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Why Yonge and Eglinton is the Best Neighbourhood in Toronto With Todd Cowan and Jordan Dermer of Capital Developments

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Todd Cowan and Jordan Dermer ran a huge development company in Eastern Europe for over 10 years. Now they are building a brand in Toronto that they hope will one day become one of the most respected in the industry. They are getting ready to launch 150 Redpath which comes hot on the heels of Art Shoppe Condos at Yonge and Eglinton – the fastest selling project of 2015 so far.

Todd Cowan and Jordan Dermer Interview Highlights

0:10 What’s Going on at Yonge and Eglinton?
4:32 Who’s Todd Cowan and Jordan Dermer?
6:57 The Rebranding of Capital Developments
8:16 CD’s Long Term Plans for Toronto
9:28 What Are You Most Passionate About?
10:49 How Todd and Jordan Began Working Together
15:04 Are There Similarities Between Condo Development in Europe and Development in Toronto?
18:02 What Does Jordan Miss About Being a Developer in Europe?
19:28 What Made Art Shoppe Condos So Successful?
21:24 What Condo Investors Should Know About 150 Redpath?
26:29 Yonge and Eglinton Ten Years from Now
31:38 It’s All About Relationships
33:14 How to Reach Jordan, Todd or Capital Developments

Todd Cowan and Jordan Dermer Interview Transcript

Andrew la Fleur: Hi and welcome back to the show. Today’s show I want to talk about Yonge and Eglinton. It’s amazing how many people still do not know what is going on at Yonge and Eglinton. It’s one of the hottest neighborhoods in the city. It’s one of the best areas to live in and it’s got the highest potential, in my opinion, of any neighborhood when it comes to investing in the condo market. I’ve invested there. Many of my clients have invested there, but still I talk to people every week about Yonge and Eglinton and they still don’t know exactly what’s going on there. They still don’t know why they should consider investing there.

Don’t get me wrong, downtown will always be the bread and butter of condo investing in Toronto and it’s always going to be a great place to be especially in the core of the city, but there are certain nodes, and there’s not very many of them, but there’s certain nodes outside of the downtown within the city that share basically the same characteristics and the same reasons why we invest in downtown. That being, great transit, great infrastructure, existing very high real estate prices and potential for future even higher prices is very strong. The fact that there is very scarce availability for land. There’s very limited amounts of land and therefore, the price of that land is very high, and it’s going to continue to get higher and higher as the city grows and as the city gets denser, as more and more people move in.

Yonge and Eglinton, Yonge and Sheppard, there’s a few of these nodes outside of the downtown that basically share those characteristics and fundamentals that the downtown has. Those are great places to invest in for the same reasons as investing in downtown. Now, Yonge and Eglinton, specifically, the reason why it’s so hot right now, why there’s so much attention on the area is primarily because of the LRT. Once again, the crosstown LRT is going in, it’s under construction. It’s going to be completed in 2020 and it will be underground for most of it. Certainly at Yonge and Eglinton it will be underground. Essentially what is being added is a subway to a major cross street in Toronto and you’re going to have another Yonge and Bloor, another Union Station, another Yonge and Sheppard. Yonge and Eglinton is going to be juts like that.

On top of that, it’s a very established area. It’s got some of the schools in Toronto. Some of the best restaurants in Toronto are at Yonge and Eglinton, and it’s just a great place to be for a variety of people, not just young professionals, young and eligibles, as it has been known. That is starting to change. Yes, there’s a big young professional type population there, but more and more families are moving into that area, as they want to be closer to these schools, which are some of the best in Toronto and they want to be closer to the action of Yonge street and they want to be closer to work. There are a lot of jobs that are at Yonge and Eglinton and more and more offices and jobs are coming there in the decade to come.

Another interesting thing, I was looking at the resale numbers for some of the condo building around Yonge and Eglinton and the numbers are looking very strong. Once again, for 2015, prices are up. People are always surprised to find out the prices that you are getting at Yonge and Eglinton are higher than a lot of places downtown. You are seeing six hundred, six hundred fifty dollars a square foot being achieved in not just a couple, but the newer condo buildings around Yonge and Eglinton. You can still purchase pre-construction property at Yonge and Eglinton for six hundred dollars a square foot, and some cases under six hundred dollars a square foot, for something pre-construction today, when the resale is selling for over six hundred dollars a square foot. It’s certainly a great place to invest for that reason alone.

There will be more information on that from me to come, but I wanted to bring you this interview today with two developers who are active at Yonge and Eglinton. Very active. That is Todd Cowan and Jordan Dermer from Capital Developments. Company used to be known as CD Developments and they’ve recently re branded as Capital Developments. Of course, they are behind probably the biggest success of any project in Toronto for 2015 so far and that is Art Shoppepe Condos. Of course, which came out a couple months back, early 2015. They sold over five hundred units there in less than sixty days. Easily the fastest selling project of the year. Huge success. Massive line ups of people. People camping out. It was quite a mad house. People loved that project and people really got behind it. Now they’re launching a new project, 150 Redpath, which is also in the same neighborhood, Yonge and Eglinton. Just a couple block away from Art Shoppepe and just a couple blocks away from the corner of Yonge and Eglinton.

We talked about that new project, 150 Redpath. We talked about their history, how they partnered up together. Very interesting interesting story how they worked in Europe for a number of years before coming back to Canada as developers. We talked about the type of company and the brand that they are trying build over the long term. What’s their vision for their company and how they hope to one day be spoken in the same terms as Tridel and Menkes and many of the other top industry leaders. That is their goal. That is the type of company they are to build.

For all the show notes on this episode and links to the investor package for 150 Redpath and to learn more about Capital Developments and Todd and Jordan, you can go to truecondos.com/capital and you can find all the show notes for this episode. Without delay, let’s get to the interview here with Todd Cowan and Jordan Dermer of Capital Developments.

Andrew la Fleur: It’s my pleasure to welcome to the show Todd Cowan and Jordan Dermer. They are the co-founders and managing partners for Capital Developments. Guys, welcome to the show.

Todd Cowan: Thank you.

Jordan Dermer: Thanks for having us.

Todd Cowan: Pleasure to be here.

Andrew la Fleur: Let’s start by talking about the re branding. You’re Capital Developments now, formerly CD Capital. What’s the story behind the new name and the new brand?

Todd Cowan: I think that we wanted to create a brand that would resonate more with the development community and we wanted to further explain that, not only is CD Capital comes form a very strong financial and institutional background, but a the same time we also have a very deep experience in development and we wanted to make sure that people understood we’re really a development company with strong financial backing. We felt that, taking the CD and expanding it to Capital Developments was a way for us to build a longer term brand. Which is more on key with what we do.

Andrew la Fleur: Speaking of longer term, what are your long term plans for Toronto? What’s your vision for this company and what you’re doing here?

Todd Cowan: Our longer term plan for Toronto is to build a great development company, that’s built on relationships and the new branding and the whole philosophy behind Capital Developments is: relationships matter. People matter. It’s through great relationships that lead to great developments. It’s not enough just to buy a site, and hire and architect and do another condo building or office building. It’s about working with great people who have integrity and share the same vision we have to build project that we’re going to be proud of and the city will be proud of long term. We’re really trying to create a much more stronger sense of quality and integrity and sustainability of the projects. Jordan, what are your thoughts?

Andrew la Fleur: On a related note, my next question if you tying into it, but maybe Jordan you can speak to this. What are you guys most passionate about? What makes really makes you tick? What gets you excited about development and building condo buildings?

Jordan Dermer: I would say we’re most passionate about making meaningful contributions to cities and I think an example of that was what we did with Karl Lagerfeld and the Art Shoppepe, as well as the actual design of the physical building. We felt it was our obligation to do something really meaningful in a node that’s being rejuvenated in a massive way with public transportation, retail, office, ten thousand new residents moving in there over the next five to seven years. So that is passion for us.

As Todd also mentioned, good relationships is passion for us. For us, when we work on projects we like to enjoy the people we work with on these projects. Both on the investor side and on the consultant side. As you well know, the platinum agents, how we treat them and so on. It’s a culmination of relationships, location, design, international flair, all those components, I think, is for us what makes it very passionate.

Andrew la Fleur: Why don’t you give us a bit of your background. How you guys found each other, how you started working together. I know you’ve got a lot of history together in eastern Europe, and then you came over back to Canada. I know your timing is a little bit tight for the interview today, but just a bit of a back story on how you guys partnered up and how you guys landed back here in Toronto.

Todd Cowan: We both worked at a company called Trizec, or Trizec Properties, or Trizec Hahn, it had various names over the years. Which was a Bronfman company. In the early to mid nineties, Jordan and I both joined that company here in Canada. Which company was taken over ultimately by Peter Monk, who came from the gold industry. He saw a great opportunity in depressed property values globally. So he saw a cyclical play, bought Trizec and very quickly realized there was a great opportunity in central and eastern Europe, which is a market of about five hundred million people. Which, for many many years, basically had a blanket over it, and there was no new development had taken place in that part of the world.

There was a huge opportunity as the Berlin Wall had come down. Those markets were opening up to the west. The EU was expanding its borders to try and bring in a lot of those countries. Within the EU there was a lot of funds flowing into central and eastern Europe to help them with their infrastructure, with their governments, with their banking structures. He asked us to go and relocate to Europe and establish a development company on his behalf under the name of Trigranit. Jordan was in Montreal and I was in Toronto. We both moved over there and spent ten years of our lives founding, establishing and building up a development company which was focused on building very large mixed use projects in the capital cities throughout central and eastern Europe. These cities included Budapest, they include Prague, they include Bratislava, they include Warsaw, Bucharest, that whole region, about five hundred million people.

Through that experience, Jordan and I worked together for close to ten years. We had a great friendship, we had a great business working relationship and after the company that we had built up was ultimately sold. A portion of the business was sold for about two and a half billion dollars in mid 2006. We used that as an opportunity for the two of us to relocate back to Canada with our wives. We had a great working experience together so we knew what it would be like to be partners, so we decided, let’s continue on and set up CD Capital which is now Capital Developments.

Jordan Dermer: I would just add to that, what I really like about Todd is he’s extremely humble and hardworking guy. What he failed to tell you through that whole response to your question was he was actually the chief executive officer of this company for the last four years that ended up selling for two and a half billion. I was the chief-

Todd Cowan: Just a minor accomplishment.

Jordan Dermer: Just a minor accomplishment. Where you had [inaudible 00:14:24] in twelve countries with probably five hundred employees where, at any given time, could have been eight or nine developments under construction. With that experience, we were both able to come back here with confidence and continue doing business with some of the partners that we were in business with over there, pulling some of our own capital, hiring some young, strong talent and building up a development company which we one day hope to be similar to what Trizec was in Canada at it’s when it sold to Brookfield.

Andrew la Fleur: Developing property in Europe, especially eastern Europe, in the nineties, there’s got to be a lot of interesting stories. Are there similarities between doing what you’re doing in Europe and here? The differences? What are the main things that stand out for you as being similar and many things as being different.

Todd Cowan: I think what’s similar, what’s interesting actually is that Toronto has gone through a property boom for the last ten, fifteen years, which is very similar to what actually happened in central and eastern Europe from the early to mid nineties to 2006-2007. Where those markets were going through a major boom. In eastern and central Europe there was a lot of influence from people moving to that part of the world and capital flowing into that part of the world. Together that created a very exciting development opportunity. Here in Toronto, the influence of people that are moving to the city from outside the country and even capital that’s come to Canada. It’s quite similar. From that perspective, it’s very similar.

What’s different, is that when we were developing in central Europe, we were really, as a developer, we were really welcomed with open arms. Everyone in that part of the world was really looking for prosperity, they were looking for growth and what we were bringing were jobs, we were bringing capital, we were bringing opportunity, we were bringing retail. We were bringing a-

Jordan Dermer: Massive

Todd Cowan: Massive investment. We were bringing a new quality of life for them. Developers were really embraced by the cities as being a real economic driver, where in Toronto, it’s mixed. Sometimes I think that the city and the communities are not as supportive of development as perhaps they should be, given the fact that the development industry is really a major driver to the economy of Toronto. It’s improving the quality of life and the street life and the parks and the funding of roads and infrastructure. A lot of that is being funded by the fees and the capital that is flowing into the building industry.

Andrew la Fleur: For you Jordan, anything that you miss about being a developer in eastern Europe now that you’re here in Toronto for the past few years?

Jordan Dermer: Based on what Todd was saying about the welcome arms, we would fly into a city with our chairman at the time, let’s say between 1996 and 2006, where you could come and you could sit down with a mayor or a group of city councilors and identify a site where you feel you could invest and you put a hundred million euros into a brand new shopping center. Yorkdale or Eaton Centre style for example and the mayor’s eyes would light up and say, “What would be your timing? How fast can you do this? Who would you hire as your architect?” Ask a lot of questions, get a proposal from you and through city council and by his own power vested in him, he could actually sell you the site. There may be a form of tender, there may be not, but you don’t see that here.

There’s a lot of competition. There’s a lot of brands like Tridel and Menkes and others that are massive and well qualified and very well respected. We aspire to be one of those brands one day. Both on the residential side and then the office and retail side as well. Definitely a stiffer competition on this side of the pond.

Andrew la Fleur: I’m sure you guys have lots of stories which we’ll get to another time. Let’s jump ahead to present day, this year at least. Art Shoppe condos was a massive success. I believe the building is eighty, eighty five percent sold, something like that now already, which is a tremendous achievement. One of the hottest selling projects of the year. What do you think was the key driver to the success there?

Todd Cowan: I think the key driver to the success was a number of factors. I think it was the combination of, one, the location, being on Yonge street very close to the public transit system and the big investments that are happening there. I think it was the brand recognition of the Art Shoppe, which has been around for eighty years and i think that everyone knew about this project, they had been anticipating it for a long time. There was a lot of pent up interest. I think we did a great design. I think we tried to do a design for this building which is different.

It’s aesthetically pleasing, it’s not just a typical glass building. It has a lot of articulation of the façade. It has a lot of green space and then, to top it off, bringing that sense of luxury and design and style by having the influence of Karl Lagerfeld, by designing these two beautiful lobbies. I think, really, the combination of those four or five key factors is what’s made it such a great success.

Andrew la Fleur: That’s great. Jumping ahead to today, 150 Redpath. I know you guys are very excited about this one. This is your third and, perhaps, final chapter at Yonge and Eglinton maybe for now. What can you tell us about 150 Redpath? What do investors especially need to know about this building and why should an investor look at purchasing a unit here at 150 Redpath, in your opinion?

Todd Cowan: I’ll talk just briefly about the philosophy and maybe Jordan wants to talk a bit more about some of the details, but not only, as a developer, do we feel a responsibility to create buildings which are aesthetically pleasing and of great quality and will sustain themselves for the long term. We also feel that it’s not enough to build the typical condo building, but I think you need to understand the changing dynamics and living habits of people in the city and we’ve come up with this concept of really a sort of customized living and trying to recognize the fact that people don’t just live nine to five. Very few people drive their car in our community to work. People are working remotely. They are working at very differing hours and they’re using the building that their living is really as an extension of their home. We’ve tried to create this 24 hour always on lifestyle, which is meant to demonstrate and exemplify and appeal to the changing lifestyles of the people who are living in the urban fabric of Toronto.

Jordan Dermer: Just a few things to add to that: One fact that maybe people don’t talk about often is that there are fourteen within a five minute drive and probably a maximum fifteen minute walk from 150 Redpath, to choose from. For residents, for investors who have tenants in their units. The other thing I would say, downtown Toronto, I believe, is overrated, in that at night the core empties out. Unless there’s a hockey game or a basketball game, granted, there’s a surge, but at the end of the day, come six o’clock, five o’clock, people get on the subway and where to they go? They go north, east, or west and they’re gone. When you go down to the Bay Adelaide Centre at eight o’clock at night, what’s going on there?

You come up to Yonge and Eglinton and you see what’s going on in terms of shops, restaurants. Just looking at the brochure here, Indigo, LCBO, Roots, Lululemon, Restoration Hardware, Sporting Life, American Apparel, GAP, Urban Outfitters, and the list goes on. A lot of people don’t like getting cooped up in a mall, like at Yorkdale and Eaton Centre. The air tends to be stifling. Here you can walk out doors from 150 Redpath, five minute walk to any of these shops along Yonge street, in addition to numerous restaurants, bars, night life. It’s happening up there at eight o’clock during the week and weekends.

Todd and I live in the area, we’re biased, but that’s where we would go for a meal or a shop with our kids on a weekend. Stroll up and down there. It’s fantastic.

Andrew la Fleur: It’s certainly got a wide appeal for families, for young professionals. You’ve got the office buildings, obviously a huge historical residential base, lots of people living there and more and more people coming in with the new buildings. Mixed in with, like you said, the restaurants, the retail. You get the vibrancy of Yonge Street without the sketchiness of downtown Yonge Street, you could say.

Jordan Dermer: And the end user, you’ve got a cross town stop at Mount Pleasant and Eglinton at your doorstep. You’ve got a brand new going to the Madison project twin towers, which is sold out now. Which, literally a three minute walk from your front door, which is unheard of. And then, like I said earlier, the fourteen schools. Choose from which one you want. From public to private. Junior to senior schools. They have it all, and some of the most beautifully renovated public schools in all of GTA. Right on Row Hampton.

Andrew la Fleur: Where do you see Yonge and Eglinton ten years from now? Everyone talks about the LRT. You guys are making a huge contribution to the neighborhood with the three buildings, 150 Redpath, 155 Redpath and Art Shoppe. Where do you see this neighborhood ten years out? What do you envision?

Todd Cowan: I see this is a neighborhood where the population is set to double in that set time on the horizon, where we’ve forecasted there’s twenty to twenty five thousand people which will move into the various building which are being built within a short walk. I think you’re going to see that that area becomes one of the most important urban nodes for retail. Where today it is important, but even if you look at rent levels compared to Bloor Street, compared to Queen street West, I think you’re going to see that Yonge and Eglinton is really on an upward trajectory in value. I think you’re going to see a lot of positive turnover where the successful local stores and restaurants will continue to operate, but you’re also going to see more and more and more influx of major, successful retailers and service providers which will ultimately fill in the voids which currently exist on Yonge Street. I see that it’s just going to become a stronger and more prosperous neighborhood ten years from now, with a population that can really sustain a very high quality and level of retail services.

Jordan Dermer: I would just add to that, I feel that Yonge and Eglinton will be, without question, the new midtown. If you look at the values in Yorkville, at it’s peak, units were selling at two thousand, two and a half thousand if you look at extremities like penthouses and the Four Seasons, per square foot. When you think about this project, selling at about the six hundred and thirty dollar average per square foot price point. That’s real value compared to Yorkville and other areas in the city.

Todd Cowan: Exactly. Why is Yorkville attractive? Why does it have that cache and why is it attractive? With such high property values. Partly because it has the Bloor Street subway line and the Yonge Street line. Yonge and Eglinton is getting this cross town LRT partly because it has a very high level of retail, lifestyle, restaurants, which adds to the value of living in [inaudible 00:29:36] and so, to your point Jordan, fast forward ten years from now, I think you’re going to see a massive increase in the value of real estate in Yonge and Eglinton, because all those restaurants and services will be there, but on top of that, you’ve got these amazing schools, which are all around. You have a tremendous amount of parks and green spaces and public spaces because Yonge and Eglinton is an established neighborhood, unlike west and east and south of the core, which are new neighborhoods, up and coming neighborhoods, interesting, but they don’t have [inaudible 00:30:18] It’s going to take them years to fund and create the schools and parks and all of those things which have existed for fifty years at Yonge and Eglinton.

Jordan Dermer: If you really break it down, I’m sure there are some people would take me on happily in this debate, but what does Yorkville have that Yonge and Eglinton doesn’t have? Granted, there are some high end boutiques on Bloor Street, but are people really looking for that when choosing a condo. You’re a five minute subway ride to Yonge and Bloor where you can get off and stroll beautifully up and down Bloor Street and enjoy a shop, a meal or what have you, but at a third or a half of the price, you can buy at Yonge and Eglinton and everything is at your doorstep.

Andrew la Fleur: You still have the best restaurants in Toronto right there, best shopping, like you said, best schools, even much better schools are at Eglinton than at Bloor.

Todd Cowan: Another way to put what we’re say is there’s going to be kind of a leveling of the playing field, where right now there’s a very wide divide or differentiation between Yorkville and other important neighborhoods. I think there’s going to be a leveling of the playing field where you’re going to see how much property values are going to go up.

Andrew la Fleur: That’s great. Thank you guys so much for your time today. Anything else you want add about Redpath or about Capital Developments or anything else you want, especially investors, to know about your company and what you’re building here?

Jordan Dermer: For us, the most important thing, and I think if you go on our website you’ll see, is all bout relationships and the people that we work with and how much the matter to us. They’re no different from the way we treat the platinum or VIP agents who bring clients or investors through our door to the end user or the renter or the investor buying a unit in our building. We’re very proud people and we have a reputation to withhold and the only way to accomplish that is to deliver on what we promise and to build projects that, not only are we proud of, but people are proud to live in and call their home. We will continue to do that.

It’s not about squeezing out the last few dollars out of a project profit. I think you’ll see that when you look at our amenity packages. There’s not that many developers doing outdoor rooftop pools at tremendous cost and amenities of that nature, but we’re doing because we believe in it and we believe that that what’s people want to live in. We don’t want to deliver little boxes in the sky, where when people walk out their door and lock it, there’s no where to go and nothing to do. We want to deliver value, enjoyment, live work play environments. We feel strongly about that.

Andrew la Fleur: Great. If people want to get a hold of you guys or more information about Capital Developments, where’s the best place to do that?

Jordan Dermer: Our website, our contacts are there, our LinkedIn contacts, our phone numbers, emails. Feel free to contact us any time.

Andrew la Fleur: Great. We’ll definitely include a link to that in the show notes for this episode. Jordan and Todd, thank you so much for your time today and hopefully we’ll get you back on the show again soon.

Todd Cowan: Thank you very much.

Jordan Dermer: Thanks for having us.

Andrew la Fleur: There you have it. That was my interview with Todd Cowan and Jordan Dermer, once again, from Capital Developments. I hope you enjoyed that. For all the show notes on this episode, just head over to truecondos.com/capital and you can get the investor package for 150 Redpath and you can get links to Jordan and Todd’s LinkedIn profiles, as well as the Capital Developments website and more. So, head over to truecondos.com/capital to check that out. Thank you very much, once again, for listening, for supporting this show.

Thank you for your reviews and kind words that I’m receiving every single week for this show and, once again, until next time, I hope you have great week. Talk soon.

Thank for listening to the True Condos podcast. Remember, your positive reviews make a big difference to the show. To learn more about condo investing, became a True Condo subscriber by visiting truecondos.com.

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