Why King West is such a hot area for investment with Eric Kuzian

Andrew la Fleur: On today’s episode, we talk to Eric Kuzian about Kingly Condos coming soon to King West. Stay tuned.

Speaker 2: Welcome to the True Condos podcast with Andrew la Fleur. The place to get the truth on the Toronto condo market and condo investing in Toronto.

Andrew la Fleur: All right. It’s my pleasure to welcome to the show for the first time Eric Kuzian. Eric is the President of PSR Brokerage, leading brokerage downtown Toronto and it’s great to have you on the show, Eric.

Eric Kuzian: Thanks Andrew. It’s a pleasure for me to be here.

Andrew la Fleur: Eric, this is your first time on the show. We’ve done a lot of work together over the years, but somehow we haven’t actually done an interview yet, surprising enough. Why don’t you-

Eric Kuzian: This is definitely way overdue my friend.

Andrew la Fleur: It is. We’ve done so much work together. Why don’t you start by telling everyone, and even me, I haven’t heard this story, what’s your story of how you got into real estate? What’s your background and how did you come into real estate?

Eric Kuzian: Oh, yeah. Haven’t told this story in a while. It seems like it was so long ago. Basically, in my university days I didn’t really know what I wanted to get into so at the same time I was working for my father’s family business, which was dry cleaning. We had a bunch of franchises and we’d open up here, open up there, and I ended up really focusing on new neighborhoods. Started really liking the real estate aspect of it and started understanding where new locations could be and these new locations ended up being some of our top performing locations or franchises. From there, I really liked the real estate side of things. Had a conversation with my father and I said, “Listen, I think I want to kind of get into real estate.” He said, “I think you should.”

Jumped into real estate. Obviously, the residential side was more interesting even though I had started negotiated leases more on the commercial side, but once I got into the residential side, much like everybody else, I had no idea what I was going to do, where I was going to trade. Interviewed a bunch of brokerages, ended up doing my first brokerage with HomeLife/ROMANO, which was right at Yorkdale … Just across the street from Yorkdale mall. That was basically me …. Two reasons I joined the brokerage, one was I figured it central. Highway was right there, I could get to anywhere. Service all types of clients. I didn’t really understand where I was going to be trading. From there, I really liked the Office Manager and the broker of record, who was a small boutique office. Very family oriented and tenacious in getting deals done.

I felt I had a good support. That’s how I jumped into it. My second year, I believe it was, I started doing a lot of business downtown and they didn’t really have representation downtown. They were much more dealing with their neighborhood of where the brokerage was located. Danny Romano, at the time, came to me, he said, “Listen, if you want to partner, I’ll open a brokerage with you downtown and you can do your thing.” We changed it, branded it differently, met with Mr. Cimerman, who’s the President of HomeLife Global. Let him know that while I’m staying true to the brand, I didn’t really like the colors, and had my creative guy make the colors black and silver instead of the green and gold.

It’s funny, because about a month after I did that, Andrew, I had, I think, about 80 or 90 different HomeLife agents across the country calling me asking me where I got that logo. To this day they include it now as part of their logos. Long story short, we created a beautiful boutique office in The Carpet Factory, which was Dufferin and King at the time. I started doing a lot of business in King West. Every time I met a cool agent that I thought would be looking to do something a little differently in the urban Toronto market, they joined my team, liked what I was doing. Then from there it progressed to this opportunity, which was private service realty at the time, which was predominantly selling Peter Freed developments.

The opportunity was for me to come in, and run the company, and my vision was different. I didn’t just want one developer to work with. I wanted to go after every developer. Separate church and state. Have a resale division, have a new sale vision, and it was really a hybrid because the main companies who just do new sales, just do new sales. Then the main companies who do resales, just do resales. I like the idea of creating a hybrid and eight, nine years later we’re just over 130 agents and the new sale side is obviously now [inaudible 00:04:40] 16 different developers. The rest is history, my friend.

Andrew la Fleur: Absolutely. Just some of the projects you’ve worked on, Art Shop was obviously a highlight in the past couple years. What other projects, just to give people an idea of projects that you’ve worked on, things that you might be particularly proud of on the new sale side.

Eric Kuzian: Yeah. Art Shop was obviously a big feather in the cap. It was a very prominent project, well received, and a lot of hype. Bringing in Karl Lagerfeld, who is arguably the best clothing, fashion designer in the world, to hang his hat and do that project with us was truly something unique and rare. We definitely, obviously, took full advantage and enjoyed that opportunity. King West, where we obviously have our office is something that we’ve done over 2,000 units and doing projects with Philippe Starck at 75 Portland, and Fashion House, then with the Castle development guys taking the arch off and doing the Red Pass Towers at Young and Eglinton. Then working with boutique developers like Zinc and Curated who are much more project focused, neighborhood focused, and really putting some great product out there. We’ve had a whole range of 80 unit projects up to 650-700 unit projects. Each one’s different, but each one’s been extremely fun and happy to be successful.

Andrew la Fleur: Moving forward, I’m just curious what’s your vision for PSR, for your company, moving forward?

Eric Kuzian: On the resale side, we just want to make sure that we become a very competitive brokerage that offers progressive tools for today’s realtor. We’re very focused on not what worked 30 years ago or 20 years ago, we focus on how real estate’s going to be in the future. We’re very brand conscious, we’re very clean in terms of our lines and our marketing. That’s the vision on the resale side to basically provide this brokerage that can really do real estate the way we feel real estate should be done in an urban environment.

On the new sale side, I think it kind of translates to the same vision. There is an opportunity, in my opinion, to again, take a fresh approach, a relationship based approach, and represent developers properly where we bring projects to life and we bring it to the marketplace in excitement with drive, and vision, and really execute the developers concepts to the way we get it to the point of sales.

Andrew la Fleur: Great. Let’s talk about the market. What’s your take on the condo market right now? There’s been a lot of mixed signals out there, I guess you could say, since the Fair Housing Plan came out a few months back. Where do you see the market right now?

Eric Kuzian: That’s a great question. I, personally, think there’s been mixed signals for the last year and a half and nobody’s gotten it right. That being said, the … I think like anything else when they first announced HST and when they first announced … Whether they started talking about foreign tax, kind of like what happened in Vancouver. I think every time they announce something, everybody just puts the brakes on for a certain period of time, and then they realize that the sky is not falling, and everybody jumps back into the game.

The condo market, especially in the downtown core, which we predominantly trade in, we didn’t really see much of a slow down. Prices are still going, the condo market is what has been the best product in terms of appraised value and sustaining their prices over the last three, four months. Now, product’s gone again and inventory’s low and you’re starting to see bidding wars come back. I think you’re going to see the same aggressive market, maybe not to the extent that we saw in February and March, but I think you’re going to go back to seeing some pretty impressive numbers coming back out with a very healthy real estate market.

Andrew la Fleur: That’s a great point, you bring up the HST. It’s not something that I’ve heard of anybody mention as well, but it’s … Our memory is short. If you go back to 2010, you’re right. There was a dramatic pause in the market when they introduced the HST and everybody was unsure of what was going on and how that was going to effect things. Now, today, it’s not even a thought. Nobody even thinks about the HST being a factor, because it’s just been understood and absorbed by the market. It’s a non-factor, but at the time it was a huge deal.

Eric Kuzian: Yeah, absolutely. Like you said, everybody just forgets, right? The funny thing with real estate is that because it’s been such a hot real estate market and because real estate is so interesting, because everybody understands it. It’s a globally, universally understood language. Someone owns real estate, someone rents real estate. Because it’s so globally and universally understood, I think what ends up happening is the media grabs it and it becomes such an interesting story, because that’s what they can relate to with so many people. You just have the media who’s pushing stories, pushing stories, pushing stories. Everybody reads and everybody has an opinion, nobody really understands what’s going on. Once that all quiets down and they realize that they can’t talk about the Fair Housing Plan anymore because it’s been done, everybody jumps back into the game.

Andrew la Fleur: Great. That’s a great point. Yeah. You can only have so many headlines and then you just got to get back to living your life.

Eric Kuzian: Exactly.

Andrew la Fleur: Everybody needs a place to live. We want to talk about Kingly condos obviously today. Let’s start by talking about the location of Kingly condos, which is King West. You, more than anybody, know this neighborhood. Like you said earlier, you sold 2,000 condos here. 2,000 condos, which is a lot, in case anybody doesn’t know. You’ve been here for so long, you have such a rich history here, so talk to us about maybe … Most people, by now, are familiar with King West, but for the person out there who’s not as familiar with King West, who maybe just thinks of Toronto, they think of maybe Waterfront, maybe Young Street, and that’s about it. They’re not familiar with everything that’s been happening in King West. Talk to us about the evolution that you’ve seen of this neighborhood and what are the highlights today there around the location of Kingly, before we get into the specifics of the project itself?

Eric Kuzian: Well, we’ve seen a huge transformation, obviously. Like I said in the beginning of our conversation, when I first started selling King West and bringing some of my buyers into the neighborhood, it was very much an up and coming, but still I wouldn’t even say coming. Quite rough neighborhood in terms of you had these great heritage, brick and beam type buildings, but there was really no life in the neighborhood. Over the last eight years, you have three developments who obviously is a big reason why the neighborhood took its shape. Bringing in some really cool design of residential.

Once the residential came, you had the vision of some great restaurateurs and service driven industry start moving their product and services into the neighborhood. It became this really viable neighborhood. It’s very much like … A lot of people like to compare it to the SoHos or the Chealseas or the Highline of New York where it’s just these fashion district industrial type of neighborhood that just takes the beauty of its raw edges and becomes this amazing, transformed, sustainable neighborhood. The main reason for that is also it’s proximity to the core.

It’s five minutes from the financial district, but what’s amazing about King West is it has its restrictions in terms of limiting people to creative concrete jungle. You have your beautiful parks, and you have your beautiful brick buildings, and your heritage buildings. What all that does is it creates character and it makes it this amazing unique location that can’t be repeated anywhere else in the city.

Andrew la Fleur: Yeah, absolutely. Like you said, a lot of people don’t realize how close it is to everything and how its very walkable to the financial core. Not only that, there’s now, and this is part of the project, which I’m sure you will want to get into. There’s a lot of jobs and there’s a lot of employment in commercial actually coming to the district itself. A lot of people are living and working in King West and not even leaving to go to the financial district.

Eric Kuzian: Yeah, absolutely. Along with, like we said, some of the coolest residential buildings, you have Allied, who has probably the biggest portfolio of amazing commercial buildings right in the heart of King West. What that does is it drives, not just any business, but more the creative and distinctive businesses that really add to a neighborhood. That’s exactly what Kingly is doing on the commercial side.

You’re looking at quarter million square feet of beautifully designed office, retail. The complete office is completely leased out by two great companies, [known 00:14:10] Indigo and Shopify who have decided to move their headquarters, right into the heart of King West. When you’re looking at these national brands who are looking to move their headquarters into a neighborhood, like you said, once employment starts coming into a neighborhood, now you’re talking about a neighborhood that’s here to stay and to keep growing in terms of values and sustain its character.

Andrew la Fleur: Yeah. See, that’s the gain to Kingly here, you’re talking about the fact that there’s a commercial component to the building. It’s really a two part building, isn’t it? You’ve got the residential side to it and you’ve got the commercial side to it. The commercial side, you alluded to with 250,000 square feet of office going to be Shopify. Okay, talk to us about the developer. The developer may not be known to most people who are familiar with the condo industry, so tell us about the developer for Kingly. What do we need to know about them?

Eric Kuzian: Well, you’re looking at two separate billion dollar wreaths. What these companies have done is Allied Properties, for example, is a company that’s about just over 25 years old and they, like everybody who might not know in the mid-90s, they started scooping up these old brick and beam type buildings in King East and in King West, where people thought were rundown neighborhoods that nobody would be interested in. Of course, through their design and their vision, they started creating these amazing spaces that people wanted to move their offices into.

Again, bringing employment into areas that started seeing more and more intensification. Became, now, the most desired buildings to be in. They’ve done it well. They have a huge portfolio across the country, not just in Toronto, but I would say King West is definitely one of the biggest portfolios that they have. Riocan, the same thing. About 25 years they’re in the commercial space, they’re in the redevelopment space. Mostly, predominantly doing commercial, but now they have a new brand called Riocan Living and they’re throwing their hat in the residential game.

They want to take their abilities, and execution, and bring it into the residential market as well. When you have these two great companies who’ve come together for this first collaborations of a building, that’s why the excitement and the attraction to Kingly. The building is quite different from what we’re used to doing, Andrew. Building’s already under construction. They’re self-financed, they have decided to build the building, and they haven’t wasted any square inch to make sure that they’re putting their best foot forward and putting the beset product out that they can build.

Andrew la Fleur: Yeah, so it’s something very unique and that’s obviously a highlight of the project is, like you said, people need to know. It’s already under construction. You can go there to King and Portland, you can see the building going up, so it’s a very unique situation for investors where somebody can come in today and buy brand new in a building that has never sold any units before. Get in at the first stage and it’s ready in, what, how long is it expected to be finished in?

Eric Kuzian: We’re looking at an occupancy of March 2019. That’s just under 18 months.

Andrew la Fleur: Just under 18 months, incredible.

Eric Kuzian: Just under 18 months, yeah. You said it [crosstalk 00:17:34].

Andrew la Fleur: You’re not waiting … Yeah, you’re not waiting five years for this condo.

Eric Kuzian: No and I think the attraction, aside from its location and we can actually get into the features of the building, which is obviously a huge attraction as well. What it really does is it serves both type of buyers. The investor, like you said, doesn’t have to wait four to five years for their money to start working for them and they’re still getting in at the first opportunity. Then for the end user, you have a pretty aggressive and competitive resale market. The end user, now, can pick the unit they want, pick the colors and finishes they want, buy a never-lived-in unit just for them, and have it ready for them in the next 18 months for them to move into. It really encompasses both types of buyers perfectly.

Andrew la Fleur: What do we need to know about the features of the building? What’s unique about it? The suites themselves and the building itself?

Eric Kuzian: The building is, first and foremost, a Hariri Pontarini building. Hariri Pontarini is arguably one of the best architects in the city of Toronto. Their head office is actually right beside this building, so that’s how attached and knowledgeable they are to make sure that this becomes one of the signature pieces in their portfolio. What they have done, which is very unique, and for those who don’t know King West, you’re looking at a very traditional looking building, which is quite regal with massing and red brick, which is truly unique for the neighborhood, which seems to be much more concrete and glass which seems to be the more typical builds these days.

This building’s really going to stand out. It’s the type of building where 100 years from now, Andrew, it’s going to look the exact same. They take that old-world charm and they bring in these New York style modern warehouse windows and they bring in these amazing amenities. It’s going to be one of the few buildings in the neighborhood that will have 24 hour concierge, that will have a private dining room on the rooftop amenity space, a private terrace off the rooftop amenity space, which is on the 16th story and has amazing views all around. We have a fitness studio that’s not your typical smaller amenity fitness studio that you’ve seen in the buildings in King West. This is a double height fitness studio that’s quite grand and something that would replicate any state-of-the-art fitness gym in the neighborhood.

Along with that, you have some really cool second floor work study, work loft type of amenity space, which is again, really tailored for the demographic of King West, which is the individual who either has to bring some work home with them or the individual who works from home. You have this amazing open space on the second floor where you can plop down on some amazing furniture with your laptop or actually a dedicated Board Room where you can hold meetings if needed. It really encompasses the whole work-play lifestyle that is quite popular in King West.

Andrew la Fleur: Yeah. You said, just to point out, it’s one of the only buildings in the area with 24 hour concierge and some of these amenities. Some people might not understand why that is, but again, it’s a function of the neighborhood. It’s not a high rise neighborhood like you have around Young Street, University, Church Street in the core. Your buildings are generally topping out in the neighborhood at 20 stories or most of them are far less than that. You don’t get these massive buildings with 600 units that are just decked to the nines with amenities, but also gives you a very different living experience. Basically, what you’re saying is this is unique in that it’s giving you a lot of those amenities of a larger building with still that intimacy of the typical King West smaller building feel. Is that fair?

Eric Kuzian: Yeah. It’s even more boutique than your typical … This is going to be an opportunity for 130 exclusive, high end, luxury suites. It’s definitely going to define itself as probably the most luxurious building in King West, because of that exclusivity, because of the features, because of the way the building is going to stand out from what’s surrounding it. When you have those features, you want to make sure the services in the building speak to that demographic and align itself with the campaign and the feel of what that project is going to be.

Andrew la Fleur: That’s great, Eric. It’s been great chatting with you about the project. Just, as we wrap up, what would be a common, I guess, maybe an objection, if there is any? It really comes from those people who aren’t familiar with King West, who don’t know the area, who are still stuck in their heads that the only place they want to invest is the Young Street corridor if you will. From yourself, somebody who’s been in King West for so long and you know the numbers, and you know the values, and you know the rents that are going on there, what would be your message to that person who is still on the fence about investing in this neighborhood and thinking, “I should only invest in the Young Street area.” What would you say to that person?

Eric Kuzian: I would tell them to check the numbers on the real estate market because those numbers don’t like. The opportunities in King West, like you mentioned a bit earlier, you don’t have these massive buildings, so the unit availability is quite sparse. When you don’t have that type of availability for rent or for purchase, you really see the property values in this neighborhood skyrocket. Anybody who can talk to a realtor or jump on the MLS, if they are a realtor.

If they see any building in the heart of King West … What I define as the heart of King West is west of Spadina, east of Bathurst, because the very, very unique pocket where pretty much all the action happens. If you see anything for rent, it will be gone the next day. If you see anything for sale, it will be gone in the next day or so. It’ll be gone for a great price and a great type of tenant who is coming in as well. That is why I would argue to anyone else that if you’re placing your money as an investment, I don’t think there’s a better market than King West.

Andrew la Fleur: Well said, Eric. Thank you very much for your time today and I’m sure we’ll have you again on the show soon.

Eric Kuzian: Thank you so much, Andrew, it’s been a pleasure.

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