As they say, ‘riches are in the niches’. But when it comes to real estate, riches can also be found in staying in your lane and doubling down on what works. This week, local Vancouver developer James Evans joins Matt & Adam to discuss his impressive trajectory from humble beginnings with little real estate knowledge to becoming the go-to-guy for rescuing heritage homes and converting them to stunning multi-family. How’s the market? Where are the best buys? And how can a well-defined real estate strategy save you time while creating opportunities. All this today and more!
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Who is James Evans?
I’m a long time developer; I’ve been doing this for the last 25 years. I’ve mostly been working in Vancouver for the last decade on everything from heritage restoration to mixed use to townhomes to rentals.
Prior to working for myself, I was working for other developers. I began with Progressive Construction and then Sun Corp. In the early 2000s, I went to work for a real estate advisory service and then got back into building. About 12 years ago, I started working for myself.
I got into real estate by accident. I got a degree in transportation economics and was working with different government agencies. I didn’t know anything about the business when Progressive presented me with a contract. It was an interesting opportunity, so I decided to jump in.
Why do you like to work in East Vancouver?
I like to look at what my colleagues are attracted to and go the other way. I want to be where other people are not, doing something a bit different. As I learned more about different project types throughout my career, I found the real estate niche that interested me. I gravitated towards ground-oriented, wood frame in single family and multi-family.
Next, I had to decide where I wanted to be. In East Vancouver, you can do something a little bit quirky and the market will accept it. People are more open-minded and appreciate when projects have a bit of an edge to them.
The first project I did on my own was The Jeffs Residences, a 20-unit heritage conversion plus townhome in-fill just a block off Commercial Drive. The townhomes were designed to appeal to families. The heritage house had seven units and each unit was a little bit weird. The original building was created for a doctor back in the early 1900s, but we had to create seven individual units out of it. I was terrified we wouldn’t be able to sell but there was a lot of interest. We sold the whole thing in 48 hours and had back up offers. That was a big lesson for me.
I had to decide if I wanted to be in the new, transforming neighbourhoods, like Burnaby, or stay in an established neighbourhood and look for in-fill opportunities. In East Van and Commercial Drive, there aren’t many condos. But there are people there who are looking to stay in the neighbourhood and need other options. Most of the buyers at The Jeffs Residences were locals trying to stay in the neighbourhood.
On the mixed use project, Ella:
Ella was the first mixed-use project in the area and mostly sold to local residents. With Ella, we pre-sold and sold out the whole project before starting. We had mailers go out to the local neighbourhood and our mail carrier actually walked in and bought four units with her family.
What were the early challenges you faced with The Jeffs Residences?
The Jeffs project was done under a heritage revitalization agreement with the city. I held a public open house and about 80 angry people showed up against the project. The planning committee ran for the hills, so I had to regroup a little bit. I realized I was talking about all of the wrong things. I had not emphasized how well-loved and well-known the house was. The house needed capital investment or else it would fall down, and the current owner couldn’t do it.
So I held a second open house and talked about the actual house. I couldn’t do anything about the usual complaints, like traffic and more residents in the area, but I could focus on the house. I held that second open house actually at the heritage home, so people could see what kind of shape it was in. I asked people if the house was worth saving. And if it was, I showed them my plan. And if they didn’t like my plan, I asked them what their plan was. That changed the conversation.
So when it was time to go to council, I was able to bring people who were originally opposed to the project along with me in support. There was still some pushback but we got approved unanimously and the project got done.
You see similar problems in Grandview. People don’t like change and some people don’t like developers. I think it helped that I was a local in the Commercial Drive area. Eventually, people decided I was okay. And once the project was finished, everyone agreed that it was a good thing.
The Jeffs Residences really became a community. I think 9 kids were born in the first little while and they were all hanging out and growing up together. Parents could call out to the courtyard and see their kids all playing together. If you have hundreds of neighbours, you probably don’t know them. But if you only have 20, it’s a lot easier to create that community. It was very gratifying for me to provide that family housing.
Is the conversation at open houses different nowadays?
The conversation about development at these open houses is always about mass, parking, density, etc. It’s always the same thing at public hearings and open houses. The people who show up and jump up and down are the ones who are opposed. The people who support the projects are off living their lives. After a while, it gets tiring.
We have to find a better way of doing what we do. There’s a real shortage of housing and we all know that. Missing middle and housing for families is in very short supply. Our approvals process is so glacial and painful. We need to find better ways to get things done faster.
I went through a six night public hearing process for a 35-unit, moderate-income, rental project in Kits. Six nights! It’s an area with much-needed rental housing. Half of the city is renters and it’s not fair to not include them in our housing plans.
Is it easier to develop housing in East Vancouver?
No, I don’t think it’s easier to develop on the eastside of Vancouver. Like most developers, I’m opportunistic. I have to consider a lot of things before I take on a project. If a site has its entitlements and I don’t have to do any rezoning, that’s all the better. But most of my projects have to go through some sort of rezoning and public approval project.
How do you find real estate deals?
Sometimes the deals find me! For example, Brookhouse came to me. The property was supposed to come down and I got a call from someone at the city asking if I was interested. Essentially, it was a mini version of The Jeffs, so the city felt they could support it.
Generally, I’m looking for wood frame housing and in-fill projects. I want to be able to do something interesting – not just another cookie-cutter project. If an opportuniy passes those tests, I then look into the economics, if I think it will be approved and what I could do with it.
What advice do you have for someone wanting to get into the development industry? How do you become confident making real estate decisions?
There’s no university course that will teach you this. You have to go out and do it. I’ve learned to trust my gut and not get stuck in analysis paralysis.
In my younger years, I spent a lot of time falling on my nose. But those falls taught me something and I was working with people who supported that learning. I lived through the ups and downs of the market. Not every project I’ve done has been perfect, but each one has helped me make a better decision on the next site.
On making tough decisions for the Ella project:
With Ella, we sat down and thought about what businesses we didn’t want there. We wanted to create a community. We now have a bakery, a doctor’s office, a physio office, etc.
We made a point of really upping our game on the aesthetic and outside of Ella. That sets the tone for not only who would be buying the units but also for the neighbourhood. Other developers had to meet that bar. So we chose not to go cheap and cheerful. In 20 years, I want to walk by Ella and be proud that I built that.
Do you worry about what the real estate market is doing?
That’s why I like having smaller in-fill projects, like Brookhouse, and another one I’m doing on Napier right now. Those projects are fairly safe in a downturn. You don’t make a lot of money on those but they keep you busy. And then I have my larger projects as well. With construction costs and interest rates rising, my crystal ball is pretty murky right now.
With these little in-fill projects, especially with heritage homes, I don’t have a lot of competition. And they’re more unique. So I consider those safer places to be. But it’s hard to predict pricing when you don’t know what the market is going to look like in 24 months.
What steps do you take to mitigate risks as a developer?
It’s hard. The only thing you can fix is your land price and maybe the fees to the city. You can lock in trades but they won’t show up if they’re going to go broke. And commodity pricing is constantly changing. It’s very hard to mitigate against these risks.
There are various steps you take as a developer with two main pressure points: before you buy and before you build. If you haven’t started building, you can press pause and wait for the market to improve. But once you’ve started building, you have to go to the finish line.
Has it helped to focus on one niche in real estate development?
It does help when opportunities come to me that fit the lane that I operate in. I’m happy to leave the big condo towers to other developers. That’s what they do. And then there’s the guys that operate out of their trucks and only build a few duplexes each year. I’m somewhere in between. And that’s been a good place for me to be.
I’ve done some projects and I’ve learned some lessons. Everything has been evolutionary. My trail has had its ups and downs but if you can remember some key lessons and focus, you can find a lane that works for you. Don’t try to be something else.
Besides East Vancouver, what other neighbourhoods in the Lower Mainland are you excited about?
I like Burnaby and South Surrey. I’ve done a few projects in the area around Fleetwood and have some in-fill projects in Burnaby. I haven’t done anything in Coquitlam but it’s an area I’d like to be in. Each municipality is its own microcosm and you have to keep on top of them. As a one man band, I’ve had to keep my attention closer to home.
In East Vancouver, we’re seeing people buying back into the neighbourhood. Is that just happening in East Van or is it happening everywhere?
It’s hard to say. With my East Vancouver projects, there have been people who grew up in the area but had to leave because they couldn’t find anything suitable or affordable. And now they’re trying to find a way back in.
In Surrey, it’s mostly single-family homes. So it’s less about people not being able to find something but now having the option to buy a new home, instead of an older one. They’re not moving back but moving around the neighbourhood.
As of July 2022, are you buying real estate? Is it business as usual or are you waiting out the market?
I’m very cautious, as are all of my development colleagues. I never say no, but the lens I’m using to evaluate things is a lot smaller. I spend a bit more time analyzing deals. I definitely want to stay in the market and keep my eyes out for a site where I can add some value. It’s not a situation where I’m telling people not to call me for 12 months.