractor selection, and project management to ensure timely and cost-effective completion. Ben asks Alan, “for the build-out of your projects, how much is Vantage looking to handle in-house, and how much are you going to outsource?” Tune in at 1:04:58 for Alan’s thoughts.

  1. Risk Management

Next on the list, Risk Management: identify potential risks, including market fluctuations, construction delays, and legal issues, and develop strategies to mitigate them. Ben mentions that the one thing that popped out of that risk management definition is legal issues. We’ve only had one lawyer on the show, Leor Margulies of Robins Appleby, and Ben says every time he speaks with him he talks about an interesting legal situation that a developer is in. Ben asks Brandon, “how are you going about sourcing the right legal team that has the necessary experience to navigate the many pitfalls in the development process?” Tune in at 1:08:47 for Brandon’s  “no fancy process” where he states he typically chooses based on word of mouth and referrals.

  1. Marketing Strategies:

Number 8 on CHAT GPT’s list is Marketing Strategies: create effective marketing plans to attract tenants, including online listings, social media, and partnerships with local businesses. Ben says, “partnerships with local businesses” is what interests him. Turning to Alan, he says, “I see your old company TriCon Residential has links on their website to PODS Moving and Storage as well as CORT Furniture Rental, which makes perfect sense as important relationships for a rental developer to have, while Fitrozia has a partnership with the Cleveland Clinic to provide healthcare services to tenants.” He asks, “you might be too early in the process to be thinking about these types of relationships, but are you thinking about these types of relationships and co-branding opportunities?” Tune in at 1:11:53 to hear Alan’s insights on partnerships, “we bring partners to our buildings that will benefit our community.”

Ben mentions that Mathieu is betting big on sustainability, he asks Mathieu “how much of that is for sustainability’s sake, and how much of it is marketing, attracting a certain type of tenant willing to pay a premium for an environmentally-conscious developer?” Tune in at 1:14:18 to hear Mathieu discuss sustainability efforts and why it’s not usually on the top of people’s list when they are looking for housing. Mathieu also shares some details and discusses the One Planet framework and what has to be delivered in terms of sustainability.

  1. Property Management

Next the guys discuss Property Management: understand the essentials of property management, including tenant screening, lease agreements, maintenance, and customer service. Ben says to Brandon, “as far as I understand, Ontario has a massive backlog of disputes in front of the Landlord and Tenant Board, and bad tenants have been a big problem for rental property owners over the last decade. I know you’re a long way away from welcoming your first tenants, but how are you thinking about mitigating the problems associated with bad tenants and properly screening applicants?” Tune in at 1:18:16 for Brandon’s response.

  1. Sustainability

CHAT GPT’s last point of the 10 most important things someone should know before becoming a residential apartment developer is sustainability: incorporate sustainable practices and energy-efficient features to appeal to environmentally conscious tenants and reduce long-term operating costs. Ben turns to Alan saying “correct me if I’m wrong, but when I hear “Private equity approach”, I think shorter term timeline. Is the plan to be a merchant developer, or will you be holding assets long term, and thus more interested in reducing the long-term operating cost of a development project?” Tune in at 1:21:45 for Alan’s insights.

Before the group move on to the rapid fire, Ben asks the guys if they want to discuss any challenges they are working through right now. Tune in at 1:25:18 to hear their responses and the guys discuss the CMHC rental announcement.

Lastly, in the rapid fire question and answer, the guys answer questions like, a loudmouth out of touch mortgage broker with a two star Yelp rating says that small condo units under 400 sf are an abomination. Do you agree?, If you were giving advice to a future developer, would you recommend working at a top 10 developer doing many projects, or a small developer that’s working on only a couple projects?, Ten years from now, which neighbourhood do you think will have higher resale condo prices, Weston or the Golden Mile?, If the City is already collecting obscene development charges, why do they also need to collect Section 37 community benefit charges?, When hiring your first employees, will you look for people with a lot of real estate experience, or just try to find smart and ambitious young people? What worries you more right now in terms of new development, low revenues or high costs? And which property would make the best Airbnb rental – the Fresh Prince’s Bel-Air mansion or Joey & Chandler’s apartment from Friends?

Tune in now to episode 68 of the Toronto Under Construction podcast.

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