What to Look for in a Condo Investment with Matt Young of CD Capital

Matt Young Interview Highlights

1:15 Who is Matt Young?

3:26 How Matt Young Got Into the Condo Industry

5:55 What It’s Like to Break Into the Condo Industry as a Young Developer

7:30 Who is CD Capital?

8:35 What Projects Is Matt Young Working On?

10:41 Yonge & Eglinton Ten Years from Now

11:28 Is There a Condo Bubble in Toronto?

13:32 How Does the World See Toronto Condo Development?

15:25 Is Matt Young a Condo Investor?

15:51 What Does Matt Young Look for in a Potential Condo Investment?

17:15 Matt Young’s Startup: “Alfred”

23:15 Upcoming Projects: “The Art Shoppe”

24:32 How to Reach Matt Young

Links

Matt Young on Twitter

CD Capital

Freed Developments

Alfred Service

155 redpath condos

How to Leave a Review for The True Condos Podcast on iTunes

Matt Young Interview Transcript

Andrew la Fleur: Hello and welcome back to the True Condos Podcast.  Once again, I’m your host, Andrew la Fleur, and I’m a realtor and I specialize in helping people to invest and make money in the Toronto condo market.  Thank you once again for supporting the show.  Still our show is featured in iTunes on the new and noteworthy section which is great.  It’s getting some great attraction there.  The number of listeners every week is growing.  The audience is growing for the podcast, I really appreciate everybody who’s been listening, sharing, telling your friends about it, emailing me, and just giving me some great feedback.  Thank you very much.  I am going to continue to do this show and I really appreciate all the great feedback.

One thing that we haven’t been getting lately for whatever reason even though the number of people listening is growing, we haven’t been getting a lot of reviews on iTunes lately.  If you do like the show, if you’ve been listening all along or maybe you just discovered the show and you want to support it, please go to iTunes and leave a review for the show, The True Condos Podcast.

On today’s show, we are interviewing Matt Young.  I should say I am interviewing Matt Young.  Matt is a Vice President with CD Capital, a development company here in Toronto.  CD Capital is relatively new to the Toronto development scene but they’re certainly not new to development.  They’ve had projects around the world and we’ll hear more about that in this interview.  They’ve teamed up here in Toronto with Peter Freed of Freed Developments.  Obviously, very well-known developer in the condo game here in Toronto for some very high profile sites in the city.  You’ll be hearing and seeing a lot more things from CD Capital the next couple of years.

Previously, Matt was with Lifetime Developments and he worked on projects, very well-known projects like INDX, and Karma, and Bisha, and the Bond.  Matt is a relatively young guy in the condo game so it’s interesting to talk to somebody young and up-and-coming as a condo developer in the city to hear his perspective on things.  He’s a very sharp guy, and I think the future is very bright for Matt in the industry.

Besides his day job as a developer, he’s also an entrepreneur and he’s got a great business which he’s going to talk about on this interview related to the condo market, and he has his own development company on the side with aspirations to eventually be building his own condo buildings.  So without further ado, here’s my interview with Matt Young.

Thanks Matt for doing the interview with us today.  I appreciate your time and looking forward to talking to you about your experiences in the market and just introducing the audience to who you are, and just thanks for being here.

Matt Young: Thanks for having me.

Andrew la Fleur: Why don’t we start?  Tell us a little bit about yourself, introduce yourself, how did you get started in real estate and what are you doing right now?  What’s your …?

Matt Young: I started just out of university.  I was working for my uncle’s company.  He had a small real estate investment development company.

Andrew la Fleur: Where was that?  Was that in …?

Matt Young: It was in Toronto.  He’s from Danforth area.

Andrew la Fleur: You’re from Toronto?

Matt Young: I am from Toronto.  I was born and raised in Scarborough.  After working for him for a little while, you start seeing all the condos being built and I got excited about getting to the condo business.  I really hustled and networked a lot.  It was an unlucky time.  I left the university in the recession and just started.  I went back to school.  I did a post-graduate in Calgary in Real Estate Development.  When I came back, I was lucky enough to land a job with Lifetime Developments.  I started there in 2009 and worked there for three years, and was able to launch six different projects with them.  It was the ultimate learning experience as far as I am concerned.

Andrew la Fleur: Right.  With Lifetime, what are some of the projects you worked on?  I am sure a lot of people have heard of all of them but what were they?

Matt Young: Yeah.  We worked on a lot.  When I first got there, they were in the middle of launching X2.  I wasn’t too involved in that but it was great to finally see a launch and it was amazing because that was the first project really after the recession and I remember, driving to the office in the morning and hearing on the news that there’s three lineups down the street to get condos and the condo market is back.  It’s pretty exciting to witness that.  The first project I actually launched was Bisha …

Andrew la Fleur: Bisha, yeah.

Matt Young: which we launched about eight months later which was an amazing experience.  It was their own hotel brand that they’re building, and they are very aspirational about what they want to do with the brand so to get to go through that and launch the project in market, and it was a very successful project obviously.  That was great.

Then, not too much longer after that, we launched the Yorkville which was another great success.  Then, we launched the Bond which is a great success.  We launched Karma a few months after the Bond which I think we sold that out in six months.  Then, INDX of course in 2012 where we sold almost 800 units in about six months.  It was a great run over three years.  I never really had a break but it was all I could ever ask for.

Andrew la Fleur: Yeah.  Just a lot of home runs in there.  Now, what are you doing now?  What are you up to now here?

Matt Young: After living Lifetime, I had the entrepreneurial itch and initially started my own development company, and I very quickly start to realize that the barriers of entry in the condo business is very high.

Andrew la Fleur: Let’s talk about that a little bit.  If anybody is listening who is young and new in the business or maybe they’re a condo investor but they want to get into the development game, talk to us about what it’s like to try to break into the industry.

Matt Young: I think one of the biggest challenges is finding good sites today.  The market has obviously been hot for a while.  Most of the surface parking lots are gone at this point.  The A sites and the B sites are almost all gone.  You’re starting to find you’re having to dig a little bit harder and find more complex sites.  Oftentimes, prices have gone astronomically high.  You’ve got a lot of landowners who are holding on to land and they’re not really willing to let go of their land unless the price is out of this world.

It just became very challenging for me to find a good site that I knew would be successful in the market.  Then, even beyond that, there’s huge financial requirements.  Obviously, most people who are launching a condo project, they’ve got limited partners in their deals and you have to raise millions of dollars in order to do it.

As a 27-year-old at the time, it was a bit of a challenge but I knew that I had a lot of great experience coming from Lifetime and I could use that experience.  Eventually, I met with Jordan Dermer and Todd Cowan at CD Capital, and they were really making a big play in the Toronto market, and they needed somebody to assist them with that.

Andrew la Fleur: Yes.  Now, you’re with … It’s a good transition.  You’re with CD Capital now.  Big name within the industry but maybe people who aren’t in the industry don’t know them, or don’t know what they do, or what their background is.  Tell us a little bit about CD Capital.  They’re relatively new, I guess, to the Toronto development scene but they’re making a pretty big splash right now.

Matt Young: Yeah, they’re new in Toronto.  They’re not new to real estate at all.  They were actually working in the Eastern Europe for quite a while.  They built one of the biggest real estate development companies in Eastern Europe called TriGranit which was an offshoot of Trizec which is owned by Peter Munk.

Andrew la Fleur: Nothing to do with Tridel.

Matt Young: Nothing to do with Tridel, no.  No.  They went there.  They built a massive, massive business.  That business eventually got sold and when they move back, they were from Canada.  Their families were here.  They saw the condo market and said, “We want to make a play here.” They eventually bought a number of properties with Peter Freed, and those are the projects that we’re launching right now.  It’s been a joint venture between the two companies and it’s going great.

Andrew la Fleur: What are the projects that you’re working on right now at CD Capital and Freed?  Want to highlight those or what sites are you focused on right now?

Matt Young: Yeah.  The first one we launched was called 155 Redpath at Yongle and Eglinton.  We launched that one last year.  It’s been a great success.  We’re over 70% sold.  We have our approvals.  We’re gearing up to start construction on that one.  That’s been a great experience.  We also own the property directly adjacent to is which is not zoned yet but we’re working through that process at this point.  Then, we also own the Art Shoppe which is a massive landmark property right along Yonge Street.  It’s essentially a full city block and that’s going to be an exciting project.  We’re ready to go there.

Andrew la Fleur: Yeah.  I know a lot of people are very interested and excited to find out what you guys have got planned for that site.  The Art Shoppe right on Yonge Street, just south of Eglinton and like you said, it’s something that anybody who’s been in Toronto or been on Yonge Street, you know that site, you know that store.

Matt Young: Yeah, it’s a really iconic location.

Andrew la Fleur: Truly unique.

Matt Young: It’s a very unique location.  One of the reasons they’ve invested so heavily in that neighborhood is because you really have the biggest transit investment in North America happening there which is across [crosstalk 00:09:57].

Andrew la Fleur: Right.  Freed’s always been the downtown guy.  He’s always been the King West guy really, and now …

Matt Young: I think more than that, Freed has always been the emerging neighborhood guy.  Freed was one of the first guys in King West before it was ever King West, and he saw the opportunity, he saw the writing on the wall of what this was going to become, and he was the guy who executed on it.

I think, it’s exact same for Yonge and Eglinton.  There’s amazing investment happening there.  RioCan’s spending a hundred million dollars redeveloping their RioCan Center.  There’s a ton of development happening and I think that neighborhood, more than almost any other neighborhood in the city is going to go through drastic changes.  For those reasons, they really look at opportunities there where they could capitalize on that, and that’s why Yonge and Eglinton was first choice for them.

Andrew la Fleur: Where do you see Yonge and Eglinton going?  How do you describe Yonge and Eglinton ten years from now?

Matt Young: I really see Yonge and Eglinton ten years from now being very similar to Yonge and Bloor.  It’s going to be one of the important transit intersections in the city.  If you look at Yonge and Bloor, there’s a reason why there’s so much density there and there’s amazing shopping and all those things.  It’s close to downtown but it’s also the access.  It’s one of the only parts of the city where you’ve got a north, south, and east, west subway line.

Yonge and Eglinton is going to have that, and I think with that, you’re going to have a ton of investment, a ton of new retailers coming in, and that to me is very exciting.

Andrew la Fleur: Do you think there is a condo bubble in Toronto?  What’s your take on that question?

Matt Young: I get asked that a lot and I find it funny because if you try and rent a place in the city today, it’s almost impossible to get a decent deal in rent.  Rents keep going up.  You’re having bidding wars for rentals.  I don’t think there’s a condo bubble at all.  I think it might look like it from the outside but when you look at a lot of the things happening in Toronto, I would say it’s hard to call that a bubble.

You’ve got a Greenbelt Policy that was created that forced a lot of development downtown.  There’s a lot less low-rise development happening.  You have 50,000 people, the number always changes but the last I’ve heard was 50,000 people moving into the GTA every year.  Those people all need a place to live.  Whether they’re owners, or renters, or whatever it is, they need a place to lay their head at night.

This development is really a culmination of a number of different things.  Interest rates have been exceptionally low.  I think that’s why and even beyond that, I think the downtown Toronto or urban parts of Toronto is going through resurgence and 20 years ago, nobody wanted to live downtown.  Now, people want to live downtown.  Offices are moving downtown.  There’s a ton of commercial development happening.  I don’t know how many million square feet are being developed right now.

Andrew la Fleur: It’s not just downtown, is it?  Like you mentioned, Yonge and Eglinton.

Matt Young: Yonge and Eglinton, North York, a lot of those kind of urban centers–

Andrew la Fleur: In Shepherd, yeah.

Matt Young: people like to live in that lifestyle where there’s a lot of stuff happening, there’s restaurants and things close by, you’re walking distance to most things.  Driving in the city today has just gotten worse and worse every year, and I think people are making lifestyle choices that are a little different, and they’d rather live in a smaller place but experience that lifestyle instead of living in the suburb.

Between that and all the other policies, and interest rates being low and everything else, that’s what burying this, and I really don’t see there being a bubble.  If you look at price points, Toronto compared to a lot of other international cities, our price points are very low.  Toronto is consistently ranked among the top five cities to live in in the world.

Andrew la Fleur: You’re sitting around the board room table here with the guys from CD Capital, Freed, what kind of conversations are or what’s their perspective on the market as well?  Especially CD Capital coming from they have a lot of overseas experience, they have that international perspective on how the world might see Toronto or urban development across the world, what kinds of conversations are headed around the table here with respect to that?

Matt Young: They’re all bullish, and I think the fact that they’ve made such huge investments in land and future projects coming on stream, they’re very bullish, and that really speaks to their position in their market.  It’s always a question of, how you market those projects and who you’re going to go after, and those are really more of the questions that are happening but as far as their perspective on the market in general, they wouldn’t be investing so much in this city if they’d didn’t feel reasonably strong.

Andrew la Fleur: Right.  That’s something I tell everybody, as well as look at all these developers who are pouring millions of their own dollars into these projects and they’re not planning on just building and then getting out of town.  These guys all have long, long, long-term plans on being here for a very long time.  They wouldn’t do that if they didn’t think the opportunity was there for growth.  They wouldn’t do that if they thought there were better opportunities elsewhere.

Matt Young: Absolutely.  Peter Freed grew up in Toronto.  He’s not going anywhere.  He’s built an amazing business, and he wouldn’t be investing in all these properties if he didn’t think there was opportunity.  The CD Capital guys, Jordan and Todd, they both live in Toronto.  Their families are here.  They’re not going anywhere.  They’re really here for the long haul.  Again, with almost $100 million in just land acquisitions over the past few years, I think that speaks volumes to what they think of the market.

Andrew la Fleur: Wow.  Are you a condo investor yourself?  Do you buy into all your projects or do you buy into other projects?  What’s your …?

Matt Young: While I was at Lifetime, I was very young in the business.  At the time, I didn’t really have enough money to be able to get into the market but actually today, I am looking at opportunities.  I am actually looking right now.  Just take easy on that.

Andrew la Fleur: That’s happy to know but what do you look for?  When you’re looking at opportunities on invest in, obviously your buy is towards your own projects but in a general sense, what are you looking for in a condo investment or a potential condo investment right now?

Matt Young: I think, for me, neighborhood is always important.  I have particular taste on where I want to live and where I see opportunities.  I think neighborhoods where you’ve got great shopping and great restaurant; very, very close access to transit.  Those are all really critical.  I think when you look at the fact that there isn’t a ton of transit investment over the past 30 or 40 years in Toronto, you’re really stuck on a couple of subway lines and now, the future LRT.  Anything along those areas are as far as I am concerned, always going to be a good investment.

Andrew la Fleur: Everybody is obsessed with Yonge Street, aren’t they at the end of the day?

Matt Young: Yeah.  Look, Yonge Street …

Andrew la Fleur: You can’t go wrong with Yonge Street.

Matt Young: You can’t go wrong.  It’s an iconic street.

Andrew la Fleur: Like you said, you look at the last 50 years of transit development, there hasn’t been that much.  It all seems to come back to the subway lines and in particular Yonge Street.

Matt Young: Again, it’s about lifestyle.  People don’t want to drive.  They want to be close to transit and they don’t want to have to take a bus or a street car 25 minutes to then get to the subway, to then go north to get to work or whatever.  They want to be very close to the subway.  Within two-minute walk I think is ideal and I think any project within that transit connection is going to be a very good investment.

Andrew la Fleur: You’re also besides being a real estate developer, you’re also an entrepreneur.  We haven’t talk about your … Is it still considered a startup or has it started?  Alfred, it’s called.  Tell us about Alfred, what is it?  Why did you create it?  How’s it going with that?

Matt Young: Yeah, it’s still a startup.  Sitting around the board room table when we’re talking about condo projects, one of the things that always comes up is how do you differentiate because there are a lot of projects out there.  You have to find ways to capture the imagination of the buyers.  One thing I’ve notices is living in a condo for the past four or five years is that the experience is just as important as the architecture, as the location, as everything else.  Having services and having things like that within the building I think really matters to people.

I was always thinking, how do you offer something that doesn’t necessarily cost a lot of money, doesn’t cost the developer a lot of money?  Everybody already does amazing in many programs in their buildings but how do you offer something different?  This opportunity came up for Alfred which is essentially a digital butler service for condos.

We install a locker system in the buildings, or if not the lockers, we’ll deliver service through the front desk concierge and we really try to deliver day-to-day high use services that make your life a little easier living in the condo.  Things like dry cleaning, shoe repair and shoeshine.  We’re gearing up to launch a pilot for healthy meal delivery, housekeeping services.  There’s a number of different things that after living in a condo, I’ve noticed are things that I’ve had challenges with.  Finding a good person to clean my place because I am working too many hours has been a challenge.  Eating healthy has always been a challenge.  Those are all things that we’re trying to tackle.

Andrew la Fleur: Right.  You’re really targeting the young professional, living urban downtown, in a condo, work a lot of hours, don’t have a lot of free time, and you’re bringing services right into their door, right in their own building …

Matt Young: Yeah, exactly.

Andrew la Fleur: that they would normally have to spend a lot of time going out and trying to find.  You’re bringing it right to them.

Matt Young: Yeah, for sure.  Most dry cleaners close at 6:00 or 7:00.

Andrew la Fleur: Walk us through.  It’s really cool, the system you developed.  Walk us through how it works like you say, the dry cleaning.  I guess, I have a shirt I want to get dry cleaned.  How does it work?

Matt Young: You download our app.  We have an iPhone and an Android app.  You fill in your information.  You have your credit card information in there, and then once your account is set up, you basically drop your stuff off in a locker.

Andrew la Fleur: In the building.

Matt Young: In the building.  We pick it up every day.  We take it off site.  It’s cleaned organically.

Andrew la Fleur: How do you know that it’s in there in the locker?  Through the app?  Does it say …

Matt Young: Our drivers check the lockers every single day.  The very first time you put it in the locker, you’ll place an order so we know who you are.  Then, once you place the order the first time, your items are delivered back in an Alfred bag free of charge with an ID tag on it.  After that, you just use that bag as a laundry hamper, you throw your stuff in the locker, our drivers will pick it up, scan it into the system, and deliver it within 48 hours back to you clean, and you never have to go anywhere.

Andrew la Fleur: This is the part that surprised me.  I would have thought the prices would a lot more for that service because I do dry cleaning all the time.  I live in a house unfortunately so I can’t take advantage of this service right now but I think it’s amazing.  I’ll drive to the dry cleaner, drop it off, and have to go pick it up, and it costs me whatever, $3 a shirt or something like that but the price point seem to be really about the same as do-it-yourself but it’s all done for you.

Matt Young: Yeah.  The price is the same.  That was really important for us.  We wanted to be price-conscious.  Being organic was really important to us as well.  Really, the reason we’ve been able to do that is because using technology and the system we have, we’ve been able to cut staffing out of the equation.  We’ve been able to cut out the real estate renting space.

Andrew la Fleur: Overhead, right.  Yeah.

Matt Young: All that overhead.  In exchange for that, we do the driving and picking up.  Ultimately, we make a much more convenient service that doesn’t cost anymore and that was really the goal.

Andrew la Fleur: How many buildings are you in with the service so far?

Matt Young: We service, it’s changing on a daily basis.  I think there’s about 65 buildings now that we service, mostly in the downtown area, and we’re growing on a weekly basis.  The goal is to serve 1000 buildings hopefully.

Andrew la Fleur: If somebody is listening and they want to get Alfred in their building, give you a call, send you an email, go … Tell them what they got to do.

Matt Young: Yes.  If you go to our website, AlfredService.com, we’ve got a button on the website that says, “Get Alfred in your Building,” and you can fill in your building information, and just send that to us.  It will send an email to us with all your information, and we can add the building as an on-demand building so we could … As long as you have a concierge, you can then utilize our service.  If you don’t have a concierge, at least you’ve given us the information that you want us in your building and then we can reach out to your property manager and hopefully, meet with your board, and if they like the service, they’ll bring us in.

Andrew la Fleur: Where do you see the company … How do you see it developing?  You mentioned other services and stuff but long term, what do you want to do with the company or what are you dreaming of?

Matt Young: I think the goal obviously is to deliver an amazing experience.  That’s first and foremost.  I think we want to tackle more services than just dry cleaning, and shoe repair, and meal delivery.  Ultimately, anything.  Like I said before, anything that makes your life a little easier in the condo is really our niche and what we want to focus on.  Beyond that, we’d love to move into other cities, outside of Toronto, places like Vancouver and Calgary, Montreal, even in the US, there’s potentially the opportunity.

Andrew la Fleur: That’s awesome.  Yeah, I think it’s a fantastic idea and I hope it goes.  I am sure it will.  It’s going great so far and would continue to do well for you.  Any upcoming buildings or projects that you want to talk about?  I don’t know what you can talk about in terms of stuff that’s coming down the pipe.  Anything?  Any other projects you want to highlight that you’re working on?

Matt Young: The next project is going to be launching, it will end up being the Art Shoppe.  We don’t know exactly when but we’re starting to work on things now, and it’s such an iconic building that what we do there is going to have to be iconic or an iconic location.  We’re very excited.  It’s very early days right now but we’re very excited about what’s coming back and we have a great architecture team.

Andrew la Fleur: Does the project have a name yet or is it still …

Matt Young: It doesn’t have a name yet.  It’s too early to say any of that stuff.

Andrew la Fleur: Too early, yeah.

Matt Young: As soon as we have information, we’ll be sure to let you know.

Andrew la Fleur: Great.  Just in closing, is there anything else you want to talk about?  Is there a question maybe that no one has ever asked you about yourself, or your work, or your entrepreneurial businesses that you wish somebody would ask you about?

Matt Young: I honestly can’t think of anything right now.  Put me on this button, no.  not really.

Andrew la Fleur: No worries.

Matt Young: No.

Andrew la Fleur: Great.  Thank you very much for your time today, Matt.  I appreciate it.  if people want to get a hold of you, what’s the best way to find you online or otherwise?

Matt Young: I am on LinkedIn.  If they go to CDCP.com, which is CD Capital’s website, my email and information is listed there.  If anyone ever wants to email me about anything, I am happy to answer it.

Andrew la Fleur: Great.  We’ll definitely put links to everything that we’ve talked about on the show on the show notes for this episode so check that out.  Thanks again, Matt.  I appreciate your time and hopefully we can have you on the podcast again soon.

Matt Young: For sure.  Thanks for having me.

Andrew la Fleur: There you go.  There’s my interview with Matt Young.  I hope you enjoyed it.  I certainly enjoyed just sitting down and talking with him.  He’s a really sharp guy, as I mentioned.  I think he’s got a lot of great insights on what’s happening in the market.  His company, Alfred, which we talked a lot about, I think it’s just a really cool company.  If you are living in a condo downtown, definitely check out Alfred and take advantage of those services.  It’s very cool, very innovative, and I think you’re going to see Alfred everywhere real soon.

Once again, for all the show notes on this episode, just head on over to TrueCondos.com/Matt and that will give you all the notes and links for everything that you’ve seen on the show.  Again, if you like the show, please leave me a review on iTunes, I’d greatly appreciate it.  Thanks for listening.  Bye.

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