Episode Transcript
Intro: Welcome to Design Makes Everything Better: a podcast about design as a process for making decisions and succeeding. Today, on episode number one, Vince interviews David Wex of Urban Capital Property Group. They discuss: architecture as product, business and development, condo design, and insights from real estate development projects. Now, here’s your host: Vince.
——————
[0:45]
Vince: Thank you very much, David, for joining us on the podcast today.
David Wex: A pleasure.
Vince: So, Urban Capital as a developer has always caught the attention of architects, and I would probably be safe to assume that most people in the design industry have noticed the work that Urban Capital has done, just because of the buildings themselves being beautiful. But it also represents, in many of them, a particular way of looking at city building and city living for the future.
There’s a great deal of writing, even on your website, that talks about future belief systems in living in the city and what cities of the future could look like. So Urban Capital presents itself as a leading developer in Canada. How would you describe Urban Capital, or do you feel some of those assumptions that I have as an architect fit within what you would see as Urban Capital?
David Wex: I really like what you said. So, thank you for that, and yeah, I’m pretty good with what you’ve said so far.
Vince: Okay.
David Wex: I think we’re off to a good start.
Vince: Right.
David Wex: I think, for sure, it’s a differentiating factor for us. We’ve been around since the late ‘90s, so there was a lot of differentiation you could do back in that day, and to a certain extent, maybe, design in Canada and North America has caught up a certain bit – not fully caught up, but a little bit to other design-centric markets or societies.
But 100%, I think design is a calling card for us, and I always prided myself and my partner as well on the fact that the design forms a big part of our offering. That could be interior design or architecture. Both, obviously, they work together, and they need to – and landscape, obviously important elements. All elements of design are the first factor of our help. That and also, I would say branding and marketing all work together.
Vince: Yeah. Would you say that was a business decision from the get-go, or is that something that slowly evolved out of personal interest, that taste in design that it just naturally occurred? Or is it that you saw a business proposition of which the work that you do would be more desirable from a customer offering point of view just because it’s designed beautifully?
David Wex: I think, for me, it was more personal. I really do. I’ve always had an interest in architecture. I’ve always had an interest in graphic design. So, I think if I said that it was from a business perspective, I would be almost post – I’m not sure how to say that, but an ex-post justification. It’s really what I wanted to do.
Vince: So, if you were interested in architecture, what led you into being a developer versus, say, being in the world of design, specifically and as a consultant?
[3:50]
David Wex: Well, I would say that many of my friends and people would know me that I’m more of a want-to-be architect than anything. I just didn’t end up going to architecture school, which may or may not have been a good decision at the time. But architecture has forever interested me, and city building, cities, and all that stuff. So it is a bit of a personal journey, and certainly, I think, we design, or I design or develop buildings that are for an individual market, and that’s pretty important when I say that. They’re very design-forward.
So, what’s design-forward in the Toronto market or Vancouver, which we’re not active in, or let’s say, Montreal, which may be a little different than other cities, smaller cities, certainly when we got there. A building like we finished in Halifax recently, Gorsebrook Park, which I love.
Vince: Yeah. It’s beautiful. It’s very beautiful.
David Wex: Thank you – might not be so design-forward in Toronto. I have buildings that have been done that are similar. It’s certainly elegant; it would take note, but it wouldn’t be out there. In the Halifax market, I do think it’s something that is noteworthy and also raises the bar that others hopefully will look to, to match or to exceed and thereby bringing up the overall design of new buildings or at least private-sector buildings in Halifax.
The building we’re working on together, I think, also, on a smaller scale, will hopefully, although you’ve done some great buildings in that market, and so I am not saying that it’s totally breaking new ground. But, in a way, I think our business plan and my own personal endeavor is to try to make a statement architecturally and design-wise with the product we put on the market.
Vince: You know, you’re saying that you’re an architecture want-to-be or what. In my experience just working with you, I was really surprised, but also, I learned a lot just in terms of your personal design direction to a lot of the work that we ended up doing together. Quite frankly, I have no reservations in saying this, but the building that we worked on specifically, and I suspect that it’s a lot similar to maybe some of the other projects that you’ve done, is so much you, not really Breakhouse.
There’s a partnership there, absolutely, but as an architecture want-to-be, I would say that you are so much more a designer than I would say most architects, even. Your design point of view is very strong. Do you always approach your projects with that independent rigor to your relationships with other designers?
[6:45]
David Wex: It depends. It really depends. As you know, we did River City with Saucier et Perrotte. I would not tell Saucier what – he would not care. But he’d be pleasant about it somewhat. But, no. He’s not going to take any input just from me.
Vince: How is that process for you? Do you enjoy that, kind of stepping away from it a little bit?
David Wex: I just want to go back to the other point. We, Halifax architects, or architects in other cities — First of all, we have a product. One of the things that I think is interesting to note about us is, I have a product, as you know. We have a spec sheet; we have spec document. We have a certain product, and we put that product into every one of our buildings regardless of the market, and if you don’t like it, you don’t buy it.
For example, we built a building in Saskatoon. It looks exactly like the inside of the building at Halifax or Toronto or Montreal, and even River City. If you didn’t look outside, you wouldn’t know which one you’re in. It did super well. Its location was prime for that city. It hit at the right time. We sold it out. We did very well on that project.
People in Saskatoon, who are by and large conservative, and these were the investment bankers, lawyers, politicians of that city, are living in a glass condo with concrete ceilings and exposed ductwork. This was not what they were expecting, although it’s what we sold. I guess what I am saying is, our product is our product, and we repeat that product. It’s a product. I don’t necessarily adjust my offering to different markets.
Sometimes, you can call it branded development versus opportunistic development. That design is what we sell. Now, we do make some concessions here and there to different things. But, to a certain extent, we come into market, and so there’s a little bit of explaining to do to our designers. It’s like, “Hey, this is our product. This is the spec direction you take. This is how we do things.”
A lot of architects, I will say who we work with initially, like you guys, are like, “Ah, this is going to be great. This is a developer who is sophisticated and does good stuff. We can try some crazy ideas. A lot of times, it would be like, “Yeah. We’ve tried that crazy idea. It doesn’t work, and thank you.” We really have given it a good shot.
So there is a little bit of like our team – we know our product. As you know, sometimes we say to you guys, “Guys, we’re going to sketch up these units. We know what you want and no ill will or disrespect intended, but we’re just going to end up there anyway.” So I don’t think you will deny the fact that at some point, you’re like, “Okay, they’ve waxed enough. We can’t afford to keep doing these charrettes on design for your building. Yeah, just tell us what you want.”
Vince: I have no idea what you’re talking about. [Laughter]
[9:45]
David Wex: Yeah. Exactly. So, I’m aware of that, and we have the capability to get there.
Vince: Yeah.
David Wex: I’ll be honest. With River City, that building was designed from the outside in completely. The inside layouts were meant to bend to the outside form that Gilles Saucier had in his head. Yes, he takes, as a client, what I’m interested in, but it has to fit into his design idea and direction. While there is some compromise, there’s not a lot. I don’t sit in a meeting and tell Saucier and Perrotte, for example, this is how the building needs to look because it’s not going to…
Vince: Right.
David Wex: There are some details in that building that, over time, we’re like, “We’re not doing that detail again. You need to arrange that things are – a little flexible.”
Vince: Yeah. I would say in the context of what you do is develop a product. It became pretty clear to our office early on in the sense that as designers that work with a variety of different clients from a variety of different fields, they are looking for, oftentimes, something that is very uniquely specific to their business, and even in the development context, like each of the units are very different from one building to the next. But you presented something which was very clearly something that has been tested and proven, which presented itself as a product, which is no different than any other industrial design endeavor in many ways.
From an architectural standpoint, it’s different to look at it that way because when we go to school, it’s always very much about uniquely designed places that are contextually sensitive that are – and I’m not saying that yours aren’t because they’re very much connected to the landscape. But there’s always this conversation about the social responsibility on the streets, and what is it bringing back to the community, and so on.
What I would say is defined as architecture. When I saw Urban Capital, I saw it more as that more so than a product. But it’s not to say that one is better than the other by any stretch because the work that you’re doing in that product realm is significant and it’s beautiful. But it wasn’t what I thought it would be with regards to that architecture component.
How do you see the difference between what you do in the realm of this product development, which is strong and clear in its brand, and its language, and its identity, versus say other developers or other developments, which would be more unique from location to location?
David Wex: I think there are a few things. One is that because I’m interested in architecture, therefore, you get the benefit and the negative of the fact that your client has some strong view about it. We are trying to build a consistent brand. One thing I noticed, for example, you see it a lot in large developers in Toronto, which we’re, I would say, a mid-sized Toronto developer.
[12:54]
The more traditional ones, you would have two arms: the high-rise and the low-rise, or housing, townhouses. On the same website, you’d have glass towers for the high-rises and faux Victorian or faux Georgian townhouses and homes in the low-rise. That, to me, is a muddled brand of an opportunistic developer. They’re trying to meet the market as the market knows itself and is comfortable not trying to bring the market anywhere.
In our case, yeah, I think every building is, obviously, unique. We have never taken a building and put it somewhere else, so it responds to its condition of site and strength and constraint, and the designed ethos of the firm. But it is part of a consistent product. We did architecture as product of something, actually.
I don’t know if you remember or you saw this. It’s on our website. A number of years ago, for the Interior Design Show in Toronto, we did the centerpiece exhibition, which was your entire condo in a box. It’s called Cubitat.
Vince: I didn’t see that, actually.
David Wex: It’s on our website. It’s super, super cool. It went viral around the world. The Smithsonian contacted us to get it. It was basic, like architecture as industrial product. You buy a box and just plug it into your space, whether that space is an outdoor platform in the country. Anyway, it didn’t work. Everyone was like, “How are you going to do this?” We’re like, “Are you kidding me? This thing costs more – we’d have to get a flatbed truck and transport it in the middle, like at 4:00 in the morning down Valley Parkway. It was like, “It doesn’t work.”
But it was the idea of architecture as product, and the whole world also was prefab, the whole thing that never really happened. But to a certain extent on the continuum of everything is designed from scratch, this spoke to this is an industrial product. I tend to think of what we do as more towards the product range. That allows us to develop in multiple markets; it allows us to develop a 72-unit building in Halifax, which is way too small for what we do without a huge amount of management time because we have a team, and the team knows, and everyone knows the details.
Vince: Yeah. You have the known conditions that you don’t have to worry about every single time you buy a product.
David Wex: We try to box those in.
Vince: Right. So in the context of roles and responsibilities that a developer would have, where is it outside of what you provide for your customers or the people that are buying the condos. As a developer, would you also consider yourself, to the point of view, I guess, to those that are buying it? Are you a guaranteed investment in your product, or are you a community builder in your products? Are you a homebuilder in the realm of a product? How would you slice up what you do as a developer?
[15:50]
David Wex: I think we’re a homebuilder. We build homes. That’s the product. The homes come with a certain expectation in markets that we are active in. We have a reputation. In real estate development, there’s not a lot of branding. In Toronto, there are some good brands. Tridel has a great brand. Tridel’s brand is a bit like Toyota. It’s a solid, trustworthy, not necessarily going to breakout in any kind of design aesthetic. It’s not going to be a leading edge in that, but you’re going to have great quality, great service. That would be their market. Then, on the other end, you would have a bespoke developer that doesn’t deliver or whatever.
I think we’ve got a good brand in the sense that you’re going to get good design from us, and we’re a real line large developer that will stand behind their product. By and large, that’s, I tend to hope, our reputation is. In a market like Halifax, where we’re now embarking upon our third building, we have a list of people before we open who have bought from us before, who have heard of or seen our products and are like, “Yeah, we want to get in them.” We have over 1,000 people who are on a list who look at North when we opened this weekend. It’s only a 72-unit building. We feel good about that.
Vince: What is your relationship like with your older projects? I’m curious about how in a span of a career and the future career that you have ahead with the new developments, do you still have some kind of a relationship in some way – I don’t know how else to describe it – with the projects that you’ve done before? Do they mean anything to you, or are they just put a photograph up, and maybe you drive by it every now and again? Or for the cities that you don’t go to, is there a photo of that development up on your wall in your office, and that’s the extent of it?
David Wex: Some of them, I can’t look at anymore, honestly. I can’t. Some of them are done 20 years ago are a little embarrassing now because I went through this saying, “No, it’s a bit like — some of them I can’t look at, honestly, Vince. Then other ones – River City. Take that, for example. We — year fifteen. I can’t look at it anymore. I see the flaws. It has won tons of awards and got so much video. I probably will look at Gorge Brook, which I haven’t seen because of the Atlantic bubble. It’s finished and occupied, and I haven’t seen it in almost a year, and from photos, I’m like, “Ooh.” So, it’s tough. It’s like any old relationship.
Vince: Yeah, and it’s just so personal to you. There’s a contractor in Halifax that has a tattoo of a diagram for each of the houses that he built.
David Wex: Hopefully he doesn’t have too many houses.
Vince: Hopefully, he doesn’t get too busy. Right? Because it would get pretty ugly.
David Wex: Yeah. Right. Keep in mind, we’re condo developers, so it is like a product. We do sell it, and then we warrant it. After the warranty is done – buildings that we finished 10 or 15 years ago are just buildings. I live in one in Montreal. We have a condo there, and it’s awesome. It was finished in 2006, and no one really knows who I am, which is great. When we changed the colour scheme in the entire common element. Was I happy? No, but that was a personal choice I made 15 years ago, and now they’ve changed it, and it’s okay. I’m okay with it.
[19:37]
Vince: What do you see in the future for Urban Capital? Are you seeing a continuation of this similar condo-type development, or would you look to grow in a larger scale, do more River Cities, for example, or even larger? Or do you want to go into a smaller realm? What do you see for yourself and for the company?
David Wex: First, Urban Capital has two guys. It’s Mark Reeve and me. The genius of our relationship is we each do our own projects. Interestingly, we don’t collaborate because we would not have lasted 20 years had we done that. We have a number of big projects that usually have a moniker city in them. So, N City, River City, Cité Midtown, and Montreal, which is 1,000 units.
I like doing those projects because you can really create a community and an experience. The North Project, obviously, doesn’t fall into that category. It’s very much a boutique contextual building reflective of its particular location. Yeah, I love the idea of doing large-scale projects. Both truly excite me.
We might have one that’s percolating maybe in Halifax that might actually be that, which is very interesting for me. By and large, I would love to do more of those. Are we going to morph into a hotel chain or an electric vehicle company? No. We’re going to be condo developers. That’s what we do.
Vince: No apartments.
David Wex: No. I don’t think so.
Vince: How do you feel in terms of what you’ve experienced in – I’ve actually never met Mark, so I can only imagine with yourself that over the years as the projects have grown, and you’ve been up against all kinds of challenges with the city and with residents and so on, do you find that it’s what you thought it would be, or has it changed over the years, the role of a developer and will it continue to change in a particular direction?
David Wex: I started this in the late ‘90s, and it was a bit of a lark. I guess, in some ways, I would never have thought that we would end up doing it because I didn’t grow up in a family that did real estate development, or anything like that, or had the kind of money that needs a shepherd to do that. You don’t really need a lot of money; you need a good, charming personality and some people who know people who know people who might put some money in or something like that. That’s how it works.
We also rode a big wave from the late ‘90s, early 2000s to now, to be in real estate development, urban real estate development in Canada. Wow! That was a great 20-year whole trajectory. Mark and I have really ridden a wave, and it’s been great. I think that going forward, I think we just want to continue doing that. I think I’ve changed. I think the biggest thing is the financial aspect of it.
[22:00]
Vince: In which way?
David Wex: It’s negative. People don’t realize. We do a magazine every year. Our magazine just came out. It’s going to be on our website soon. We did a comparison of a project financially we did in 2003 versus now. Margins of doing a project in 2003 or 2000s, you had to be around making 15-20% – your profit would be 15-20% of your cost to cover the risk. That’s what the numbers usually look like.
Now, if you get 7% or 8%, it’s a success. The amount of cost, and, by and large, what you will discover – not in Halifax, yet. I hope no counsellor or staff are listening to this, but the amount of development charges that you see in places like Toronto and Montreal, and even Ottawa that apply to a project, when we started in 2003, the city charges that you might have on a condo might be $10,000 or $12,000. Now, they’re like a hundred and something.
The various charges from development charges, the Section 37 charges to this fee to that fee, are in the hundreds of thousands. People say, “Wow!” We were selling condos for 400 bucks a square foot. Now, they’re $900. The reality is that the vast majority of the increased cost relate to city charges.
It’s like the city has taken the economic rent that has grown from increased prices, and they’re drunk on it. It’s been a great source of revenues, and no one has to raise property taxes and stuff like that. Probably the biggest changes are things like city costs and also using development to try to obtain many social goods from affordable housing to environmental to all kinds of public goods. All that does, to a certain extent, is raise the price of the units that you have to charge on the market.
When we came to Halifax a number of years ago, we were selling condos at 250 bucks a foot. Now, it’s $650. Even at $650, we will do not nearly as well as we would have done back in the day at $250 when the cost structure was really different. I think the big change is that people are doing development in many ways to keep their businesses running. As I always say, no one cries for developers. This is not a sob story. That’s probably one of the biggest things, I would say, has changed in the last 20 years.
The other thing, of course, we don’t know is, what is the impact, if any, long-term what’s going on now with the pandemic? I think that has effects on obviously, the entertainment, restaurant, hotel, downtown office markets, and it really has an impact on residential condominium markets. That’s to be determined.
Vince: Yeah. That’s a small tolerance for error there, for 7-8%, if anything.
David Wex: Yeah. What if we don’t make it?
[25:00]
Vince: The proportion of risk to reward is really kind of swaying in the favour of fewer developers taking that risk. You’re saying, like in the beginning, your point on this, that a lot of the initial projects that, say, a developer would take on didn’t really require a lot. But now, you’re saying it actually does require a fair bit of risk tolerance, more so than say what it used to be. Or would you say that that’s still kind of the same?
David Wex: Yeah. I think it is. It also means that there’s less opportunity to experiment. Architecturally, you’re going to be going with known – this return thing is out of whack. But there’s a lot of money in the market flowing into development. People think it’s easy to be a developer. When we bid on sites, we often don’t get them because someone who doesn’t have experience or knowledge or has been through it thinks, “Yeah. I’ll pay that for that piece of property.” Then, boom. It doesn’t work out.
I’m not griping; I’m just saying the biggest challenge right now in development – there are always challenges. When I started out, someone told me it’s like pushing a big boulder up a hill, always. I think that the challenges now are financial because there are so many costs. To give you an example, Montreal, right now, has a 20/20/20 rule: 20% social housing, 20% affordable housing, and 20% for families.
So, that basically means that 60% of your offering needs to be non-market. How are you supposed to price the remaining 40% to pay for all those social goods that the city wants?
Vince: Wow.
David Wex: No one is against social housing, or affordable housing, or against – like no one. How do you argue against that? The fact is that the people in the basic market, the market part of the market, that don’t get the benefits of this have to pay for all this. It’s very, very tough. Those are the kinds of challenges I think we faced in the big picture over the last 10-20 years.
Vince: Would you say that’s one of or the biggest misunderstandings of the role of a developer, the challenges of a developer would be? Or how else would you say that the perception that everybody has of developers is that it’s easy, and there’s loads of money, and there’s no risk?
David Wex: Yeah. Exactly. Yeah, I think that’s a big problem, for sure. In Ontario, the Builders Association did a radio campaign a year or two ago to educate the public on that. I think that’s necessary. Look. I’m not into griping, and, as I said now countless times, even though I am griping, that is probably the hardest thing. The economics have really taken a hit – the aim by municipalities to fold social good into development and the process of going through it. You know, we’re about to get on a call with the city about approvals on our project, you and I, and we know the challenges we face there.
[28:43]
I have a rule. I feel that everyone needs to be 80% happy, and if someone is 100% happy, some constituent, because development has a lot of constituents. It’s got your purchasers, your investors and partners, banks, city staff, and your consultants who work hard and want to see their vision generally brought to life without massive destruction. All of them need to be 80% happy. If one of them is 100% happy, then, for sure, someone is going to be 20% happy.
We just try to make the best of it, and it’s a constant push-and-pull. That’s just what it is, like any kind of business or development. Within the constraints that you face, you want to build something good. If you can believe that and get most of your purchasers happy and everyone involved, and they still want to work with you.
Vince: Eighty percent is actually pretty high. It would be a good life marker if you can live 80% of your day as happy.
David Wex: I was on a call with the City of Ottawa staff, and we have a project that’s stuck in approvals. It’s a building that I think looks amazing in the Heritage District, and the city wants us, of course, to step the building back on the fourth floor. It’s a nine-story building, and it just looks ridiculous.
We had a finally come-to-Jesus meeting last Thursday, and I was on it. The Heritage staff said, “We’re 90% happy with your building. We just want you to do this.” I’m like, “Guys if you’re 90% happy with my building, approve it.” That’s 10% more than what I’m usually used to. So, if I do what you’re asking me, the architect is going to be zero percent happy with the building. It looks totally ridiculous.
Vince: We have to probably wrap this up because we have that other phone call to jump onto to make everybody 80% happy there. So, we want to do this fun series of little rapid-fire questions so that we can get a little bit more of a personal read on you and what you think, in general. So, bear with us. It will be fun. What book do you most often gift?
David Wex: Damn Good Advice by George Lois.
Vince: I don’t know it.
David Wex: You should know it. He’s like the ultimate Mad Man. George Lois was the famous advertising exec. creative.
Vince: I can’t wait for the gift. [Laughter] Okay. Most comfortable in a suit, tee-shirt, or barefoot.
David Wex: Tee-shirt and barefoot. I’m definitely not comfortable in a suit.
Vince: Your favourite car?
David Wex: My favourite car is my little 72 BMW 2002.
[30:47]
Vince: It’s beautiful. I think I saw that one on your website. Right?
David Wex: Yeah.
Vince: The ‘70s. Did they have the air shocks?
David Wex: Yeah. They had that all the time, but the one in the ‘70s put the company out of business. I think it was the XM.
Vince: Perfect business sense. So, people come over for a visit. Do you cook or order in?
David Wex: If it’s me, I order in, for sure, 100%, unfortunately.
Vince: You don’t enjoy cooking? You strike me as a cook.
David Wex: I don’t. I enjoy being a sous-chef.
Vince: Peel the carrots or something. A favourite piece of industrial design?
David Wex: These are good questions. My favourite one is the stereo by – I’m losing my mind, but Clairtone, the Canadian.
Vince: They are hard to come across, but man, if you can find one, they’re just gorgeous. What thing did you not know about, and once you got it, you could never live without?
David Wex: I’m not on social media for the very reason that it would be one of those things that would eat my life up, so I’m totally not on social media in the last years, would be one of those things that – or like Netflix would have been. When I started Netflix, “Oh, my gosh, this eats up my entire life.” I can’t think of anything else right now.
Vince: What’s one skill you have or a hobby that you do that would surprise people or that you might not even tell people about until today.
David Wex: I don’t know. I guess I like to go out clubbing with my friends. That’s probably something that is probably age-odd.
Vince: It’s the best. It’s the best thing. I love it.
David Wex: That’s the only thing in the pandemic – the only thing in the pandemic that’s bumming me out, other than the fact of the economic down.
Vince: All right. Last question. Favourite city?
David Wex: My favourite city is Montreal. It’s just my favourite city in the world, and I’ve travelled a lot. I just love it because I think it’s cool, and the vibe there, and I love working there. I’ll tell you, the cities I really love are the worlds’ tier-two cities like Lisbon or – I went to Melbourne. Cities aren’t like top there like high in the top there, but the cool, understated cities that are just happy in their own.
Vince: Yeah. Lisbon is amazing. Have you ever been to Porto?
David Wex: Yeah.
Vince: Oh. It blows my mind. I love that place. David, thank you so much for your time. It was nice to talk to you in this platform versus just window details and stuff. It was a pleasure, and we’ll talk to you in a few minutes, I guess. Bye. Bye.
Outro:
Thanks for listening to the Design Makes Everything Better podcast by Breakhouse, a Canadian strategic design firm. This was episode one with David Wex of Urban Capital Property Group. A full transcript and show notes can be found at Breakhouse.ca/podcast/1.
Have feedback or ideas for the show? Drop us a line at podcast@breakhouse.ca.
[End of audio 34:08]
