Real-estate development Q&A with developer Dan Cox of Cox Developments
Ten on the 10th
Published October 11, 2020
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.
October's Ten on the 10th features Dan Cox of Cox Developments, a firm based in Victoria, BC.
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.
Who are Cox Developments?
We are a father son team. However, Cox Developments was formed very organically, actually, and came together about 10-years-ago as my dad was off doing his own thing, and was semi-retired from the business. At the same time I started to take an interest in real-estate development and began to pursue projects. About three years in, I brought in a few partners to help me, including my dad, to put together what is now our rental building at the corner of Pandora Avenue and 1488 Cook Street known as V1488
. From there we realized there were no red flags and we could actually work together.
How would you say you differ from other developers in town?
We are a very small organization, probably doing larger projects than most would expect from two guys. I’d say we have not needed to build a corporate model that employees would have to follow that leads to constraints on design or creative direction. Of course, the project needs to be financially feasible but being a small operation allows us a bit more creative freedom and the ability to make quick, last minute, 180 degree changes to the direction of a project if it is necessary. Furthermore, we’re both really into design and try to push the constraints wherever financially possible.
How do you guys begin working on a project? What is the research and creative process behind your designs?
When we start looking at a project our first thoughts go to how we can build something different than our last project. What is the best type of design for the site. What can we provide that hasn’t necessarily been offered before and will the development contribute something of good to the area.
What type of projects do you look for?
For us, we look for projects that we can be creative and that we can have fun with. It obviously has to be financially viable, but that can come in different forms, like small projects or big projects. We’ve been very lucky to be afforded the opportunity to develop some cool buildings. And for us, that’s the biggest motivating factor to do what we do.
What are some challenges you are facing in today’s development market?
I think the biggest challenge around development right now is construction costs. I don’t know a single project out there that is, or has, stayed on budget. There are a number of reasons for this. Labour is becoming scarce, material costs are increasing daily due to global affairs, and the building code is constantly increasing requirements.
What do you see for Victoria’s Real-Estate Development market moving forward?
My personal opinion is it’s an uncertain time here, but I don’t believe it will be a negative one. Rents and the value of real-estate are ultimately going to increase. On one hand you have a council in Victoria that is essentially prohibiting the development of any new condo projects and making unreasonable requests on any new rental projects. This ultimately affects the end user. Combine that with the increase in construction costs, and in order for projects to work, you will need to achieve a higher sale or rental price than what is currently the market rate. At the same time Greater Victoria’s population is increasing year over year and I don’t see that stopping anytime soon.
The appetite for multi-farmily development sites in downtown victoria seems to have cooled off a bit recently. What do you believe is the reason for this?
A big reason why is because of council. Maybe I’m being too blunt. But they are putting demands on developers that currently make projects un-financeable. Their 20% affordability rule on new condos and their demand to have a portion of new rentals to include affordable units makes a lot of projects not viable. Furthermore, most of Victoria has really difficult soil conditions. The building code is continually changing and it is making it more expensive to come out of the ground. Factor this all in with council’s requests, and projects that may have worked two-years-ago financially do not work today. Until the sale and rental market rates increase, it is my belief that several planned projects will not get off the ground.
What is it about some of the suburban markets (Esquimalt, Langford, etc.) that seems to be attracting developers that previously would have only considered sites in the downtown core?
Ease of approvals is probably the biggest factor. Both Esquimalt and Langford have pro-development councils. There is more certainty that if they go through the rezoning process, they’ll get something approved. In Victoria it seems to be more of a 50/50 toss up these days.
One of your projects, now underway and known as The Wedge, features a unique design. Can you speak to how you arrived at this concept?
It was a bit of a challenge finding the right design to fit on the development site for The Wedge
, which is the former McCall's Funeral Services building on Johnson Street at Vancouver Street. Initially, the City and the community wanted us to retain the entire McCall's funeral home facility despite the buildings not being heritage designated structures, and we faced a lot of pushback over the idea that the whole property may need to make way for the project.
After much thought, we saw value in keeping the chapel, which was where the heritage asset was on the property, and which was seen as important to retain by the community. Because we were giving up a large portion of our site for this chapel, we had to figure out a way to gain back density to make the project viable, thus, came the concept of increasing the building size as it rose higher by cantilevering it over the chapel. Although this went against the design guidelines of downtown, we were able to take the opportunity to create something totally different and step out of the prescriptive normal box of most buildings downtown.
We know that the pandemic has impacted real-estate preferences, at least over the near-term. But do you think COVID-19 will change the way the development industry builds and designs multi-unit buildings in Victoria? Why, or why not?
With anything new or when dealing with unexpected events, there are always positive and negative consequences. This is a hard one to answer as no one really knows. From a construction point of view, the industry should be focusing efforts to protect the workforce on job sites. My experience with it has been minor as our major construction was complete before the pandemic hit.
If I had to guess, you’ll see more prefab offsite work, and there will be a limit on how many trades will be allowed to be simultenously in a suite for finishing purposes, putting pressure on each trade to get their work done diligently.
Lastly, if there was one positive for the trades, overall hygiene at construction sites has increased and there have actually been fewer sick days among workers. C
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View CBRE Victoria's website here
- View Cox Developments' 989 project website here
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