Vancouver Commercial Real Estate Podcast

Please tell us about Chard and about yourself.

Chard is a family developer based in Vancouver. My father started the company 27 years ago and I took it over three years ago. We have about 20% of our projects on the island (with the other 80% in Vancouver) and we’re 60-70% in residential. We are primarily focused on the fringe of urban centres. For example, we bought on Main Street back in 2015 and now it’s one of the best places in the city. We focus on quality and experience all the way down the supply chain. We have even had some of our residential buyers buy in our strata office buildings. We’re very proud of that and strive to hit 20% repeat buyers on all of our projects.

I’m an accountant by trade and studied at Western University. I worked in Dallas with Ernst & Young on a two week assignment that turned into a two year assignment. I worked hard and said yes to every opportunity. And that’s what got me to where I am today. You need to be humble, raise your hand and roll up your sleeves.

I then worked for a developer here in Vancouver before joining the family business. My father and I have a mutual respect for one another and have had no problems in eight years of business together.

Was there a strategy to working with other companies before joining Chard?

It is who my father is: He allowed my siblings and I to chart our own paths. He’s very supportive of the paths we want to take. It wasn’t until I approached him and showed interest in joining the family company that our business relationship organically grew. But I didn’t know I wanted to join the company originally and he never pushed that on me.

Chard has been a big developer in Victoria in the Harris Green district, just outside the downtown core. What have you seen in the evolution of the Victoria market?

Our goal in Victoria has been to try and add to the vibrancy of downtown. Victoria has become more sophisticated in recent years but the dynamics have not changed. Buyers come in waves and this year we did have a very strong July. This September we’re seeing a lot of strong traffic too.

Victoria has seen huge growth lately, outpacing Vancouver and most of Canada. The year over year growth in Victoria is 1.52%, while it’s 1.06% in Vancouver and just below 1% for all of BC. So Victoria is growing almost twice as fast as Vancouver. The immigration cycle in Victoria is also very different – it’s more of an interprovincial hot spot. A lot of people come over to the island from other provinces and the Metro Vancouver area. People love the climate. We’re seeing a lot of people in their 30s/40s moving over to start a business or bring their business with them. So we’ve seen a lot of sophistication in the buyers and the market in general.

Let’s talk about your current project, The Nest. Where are you at with that project?

The Nest is around 40% sold; we started sales about four months ago and we’re in a really strong position. We had a lot of strength from our repeat buyers right from the beginning.

Absorption is slower in Victoria because it’s a smaller market. You have to design to appeal to all demographics and affordability levels. We’re seeing owner-users who are downsizing into two-bedrooms or larger one-bedrooms. And we’re seeing investors buying the smaller one-bedrooms where they see the rental opportunity. Rental rates are very high and vacancy is very low in Victoria.

In 2017, we launched Yates. That was a very strong time in the market so it’s hard to compare The Nest to that. But it usually takes us 8-9 months in Victoria to get 25% sold. And we always put a shovel in the ground when we hit 25%. So that’s what we’re going to do with The Nest.

Can you tell us more about the Harris Green neighbourhood?

It’s becoming Victoria’s Main Street. It is going to have a great mix of residential, commercial and office. I would compare it to Stanley Park or Queen Elizabeth. You’re close to Beacon Hill and close to Fairfield. It’s where the best neighbourhoods meet – between Fairfield and downtown – with that great neighbourhood feel.

I definitely see it becoming like Yaletown. But it depends how we position the buildings. In Vivid, we had a unique partnership with BC Housing. We sold at 10% below market to get people into home ownership, which appealed to the younger market. So that’s why we have that younger, professional demographic. We’re very proud of being able to help people get into the housing market.

We have a mews in our Nest and Haven buildings that make them more integrated and helps bring out the vibrancy in the community. We have rentals and affordable housing; all types of housing together in one area helps to mitigate issues down the road.

What is the rental market like in Victoria? How is it different from Vancouver’s rental market?

We build high-quality, condo-like rental buildings. Rental is thought of as second-class housing but that is incorrect. It’s a different mindset than home ownership and that mindset needs to be respected. In Vancouver, we see renters who are more transient. They’ve just moved here, like healthcare professionals or Amazon employees, for work or for lifestyle.

On the island, it’s an interesting dynamic with renters. We see interprovincial migrants coming to the island to test it out. We see young professionals and students as well. The speculation tax is an interesting factor. People from Alberta or Ontario will buy second homes on the island and rent them out to avoid paying additional taxes.

What projects do you have in the pipeline? What other asset classes are you excited about?

We are urban builders and that was the strategy behind our recent White Spot site. It’s a strategic buy to continue to expand the downtown Victoria core. I think it will be a welcome addition to the community and we look forward to working with the community to understand what they want to see there.

We have a hotel development in downtown Victoria. It’s an exciting project we’ve had in the works since 2016. This is an opportunity to continue to support the Victoria economy with a heritage property in partnership with Hyatt hotels.

In terms of asset classes, I love light industrial. We’ve never played in Langford and don’t have plans to. We know downtown Victoria well and plan to stay there. We want to add a quality housing experience to places like Sidney and Esquimalt as well.

How does Chard manage its diverse property types?

We’ve always been very opportunistic. My father’s experience was in commercial and so was mine. We find residential to be more detailed whereas commercial is more strategic. We have a great finance team who spends time looking at different trends so we can follow the economy and demographics. We essentially have our own in-house dashboard. On the design side, we work with great consultants to stay nimble.

Real estate comes down to people. We work with so many different people and everyone brings their own layer to the project. That helps us stay diverse and stay nimble. We can always adjust to maximize the value of our project for our partners and the community.

What’s next for Chard? Are you looking into new areas?

We’re looking to remain in the core regions we know well because we don’t want to spread ourselves too thin. We diversify ourselves by being in many different asset classes, but only a few areas. For example, we’ve tried to centralize in Mount Pleasant in Vancouver. We understand the dynamics of a region and specialize there.

We’re also starting two new projects in the Marpole region. We look at where the opportunities are and where people want to live and work. We’re excited to work with the community and create some much-needed rental there.

We’ll always look at new opportunities if the price is right but right now our focus is on the neighbourhoods we know really well.

Where do you see office going?

I think some industries will use less office space. They have the luxury to work more remotely. But other industries will need more office space. Companies will need to look at their design and decide what they need. Management needs to talk to their staff and understand what people are looking for. But I do think the office will come back. People will want that balance – the flexibility to work from home or in the office. You should trust your employees to make the right decision and work hard for you.

We need to design spaces that are flexible, that make people want to come into the office. Lower tier spaces are going to struggle.

Do you see Chard expanding their office portfolio? Where would you look to buy?

We do have one office building downtown, at Pender and Homer, that is a medium-scale project. We like projects around 30,000-90,000 square feet. The strata office we have in Marpole is about 90,000 square feet. It comes down to location: Where do we insert ourselves into the developer spectrum?

Why do you like Vancouver and Victoria for purpose-built rental?

Vancouver and Victoria are great places to live and people need homes here. Great cities with lifestyle amenities will continue to attract individuals. I understand low cap rates but it is a safe investment. We see that especially with pension funds who have to guarantee retirement income. The security that rentals offer should not be overlooked.

How do you think about risk mitigation?

Risk is always on our radar. I never want us to back ourselves into a corner; that’s why we have so many different asset classes. We’ve allowed ourselves that flexibility to pivot.

What advice do you have for someone looking to get into commercial real estate in Vancouver or Victoria?

Stay true to yourself, how you conduct your business and who you deal with. There’s always another deal but at the end of the day, the most important thing is who you do those deals with. That creates a better experience and a better investment.

Find out more: charddevelopment.com