Designing an Iconic Building with Peter Freed of Freed Developments
Peter Freed Interview Highlights
1:03 What to Expect in Today’s Episode
2:45 How Peter Freed Got Started in Real Estate
9:14 What People First Thought of Investing in King West
12:08 What Drives Peter Freed Today to Keep Going?
14:08 What Bugs Peter Freed the Most About the Condo Industry?
15:26 Comparing America’s Model to Canada’s Model
18:23 Is There a Condo Bubble in Toronto?
20:07 Why Yonge & Eglinton?
21:40 What Yonge & Eglinton Means to Peter Freed Personally.
23:07 What Makes the Art Shoppe Condos So Special?
25:10 Retail Coming to the Art Shoppe Condos
27:22 Non-Negotiable Details of Freed Development Suites
29:02 Celebrating Living in Toronto
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Peter Freed Interview Transcript Coming Soon
Andrew la Fleur: Hi and welcome back to the show. The word landmark building or iconic building are terms that get thrown around a lot in the condominium industry by marketing companies and developers describing the buildings that they are promoting. However, there’s only actually a very small handful of buildings that can actually back it up and truly call themselves a landmark or an iconic building. The Art Shop Condos and Lofts, which is launching now at Young and Edmonton certainly will be one of the buildings that is a true landmark and iconic building that will really define an area and really be a building by which the others in the area will be measured against when it’s all said and done.
I’m very excited today to be interviewing Peter Freed. Peter is the man of course behind Freed Developments. Freed Developments is very well known in the King West neighborhood, which is known by some people at Freedville actually because there’s no many buildings in the area built by Freed. Now over the past year or two, Peter has shifted his sites to Young and Eglinton. He’s got three fantastic sites there. The most important you could say of the three would certainly be Art Shop condo sites right on Young Street, just a block south of Young and Eglinton. We talked a lot about that project.
We talked a lot of about Peter’s story and how he got started in real estate and how he got to the place that he is today in the industry. It was just a really great interview overall. Peter doesn’t tend to do a lot of interviews, so I was very excited to be able to sit down with Peter for this one. I brought the show notes on this episode and to get the floor plans, prices, and the full investor package for Art Shop Condos, just head on over to TrueCondos.com/Freed, F-R-E-E-D. The show notes for this episode will be there. Here it is, my interview with Peter Freed.
Andrew la Fleur: It’s my pleasure to welcome to the show, Peter Freed. Peter, welcome to the show and thanks for your time today.
Peter Freed: You’re welcome.
Andrew la Fleur: I want to get started. Why don’t you tell us a little bit about your story? How did you get started in real estate and why did you go into this business?
Peter Freed: In my late teens, I was becoming pretty fascinated with house building at the time. When I finished school, high school, and then I went to university, which I went to very briefly, only for about a year, I was anxious to learn how to build houses. I fortunately had a friend’s father who has been a mentor to me, who is still a mentor to me to this day, who was a real estate developer. He instructed me to get a job first as a laborer to learn from the ground up. He got me a job as a laborer on a house building site in Whitby.
Andrew la Fleur: Whitby?
Andrew la Fleur: You were how old? Roughly in your teens you said?
Peter Freed: I think I was 20 at this point. After that, I a year later through another contact hooked up with another individual whose family was in the development business. We started a home building company together and got some lots from his family. We started off with 12 lots in Markham. I site supered and sold the houses in a trailer on the weekend. Did all the budgets, marketing program. It was a really great crash course in house building. Once we had some success with the 12 houses, we then got another 50 lots and then another 50 lots. I ended up building a hundred homes with them from the time I was early 20s, up until the time I was about 23, 24 years old.
At that point, I left and opened up my own construction company. I would have built you a custom house for a fee, let say. I didn’t have any capital and I didn’t know much about development at that point in time. I was just a construction manager, I guess would be the best way to describe it. I would have renovated your basement for ten thousand dollars, that type of thing. I did that for a few years. By the time I was 26, 27, I learned that you could essentially for a management fee, if you found an opportunity, you could take it to a capital partner or an investor who would put up the capital you needed.
I did that with a large investor to build some homes in Aurora. We did two small housing developments in Aurora. I guess that would take me to 96, 97 when I was 26, 27 years old. At that point, I started learning about development and realized if you wanted to be a builder, you likely should also be a developer because that’s where the true opportunity was from my analysis to date. I found a land assembly opportunity in North York in 1997, 98 where I put seven houses under agreement that had very big back yards. I auctioned them for two years and I rezoned it into 50 town homes. That would have been my first.
Andrew la Fleur: Where was that?
Peter Freed: Right behind Mel Aspen Square on a street called Ellerslie, right at Beecroft and Ellerslie. It sat on a park called Dempsey Park. We called the project Dempsey Park. That was very successful, so we did it again.
Andrew la Fleur: Would you say that was a defining moment? The light bulb went off at that point and you said …?
Peter Freed: That was breaking the ice as a developer and fortunately having success. We did it again at Ellerslie and Bathurst. Bought and assembled some more land. Got another 50 units approved. Sold that site to another builder once the approvals were in place. It just went from there. I did about a thousand homes that way. By the time I was 31, 32, which takes me to 2002, 2003, I had been looking at the King West area a lot, King and Bathurst. That’s when I bought my first site in the King West area to do our first building.
Andrew la Fleur: The first site was?
Peter Freed: 66 Portland.
Andrew la Fleur: 66 Portland. Can you tell us how that deal came about or why? Maybe it seems like a big jump to go from town homes in North York, that sort of thing, to a downtown, especially here. Obviously we know King West what it is now. Some people call it Freedville obviously, but back then, this was when exactly?
Peter Freed: 2002, but I had …
Andrew la Fleur: In 2002, there was nothing here. It was derelict mostly.
Peter Freed: To the common eye, yes, but at the same time, it had a lot of old nice historical buildings that were starting to come back to life by virtue of the that Allied Reet, that’s Mike Emory, had started acquiring, had acquired a big portfolio of these buildings and were starting to put tenants back in them. It was a 10-minute walk from the downtown core and a five-minute walk from the lake and Queen West. To me, it just seemed like a diamond in the rough that had obviously a long history to it.
Andrew la Fleur: What did people say to you at that time? What were people saying? You’re crazy, this is not a good move? Were people saying wow, you’re a smart guy and you’re ahead of the curve and I want to join with you? Was it like, this guy is crazy. King West, who would want to invest there?
Peter Freed: When opportunity is not obvious to the average person, it’s hard. Most people don’t have any vision. Most people are risk adverse, which is understandable. I just saw an opportunity to do a project at that point. I wasn’t thinking I was going to end up doing 13 projects or however many it’s been. I was excited to do one project. Most people I showed it to, the opportunity, turned it down. It took me a while to find someone to agree to take the risk with me, but fortunately I found a partner to do the project with. We launched it for sales in the spring of 03 and had some reasonable success.
Condos didn’t fly off the table. We didn’t sell out or anything like that, but we sold about half the units, which was a reasonable start. Worked diligently over three to four months to get it up to about 65% sold and got our construction financing and started. At that point, we looked for another site. We bought a site on Adelaide, which became, I guess it was called 10 Morrison at the end of the day. We market it as 455 Adelaide.
Andrew la Fleur: I didn’t realize that was your second site. I thought you were still on South of King.
Peter Freed: What happened, we started. That was the second one we put under contract. A very short time after that, We bought Krangles Auto, which is now the Thompson Hotel site. The same family owned a little piece of property across the street on Stewart, called 20 Stewart. We actually picked up three new opportunities in a short period of time. That’s when we started picking up speed. The neighborhood started to emerge or become more obvious to the average person. Between those projects, we added another 600 or 700 units, plus a hotel, retail, and parking. That was our big move in retrospect in 2004 and 2005.
Andrew la Fleur: What drives you today? Now you’re a veteran in the business. You’ve got many buildings under your belt. You’ve got a neighborhood pretty much named after you now. What drives you today to keep going?
Peter Freed: I love creating projects. I love design. I love Toronto. It’s what I do. When we can find new opportunities in good locations where we can effectively do what we do, that still excites me. We’ve a big organization now, a lot of people, a lot of great people that we’re keeping busy. It’s just a privilege to be playing a role in elevating our city and assisting in building it.
Andrew la Fleur: Your brand is very distinctive. You have a very distinct reputation in the industry. What do you want your brand to stand for? What do you want people to remember you or know you as when they see your buildings or when they step into your buildings? What do you want them to experience or feel?
Peter Freed: We hope that they feel an elevated style of lifestyle and design. We hope that our buildings stand out as buildings that have elevated the design threshold in the city, buildings where people cared to differentiate them from all the other commodity type offerings that we see every day on every corner. Just an elevated product that hopefully stands out from our competitors.
Andrew la Fleur: What bugs you most about the condo industry? If you had a magic wand you could change one things overnight about the condo industry, what would it be?
Peter Freed: One thing. There’s many things I wish I could change about the condo industry.
Andrew la Fleur: You mentioned the commodity driven product that’s out there. That’s obviously a huge part of the market. Is that something that bugs you or that motivates you to be different from that? You don’t worry so much about what other people are doing?
Peter Freed: I don’t worry. It is what it is. The masses are going to do what they’re meant to do. I wish you could start building projects after you’ve maybe sold a third of the units, not two-thirds. I appreciate the de-risking factor of the two-thirds. If I was chairing the board of a bank, I would keep it the way it is. I wouldn’t necessarily even take a construction loan at a third resales unless I felt really good about the overall direction of the economy or the risk profile of that project. I just think it’s a shame that you have to sell most of the units before you get started. I think you leave a lot of value on the table.
Andrew la Fleur: What do you mean exactly? I’ve heard that sentiment a lot from different people in comparing the model in the US, most of the US, where they build it and often, or they used to build it before they sold it. At the end of the day, it creates a different product when you can finance it that way, where you can build more suites that are geared for the end user as opposed to the investor. The suite does it more for the investor, so you can sell them quicker. Is that where you’re going with that?
Peter Freed: The word investor obviously, how many people do you know are buying a condo today for themselves to move into three or four years from now? I don’t know anyone who is doing that.
Andrew la Fleur: I don’t know what I’m going four years from now.
Peter Freed: Right, exactly. Obviously, what’s fueling the condominium industry are investors buying pre-construction condo units, which the vast majority of are in reality, the future rental supply for the City of Toronto. I just believe that you ask me the question if there’s one thing I could change, it would be that so it wouldn’t be so investor driven. It would be more end user driven and there wouldn’t be such an aggressive mandate for a developer to pre-sell to lock down the financing at such an early stage.
Andrew la Fleur: Do you think that mandate, the way that it’s structured, creates bad buildings?
Peter Freed: That in itself doesn’t create bad buildings. People developing the bad buildings creates bad buildings. It’s not necessarily about budgets either. I’ve seen some of the most horrific construction projects have the largest construction budgets just with people not knowing how to allocate their dollars accordingly. It’s a matter or taste, subjective. Some people may like it. Some people may not. You can develop a beautiful building with a very low budget. I think the industry gets itself into patterns, comfort patterns of copying, imitating, reproducing …
Andrew la Fleur: No innovation.
Peter Freed: … the same product over and over again with very little innovation or very little willing to take any chances or risks to do something a little bit different. That’s unfortunate because then you end up with a city with a hundred buildings that look the same. That’s very negative in my opinion.
Andrew la Fleur: Do you think there’s a condo bubble in Toronto? What’s you’re take on that question?
Peter Freed: Not at all. To me, it’s obvious that there isn’t at the moment. I focus on things, statistics like the fact that over the last 20 years, Toronto has sold approximately 40 thousand new homes and condos every single year. We have incredible growth here. There’s a hundred thousand people a year moving into the city. That is not a small number of people. 80% of the condominiums apply more or less as a new rental supply. There’s a 1% vacancy rate. Why the press doesn’t talk about that key point more is I guess they’re trying to sell papers with bad news, which we all know they do. Is there ever a reason to be concerned about the industry? Of course. It flows in waves.
There’s lots of macroeconomic factors that are out of our control, like the financial crisis in late 08, early 09. We should always be worried in this business or else you shouldn’t be it. It’s a terrifying business. There isn’t a condo bubble in Toronto. I think the values in Toronto are still very low, 600 dollars a foot, 650 a foot. What comparable city like Toronto in the world, in the downtown core with a brand new stylish building can you find a condo for six to seven hundred dollars a square foot? Nowhere. That gives me comfort. Again, all within the context of always being nervous and for good reason.
Andrew la Fleur: Let’s talk about Art Shop. Art Shop is obviously launching very soon. I know you’ve been working hard on that. I’m assuming you’re very excited to get that project out there into the marketplace. Taking a step back. Young and Eglinton is an area, why Young and Eglinton for you? You’ve got three sites there that you’re in different stages of development now. What’s significant about Young and Eglinton for you?
Peter Freed: So many things. I would start with transit. The new LRT, eight billion dollar investment running east west along Eglinton, intersecting with the Young Subway Line. To me, that’s as obvious as it gets. It’s going to be, in a lot of ways, the center of the city. It’s a great neighborhood already. It’s only get better. I see 20 to 30 thousand people moving into that neighborhood over the next decade. It will absorb a couple of thousand units a year at least of new sales and construction. All the density approvals, planning rationale to support the new infrastructure. It’s just blatantly obvious that it’s a great development neighborhood.
Andrew la Fleur: I understand, correct me if I’m wrong, that you grew up in the area as well.
Peter Freed: I grew up close to the area. I didn’t grow up within three minutes of the intersection. I could ride my bike there in five or six minutes, let’s put it that way.
Andrew la Fleur: What does the area mean to you personally? What memories do you have of it growing up? What does it mean? You mentioned a little bit, where do you see it going? Specifically the Art Shop site, it seems to have a lot of significance to people who are from the area in particular. What does the site mean to you and why were you so eager to acquire the site and excited to get it?
Peter Freed: Growing up close to the area, Young and Eglinton was always an attractive intersection neighborhood with some nice restaurant offerings and retail. The movie theaters were there. It was pretty simple at the end of the day. It has not changed a lot over the last 25 years, but it’s now changing a lot. It’s now overdue to change. The Art Shop site to me growing up to me was always that huge city block furniture store. It just sat on a tremendous amount of land. To have the opportunity to acquire that site and create a world class project on it and to play a major role in the re-positioning of the neighborhood, it means a lot. It’s a fantastic opportunity.
Andrew la Fleur: What are the key highlights for you of Art Shop? What stands out as making this building something special?
Peter Freed: I would start with saying that it’s again an entire city block. You have an incredible amount of frontage on three city streets, Young, Sudan, and Hillsdale. Then the north, south, eastern border of the site, we’re running a linear park from Sudan down to Hillsdale. As far as master planning, that really stands out. Then to have 550 thousand feet of building to play with is also incredible.
Andrew la Fleur: Would this be the largest building in terms of footage that you’ve done?
Peter Freed: For a single building, yes. The Red Path Project, the two towers combined I think are 650 thousand feet. They’re both quite significant, but the Art Shop for one building is I believe the largest footprint we’ve worked with. It’s actually almost the same amount of land, I would say 97%, within the same size as the Thompson Hotel. They’re both about 70 thousand feet of land, which is just a little bit under two acres.
Andrew la Fleur: These types of sites are just getting rarer and rarer and harder and harder to find. I’m trying to think too of similar size sites anywhere in the city right now. There’s one or two. Those are very hard to come by, a whole city block like that.
Peter Freed: That’s why, for example, the Red Path Project, we had to assemble 22 properties to create the site. The Art Shop, we bought a couple of homes just to clean it up on the east side, to enable us to build a linear park. We had a little part on the south side of the site that we’re now taking north to Sudan. It’s becoming harder and harder. The opportunities are out there, but it takes a lot of work.
Andrew la Fleur: What can you tell us? I know you’re probably in ongoing discussions, but what can you tell us about the retail component of the building? Has anybody been secured? Can you give us any hints or any teasers as to what we can expect there?
Peter Freed: You can expect one of the major grocers in the country. I can’t mention the name yet. We have signed a deal with a large retailer, large grocer. On the ground floor, we’re going to have a mix of a handful of retail tenants. It’s going to be world class luxury retail. We’re always going to keep the lifestyle of the resident and the building in mind when we do leases. It is being programmed.
Andrew la Fleur: We’re not talking about a dry cleaner and a convenience store?
Peter Freed: Not necessarily, but …
Andrew la Fleur: Not that type of vibe.
Peter Freed: … dry cleaning is part of a large offering. Certainly people need dry cleaning. It certainly won’t be the focus.
Andrew la Fleur: You’re not going to have a 30 thousand square foot dry cleaner?
Peter Freed: No.
Andrew la Fleur: That’s worth pointing out. You mentioned the grocery store is actually going to be on the second level of the retail and then you have a whole ground level as well. In total, how many square footage of retail is there going to be?
Peter Freed: It’s about 85 thousand feet.
Andrew la Fleur: 85 thousand, the scale, there’s nothing like it out there. It was just announced Karl Lagerfeld is going to be designing the lobby. What can you tell us about that?
Peter Freed: Karl Lagerfeld, we retained him to design the lobbies. There’s two lobbies, the north lobby and the south lobby. We’re very excited about that. It’s his first project like this in the country. He’s quite a character. He’s quite gifted. He’ll utilize his creativity to make the project even more special than it already is.
Andrew la Fleur: When you’re designing or looking at suite interiors, I understand from what I’ve heard, you’re very hands on with the design details of your buildings. What are the non-negotiable things that you like to have in every suite? In a round about way, asking you when investors are looking at units, what are the things that they should be looking for that makes a great suite?
Peter Freed: I’m a big believer in open concept, functionality, and creating spaces that give off a positive energy. We try to delete walls whenever we can, at the same time appreciating whether it’s a one bedroom or two bedroom unit or even a three bedroom unit. If it’s a small unit and you have 400 square feet, there’s only so much you can do in 400 square feet. If it is a very small unit, again you want it to be open. You want it to feel bigger than it really is if possible. You have to imagine people being comfortable in the space and using it for different reasons. We’ve created thousands of these units over the last decade and like to think we’re pretty good at it at this point. I would certainly hope so. Then we like to work with designers, local designers and international designers to try to differentiate the product, to keep it fresh.
Andrew la Fleur: In terms of the finish.
Peter Freed: That’s been our approach.
Andrew la Fleur: One last question as we wrap things up. Is there any question that nobody has ever asked you about yourself or about your business or about the condo industry, but that you wish somebody would ask you? What would that question be?
Peter Freed: That’s a pretty tough question to answer cold.
Andrew la Fleur: Take your time.
Peter Freed: It’s a tough one. I’ve been asked a lot of questions. Just more so, just more focused on just Toronto itself, just to make a final point. I’m surprised that people don’t celebrate our city more than they do and realize how lucky we are to be in Toronto and just how much of a privilege it is to be developing real estate in the city at this point in time. The people always talk about products or pricing, the more physical components. I think they don’t step back enough and just ask about Toronto and what Toronto means to me in the grand scheme of things.
Andrew la Fleur: You’re obviously very proud of your city and very proud of the stance of the city in the international scene.
Andrew la Fleur: Wow. What’s …
Peter Freed: I’ll just throw that out right here at the end.
Andrew la Fleur: That’s exciting. We’ll be watching for that book. Is it like a coffee table book?
Peter Freed: It’s a coffee table book. I bought a very large book collection on Toronto a number or years ago from a collector. It has almost a couple of thousand books from the early 1800s until present. I’ve spent the last year extracting all the best images from the book collection to create this coffee table book, which really is going to in essence be a pictorial celebration of the city.
Andrew la Fleur: Does it have a title yet?
Andrew la Fleur: Toronto, perfect. Great. Thank you very much, Peter. I will definitely watch for that. Thanks for your time today. All the best with Art Shop.
There you have it. That was my interview with Peter Freed from Freed Developments. I hope you enjoyed that. Once again, for the show notes on this episode and to get the investor package for this project, Art Shop Condos, just head on over to TrueCondos.com/Freed, F-R-E-E-D. I’d be sure to get you that information right away after you complete the little form there. I’m very excited about Art Shop Condos. I think it’s going to be a truly iconic landmark project with a design that’s going to really set it apart with retail component and amenities that are going to make it one of the best buildings in the city, certainly the best building in the Young and Eglinton neighborhood in my opinion.
I’m just very excited to be bringing this project to all of our investor clients. I should also mention that I personally invested in the Young and Eglinton neighborhood as well, as some of you already know. One of the units in my portfolio is in 155 Red Path, which is also one of Freed’s other buildings at Young and Eglinton. I am a big believer in what’s happening and what’s to come in Young and Eglinton, as well as the Freed brand and the Freed name. I’m personally invested in as well.
Definitely a recommended building for any investors who are out there, Art Shop Condos. I look forward to bringing you all the details on this. Just head on over to TrueCondos.com/Freed, and we’ll get that information over to you right away. Thank you again for listening and have a great week. We’ll talk to you next time.
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