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Extreme Architecture with David Wex of Urban Capital

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David Wex, who along with his partner Mark Reeve, are Urban Capital. Since David started in the condo industry in the 90s, he has been a trailblazer with a vision to build high design condominiums and get into areas years before they have gentrified. River City is a multi-phase condo community in the West Don Lands – once derelict lands that are now one of the coolest neighbourhoods in the city, and River City 3 is unlike anything else ever built in Toronto.

David Wex Highlights

0:25 Podcast Review
1:37 About David Wex
3:40 How David Wex Got Started in Real Estate
9:13 How the Site of River City Came to Be
14:33 The Design of River City 3
16:20 The Progress of River City
19:20 Is There a Condo Bubble?
22:01 How Toronto Will Evolve in Years to Come
24:00 One Thing David Wex Would Change About the Condo Industry
27:49 Why Buy Into River City 3?
29:10 How to Reach David Wex & Urban Capital

David Wex Interview Transcript

Andrew la Fleur: Hi and welcome back to the show. On today’s show I’m going to be speaking with David Wex, who is one of the partners, along with Mark Reeve, of Urban Capital. And Urban Capital are the developers behind River City 3.

Before we get to that entry, I just wanted to give a shout-out to a guy by the name of Michael Pignatelli. Michael left me a very nice little review on Twitter. He said, “I have to say I’m really enjoying Andrew la Fleur’s podcast on Toronto condo investing. Search the True Condos podcast on iTunes.”

So, Michael, thank you very much for that great review. And if you are listening to the show right now, and you would like to leave a review, I would really appreciate it. You can just head on over to iTunes and leave a review there, or you can do like Michael. You can hit me up on Twitter, Facebook, social media and let me know what you think of the show.

So, thank you very much, Michael, and thank you very much, everyone, for listening to the show, supporting it.

I should also say that we’ve just passed a pretty good milestone. We hit over twenty thousand downloads for the podcast so far. So that’s a pretty good accomplishment for this podcast, I think, and I’m looking forward to hitting thirty thousand. So, thank you very much, again, for supporting the show.

So, let’s get to the interview with David Wex. Once again, David is a partner at Urban Capital, and we’re going to be talking about his experience. We’re going to be talking about River City 3.

And River City 3 is certainly one of the most unique condo buildings in the city, or anywhere. You really have to see the design, if you haven’t seen the renderings and what this building is all about. It’s just a breathtaking building that’s really unlike anything else in the city.

And I kind of found David, actually, to be, in some senses, unlike any other developer in the city. He’s a very honest and refreshing approach to the business and the industry. And he’s certainly very passionate about design-forward thinking, pushing the envelope, blazing a trail. They sort of sound like clichés, but if you look at Urban Capital’s resume, CV, then you can certainly see that it is the case. They’ve really got some very ground-breaking buildings right from the very first building they ever built, which we talk about in the interview.

For all the show notes on this episode, and links to everything we’re talking about, including more information on River City 3 and how you can get the investor’s package for that project, just head on over to truecondos.com/rc3 and we’ll be sure to get you that information. Just drop your name and email into the form there and we’ll get you all the details on River City 3 if you’re interested in learning more about this project.

So, without further ado, here is my interview with David Wex.

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: Great, it’s my pleasure to welcome to the show, David Wex. David is the partner at Urban Capital. David, welcome to the show.

David Wex: Thank you.

Andrew la Fleur: David, why don’t you start just introducing yourself to the audience, and just telling us a little bit about yourself and how you got started in real estate and condo development.

David Wex: Well, I probably fifteen to twenty years that I started this. I didn’t start with any sort of background in it. Back in the 90s when there was really nothing going on, I sort of left my job and wanted to do this, so for a couple of years I didn’t do very much, and then I fell upon someone who knew the Dundee people and they supported us in a little project called Camden Lofts. You know Camden Lofts, 29 Camden Street?

So that was a really special building. Still probably one of my favorites. Done at a time when it wasn’t even possible to do residential down in the King-Spadina area. So we got special city approval to do a residential building in what was strictly a commercial or industrial area. Kind of the harbinger of the King-Spadina thing, the new King’s thing back then was going to happen back then.

Barbara Hall was a big supporter of it, so I did a little project called the Camden Lofts: forty-eight units to sell at a hundred ninety-five bucks a foot. And that was the first one, and yeah, started from there.

Andrew la Fleur: So what were you doing before then? You said you left a job.

David Wex: I was a lawyer.

Andrew la Fleur: You were a lawyer?

David Wex: Yeah, I don’t usually admit that.

Andrew la Fleur: Oh, okay. In real estate, or-?

David Wex: No, no. In a big firm, I was a-

Andrew la Fleur: Like, corporate kind of thing?

David Wex: Yeah, a big firm I was in one year.

Andrew la Fleur: Okay. So 29 Camden was your first project. What year was that, that you started?

David Wex: ’96.

Andrew la Fleur: ’96, and so, one of the things you have a reputation for is sort of being a trailblazer, going to areas before anybody else is there.

David Wex: Yeah.

Andrew la Fleur: You mentioned King and Spadina, an industrial sort of warehouse-y sort of wasteland.

David Wex: Total wasteland.

Andrew la Fleur: Hard to imagine today.

David Wex: Yeah.

Andrew la Fleur: So, I’m always curious. I always like to ask, what did people say to you at the time when you told them, “Look, I think I’m going to do a condo at King and Spadina?”

David Wex: Well, I didn’t … First of all, I didn’t know many people, so no one really said anything.

Andrew la Fleur: Okay.

David Wex: It was an experiment. I mean, we bought that site for almost nothing. In fact, probably, had we just held it and then sold it two years later, the land very, very well and the end kind [inaudible 00:06:05] cause you know, it was way ahead of its time. But that got us going.

There were a few trailblazers, whatever, you know, forward thinking people who bought into the building. I remember I met all of them, back probably took, as I said two years to convince people. Kichoni Simone did the interiors.

Core was the first project I worked on with them. It was really out there. It was all concrete. The ad campaign was the convergence of concrete and cool. No one got it. It was like things like fashion. The tagline was “fashion crimes at your doorstep.” Fashion crimes, the cool …

Andrew la Fleur: I don’t know. Maybe it was before my time.

David Wex: Yeah. I think it’s still around. Anyway, the ad campaign was so downtown centric.

Andrew la Fleur: Right.

David Wex: The launch was really tough. We were really out there.

Andrew la Fleur: This was ’96. Like, again, today it’s like …

David Wex: Yeah.

Andrew la Fleur: It would be … no problem, but ’96, King and Spadina was on nobody’s radar.

David Wex: It was dusty. It was derelict. There was no one around. People walked along Queen Street but they tended to end at Spadina. And if they were walking, they were walking east-west. No one ever walked south along Spadina.

Andrew la Fleur: Right.

David Wex: And so then after that … That was at the same time the [inaudible 00:07:23] Howard [inaudible 00:07:23] 20 Niagara.

Andrew la Fleur: Okay.

David Wex: That was really the same time. So those were the two first projects down there. We were really King-Spadina.

Andrew la Fleur: Yes.

David Wex: And once that got going, probably in the early 2000s, then contacts did District Lofts. And then it really started to … But Camden, we followed Camden with another project, Charlotte Lofts.

Andrew la Fleur: Right, I was going to ask you about that.

David Wex: Yup, that was also an early one. That was 2001. And then, those were all, that was sixty some odd units. And at the time, we also … I’m from Ottawa, so we went to Ottawa and we did a four hundred unit.

Andrew la Fleur: Oh, wow.

David Wex: And that was in three phases. That was insane. So, when we started Camden, people used to say, “Oh, it’s not New York. It’s not going to work here in that kind of urban living,” which was wrong. And then when we went to Ottawa people said, you know, it’s not going to Toronto, which was not true because people bought into it, as well.

And then we went to Montreal. You see me going to other cities like Halifax and Winnipeg, that haven’t had this development.

Andrew la Fleur: Yes.

David Wex: Always people say, you know …

Andrew la Fleur: “Not here.”

David Wex: “This is not going to work here.” I’ve just been looking at some U.S. cities where [inaudible 00:08:38] it’s not going to work there. I said, “you know-

So I think that you’re right. Same thing with River City. River City was a total wasteland. I often say that that whole area outside the consciousness of Torontonians, cause you never really knew where it was.

Andrew la Fleur: Yeah.

David Wex: It was all boarded up

Andrew la Fleur: Yes.

David Wex: Unless maybe you were buying a BMW from took you into that area.

So, all these sites to a large degree have been outside the comfort zone initially, and have proven to [inaudible 00:09:09]

Andrew la Fleur: So, it begs the question, then, how do you evaluate a site? What do you look for today? Like, when you … Let’s talk about River City. Jump right into that. When you were looking at that site, what did you see? What was your vision that attracted you to it when, again, it was another …

David Wex: Yeah.

Andrew la Fleur: Maybe describe it for how it was when you first came upon it, so people can get a picture of it.

David Wex: Total, total . But, you know, it was very interesting because it was extremely urban. It was very hard [inaudible 00:09:46] so it’s cool. And the architecture from my could understand that.

Andrew la Fleur: So you already had the architecture firm in mind beforehand?

David Wex: No. It was concurrent. So, this site came up. I thought it was … I remember telling Waterfront … This site was the first residential site leased by Waterfront and there’s a whole history of why Waterfront Toronto was involved, but regardless, they went first with this site. I remember telling them I thought that was a bit odd. But nevertheless they did. And it was already somewhat connected to the city where some of their other sites were not.

So, that site was a tough site. So, I knew a couple things. I knew that not a lot of developers [inaudible 00:10:30] face it. But I liked the hardness of it. To me, this is a bit esoteric, but a development or a big park land development in Germany [inaudible 00:10:44] it was the old Thyssen Steel Works that turned into [inaudible 00:10:52].

Andrew la Fleur: Okay.

David Wex: Huge old industrial site.

Andrew la Fleur: What city?

David Wex: It’s Duisburg. They basically took an old steel plant and turned it into one of the most beautiful park land, by combining the harsh industrial with the full … And I used that when I did our application to Waterfront. I said “This could be beautiful, if done properly.”

Andrew la Fleur: Yeah.

David Wex: And so, that whole idea of embracing the infrastructure, embracing the local community and really loving it, I think was a big, together with Saucier and Perrotte it was a very distinct style. Kind of won the day.

Andrew la Fleur: Right. Maybe talk about Saucier and Perrotte because, as far as I understand, they don’t really do residential architecture.

David Wex: Well, they do now.

Andrew la Fleur: They do now, I guess, because, “Hey, we’re winning a lot of awards here, maybe we should do more of this.”

David Wex: They do now.

For many architects residential is the lowest form of [inaudible 00:11:56]. Right, they start with, you know they want to do museums, public buildings, then they want to do commercial-

Andrew la Fleur: They want to build monuments, that sort of thing.

David Wex: Yeah. And also budgets. Budgets for residential are usually not great.

So, for them, they’d never done residential. They’d done some public, some university residences, but never done condo or famil. And they’re very particular and they don’t have a big portfolio of work, but what they’ve done is very notable. So to come and bring them to a market like Toronto, there’s so much going on and it’s so competitive, sensitive.

They were worried about it, because they didn’t want diluted put their name on a. So, bringing them here, first of all, meant that I was going to get a very different building.

Andrew la Fleur: Yeah.

David Wex: Which is what we thought we would need, for sure for this location. But at the same time was a risk for them and a risk … Never done it, big learning curve. And for them a risk that a developer they didn’t really know could debase their portfolio or.

Andrew la Fleur: Right.

David Wex: So, but by and large, it’s been difficult all around … Used their design with residential traits that we’re so used to here in Toronto, but I think we’ve succeeded to a large degree. I think we are happy.

Andrew la Fleur: Yeah.

David Wex: And even the trades.

Andrew la Fleur: Even the trades. That’s a miracle. The way the three buildings obviously play off each other and interact with the black and the white, was the vision for the three buildings set out right from the beginning or did it evolve? Like, did you hire them to do all three buildings?

David Wex: Yeah, the answer is yes. It has evolved and it was set out at the beginning.

Andrew la Fleur: Okay.

David Wex: So, yes, we hired them to do all the … Absolutely. There’s also a fourth phase, interestingly, which-

Andrew la Fleur: Was the fourth phase always in the plan, or was that an addition later?

David Wex: It was always in the plan, just never developed.

Andrew la Fleur: Okay.

David Wex: The assembly, or the ensemble is the three building. For sure, they evolved, but if you look at the original drawings, the original concept, it’s very much executing that over the years.

Andrew la Fleur: Right, right. Let’s talk about the design of the building itself. The picture speaks for itself, but what do you love about it? What are you most proud of? What are you most excited about the building, River City 3, you know, to see it completed?

David Wex: Well, I think that River City 3 is definitely, from a design point of view, it’s the most striking, in the sense of it. From a first notable. I always say that, like in three years, when that building [inaudible 00:15:05] three years, every car because it’s so striking.

Andrew la Fleur: Yeah, so that image. Yeah.

David Wex: But, I think the whole thing for me, the beauty of, the importance of executing the Saucier and Perrotte buildings, you can really screw it up if you don’t get the details right. Everything has to work perfectly, and it’s very linear, very clean, so any tolerances have to be kept to an extreme minimum. So, you follow a line around, [vee-ehl 00:15:45] line or two all the way around the building, like they have to match up at the end.

So, I think, for me, the biggest success of that project is having kept the whole group together, kept the architects and contractors alongside together, from killing each other and delivering it. I think it’s been the toughest building in terms of construction, in terms of executing the design.

So, what I’m most proud about is the fact that we delivered it.

Andrew la Fleur: Yeah, amazing. How do you feel about how River City 1 now is completed and finished building. It’s registered and occupied and everything. River City 2 is starting occupancies very soon.

David Wex: Yeah, next week.

Andrew la Fleur: How do you feel about the progress so far, particularly River City 1, the finished building? How do you feel about it?

David Wex: So, River City 1, I feel good about now. It was not a good delivery. Basically our kitchen [inaudible 00:16:44] bust probably two months before the first occupant.

Andrew la Fleur: Okay.

David Wex: So, it really set us back on our [inaudible 00:16:51] … We had to find someone else. So, I’d say we spent the past year digging ourselves out of a whole delivering …

I think now people are happy. We spent 1.2 million dollars since delivering that building … We’ve basically done what we can because the original delivery was not great.

Now, coupled with the fact that Waterfront Toronto did not finish the [inaudible 00:17:19] is …

Andrew la Fleur: Right. That’s always, in every building, especially in a project like this, where there’s a –

David Wex: Big three phase.

Andrew la Fleur: Yeah. Every developer I talk to, it’s, “We did our part, the city … ” you know, the city doesn’t do their part and then it kind of reflects back on the developers.

David Wex: It does.

Andrew la Fleur: As if you had somehow screwed up, but …

David Wex: Three government agencies, Infrastructure Ontario, Waterfront Toronto, and the City of Toronto … there were areas where within a hundred square feet, three government agencies … this walkway over here is done by the city, but this landscape right next to it is done by the providence, and to get them coordinated.

So, our purchasers really for a year, had (and still today have) areas of unfinished public ground that we just cannot get the government and whichever level of government …

So that combined … so River City 1 was a tough delivery for us, plus it’s very hard to execute the strategy that the architects want.

Other than that, I think, right now speaks for itself. We get so many kudos for that building. People are happy. People love it. People are buying in phase three because of one and two.

Phase two is turning out very well. We had a really difficult time on that project with the windows. Very complex. They’re fitted. The windows multiple, multiple processes to get them to the site, involving Toronto. The piece of glass starts in Toronto, goes to the US, then goes to Saint Catherine’s, and then each has a different process and gets to our site. And then this winter has been a tough one, cause of the cold.

But that being said, people are starting to move in. The units look great. All the amenities will be done. The lot and the lobby will be finished. It’s going to look really good. So I’m happy with how phase [inaudible 00:19:13]

Andrew la Fleur: Great. Talking about taking a step back and looking at the condo market overall. A lot of people are, you know, you always hear the same old things. There’s a condo bubble. Too many condos. We’re over-building. This sort of a thing. What’s your take on that?

David Wex: No idea. No idea. I don’t know.

Andrew la Fleur: Yeah. Good answer. I have not ever heard that answer.

David Wex: Yep, I don’t know. How are you going to … So, it’s true that for ten years now people have been betting against the condo market, and those who have bet against it have done well. But you know what they say on those charts, right, or whatever those … “Don’t use the past as the future.” I don’t know.

All I can do is we can build good stuff. We can basically make sure our purchasers are happy. And I don’t forecast what’s going to happen in the condo market.

Andrew la Fleur: That’s okay. How do you compare Toronto? You’re active in a lot of other markets, now. How does Toronto compare to the rest of Canada, the other markets you’re in?

David Wex: Well, Toronto’s like the leviathan, was that the word? Like, it’s massive. It’s massive. It’s got so much forward momentum. We make, you know, we make ten sales in Toronto and I get a report at the end of the … I make one sale in Winnipeg and I get a call immediately, right?

These markets are very different. Toronto is a deep, sophisticated, competitive, active market. Huge. And then Ottawa, for example, right now, where we’ve been probably one of the biggest developers, and we’ve been there for ten years, it’s kind of, it’s tough. You know, it got over-supplied easily, because it’s a city of eight hundred thousand people, and this has four million.

Other markets I’ve been in, I’ve been in Montreal. Montreal is totally, you know, it’s not surprising, over-built right now. Other smaller markets I’ve been in, Winnipeg and Halifax, are small markets. We’re the only player in town, though. So being the only player in town is great in a small market.

I’ve been looking at some US markets right now where they’re just taking off, and they’re starting out and we have a huge competitive advantage in those markets because we come from such a competitive market.

So I think every market is a little bit different. There’s a huge investor component. River City is not a big investor building, per se. Neither are some of our other projects like Smart House was a investor …

Andrew la Fleur: Weighted.

David Wex: … project. But, River City, not incredibly. Other cities don’t have this investor thing going on, so you sell, really, to end users. So it’s a much slower process.

Andrew la Fleur: How do you see Toronto evolving, then, over the next few years to come and what direction do you want to take strategically as a company?

David Wex: Well, Toronto’s our base. I’m happy with, like, if we tweaked our waiting, fifty percent of our work should be in Toronto. It’s where we’re based. It’s the biggest market. We just also like to diversify and be a part of other markets.

Toronto, you know, you can pioneer in Toronto. There’s areas of pioneering that are going to come to Toronto. Inner suburbs, for example, you’re seeing a lot more of. But it’s very hard to make a statement in Toronto because there’s so many people here making statements.

Andrew la Fleur: Yes.

David Wex: So it’s hard. It’s very easy to go to Chicago-

Andrew la Fleur: Not every project can be a River City 3.

David Wex: No. I would like every one of my projects to be a River City, for sure. Smart House, for example, that pioneered in a different way. Architecturally, it’s a very nice little building, but how it pioneered was its product.

Andrew la Fleur: On the inside it was very different.

David Wex: Yeah. Embracing smallness.

Andrew la Fleur: I don’t think I’ve seen a project in the last two, three years get more press, more media, more interviews by you, than Smart House.

David Wex: Unbelievable.

Andrew la Fleur: It’s still, even a year, how long has it been, a year or two … A year and a half. You’re still getting calls every week.

David Wex: Yeah, that and the thing we did for IDS, Cubitat, gets a lot of press. A huge amount of press, because we embrace something that normally you’d try not to embrace. And because there’s so many things about that.

River City’s also got a lot of press. There’s something to talk about in these projects. So I would say that over, that there are more sites that we’re looking at. We will continue to do a lot in this city, but it’s not the only city we’re …

Andrew la Fleur: If you could change one thing about the condo market or the condo industry, if you had a magic wand and you could just make one thing change instantly, what would it be, and why?

David Wex: If I could change one thing. Wow, you should have asked me that question ahead of time. I would say with the condo industry, I would say about the process. I would change the way we do approvals. I hate the way we do [inaudible 00:24:34] because it’s very, very lawyer based. It’s very litigation, lawyer based.

Andrew la Fleur: Combative?

David Wex: It’s combative. It’s random. I don’t believe it’s driven by the right things, which is planning, design. It’s driven by density rights, arguments over … It’s all a litigious and lawyer-based way of doing things which is insane. We’re building a city on the basis of how good your lawyer is at making a case for more density. That’s not the way we should be doing things.

Andrew la Fleur: Who can win the argument best?

David Wex: Yeah, or who has the most power. And then we need the OMB in a certain way because the city itself, a politically driven thing doesn’t necessarily make the best planning decisions. But if we had … I’m not a real expert on this, but other cities like Vancouver, where it’s a board that’s made up of professionals or something like that.

Montreal was awesome. We went to Montreal. We had a proposed building. We had a tower in this area. They’re like, “We don’t do towers here.” It’s like, and what process do we have to change that? There is no process to change that. You must build a ten story building. It must look like this. Makes it very easy to-

Andrew la Fleur: It’s more black and white. You know what you’re getting into [crosstalk 00:26:00]

David Wex: City has a consistent look.

Andrew la Fleur: You know how to bid for land because you know what you’re going to get on the back end.

David Wex: Right now, basically, to buy a piece of property in Toronto, you need to put the most amount of money per square foot times the most density possibly imaginable that you’re going to get through an acrimonious process.

Andrew la Fleur: And it may or may not work out in the end.

David Wex: May or may not work out. So, if I could change anything about how we build buildings here, it would be that. That’s not a popular … I sat in a meeting with Jennifer Kismet and a bunch of developers, and I don’t think I was popular because I was like, “I don’t like the OMB. I don’t like the process. I would like it to be: this is the process.”

We’ve been screwed because Camden Lofts, the first project I did, complied with the King-Spadina ruling. The only building that ever did that.

Andrew la Fleur: Right. The only one before or since.

David Wex: Exactly. Well, there was nothing before. It was the first one that came out and then immediately it got thrown out, I mean, to a certain extent.

Andrew la Fleur: Well, somebody always has to break that door through. I guess it was you.

David Wex: Yeah, but then I built that building and then, you know the Morgan came and it was massively bigger.

Andrew la Fleur: Yeah, just completely destroyed any densities that were set.

David Wex: Yeah, any limits. You know, and then, boom. So I would say that that would be my, if I can change something, is the way we get things approved.

Andrew la Fleur: Now, one last question. I know that everything you do, and in talking to you and getting to know you, everything you do is driven, you know the product that you’re building is not really driven for the investor. It’s more driven for the person who is actually going to end up living in the unit, in the space, and going to design, and going to quality and service, not to put you in a tough position, but why should an investor, in your opinion, purchase a unit at River City?

David Wex: Well, as I said, I’m not really a sales guy, but I would just say-

Andrew la Fleur: Why should anyone buy at River City, perhaps, is maybe a better question.

David Wex: I think you’re buying, look, you’re buying into a certain design. You’re going to be buying into a building that’s going to stand, that’s going to be unique in the market. I hope our purchasers are happy with the quality we deliver, we strive for, sometimes we don’t but that’s certainly all we can promise, if we don’t initially, we will do what we can to make sure we do ultimately.

You’re going to get a developer who is concerned about the legacy, the design, the long term viability or value of that proposition. I’m constantly surprised by how people don’t really look at developers when they buy condominiums. They look at location, price, stuff like that. It’s the biggest investment.

Andrew la Fleur: So when somebody’s looking at you, what do you want them to see?

David Wex: Well, I’d like them to see the work that we’ve done. I’d like them to know that we’re going to deliver what we say, and I like them to know that, at least, our product is going to stand out in the market.

Andrew la Fleur: Great. If people want to get ahold of you or reach you, or find out more about Urban Capital and what you guys do, what’s the best way to do that?

David Wex: You could send us an email. You can send me an email. It’s wex.ca. That’s probably the best way. You can go to urbancapital.ca, and we get a lot of people who link to us through our website, and that will get to me, if you want.

Okay. Cool.

Andrew la Fleur: David, thank you very much for your time, today. Really appreciate it.

David Wex: Pleasure. Great.

Andrew la Fleur: Okay, there you have it. That was my interview with David Wex. Once again, partner along with Mark Reeve. They are Urban Capital. So thank you very much for listening to this show. For all the show notes on this episode, including links to get the info investor’s package for River City 3, just head on over to truecondos.com/rc3 and there you can find all the information on this episode.

Okay, thank you very much for listening and until next time, have a great week.

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