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episode # 45

BC’s Best Hidden Commercial Real Estate Market with David Algra

If you had to guess which real estate market saw one of the biggest increases in commercial property value over the past 2 years, would you guess Chilliwack?

This week Adam and Cory welcome David Algra of Algra Bros Development to discuss their current downtown Chilliwack project, District 1881, a bustling cultural hub of amazing storefronts, locally owned restaurants, breweries, residences, and office space.

David discusses the success of Algra Bro’s development model of pedestrian oriented developments (POD) which encourages walkability and great retail like amenities at homeowners’ doorsteps. He also uncovers the growth of the downtown Chilliwack area and hints on some markets that he likes for future development. This is another episode you don’t want to miss out on.

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Episode Summary


 

Who is David Algra?

I was born and raised in the Fraser Valley and currently live in Abbotsford. I started my career in framing and from there, my brothers and I built up a development company. We started in residential real estate but got into commercial about seven to eight years ago. 

Algra Bros Development originally got into commercial real estate because we had an industrial park in Abbotsford where our office was located. We wanted to move our office to a more walkable part of the city but couldn’t find a suitable space. So we decided to build our own and before we were halfway done, the building was sold. We enjoyed that so we started on the next commercial building. We felt there was a real gap in the commercial real estate market for pedestrian-oriented development, especially smaller formats in the Fraser Valley. 

How did Algra Bros Development get involved in developing downtown Chilliwack? 

Chilliwack has watched their historic downtown core deteriorate over the last 20-30 years. They started investing in real estate there about 10 years ago, buying land and assembling properties. They wanted to revitalize their downtown. 

At that time, we were quite busy in downtown Abbotsford and didn’t have the capacity to take on projects in Chilliwack. But we ran into some problems with the City of Abbotsford over what we wanted to do. So we decided to liquidate our projects in Abbotsford and take a shot at the RFP (request for proposal) in Chilliwack. We managed to get our proposal together quickly and purchased a four acre site from the city in downtown Chilliwack. 

We saw a lot of the same social issues in Chilliwack as we had experienced in Abbotsford, just on a bigger scale. We had learned a lot of lessons from working in downtown Abbotsford and took that to our projects in Chilliwack.

Can you tell us more about District 1881, Algra Bros Development’s four acre site in downtown Chilliwack? 

District 1881 has about 80,000 feet of commercial retail and office space, about 80% retail and 20% office. We have a five-storey residential building with over 65 units. We’ll also have another 12 townhouses and 70 apartment units coming in. 

We’ve always wanted to retain the real estate we develop, design and build, but we often end up selling it. We don’t intend to, but sometimes people really want to buy it and we make a deal. We have aspirations of keeping the District 1881 site in downtown Chilliwack but who knows what will happen in the future. 

How did Algra Bros get into the niche of pedestrian-centred development and away from car-centred commercial real estate development? 

It started with Garrison Crossing. Garrison Crossing was the old Canadian Forces base in Chilliwack. We became a builder on that project, building there for about nine years. In that time, Garrison Crossing became one of the best examples of pedestrian-centred real estate development. 

We learned the value of pedestrian-oriented development from a residential perspective. People really valued living in a place that was pedestrian-friendly. We think the pedestrian experience is important for businesses, which has tightened our focus in developing commercial space. 

What is pedestrian-oriented development?

Pedestrian-oriented development is simply the idea of designing things for people and not for cars. So that could look like designing roads and lanes where people aren’t second to cars. Another factor is spacing buildings so people can walk from one to another. Those more narrow streets give these communities an old town feel. 

What challenges have you faced in pedestrian-focused building? 

Parking! Parking is a big challenge in pedestrian-focused development. A lot of commercial tenants are of the opinion that they won’t get any business if there isn’t a huge parking lot in front of their retail space. But studies have shown that people will walk a maximum of three blocks. So if you have parking a block away and you provide a good or service people really want, they will walk to you. The challenge has been convincing commercial tenants of this.

How has it been working as developers with the different municipalities? 

Working with municipalities is my job in our business. Chilliwack has been fantastic to work with. We’ve found that the further we go in our business, the more cities want to prescribe to you how to build and design your product. The freedom we have as designers and builders becomes less and less. City plans and zoning bylaws are becoming more specific every year. 

Chilliwack gave us the freedom we needed to build and we’ve had a great relationship with them. The city has been very happy with what we’ve created. One reason why we left Abbotsford was because we didn’t have the freedom to build or design what we wanted there. It seems the further west we go, the harder it is to find that freedom. 

How has Algra Bros Development considered the heritage components of your Chilliwack site? 

The City of Chilliwack didn’t have any bylaws concerning heritage buildings when we bought our four acre site, District 1881. They had actually demolished most of the buildings before our deal. In our proposal, we had expressed that we wanted to save the historic facades of the buildings that remained; I believe that’s actually why our proposal was chosen. In the end we were able to save about six or seven of the nine buildings that remained. 

Will Algra Bros continue working in Chilliwack? 

When we purchased the four acre site from the City of Chilliwack, we had to decide if we wanted to purchase more land or not. We’ve watched as the land values have tripled since we placed tenants, so it doesn’t make sense for us to buy more lots today. If there was a large assembly, it might make sense, but it doesn’t work for us to buy small lots piecemeal. 

I think we’ve priced ourselves out of this market. As well, we do have quite a bit of real estate here, so I’m not sure from a risk-level that we want to acquire more. But who knows how the Chilliwack commercial real estate market will change in the future. 

What other markets are Algra Bros Development considering?

We’re always looking for new real estate markets and opportunities. We’re still involved in detached houses in the Valley, so we’ve been watching that market. We may be moving east to the Interior in the next five to ten years. I see markets emerging in the Interior that will perform extremely well in our next upcycle. 

We also track industrial real estate and have a few industrial projects in the Fraser Valley. Looking at that pricing, I think we’ll see a larger push for those industrial businesses to move into the Interior. That will contribute to even more growth in that area. There’s the lifestyle and the affordability of the Interior that’s very attractive. 

Vancouver Island isn’t really on my radar; I haven’t followed any of it. Never say never, but moving to the Island is not something we’re currently looking at doing. 

Do you hope that these cities where you’re working become more walkable and liveable? 

Absolutely! For example, the City of Chilliwack has put in a lot of effort to develop a bike-friendly lifestyle. A lot of people are forced to move east if they want to own a home. I believe the cities that offer an urban experience will perform better than those that don’t.

The core of downtown Chilliwack has a slug of amenities and core businesses like the hospital, courthouse, post office, etc. Those businesses have stayed in the core. Downtown Chilliwack is flat, so you’re not dealing with the hills that you have in Abbotsford. That makes it a lot easier for people to walk or bike. There’s also not a highway or train that runs through downtown Chilliwack, unlike downtown Abbotsford, which contributes to the pedestrian-friendly potential for Chilliwack.

What advice do you have for someone looking to get into commercial real estate?

Keep your spaces full and don’t be afraid to drop your rent to get a really good tenant. 

Find out more: http://www.algrabros.com/ and https://www.instagram.com/district1881/

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