With the Toronto real estate market booming, real estate developers have a world of details and know-how to navigate. We’ve reached out to Mr. Jason Birnboim of Beaux Properties to give us an overview of the intense Toronto real estate development industry. Whether you’re a home buyer planning on moving to Toronto, or an aspiring developer, Jason’s answers will shed some light on the local situation.
What do you love most about your job?
I derive a lot of personal satisfaction from the opportunity to acquire or create real tangible structures or dwellings that will have a positive impact on people’s lives. It’s a plus that they also generate a satisfactory return on investment for our stakeholders and partners. I also tremendously value the opportunity to work side by side with one of the great minds in this business, my father.
What is the single most difficult part of a real estate developer’s job?
Development, in my experience, is typically two steps forward and one step back. You need to constantly monitor and oversee so many different components at once. There’s always a risk of something going wrong beyond your immediate control. Essentially I’m referring to the concept of risk management.
In addition, managing cash flow is critical. Only undertaking projects that are well capitalized is imperative if you hope to survive. In development you need to expect the unexpected, routinely.
Have you spotted any interesting market trends recently? How do you see construction projects in Toronto develop in the future?
Developers tend to move in herds. It’s rare to see anyone pioneer new concepts, particularly in Toronto, where the model is so firmly established. Still, I believe the condo/retail model that my partner has perfected is definitely a very unique concept. It could become a bigger trend going forward.
I have seen landlords stratify the first few floors of some New York commercial real estate into interesting retail concepts. I would welcome that trend in Toronto, though it has yet to really take off.
If anything, the trend over the past 7 or 8 years involves developers and investors taking on zoning risk at the acquisition stage of a project. There’s just so much capital out there in search of profits, that developers are capitalizing on that investor driven hunger and speculating on land. This leaves little margin for error.
The real estate development industry in Toronto is incredibly dynamic, sophisticated and mature. The impediments to construction tend to be regulatory. Our civic leaders need to be mindful to avoid stretching out the development life cycle further through legislative barriers.
Will green-certified properties in Toronto take over as the new gold-standard for real estate?
No. I believe the market is too price sensitive to fully absorb the full cost of green certification, much of which I’m told is redundant. To the extent that a developer can achieve energy efficiency, they will do so out of conscience as well as concern for reputation. However, the certification route can be very costly.
In many instances it is used more for marketing purposes than an actual goal of reducing greenhouse gas emissions. I personally believe that relaxing the parking requirements, particularly on city of Toronto commercial/retail projects, will achieve the greatest environmental benefit. It will do this through the reduction of vehicular use within the city, and increasing the use of public transit.
Do you have a current project that you’re particularly excited about?
I have a creative mind, but fall short in my natural creative talents. Fortunately, I work with a group of exceptional people who can bring some of my ideas to life through design. We have recently embarked on a project that involves the intensification of a 20-storey apartment building that we own in the Yonge & Eglinton area, between three neighbourhoods: North Toronto, Davisville Village and Chaplin Estates. We plan to build stacked townhouses at the front of the building and add a really striking 2-level penthouse concept on the roof.
Once complete, this boutique project will add more rental suites to the property and area. Perhaps more importantly, its clever design will transform the street level experience of the building through great architecture and landscape design features. The penthouse will also help make the building iconic and really give it a cool modern update. Mixing the old and the new and enhancing a prized asset really resonates with me.
What would you recommend to young entrepreneurs in the industry?
Anyone entering the development world today must recognize that it’s very difficult to become an overnight sensation. The big names in this business are decades old. They have survived several major economic cycles. Toronto specifically is a robust market, full of promise due to the steady flow of hundreds of thousands of new minds and bodies into our city.
I value my education greatly and would encourage anyone interested in this business to start with a degree. Choose either finance, an MBA, or perhaps a program geared towards real estate. There are lots of options out there.
Beyond education, don’t be afraid to start on something modest, that will help you build a network as well as develop good instincts for the business. Real estate is almost the antithesis of the tech business – things move slowly and steadily, and cash flow is critical.
Any other insights you’d like to share?
I feel very fortunate to have the opportunity to live and work in Toronto. I have done business in several large markets and I genuinely believe that the industry in Toronto is exceptionally strong and steady. If you’re willing to put in the time and the effort, you will be rewarded here over the long term.
Would you like to know more about the Toronto real estate market? How about the Greater Toronto Area? Check out these expert insights:
Real Talk with Real Estate Developers: A Haven in the GTA
Toronto Market Insights with Jenny Vuong & Greg Parker: Buyers Pressured by Time and Money
Expert Insights: Georgina Real Estate Trends in a Nutshell