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Q&A with Robert Jawl of Jawl Properties on a post-COVID Victoria office market and development outlook

Robert Jawl, the Managing Director of Victoria-based real-estate development firm Jawl Properties, discusses Victoria's post-COVID office sector, and an outlook on real-estate development in the city centre.  Citified.ca

Q&A with Robert Jawl of Jawl Properties on a post-COVID Victoria office market and development outlook
Ten on the 10th
Citified's Ten on the 10th is a monthly question-and-answer segment connecting our readers with the insight and knowledge of Victoria's top real-estate and business professionals.
 
Ten on the 10th's April, 2022 segment features Robert Jawl, Managing Director of Victoria-based real-estate development firm Jawl Properties. Jawl Properties is one of Vancouver Island's largest real-estate developers, with a significant volume of the Capital's office inventory developed and managed by the company.
 
Click here to view a list of former Ten on the 10th Q&As.
 
Asking the questions is Ross Marshall, Senior Vice President of the Victoria offices of commercial real-estate brokerage CBRE. As a leader in facilitating large-scale commercial real-estate transactions throughout the Capital Region – which include apartment complexes, industrial retail and office properties, and land/development opportunities – Ross and his team are at the forefront of market-leading real-estate transactions on Vancouver Island.
 
Would you like to be featured as part of a future Ten on the 10th Q&A? We'd love to hear from you.
 
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Tell us a bit about your family’s 60+ years of ownership and development of real estate in Victoria.
As a family and as a company, we’ve been extremely fortunate to call Victoria home. The first members of our family immigrated here over 100 years-ago and we are very lucky that they did. The quality of life, stability, and opportunities afforded by a life in Canada and in this region cannot be overstated. From company roots in the building supply and lumber wholesale business, we have since expanded to commercial and residential property development and other ventures. Regardless of the business, we maintain an ultra long-term ownership horizon, a stakeholder mindset, and focus on quality and customer service. This approach coupled with the consistent employment growth and net in-migration patterns that this region has experienced over recent decades has led to exciting and progressive opportunities. While our company has grown in size, we remain a Victoria business at-core and we work hard to take on projects that not only react to the region’s strengths, but also contribute to it.
 
Jawl Properties has historically developed both office and residential properties. Where is your focus currently?
We are currently studying opportunities within both categories. On the office side, we are well advanced with our application for re-zoning and development permit for 1221 Blanshard Street, the former Capitol 6 movie theatre. This project is a 10 storey, 170,000 square foot office and retail complex designed by D’Ambrosio Architecture + Urbanism. Our recent nearby projects at 1515 Douglas Street and the Atrium have led us to know this location well and we believe very strongly in its potential for additional top standard office and retail premises. This project also gives us a chance to build on design, sustainability and occupant experience lessons learned from recent projects to hopefully further push the standards for best in class office projects in the core.
 
In the past year, we have also acquired several large future development sites in the downtown area that appear well suited to residential uses. While timelines for these projects are not immediate, we think that the appeal of living proximate to the urban core and the self-reinforcing effects of an ever growing downtown residential population will make these exciting project opportunities for us in the future. 
 
What’s your take on Victoria’s regulatory environment? Do you feel it is supportive of new development?
Yes I do. This may not be the consensus view of the industry as a whole but I think the City of Victoria (the jurisdiction we work in the most) has done a good job of balancing competing priorities of housing affordability, design integrity, livability, economic development and process efficiency. For a place many are quick to chastise as being “closed for business”, it sure has a lot of cranes on the skyline! 
 
I also think that when you look at the public nature of property development work, it shouldn’t necessarily be easy. Upholding sound planning principles, rigorous design standards and ensuring the public interest is advanced with new projects is essential in ensuring the long term livability and desirability of a place. To dimmish those items in service of shaving a few months off approvals timelines strikes me as contrary to the region’s long term interests. This of course shouldn’t be an excuse for inefficiency, bureaucracy for its own sake or disproportionate voice for special interests within land use planning processes, but I do think the best projects come about when there are high standards applied and broad accountability to stakeholder priorities.
 
What is the most notable challenge you’re grappling with when underwriting new projects today?
The hardest element to forecast for new project planning today is construction costs. Hard costs have increased 20% to 30% over the past 24 months which has major implications for project viability, especially when coupled with labour and supply chain constraints and the associated implications for project delivery timing. For much of the last decade, increases in apartment rents, condo sales prices, and office rents, kept pace with construction cost increases and a lot of new projects were completed as a result. I am not certain this trend will continue, and I expect project calculus to be more challenging in the near term.
 
How important is architecture and urban design to Jawl Properties when considering new projects?
We have been fortunate to collaborate with some excellent architects and urban designers over the years. These experiences have ingrained in our company a belief in the contribution of high quality and thoughtful architecture and urban design to successful project outcomes. We believe that good design allows for better occupant and resident experiences, makes a more fulsome contribution to the communities we operate in and allows our projects to operate more sustainably and durably. The public realm and human scale touchpoints in particular are areas of careful focus for us in project planning. Collaborating with great designers and pushing the envelope of what’s achievable is also a lot of fun. It challenges us and allows for new learning on each project. I’m not suggesting we always get it perfect, but respect for our community compels us to try our hardest. Good design outcomes often aren’t a matter of premium costs so much as adequate care and attention being given on the part of a collective project team.
 
How has the office market been performing lately (as we come out of COVID-19 restrictions)?
2020 was, by and large, a year of paralysis for the office market while tenants and landlords alike searched for clues on pandemic duration and the impact of work-from-home and remote work themes. Since early 2021, however, the office market has returned to life and we are seeing robust renewals, healthy new demand and rental rates today which are higher than they were in 2019. Victoria’s office market has benefited greatly from the stability afforded by its large government presence. Sectors like advanced technology and engineering also continue to grow here. The overall vacancy rate is under 7% and tighter still for top quality downtown properties where most of our focus is.
 
How has Jawl Properties been able to compete with larger institutional competitors in the office market?
First and foremost, we view ourselves as a service organization. The whole team at Jawl Properties is resolutely focused on customer service, responsiveness, and hands-on attention to detail in constructing and operating our buildings. Further, we perform leasing, property management and many construction functions in-house which enables us to control quality at multiple levels and manage all facets of a customer’s experience. Finally, we maintain a relationship based approach to business and many of our key external collaborators are folks we have worked with for decades. These mutual relationships are invaluable in ensuring building quality and customer service goals can be met. For many larger institutions, it’s hard to mobilize in a smaller market in such a way that you can sweat the details and personalize services. For us, attention to detail and tailored solutions for our customers are core to our value proposition.
 
How do you foresee the office market evolving?
Most are our clients are having robust discussions on the go-forward nature of their working styles. For many, a hybrid model seems to be the preferred solution which allows a degree of flexibility between work from home and work from the office. While this scenario will see continued requirements for office premises for most companies, we expect the nature of those needs to evolve. Collaboration and gathering spaces will increase in importance. Also, I suspect pre-pandemic trends like hotdesking will reverse as people reassert their preference for designated spaces for health and individual identity reasons. Finally, I believe that between the competitive current labour market and the need for companies to have their office space compare favorably to the “kitchen table”, the relative appeal of well located, well amenitized, and high quality buildings will increase. This migration of demand to better buildings is playing out in Victoria and many other cities already.
 
What about streetfront retail? How have your tenants persevered?
It’s unquestionably been a challenging last two years for our streetfront retail and restaurant clients. Between pandemic related operating restrictions, the lack of downtown office workers, and now labour shortages and input cost inflation, it’s been a period focused on survival for most groups. We were quick to abate rents when the pandemic struck to afford some breathing room and continue to dialogue regularly with our customers who are still dealing with residual pandemic effects to find collaborative solutions to ensure businesses can continue to operate. Vital and animated street fronts and the prevalence of locally owned retail and restaurant offerings are so important to Victoria’s health and appeal. We need to be doing everything we can as a company and as a community to ensure as many of these businesses as possible survive and more like them continue to see Victoria as a desirable place to set up shop. This means collaborative landlord / tenant relationships, a shop local mentality among consumers, a nurturing regulatory apparatus (i.e. sidewalk patios) and a continued emphasis on curation and textured human scale design for existing and planned buildings. 
 
Gratefully, customer activity is returning in a meaningful way and the return of office workers and tourism projected for the coming months will assist further. I also believe that the resilience demonstrated by groups who survived the last few years bodes well for this industry’s future. While some long standing local institutions were lost to the pandemic, we are seeing new concepts and entrepreneurs backfill the spaces left behind reflecting increasing optimism. Also of note is the relative strength demonstrated by village and community retail offerings outside of downtown in the last two years. Areas like Cook Street Village, Oak Bay Avenue, Mattick’s Farm and others have comparatively thrived as people shopped and socialized closer to home. While I firmly believe downtown will bounce back, I think the emergent strength of retail and restaurant offerings in the village centers will remain.
 
Why bet on downtown Victoria?
We believe that a thriving region needs a thriving urban core. In Victoria’s context, the epicenter of economic, social and cultural activity remains downtown. Population growth on the West Shore and increased attention on village nodes are wonderful for the region. Much of the local growth we have observed is founded on underlying population and economic expansion, versus a high level of inter-regional reshuffling. Accordingly, I don’t believe the health and success of downtown to necessarily be in competition or conflict with high growth trends elsewhere in the region. Further, over the past two decades, the full time residential population in the core has grown considerably and this pattern, if anything, is accelerating. More people nurture more amenities, emphasize livability, and activate and animate the core in a positive way. Clearly the downtown has certain challenges but when you step back and view its evolution over a longer time scale, its value proposition has grown considerably, and we hope to play a part in the continuation of that trend. C

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 Article resources

  • Would you like to be featured as part of a future Ten on the 10th Q&A? We'd love to hear from you
  • View CBRE Victoria's website here
  • To receive exclusive investment opportunities from CBRE’s Investment Properties Group, opt in here
  • View Jawl Properties' website here
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