How does a world-class real estate developer think? Jason Turcotte, Vice President of Development at one of Vancouver’s premier development companies Cressey joins Matt and Adam to discuss the Vancouver housing market, including how he got his start in real estate, his tips for aspiring real estate moguls, as well as his predictions for the Vancouver market in 2018 and beyond. This is a conversation you will not want to miss!
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Jason has three daughters (ages 4, 7 and a half, and 9) and two stepsons, almost 8 and 11. He was born and raised in Vancouver (Jason lived in Kitsilano and then North Vancouver). He got into real estate at a young age and is now Vice President of Development with Cressey.
On how he got his start in real estate:
Jason’s dad was involved in the construction side of the business. Over the summer between grade 8 and 9, he got started on a construction site. Odd jobs through summer and a year off after high school contributed to his breadth of experience in the business (not just a business education). Understanding what it takes to put a building together – whether a subdivision with roads or a high-rise – is important. Having the broader experience to see it from every angle allows you to relate better to the different jobs that go into it. Jason wanted to be on the business side and distance himself from his dad’s world, so he pursued this angle. He started his business in 2002, when the market was really getting hot. When the opportunity at Cressey came up, it involved people being thrown to the wolves and he made the most of it.
On his day-to-day job at Cressey:
Jason leads and advises a team of four development managers who work on projects once they’re acquired. He gets involved a bit on the acquisition side too, with the Executive Vice President. The Executive group decides if they want to run with a project and, if so, they put a development manager on it. That manager becomes the “sole proprietor” of that project. They work on everything from the model, financing, hiring consultants, product development, and municipal approvals. The role of Cressey’s development managers is far broader than other companies, as they run a very lean structure without levels. Jason’s team takes the project to the point of marketing and building.
On advice he would give aspiring developers:
It’s a job a lot of people want; it is really cool. But it’s not enough to come in with a fancy suit and a business degree. Bring some experience from job sites. Maybe you had an internship with a landscape developer. It’s about breadth of experience; there is no schooling for this. It’s about fundamental business nuts and bolts, and common sense.
On the areas he’s excited about right now:
Some urban centres built along the SkyTrain lines are impressive. Cressey hasn’t worked in Brentwood (which was a strategic decision). The skyline of towers is beautiful. As a region, our strategy of intensifying density around rapid transit is still underdeveloped, but they are cool hubs. These areas will go through growing pains, but give them 10 years (e.g. Brentwood, Metrotown, Lougheed, Coquitlam city centre).
On Cressey’s strategy of avoiding Brentwood:
When you look at big lots that can represent thousands of new units, it can be a deterrent. However, the project was so robust that the market was never saturated, so Cressey may have missed out. They made the best decision they could with the information they had at the time.
On current projects he’s excited about:
Cressey is leaner now on condo projects than they’ve been at any other point in 15 years. They have many rental projects on the go and work as a substantial residential landlord. Part of their mantra is to add to and renew rental stock. The Hensley project that was recently launched has a sister tower which will be over 200 units. It’s a redevelopment of a property they built in the 1980s and will double from its original size of 100 units. They are also redeveloping a two-acre property their founder bought in the early 1970s or late 1960s across from Lions Gate Hospital. Jason is excited, as it will have a whole new concept of rentals. The market is ready for a change in rentals. Millennials are renting more and more, and even high-income earners are buying less. The model is going more towards the American model, which has fewer homeowners. Cressey has been active in Seattle building rentals with a partner down there. They’re nice suites, small, but with so many amenities: multi-purpose rooms and huge lobbies. The market is ready for this concept here, and Jason is excited about it.
On the idea of life-long renters in places like San Francisco and New York, and if that’s a viable strategy here:
This might be the trickiest time to be asked this—Jason’s advice has always been to just buy if you can, but only if you plan to hold it for at least five years, as you’ll probably do alright if the market dips and comes back up. We will always be an attractive place where people will come, forever. It will be dense and sought after; maybe some macro-economic influences will be present and put pause in markets from time to time, but you likely won’t lose after five years.
On how the recent government policy changes and the foreign buyers’ tax have been implemented:
Jason’s issue isn’t so much the tax, but the notion that you invite people to come and invest here and then entrap them. They might be making $20-40 million investments but have no idea what they’re getting into until it’s too late. The NDP had to do something, but don’t tax people who already decided to spend. They may have bought a property 20 years ago on a teachers’ salary and worked hard for it. Just because it’s worth $5 million now, they have to pay tens of thousands of dollars in school tax each year. People already paid taxes on these properties and are now getting dinged. Restrictions on future transactions are another story, as you give people the choice to invest, knowing all the information in advance. The “speculation tax” term is disguising what the tax is really for and was a political move, as most people would support an actual speculation tax.
On the market for the rest of the year:
For the next three months, it will be much of what we saw in February. Still active, maybe not as much as the relevant months of the 10-year averages (but those were 10 of the hottest years we’ve seen in BC). People will wait and see about a fallout. Listings will come down, so prices won’t soften. Eventually, we’ll see new projects being the same price as the last, rather than more expensive. This will slow the feeling of buying presales and instantly making money. It will be interesting to see the trickle-down effect of this. It will be a litmus test. Jason did not expect the market to be what it was over the past three years—the cool-down from the tax did not last long, and in January the market was hot again.
- Favorite neighbourhood in Vancouver: The West End—Jason enjoyed hanging out in this area and would love to go back
- Favorite bar or restaurant: Sushi, there’s a good spot called Umi on Lonsdale and it’s good for kids
- West-side mansion or downtown penthouse: Downtown penthouse, as it’s multi-family
- First place he takes out-of-town guests: A hiking spot on the north shore you don’t usually see
- Last thing he bought for under $200 that was a game-changer: A bottle of wine