Vollständiges Transkript von VCREP #187 | Developer's Bailout or Bank Bailout? with Rod MacKay

believe it was 2,200 condoms. 02:02.571 --> 02:03.171 [SPEAKER_02]: I could be wrong. 02:03.492 --> 02:07.515 [SPEAKER_01]: Yeah, it was 2200 so it was EBN and Carney so it's a BC. 02:08.055 --> 02:19.621 [SPEAKER_01]: and federal government partnership, that's announced this, and it was part of a larger infrastructure model that they're proposing, and I think when they announced it, they said $3.2 billion. 02:19.661 --> 02:26.705 [SPEAKER_01]: So everyone was thinking that, we're going to spend $3.2 billion on these $2,200 vacant condos, which isn't the case. 02:26.745 --> 02:29.066 [SPEAKER_01]: I think it's the actual amounts a lot less than that. 02:29.106 --> 02:36.270 [SPEAKER_01]: It's probably about 300 million of capital, and then the rest of the party says it's going to be through creative financing options. 02:37.030 --> 02:38.911 [SPEAKER_01]: Yes, it's 2,200-baking condos. 02:39.211 --> 02:41.392 [SPEAKER_01]: Like you said, there's a lot of unknown. 02:41.452 --> 02:50.136 [SPEAKER_01]: So a lot of what we're going to be talking about today is speculation because, yeah, we don't know what the government's finding on paying for these condos, which developers will qualify. 02:50.776 --> 02:52.677 [SPEAKER_01]: Are they distressed or just unsolved? 02:53.097 --> 02:54.497 [SPEAKER_01]: Are the lenders being paid and refilled? 02:54.517 --> 02:57.559 [SPEAKER_01]: There's a whole bunch of questions that we're still waiting to find out. 02:58.740 --> 03:00.582 [SPEAKER_02]: Well, that's maybe dive into a little bit. 03:00.602 --> 03:06.486 [SPEAKER_02]: So I would think, it's been probably, the public has not been very warm to this idea. 03:06.587 --> 03:08.628 [SPEAKER_02]: And I think there's two reasons why. 03:08.648 --> 03:22.320 [SPEAKER_02]: I think one, people view this as a bailout for the developers who have taken on any enormous amount of risk to build these condos through where we had exceptional immigration growth and population growth, which felt like it came to almost a halt. 03:22.980 --> 03:25.662 [SPEAKER_02]: And there's so much condos in the pipeline, that, 03:26.583 --> 03:48.672 [SPEAKER_02]: the public probably looks at this is maybe a developer's bailout because of that, but he couldn't even go one step further and say that maybe it's on a developer bailout at all, maybe it's a bank bailout because you have to remember two, five scheduled one banks under the charter, all our government regulated and there's probably a lot of debt sitting on the books 03:53.314 --> 03:54.375 [SPEAKER_02]: who are waiting to get paid. 03:54.615 --> 04:05.200 [SPEAKER_02]: So could we go one step further and say, if this was even a bailout, that it's not a developer bailout by any stretch, but more of a bank bailout for the debt they're holding on some of these projects? 04:05.540 --> 04:08.442 [SPEAKER_01]: Well certainly, I think, you know, it's called a bailout for small. 04:08.822 --> 04:23.670 [SPEAKER_01]: You know, if it was sold at market pricing or even just below market pricing and then the developers are still taking a profit then certainly yes it would be a bill out but I think this was announced on June 18th and obviously there was a ton of public backlash. 04:24.330 --> 04:33.239 [SPEAKER_01]: As you mentioned, and they came out a week later on the 25th and basically said this isn't a bailout We're not paying close to market for these units. 04:33.319 --> 04:34.520 [SPEAKER_01]: It's going to be a bulk buy. 04:34.840 --> 04:48.913 [SPEAKER_01]: They obviously still didn't come out with any specifics But they really tried to make it seem to the public like they weren't bailing out the developers But obviously this remains to be seen and then as far as the whole bank angle whether it's a bank bailout I suppose 04:49.534 --> 05:04.761 [SPEAKER_01]: Yeah, probably because they're the ones that are likely going to get paid out first, the sale proceeds will usually go to first repay any construction debt, which obviously they're hanging on to a lot of currently, I mean, there's to think what 4500 on sold pre-sale units currently. 05:04.781 --> 05:07.922 [SPEAKER_01]: Yeah, about that depending on what before you read it sounds like it. 05:08.302 --> 05:13.324 [SPEAKER_01]: So if the government buys the units the developer gets the liquidity, but the lender may be the one getting protected. 05:13.404 --> 05:16.946 [SPEAKER_01]: So again, lots of unknowns, but I guess time will tell there. 05:17.503 --> 05:18.784 [SPEAKER_02]: Now, let's just say here. 05:18.824 --> 05:20.564 [SPEAKER_02]: So, and let's maybe unpack this little bit. 05:20.584 --> 05:27.927 [SPEAKER_02]: I think developers get painted with a very unfortunate brush as big bad developers making billions of dollars for unaffordable housing. 05:28.388 --> 05:39.992 [SPEAKER_02]: I think when you actually start peeling back the onion of all of the costs that go into developing property from CACs to DCCs to OJCA or ACACs. 05:40.033 --> 05:45.255 [SPEAKER_02]: Now, they talked about all of these costs on top of fluctuating interest rates, 05:46.015 --> 06:12.194 [SPEAKER_02]: construction costs that feel like they've been rising consistently land prices for the most part up until maybe this year or last year that's been continuing to rise and so many things like that that go into actually getting these projects built that contribute to the unaffordability of the projects if we want to call it that and developers are building at a fast pace when we're having nothing but immigration coming through the province is growing rapidly and it feels like a lot that 06:15.936 --> 06:32.736 [SPEAKER_02]: How do the developers view this or how does development community view this considering it kind of feels like, you know, the government left them hanging a little bit when they're kind of built as fast as they can on top of all these large government fees that go into building condoms? 06:33.275 --> 06:34.316

[SPEAKER_01]: Yeah, well I would agree with you. 06:34.336 --> 06:44.163 [SPEAKER_01]: I think largely a lot of the public sees the developers is only making copious amounts of profits, but they don't necessarily see the the risk that goes into it. 06:44.203 --> 06:52.369 [SPEAKER_01]: There's a large amount of risk and yeah, there was a large amount of risk that was taken and now it hasn't paid off and they're held with the bag and they're trying to figure out what to do with it. 06:52.429 --> 06:57.132 [SPEAKER_01]: Now, as you mentioned, immigration was it was skyrocketing. 06:57.172 --> 06:58.193 [SPEAKER_01]: I think one year we had. 06:58.653 --> 07:03.839 [SPEAKER_01]: 1.4 million newcomers the country, which obviously was extremely unsustainable. 07:04.320 --> 07:09.306 [SPEAKER_01]: But so at the same time, the developers were told we need to build build build because we need more housing. 07:09.926 --> 07:13.410 [SPEAKER_01]: And then the tiny government comes in and completely turns that top off. 07:13.430 --> 07:15.192 [SPEAKER_01]: I'm not saying that's right or wrong. 07:15.993 --> 07:22.714 [SPEAKER_01]: When you're told to build build build, but then there's nobody to fill these homes that you built, it makes it obviously a pretty challenging situation. 07:23.155 --> 07:38.718 [SPEAKER_01]: Obviously part of their risk assessment as developers is, yes, policy and governments can change, but at the same time, I think, yeah, the government probably needs to be held at least a little bit of accountable for for me what they're trying to make it seem like it was going to be, and then what ended up being, 07:39.432 --> 07:46.019 [SPEAKER_02]: Now, do you think, and again, we haven't heard how this is going to play out, we're just obviously speculating a lot of things. 07:46.459 --> 07:56.249 [SPEAKER_02]: Do you think a lot of pressure from the schedule one banks would apply to Carnegie's government with regards to dead on the books that kind of may be pushed. 07:57.360 --> 07:58.261 [SPEAKER_02]: this decision along. 07:58.641 --> 08:04.587 [SPEAKER_01]: Well, certainly, and that's why if you look at the whole bank bailout angle, it's like, okay, well, who's holding all this debt, right? 08:04.647 --> 08:06.049 [SPEAKER_01]: It's not just who's the developers. 08:06.129 --> 08:14.617 [SPEAKER_01]: I think the developers are going to headline here, but realistically, I mean, yeah, who are the guys that are holding all this debt and who stands to benefit? 08:14.697 --> 08:21.184 [SPEAKER_01]: Because once we find that out, it might mean to bit more of a clear picture about exactly what's happening here. 08:21.524 --> 08:26.786 [SPEAKER_02]: Now, can we maybe provide a little bit of insight, just maybe to where like the development community sits right now? 08:27.447 --> 08:32.709 [SPEAKER_02]: We've seen land prices come off quite a bit over the past year, year and a half now. 08:32.829 --> 08:37.451 [SPEAKER_02]: It feels like, yes, it's 2021 pricing is officially off the books now. 08:37.591 --> 08:41.533 [SPEAKER_02]: And it feels like people who are sitting on land are just trying to dispose of it for what it's worth. 08:42.033 --> 08:49.997 [SPEAKER_02]: There's probably a lot of developers that probably have a fair amount of land on the books that may not need to really absorb any of that land that's getting sold. 08:51.117 --> 08:54.638 [SPEAKER_02]: On top of that, they have projects probably in the pipeline that might have been halted. 08:55.119 --> 09:04.162 [SPEAKER_02]: From the development community, is this a welcomed scenario, potentially to have the fence come in and buy these unsolved units, probably arguably not at a profit? 09:04.882 --> 09:09.724 [SPEAKER_01]: Well, I would imagine so to a certain degree, but I guess it really depends on who stands to benefit. 09:09.764 --> 09:16.607 [SPEAKER_01]: I mean, there's obviously a lot of people that are gonna be left out of this deal, so I'm not sure how I would make them feel as a whole. 09:17.887 --> 09:27.010 [SPEAKER_01]: anecdotally speaking, I've got a couple of land sites currently and we've reached out to, you know, hundreds of dull pairs over the course of the past couple of months. 09:27.351 --> 09:31.612 [SPEAKER_01]: And yeah, the conversations that we're having is that it's it's pretty grim out there. 09:32.152 --> 09:34.493 [SPEAKER_01]: You know, a lot of people aren't looking to acquire at all. 09:34.653 --> 09:39.235 [SPEAKER_01]: They're more or less looking to survive, like you said with their existing product. 09:39.855 --> 09:49.484 [SPEAKER_01]: and if they are looking to continue to fill their pipelines so that they can continue to employ their staff, they're being extremely tight with their underwriting. 09:49.544 --> 10:01.915 [SPEAKER_01]: So it's quite challenging to move sites out there and I think it's not much of a market selling to definitely for condos, but that's even trickling down into town homes and single family homes as well. 10:02.390 --> 10:13.752 [SPEAKER_02]: Now, do you think from a federal government standpoint, obviously, the immigration we felt like record setting literally felt like it came to a halt and numbers were peeled back dramatically? 10:13.772 --> 10:15.792 [SPEAKER_02]: We had unemployment rates in Canada going up. 10:16.332 --> 10:29.995 [SPEAKER_02]: Employers were thrust with new rules on hiring foreigners and the cost of higher foreigners, all of this stuff in an effort to mitigate probably immigration and probably go back and employ greater Canadians to help with the unemployment rates? 10:32.215 --> 10:33.516 [SPEAKER_02]: brought this forward kind. 10:33.576 --> 10:45.222 [SPEAKER_02]: I don't want to say a meeting guilt, but kind of certain realizing they might have created a little bit of this problem, whether just yelling at the development community build build build build build build and then out of nowhere foreign buyers are gone for

industrial students are gone. 10:45.542 --> 10:47.123 [SPEAKER_02]: Immigration feels like it's halted. 10:47.464 --> 10:48.004 [SPEAKER_02]: What are your thoughts? 10:48.364 --> 10:51.246 [SPEAKER_01]: Well, I think that they're always looking for housing affordability. 10:51.306 --> 10:54.947 [SPEAKER_01]: So there are definitely some cases for what they're trying to do here. 10:54.967 --> 10:56.868 [SPEAKER_01]: I think this strongest argument is speed. 10:56.948 --> 11:02.111 [SPEAKER_01]: So if they were trying to build affordable housing units, it would take a lot longer. 11:02.151 --> 11:07.854 [SPEAKER_01]: And what I think what EV said was that it is still being, they'll buy it at below replacement costs. 11:07.874 --> 11:12.236 [SPEAKER_01]: So these are units that are already built or very close to being built. 11:12.276 --> 11:15.558 [SPEAKER_01]: So they can be delivered immediately or in the very near future. 11:16.138 --> 11:21.602 [SPEAKER_01]: for below replacement costs and then you don't have to wait three, four years for the project to be completed. 11:21.702 --> 11:27.106 [SPEAKER_01]: So there are some arguments for it, I guess it just really depends on the metrics of it. 11:27.146 --> 11:31.530 [SPEAKER_01]: It's really hard to look at a deal without actually knowing the numbers. 11:32.410 --> 11:47.801 [SPEAKER_01]: But yeah, I mean, I think, you know, some of the government's standpoint, they are looking to provide affordable housing and, you know, whether or not that's the way it will pan out or if it is to help out the developers in the banks, I guess we'll have to wait and see what's next. 11:47.861 --> 11:48.522 [SPEAKER_02]: So let's say. 11:49.162 --> 11:51.043 [SPEAKER_02]: this is what this isn't well received. 11:51.503 --> 11:57.707 [SPEAKER_02]: Is there any way that the government pivots on this, especially at the provincial level, because I'm very DVD, but he was taking a lot of heat at the conference. 11:58.247 --> 12:02.409 [SPEAKER_02]: And I can't quote a word for word, but it was something to the effect of, well, the people don't like it. 12:02.449 --> 12:03.149 [SPEAKER_02]: We're not going to do it. 12:03.530 --> 12:07.412 [SPEAKER_01]: Yeah, I think it was like if people think it sucks, we won't do it or something like that. 12:08.132 --> 12:17.715 [SPEAKER_01]: Yeah, I mean, I suppose so I, I mean, who knows what this government will do, but yeah, I mean, I suppose you, they could just pull out and pivot completely, you know, what they decided to do instead. 12:17.735 --> 12:18.595 [SPEAKER_01]: I'm really not sure. 12:18.975 --> 12:30.178 [SPEAKER_01]: I think if the other thing is to, they're saying that they want to make housing more affordable, what critics will say is okay, well, if you want to make housing more affordable, there is a price where these condos will be purchased, right? 12:30.639 --> 12:31.419 [SPEAKER_01]: You know, like, let's say 12:35.740 --> 12:50.509 [SPEAKER_01]: Maybe it's not 600 would have somebody buy it for 550 foot, probably that there would be a place and then if you bring that pricing down, then it would adjust the overall market and there would be some kind of reset which in turn would make it more affordable for people to get into the housing market. 12:51.149 --> 12:56.773 [SPEAKER_01]: I think with what they were trying to do here is more of a rent to own model where people might not have a. 12:57.753 --> 13:22.482 [SPEAKER_01]: down payment to put towards the property, so I suppose that wouldn't necessarily help out the folks that they're looking to benefit with this plan, but I think if you look at the overall market and let it determine itself, eventually these condos would sell, certainly at a loss, but you know, people that have been waiting for condos to become affordable, might benefit from it, which with this bail out, they probably won't 13:23.192 --> 13:26.657 [SPEAKER_02]: Now, do we know yet with regards to this bailout? 13:27.078 --> 13:31.944 [SPEAKER_02]: Do we know yet if this is going to be a affordable housing sold to people? 13:32.625 --> 13:35.469 [SPEAKER_02]: Or is this going to be a affordable housing for rent? 13:36.110 --> 13:39.675 [SPEAKER_02]: I think either way, if you're a condo buyer and you bought an abilding. 13:40.256 --> 13:51.180 [SPEAKER_02]: and all of a sudden the government buys a place not to far from your unit and he dramatically less than what you paid, that's going to obviously impact the price that you bought the condo for or to go instead further. 13:51.620 --> 13:59.943 [SPEAKER_02]: If you did pay a pretty penny for a condo and also you have affordable renters now in a building that I think also would impact the value of that condo. 14:00.323 --> 14:07.626 [SPEAKER_02]: Is there any insight yet on kind of which way the government's going with regards to which condos they're purchasing are not purchasing? 14:08.066 --> 14:36.907 [SPEAKER_01]: Well, I think it was going to be they would purchase them and then they would they would give some whatever rent to own model now not 100% sure how that would work or if they're looking to do that with some of the units or all the units I think like you mentioned yet no matter how you slice this you're going to ruffle some feathers, you know, whether you leave the market the way it is then some of the developers that's to benefit and the lenders they're going to be up norms, but yeah, the way the way that you put it if I bought a condo for 1200 foot. 14:38.288 --> 14:48.855 [SPEAKER_01]: And now the government's buying something for 750 of foot and then letting somebody that is going to pay even less than that, that was right next to me and has the same condo with the same view. 14:48.875 --> 14:51.276 [SPEAKER_01]: That would be challenging for them to take as well. 14:51.356 --> 14:56.720 [SPEAKER_01]: But yeah, again, I think no matter which way you do it, you can make everyone happy. 14:57.260 --> 15:02.284

[SPEAKER_02]: So one thing I always like to do when we get professionals like yourself on the podcast is also pick your brand on what you're seeing. 15:02.984 --> 15:06.947 [SPEAKER_02]: Obviously you're on the front lines of sales right out and releasing, sorry sales and releasing for that matter. 15:07.527 --> 15:08.928 [SPEAKER_02]: And not much of a condos. 15:09.269 --> 15:10.249 [SPEAKER_02]: It's not a pretty odd in front. 15:10.329 --> 15:12.031 [SPEAKER_02]: It's a really good commercial real estate. 15:12.351 --> 15:14.392 [SPEAKER_02]: You know, how is the market right now? 15:14.432 --> 15:18.015 [SPEAKER_02]: Because you do hear a mix of bang out there where some people say it's really busy. 15:18.035 --> 15:19.216 [SPEAKER_02]: Other people say it's dead. 15:19.616 --> 15:20.697 [SPEAKER_02]: What are you seeing on your side? 15:21.337 --> 15:27.282 [SPEAKER_01]: Yeah, I mean, it's hard to sort of give an answer of just for oddly looking at the entire market. 15:27.302 --> 15:30.284 [SPEAKER_01]: We obviously deal in a lot of different asset classes. 15:30.304 --> 15:31.085 [SPEAKER_01]: We've got office. 15:31.105 --> 15:31.885 [SPEAKER_01]: We've got retail. 15:31.905 --> 15:32.886 [SPEAKER_01]: We've gotten industrial. 15:32.926 --> 15:42.153 [SPEAKER_01]: And then, you know, there's different areas that we work in and certain areas are performing extremely well where you can list a property and it'll be scooped up in a couple of weeks. 15:42.213 --> 15:46.677 [SPEAKER_01]: And then there's other areas where it could sit for a year, maybe two. 15:47.177 --> 15:50.179 [SPEAKER_01]: Really, a lot of it comes down to is pricing things 15:51.320 --> 15:55.363 [SPEAKER_01]: There is a market price, sort of at any time, even in more challenging markets. 15:55.443 --> 15:58.486 [SPEAKER_01]: And I think we've over the past couple of years. 15:58.946 --> 16:05.951 [SPEAKER_01]: We've started Steve, vendors, and landlords become a bit more realistic in their pricing, especially on the sell side. 16:06.131 --> 16:08.413 [SPEAKER_01]: Now that you're competing against people that need to 16:13.657 --> 16:33.994 [SPEAKER_01]: Well, liquidated money and put it elsewhere, just because the economy is not doing so well, but people that just want to sell there, they're competing against those that need to so we are seeing a bit of an adjustment and pricing and some markets and it's taken a few years to get there, but we are seeing some more realistic pricing, which which is good because we're seeing a lot more transactions come through. 16:34.559 --> 16:37.741 [SPEAKER_01]: I think overall as a whole, the economy is not great. 16:37.761 --> 16:43.746 [SPEAKER_01]: We're in a recession now and I think yeah, a lot of that was propped up with immigration now that that's gone. 16:44.267 --> 16:46.648 [SPEAKER_01]: We are as they said a technical recession. 16:46.728 --> 16:53.113 [SPEAKER_01]: So certainly when you speak to tenants, they'll definitely use that to try to negotiate and get better deals. 16:53.454 --> 16:56.496 [SPEAKER_01]: You know, I'm just talking about how their business doesn't as good. 16:56.996 --> 17:00.219 [SPEAKER_01]: Sometimes you look at people's financials and it doesn't reflect that. 17:04.282 --> 17:07.364 [SPEAKER_01]: hard to paint it with a broad brush over the whole market. 17:08.185 --> 17:10.067 [SPEAKER_01]: Some areas are performing a lot better than others. 17:10.727 --> 17:20.114 [SPEAKER_02]: Is there an area of opportunity right now whether that be an asset class or a market that you feel might be, well, I'm gonna flip that right around to you. 17:20.134 --> 17:20.815 [SPEAKER_02]: What do you think, Corey? 17:20.835 --> 17:22.316 [SPEAKER_02]: Well, it's a great question. 17:22.837 --> 17:24.878 [SPEAKER_02]: Well, I'm a big believer in retail still. 17:25.319 --> 17:32.364 [SPEAKER_02]: I think if you can find retail in the right markets, secondary markets or freezer value markets, I think is like a pre, if you can buy it right now 17:33.645 --> 17:38.228 [SPEAKER_02]: that's arguably inflated that we'll have cap compression in the future. 17:38.589 --> 17:41.911 [SPEAKER_02]: And then you can do very well, especially if you have an upside on the rent so you're really well positioned. 17:41.951 --> 17:54.661 [SPEAKER_02]: But all of that said, I think location location location is more important now than ever because there is a lot of stuff that has been arguably in a decent area, but maybe not the best location that I feel has sat for quite a while now. 17:54.841 --> 17:57.923 [SPEAKER_02]: And I think it's just buyers are just being that much more selective with it. 17:58.323 --> 18:01.005 [SPEAKER_02]: If it's good product and it's well priced and well 18:02.006 --> 18:02.706 [SPEAKER_02]: things are moving. 18:02.826 --> 18:09.488 [SPEAKER_02]: When transaction standpoint, will you're right from our brokerage standpoint, has seen a huge lift in transaction over last year? 18:09.828 --> 18:11.768 [SPEAKER_02]: Doesn't mean pricing is going up anytime soon. 18:12.148 --> 18:18.489 [SPEAKER_02]: It just means that transactions are finally coming through where maybe buyers expectations are finally lining up with vendors expectations. 18:18.829 --> 18:20.010 [SPEAKER_02]: Same with tenant landlords. 18:20.110 --> 18:24.231 [SPEAKER_02]: I think landlords still haven't put in a decent amount of inducements to kind of make things work. 18:24.291 --> 18:29.252 [SPEAKER_02]: I don't think that things are flying off the shelf for the work a couple years ago, but transactions as a whole 18:31.572 --> 18:33.133 [SPEAKER_02]: in 2026 versus 2025. 18:33.173 --> 18:35.215 [SPEAKER_01]: Yeah, I definitely agree with that. 18:35.255 --> 18:40.219 [SPEAKER_01]: And I guess just to go back when you're asking how the market is, it's all over the place. 18:40.479 --> 18:41.760 [SPEAKER_01]: And it depends on the asset class. 18:41.800 --> 18:44.242

[SPEAKER_01]: It depends on how the properties improved. 18:44.763 --> 18:50.788 [SPEAKER_01]: To give you an example, we just sold a 4200 square foot retail space for double the assets value. 18:51.428 --> 19:00.192 [SPEAKER_01]: Our client purchased a step for about $3.1 million five years ago and yeah, we're closing on it in August for six and a half million dollars. 19:00.232 --> 19:08.675 [SPEAKER_01]: So double this investment five years in the time period where almost everybody is losing money because I was purchased at a time when interest rates were next to zero. 19:09.195 --> 19:20.160 [SPEAKER_01]: So that was a double the assess value and then we just sold an office unit in downtown Vancouver recently for for half of its success value and older unit that had a lot of distressed units in the building. 19:20.700 --> 19:24.581 [SPEAKER_01]: But we went to court and yeah, sold for about half its assessed value. 19:24.641 --> 19:36.004 [SPEAKER_01]: So another thing I've been hearing a lot more about is buyers talking about the property's assessment, which really just should not be used as a method to value a property. 19:36.484 --> 19:44.005 [SPEAKER_01]: But for some reason in the last year or two, we hear more and more people using the BC assessment as a metric probably because they're coming down. 19:44.085 --> 19:47.166 [SPEAKER_01]: So from a buyer's standpoint, you know, it helps their case, 19:51.268 --> 19:57.013 [SPEAKER_02]: So if I'm hearing you correctly and I'm offering on a property, I want to use the assess value. 19:57.113 --> 20:06.922 [SPEAKER_02]: Although it has no correlation, I'm going to argue the assess value is what it is, but on the cell side, I need to educate the buyer and the buyer's agent, but this has absolutely nothing to do with it. 20:06.942 --> 20:10.245 [SPEAKER_02]: Because one thing I think a lot of people don't realize is after a property does transact. 20:10.825 --> 20:16.347 [SPEAKER_02]: And maybe it's the first in an area that transacted a higher value because maybe there's new rental rates or some in that effect. 20:16.807 --> 20:27.630 [SPEAKER_02]: BC assessment sends out letters, asking you for information on why this transacted so high because they want to use that information to reassess everything in the area potentially. 20:27.710 --> 20:36.192 [SPEAKER_02]: And I think for the longest time period, a lot of properties have been assessed or valued at the highest and best use, which a lot of cases is development land. 20:36.232 --> 20:38.273 [SPEAKER_02]: When that development potential is now gone, 20:39.093 --> 20:40.915 [SPEAKER_02]: You're starting to see the numbers come down quite a bit. 20:40.935 --> 20:42.036 [SPEAKER_02]: I think in the value side of it. 20:42.056 --> 20:44.858 [SPEAKER_02]: And I think from you asked me like, you know, is there a good thing to buy? 20:44.878 --> 21:01.693 [SPEAKER_02]: I mean, if you were to go buy a well-positioned asset that had development potential before you were probably buying a development site with holding income, being in your paying, I'm premium dollar for the property because you're buying it on development spec, but it does have some level of financial income to actually offset some of your debt while holding it. 21:02.133 --> 21:05.595 [SPEAKER_02]: Now, they're not being marketed as development sites with holding income. 21:05.876 --> 21:20.845 [SPEAKER_02]: They're now being marketed as investment properties with development potential, which means you're now buying them based on income on a cap rate basis, versus buying them with development potential in the medium to long-term if the market transacts differently in changes. 21:21.265 --> 21:25.188 [SPEAKER_02]: But you're being able to pick up arguably in quotations, development labs, 21:25.888 --> 21:37.814 [SPEAKER_02]: with greater holding income that way if it never materializes as development land you haven't overpaid for the asset and that's one thing I think we talk about development land we see right now being sold at rock bottom prices. 21:38.214 --> 21:51.701 [SPEAKER_02]: There's a lot of people buy maybe a small retail plaza added two and a half cap rate because they bought it on development spec but now because that development spec is sort of all but gone they're now selling it on a five cap rate or a four 21:55.843 --> 22:01.365 [SPEAKER_02]: And I don't want to say they bought wrong, they just bought on a different metric based on those market conditions. 22:01.445 --> 22:09.108 [SPEAKER_02]: So if you look at it now that I can potentially buy that same property that may have arguably medium to long-term development potential to it. 22:09.488 --> 22:12.849 [SPEAKER_02]: But now to five cap rate and I'm getting paid for my risk. 22:13.509 --> 22:14.450 [SPEAKER_02]: That's a different story. 22:14.470 --> 22:20.237 [SPEAKER_02]: I think those opportunities, if you dig deep into them and you do have a medium to long-term outline or outlook on it. 22:20.517 --> 22:25.343 [SPEAKER_02]: I think you'll find some great good value in today's market that eventually development will come back. 22:25.363 --> 22:32.452 [SPEAKER_02]: And I think one thing we all forget is everything that's not getting built yesterday and today and tomorrow is really going to impact us. 22:32.892 --> 22:36.714 [SPEAKER_02]: three to five years down the line because all of these products aren't getting delivered. 22:36.914 --> 22:45.998 [SPEAKER_02]: And what will most likely happen is, you know, we'll go through our cycle and all the sudden immigration numbers will pick up foreign investors will be allowed back in and just going to start to see things ramp up again. 22:46.118 --> 22:52.921 [SPEAKER_02]: And then everyone's yelling about a housing crisis, but everything that's not getting built today is going to lead into that housing crisis. 22:52.941 --> 22:54.602 [SPEAKER_02]: You're going to hear about three to five years down

the road. 22:55.102 --> 22:58.083 [SPEAKER_02]: So all of that assuming comes to reality, 23:02.585 --> 23:07.706 [SPEAKER_02]: right now that has development potential in the future, you could find maybe you're getting a pretty good bite. 23:07.846 --> 23:18.489 [SPEAKER_02]: I'm not saying development prices are going to surpass income prices, but the opportunity may present itself if the development community and the immigration and all that stuff kind of kicks into what we saw in the past couple years. 23:18.949 --> 23:20.549 [SPEAKER_01]: Well, yeah, it's interesting that you say all that. 23:20.569 --> 23:26.911 [SPEAKER_01]: I mean, I think, yeah, I mean, that's me that's more for true commercial properties retail passes that you're 23:32.552 --> 23:36.477 [SPEAKER_01]: kind of put together evaluation and it's tough to make the numbers work. 23:36.497 --> 23:49.474 [SPEAKER_01]: There's been a couple traditionally if you're assembling a few single family residential homes you're adding value because you have a site where now you can build a scale and you can develop into a high rise potentially. 23:50.235 --> 23:54.801 [SPEAKER_01]: we're looking at these sites now and thinking, is this a more viable site as single family homes? 23:54.821 --> 23:56.183 [SPEAKER_01]: That's supposed to be a sample site. 23:56.343 --> 24:07.238 [SPEAKER_01]: So it's a very strange market that we're in, but I haven't seen anything like it since I started my career in 2018 and it's certainly a challenging one. 24:07.858 --> 24:27.363 [SPEAKER_02]: Well, the one thing too we all saw on the broker decided you'd be doing land assemblies or straddle windups for that matter, where these landowners and homeowners were getting 20, 30, sometimes 40, 50% premium for their property if they sold collectively based on development prices and because those numbers have come down so much over the past couple years, to your point, 24:28.003 --> 24:36.667 [SPEAKER_02]: a lot of these houses or condos might be worth more as a single-family dwelling or a strad a lot than they are as a collective development site. 24:37.027 --> 24:55.997 [SPEAKER_02]: And I think time will tell how that changes with time, but you are, unfortunately, you get ahead and live in a lot of conversations, telling people that it's not worth what it once was to sell as a collective root for a premium unless the market on the development world kind of starts to pick back up and head in the right direction. 24:56.703 --> 25:03.611 [SPEAKER_01]: It feels like, it feels like on our side of the business and commercial, I mean, I wouldn't say, you know, it doesn't feel like pricing is dropping off a cliff or anything like that. 25:03.651 --> 25:08.676 [SPEAKER_01]: I mean, this still, so decimata capital out there, that's looking for good investment properties. 25:08.696 --> 25:16.045 [SPEAKER_01]: They just, you know, they're, they're, they're being a little bit more cautious, but we are seeing a lot of transactions come through and I'd say for the most part, 25:16.465 --> 25:18.547 [SPEAKER_01]: side for some maybe some specific areas. 25:18.567 --> 25:21.369 [SPEAKER_01]: We're not really seeing pricing fall off a ledge in some places. 25:21.389 --> 25:26.033 [SPEAKER_01]: They're actually continuing to rise for well-located retail for instance. 25:26.453 --> 25:30.957 [SPEAKER_01]: But do you get the sense with content with these condos that we just need it? 25:31.238 --> 25:32.378 [SPEAKER_01]: It's going to be a new market. 25:32.719 --> 25:41.066 [SPEAKER_01]: Like there's going to have to be some kind of reset, because it just doesn't seem like, you know, even with this bailout, like this is what if we're calling it a bailout. 25:41.426 --> 25:42.788 [SPEAKER_01]: It's 2,200 condos. 25:42.848 --> 25:50.756 [SPEAKER_01]: I mean, if you look across the entire country, I know they're obviously having their fair share of problems, probably even more so than us in the GTA. 25:50.836 --> 25:53.960 [SPEAKER_01]: I don't know, has there been any discussion about doing something similar there. 25:54.748 --> 25:59.593 [SPEAKER_02]: Well, I think you've seen bulk condo sales back east a lot more than you've seen out here in B.C. 26:00.113 --> 26:03.296 [SPEAKER_02]: And I think, I mean, there's been some marketed out here. 26:03.316 --> 26:07.100 [SPEAKER_02]: The last one, I can kind of try to remember, and again, I could be off here. 26:07.120 --> 26:14.047 [SPEAKER_02]: It was when the echo in the group bought all of the remaining condos and athletes village after the Olympics in the city of Vancouver was filming the debt. 26:14.527 --> 26:15.108 [SPEAKER_02]: Is they bought? 26:15.348 --> 26:18.051 [SPEAKER_02]: I want to say it was 80 or 88 condos that could be off. 26:18.551 --> 26:21.553 [SPEAKER_02]: And then they took over the selling of the condos. 26:21.573 --> 26:23.154 [SPEAKER_02]: They obviously bought them at a bulk discount. 26:23.474 --> 26:27.916 [SPEAKER_02]: And then later sold those condos through rainy over however long it takes to sell them. 26:27.936 --> 26:32.299 [SPEAKER_02]: So I don't really know what this whole thing looks like to be completely honest with you. 26:32.319 --> 26:37.842 [SPEAKER_02]: But back east, there's been a lot more of this bulk condo sales and conversation point than we have out here. 26:38.282 --> 26:43.225 [SPEAKER_02]: Mainly because I think Toronto was even more overbuilt than what Vancouver currently is a 26:45.555 --> 26:52.617 [SPEAKER_02]: When they are never out here, we have so many geographical challenges in so many markets like Vancouver, you've got mountains and oceans. 26:52.697 --> 26:55.177 [SPEAKER_02]: And you've got a colon and you've got lakes and mountains. 26:55.197 --> 26:58.178 [SPEAKER_02]: And there's all these markets where people typically have wanted to buy. 26:58.738 --> 27:00.779 [SPEAKER_02]: All of them are surrounded by geographical challenges. 27:00.839 -->

27:02.679 [SPEAKER_02]: Far more or less than there is out east. 27:03.359 --> 27:06.620 [SPEAKER_02]: And another challenge we have is political is getting anything built. 27:06.840 --> 27:09.541 [SPEAKER_02]: Things take a far longer time to build. 27:10.101 --> 27:15.042 [SPEAKER_02]: Out here, even as things wrap up and go, things don't really move out. 27:16.403 --> 27:20.506 [SPEAKER_02]: Don't really move nearly as fast as I think everyone wants to see them move. 27:21.106 --> 27:34.377 [SPEAKER_01]: Yeah, and part of what you mentioned there, so part of the announcement was, I think part of the $3.2 billion that they've allocated is going to be to alleviate the development cost charges, which we've been talking about forever. 27:34.417 --> 27:40.782 [SPEAKER_01]: CACs, DCCs, all these charges that make up almost the bulk of the home cost when you add up everything that's been 27:41.442 --> 27:48.308 [SPEAKER_01]: making it really hard to make all these condos and homes affordable with all the taxes and chargers that are on top of everything. 27:48.689 --> 27:54.073 [SPEAKER_01]: Now they're looking to provide some relief but it like it really feels like it's too little too late on that front. 27:54.454 --> 27:57.697 [SPEAKER_01]: Well I've been talking about this for years saying that something needs to be done. 27:58.097 --> 28:01.480 [SPEAKER_02]: Well I think even from the development community that's one thing they've always been screaming at. 28:01.520 --> 28:04.463 [SPEAKER_02]: It's just how many dollars go into the 28:07.285 --> 28:24.920 [SPEAKER_02]: And when these things are getting built and depending on who you talk to the number adding varies from you know 15 20% to the much 30% of every dollar spent somehow finds its way into A government coffer and when you're looking at at those type of numbers let's say hypothetically it's 30% on a thousand dollars of foot 300 dollars of foot. 28:27.462 --> 28:32.326 [SPEAKER_02]: is going into a city coffered and when we had Brad on from West Group before and I thought he had a great idea. 28:32.506 --> 28:45.777 [SPEAKER_02]: They'll never come to fruition, I think, because of transparency, the government doesn't want you to see what you're paying for, but even why don't you take the DCCs and the CAC costs also and defer them and make them a closing cost for the buyer on their SOA. 28:45.857 --> 28:46.118 [SPEAKER_01]: Yeah. 28:46.238 --> 28:52.023 [SPEAKER_02]: You're paying the exact same, but that allows the developer to not have to pay a lot of those costs up front. 28:52.543 --> 29:14.163 [SPEAKER_02]: To get the project moving and then of which they're paying interest on a lot of that money so the cost of the condo is even going up even further That why not just push it all to the purchaser because you're paying it one way or the other The reason why that probably will never happen because they don't want anyone to see how much how outrageous these costs are And you know that's a

great solution but I don't think it's anything that we'll see the length of day because of that 29:14.503 --> 29:15.103 [SPEAKER_01]: Yeah, that's true. 29:15.123 --> 29:22.248 [SPEAKER_01]: There would probably be a lot more public backlash if you did see the the actual percentage on that every time you're be looking at the state of the same amount of adjustment. 29:22.268 --> 29:24.529 [SPEAKER_01]: So I thought my condos was 800,000. 29:24.589 --> 29:25.910 [SPEAKER_01]: No, it's $1.1 million. 29:25.930 --> 29:28.512 [SPEAKER_01]: Yeah, way wide ahead. 29:28.712 --> 29:30.773 [SPEAKER_01]: And then yeah, if you could really see it in front of you. 29:31.594 --> 29:36.677 [SPEAKER_01]: As opposed to just listening to people talk on a podcast about it might actually make more of a meaningful difference. 29:36.837 --> 29:51.425 [SPEAKER_02]: So this might be something that can kind of feel it can draw a conclusion with is we did a project in a city I won't name names that when the property was the first required the DCCs and CACs for the project was estimated about 1.8 million and change. 29:52.185 --> 29:57.847 [SPEAKER_02]: fast forward, probably 24 months, 36 months when they actually were applying for the development permit. 29:58.227 --> 30:00.768 [SPEAKER_02]: The DCC's and ACs had gone up so much. 30:00.928 --> 30:03.549 [SPEAKER_02]: It had gone from $1.8 million to over $3.4 million on the one project. 30:07.390 --> 30:31.445 [SPEAKER_02]: these costs all get passed on to consumers and with local municipalities, there's no governance over these numbers and a lot of municipalities in cities have literally lived on lived high on the hog because of development costs that were coming into the city, whether that DCC's or CAC's or ACC's now, all that money coming into the city gave them a lot of money to do a lot of things. 30:31.605 --> 30:41.913 [SPEAKER_02]: And when the development world has slowed down and that windfall is stopped, they're now looking at reassessing the homeless costs and driving them higher to make up for operating costs in the city. 30:42.353 --> 30:48.918 [SPEAKER_02]: Well, that's just going to further push development down the road because developers at the previous numbers were hesitant to take risk. 30:49.359 --> 30:56.004 [SPEAKER_02]: Now the fact that these costs have gone up that much more is even more reason for them not to take the risk and really create more housing issues long-term. 30:56.364 --> 31:10.274 [SPEAKER_01]: Yeah, I mean, and you talk to a lot of, I mean, it sounds like a lot of them are just doing more and more business in the states, because they just, they don't, they don't have all these fees and the red tape that you see here, and it just makes more sense to do business there, even though they'd love to do it here, because this is their home. 31:10.314 --> 31:13.716 [SPEAKER_01]: It seems like, yeah, capital's fleeing the country developers are. 31:14.156 --> 31:17.619 [SPEAKER_01]: So it'll be interesting to see how this all plays out. 31:17.879 --> 31:20.941 [SPEAKER_01]: We obviously, you know, start this podcast with the idea of it. 31:21.421 --> 31:23.162 [SPEAKER_01]: Is it, is it a developer bailout? 31:23.182 --> 31:28.724 [SPEAKER_01]: It's a bank bailout, but I think at this point, we really don't know the specifics too much at all. 31:28.744 --> 31:30.365 [SPEAKER_01]: So we'll have to wait in time. 31:30.405 --> 31:32.786 [SPEAKER_01]: We'll tell them we'll see how this all plays out. 31:33.626 --> 31:39.068 [SPEAKER_02]: Well, Rod, I appreciate you in the time today to kind of provide some light or at least some opinions on this bailout. 31:39.088 --> 31:43.130 [SPEAKER_02]: We'll call it potentially what's coming forward here and how it's been received by the public there. 31:43.150 --> 31:45.791 [SPEAKER_02]: But before we let you go, we have our six pack of light-hearted questions. 31:46.271 --> 31:47.852 [SPEAKER_02]: Do you got a few more minutes to hang out with us here? 31:50.007 --> 31:51.688 [SPEAKER_02]: All right, ride first one up. 31:52.168 --> 31:54.008 [SPEAKER_02]: It's summertime here recording this. 31:54.088 --> 31:57.069 [SPEAKER_02]: It's the first week of July, the sun's finally out. 31:57.990 --> 32:00.070 [SPEAKER_02]: If you find the time this year, where are you going on vacation? 32:00.971 --> 32:01.651 [SPEAKER_02]: Oh, vacation. 32:01.991 --> 32:04.752 [SPEAKER_01]: Well, not, honestly, I usually stay in the province. 32:04.772 --> 32:06.853 [SPEAKER_01]: During the summer, it's too nice here to leave. 32:06.893 --> 32:13.335 [SPEAKER_01]: I find that I'll take my flights generally in the winter time to get away somewhere warm. 32:13.435 --> 32:17.876 [SPEAKER_01]: If it's somewhere in the province, so it's probably either a Soyuz or sunshine coast, 32:20.550 --> 32:27.176 [SPEAKER_02]: Sometimes here, working out healthy living, I think tends to creep into everyone's minds at this year. 32:27.777 --> 32:31.320 [SPEAKER_02]: You're obviously on the threshold of that, running marathon's doing all that stuff. 32:32.200 --> 32:38.886 [SPEAKER_02]: Anything that you have purchased for under $1,500, just wait a positive impact on your life as of late that you can share this. 32:39.327 --> 32:42.490 [SPEAKER_02]: Does not have to be something physical could be a membership or anything like that. 32:42.950 --> 32:54.542 [SPEAKER_01]: wasn't super recently, but I think my garment purchase was probably probably one of the best things for me, you know, you can you can track your sleep, track your steps, your runs, everything like that. 32:54.562 --> 33:03.450 [SPEAKER_01]: It'll track your heart rate variability, so it'll tell you what kind of effect a couple beers after work will have on your sleep, which which is more than you think. 33:03.550 --> 33:06.854 [SPEAKER_01]: So yeah, I think the garment would be the one I would choose for that. 33:07.530 --> 33:12.334 [SPEAKER_02]: If I were to dig

into your music playlist right now, what songs are you bingeing to? 33:13.195 --> 33:18.859 [SPEAKER_01]: Oh boy, honestly, it's usually just stuff, I usually just get Spotify to choose for me now. 33:18.940 --> 33:22.743 [SPEAKER_01]: It's like I got them to throw on a running playlist or a workout playlist. 33:22.763 --> 33:27.727 [SPEAKER_01]: So I don't even have much of a say in the matter now, I'd have to get back to you on that. 33:29.994 --> 33:38.663 [SPEAKER_01]: Yeah, you usually play some like to see their like upbeat electronic music or I'll tell you what Corey, I do have this Creed and Nickelback playlist. 33:39.124 --> 33:39.925 [SPEAKER_01]: That's phenomenal. 33:40.786 --> 33:49.255 [SPEAKER_02]: Well, the minute you put the word Nick back in, you know, you go high up on my list and as sad as that sounds, if I, what TV show or movie you've been watching this summer. 33:49.655 --> 33:50.656 [SPEAKER_01]: Well, we've been watching. 33:50.676 --> 33:52.798 [SPEAKER_01]: I don't know the fallbacks always the office. 33:52.838 --> 33:58.324 [SPEAKER_01]: If we've got nothing to put on, it's the office is always the one that's kind of constantly replaying itself. 33:58.905 --> 34:02.408 [SPEAKER_01]: But lately it's been Tifa watching the world cut. 34:02.769 --> 34:06.753 [SPEAKER_02]: Yeah, it's, I feel like it's taken over the, you know, at least Canada by storm here. 34:07.153 --> 34:25.251 [SPEAKER_02]: A lot of people that weren't watching our watch and I even know my boys that don't really really into soccer, they're watching the Mexican game last night, they're watching the Brazil game last night, so they're it feels like it's taken by storm right now, which is which unfortunately they couldn't move on to the quarter finals, but I think obviously getting to the right of 16 is pretty, pretty spectacular. 34:25.992 --> 34:30.659 [SPEAKER_02]: As you know, for Canada soccer and why they maybe we've got the Spain Portugal game at noon. 34:30.699 --> 34:33.863 [SPEAKER_01]: I think you're going to find probably about a dozen of our brokers watching in the border. 34:33.903 --> 34:37.568 [SPEAKER_01]: And so maybe after the tournament is done in that productivity will go up. 34:37.628 --> 34:37.949 [SPEAKER_01]: I don't know. 34:37.969 --> 34:42.174 [SPEAKER_02]: We'll see a book recommendation for listeners or an audible. 34:43.938 --> 34:45.638 [SPEAKER_01]: Ah, yeah, good question. 34:45.818 --> 34:47.839 [SPEAKER_01]: I guess I always kind of fall back to the tonic habit. 34:47.879 --> 34:52.080 [SPEAKER_01]: So I usually try to read that sort of once a year, by James Clear, that's a classic. 34:52.100 --> 34:55.320 [SPEAKER_01]: I think I'm probably most people have read it, but if you haven't, you certainly should. 34:56.340 --> 35:02.121 [SPEAKER_02]: It's July, it's not hockey season yet, but in Vancouver, we're all hockey fattics. 35:03.002 --> 35:06.302 [SPEAKER_02]: Are the connects gonna make the playoffs in 20, 27? 35:06.442 --> 35:08.683 [SPEAKER_01]: Oh, geez. 35:09.763 --> 35:10.443 [SPEAKER_01]: That's a tough one. 35:11.268 --> 35:21.238 [SPEAKER_01]: I'm just going to say yes, because I like to be optimistic, but honestly, I've been paying too much attention to make enough of a proper analysis, but I'd like to hope that they will. 35:21.318 --> 35:29.206 [SPEAKER_01]: But after last season, and then I was getting shafted in the draft lottery once again, so that was a little demoralizing. 35:29.226 --> 35:30.267 [SPEAKER_01]: I got to say, seeing. 35:30.667 --> 35:40.837 [SPEAKER_01]: I honestly, I think the last time I watched the draft lottery was back in back when Matthews was drafted when we angry went down a couple spots then too and the Leafs jumped up a bunch. 35:41.178 --> 35:44.120 [SPEAKER_01]: So to see that happen again when it was tough to watch. 35:44.481 --> 35:50.006 [SPEAKER_02]: So I think I think we can't draw any conclusions just yet on the new 35:50.907 --> 36:16.553 [SPEAKER_02]: of connects with the syndines and johnson all that stuff because it's yet to be determined but based on our previous draft drafting history even if we got first overall we would have probably messed it up some way somehow so maybe falling to third doesn't allow us to mess it up as bad as we probably could have messed it up if we got the first place got that's okay well we got my whole trip and my whole chest so you know I always like my whole chest so being 36:18.077 --> 36:24.461 [SPEAKER_02]: All right, right, for all of those people who want to find out more about what you're doing, it will be my personal Vancouver market updates, all that stuff. 36:24.522 --> 36:25.842 [SPEAKER_02]: How can it, let's find out more about that. 36:26.243 --> 36:26.763 [SPEAKER_01]: Yeah, definitely. 36:26.783 --> 36:30.286 [SPEAKER_01]: There are lots of information on the properties and market updates. 36:30.306 --> 36:36.130 [SPEAKER_01]: What we're doing on Williamright.ca, I can find all of our agents in close there under the agent section, including mine. 36:36.210 --> 36:40.693 [SPEAKER_01]: So Williamright.ca is the best resource you can also follow us along on Instagram as well. 36:41.153 --> 36:42.094 [SPEAKER_01]: Williamright Vancouver. 36:42.454 --> 36:43.195 [SPEAKER_01]: And yeah. 36:44.055 --> 36:51.758 [SPEAKER_02]: Overall, thank you once again for taking the time to hang out with us here, provide some insight and some opinions on this stuff, and if for all those listeners, we'll be back next week with another great episode. 36:51.978 --> 36:52.358 [SPEAKER_02]: Thanks, Rod. 36:52.679 --> 36:53.079 [SPEAKER_02]: Thanks, Great. 36:54.059 --> 36:55.440 [SPEAKER_00]: It's a squad today.