Matthew Davis, Vice President of Development at Pacific Capital Real Estate Group, says Royal Bay's future development pipeline is more focused on multi-unit buildings as housing costs continue to rise. The developer also speaks to the south Island real-estate market, and its future outlook. Citified.ca
Royal Bay developer talks future of Colwood mega-project and lends insight into housing market
Mike Kozakowski, Citified.ca
Published October 10, 2024
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 Tenth is back after a summer break, and our September, 2024 segment features Matthew Davis, Vice President of Development, Pacific Capital Real Estate Group.
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 like to hear from you.
We note that Pacific Capital Real Estate’s 20th anniversary is this year. What does this milestone mean for PCRE?
It’s a huge milestone for us. The company was founded two decades ago by experienced real-estate leaders who built PCRE on a strong foundation of integrity, expertise, and relationship-building. I’m proud to say, these core values are what continue to guide us today.
In the last 20 years, PCRE has grown to develop award-winning residential and commercial real-estate across British Columbia, Alberta, and Washington State. To date, we’ve built over 12,000 homes and developed more than 3 million square feet of real-estate. Our portfolio spans single-family homes, townhomes, condos, purpose-built rental, shopping centres, industrial and office buildings. We’ve historically focused and had success developing in secondary markets like Victoria, Nanaimo and the Okanagan.
I’m incredibly grateful to our homeowners, staff, investors, and the municipalities we work with. They are the reason we continue to build quality homes and will continue to do so for years to come.
Where do you see the company in another 20 years?
I’m really excited about the future. PCRE is certainly entering a new phase of it’s evolution. While the past two decades have been about building a strong foundation and quietly achieving success, the next 20 years are about stepping into a new phase of growth and transformation. We often we are the largest developer people have never heard of, but we think that will change with the next phase of our business.
We’re on a major growth trajectory, including expanding our team from 15 to 40 employees. At Royal Bay (view Citified's project list here), we have 2,000 homes left to build, and we’ve just acquired a new site in Nanaimo, with plans to expand our Acquistion program across the Lower Mainland and Vancouver Island.
In 2025, we will unveil a new brand that will unify our BC subsidiaries under one cohesive name. The new identity will reflect our commitment to high-quality developments and communities. We’re thrilled about what’s ahead, and while we grow, we remain committed to maintaining our core values and company culture.
It’s not common knowledge that PCRE operates under subsidiary names. Can you explain that?
In Canada, PCRE Group develops real-estate both under its own name and through its subsidiaries. These include Apex Excel, an Alberta-based home builder and land developer, and GableCraft Homes, a residential builder at Royal Bay. In Washington State, PCRE partners with lead developer Continental Properties to develop and renovate purpose-built apartments.
Starting in 2025, GableCraft will join PCRE Group under our new shared brand name (stay tuned for that announcement). While the subsidiary names may change, the quality and care you’ve come to expect from our developments will remain the same.
Could you update us on the current build-out plans for Royal Bay, in terms of units completed, units under construction, and the density you have planned?
Over the past decade, we’ve transformed Royal Bay from a 240-acre gravel pit into a vibrant community with 1,000 completed residential units, public parks and plazas and a recently opened retail centre. Over the next 8-to-10 years, we plan to build another 2,000 homes, bringing the total to 3,000 units at project completion. In addition, we will introduce anther 20,000+ square feet of retail space and expand the community with several acres of public parkland and amenity space.
Upon full build-out, Royal Bay will cover the full spectrum of housing, including single-family homes, townhomes, condominiums and rental apartments. Island Health also has plans to build a 300-bed congregate care facility. As the project evolves, we’re committed to creating a thriving, complete community that will serve residents for many years to come.
What have been the catalysts to pursue more high-density condominium, rental apartment, and townhome projects at Royal Bay, compared to earlier plans with a larger focus on single-family homes?
The primary catalyst has been the changing market and buyer attainability. When we began at Royal Bay, the price of single-family homes was $500,000. Today, that figure is at least $1.1 million. The housing market de
mands more affordable and diverse options, and we’re committed to building homes that meet the needs of a wider range of buyers.
We’ve recently launched a single level rancher neighborhood. We know these units do not max out our density but they serve a market where we know there is demand and limited supply. We improve our overall absorptions and keep existing residents in the community as they now have an option to age in place. It’s about offering homes that fit a variety of lifestyles and filling gaps in the market. That’s really what we do best. I’m proud of that.
Royal Bay Secondary School has been highly successful at attracting students, leading to an expansion in 2020 to accommodate demand. What is planned for future school investments at Royal Bay?
We have 5+ acre site prepped and ready for a 500 student elementary school in our Latoria South neighborhood and we are hopeful it will commence construction soon. There’s another elementary school currently under construction on Latoria Boulevard, just west of Royal Bay. These investments are crucial as we continue to build out the community and accommodate the growing number of families moving into the area.
More broadly speaking, what do you see as the future of residential real-estate on the West Shore?
The West Shore is one of the fastest-growing regions in Canada, driven by increasing employment opportunities, natural amenities, and excellent municipal support. On any given day, we’re employing over 500 people at Royal Bay alone. The West Shore offers trails, ocean access, green spaces, and retail. With all the area’s amenities and it’s safe, family friendly neighbourhoods, it is evident why it has become such a desirable place to live.
We are certain the area will continue to grow and as a result, the forms of housing and density will continue to change. How we as developers, with our partners at the City and in the community, manage that change will be key to preserving the desirability of the Westshore communities.
We’re fortunate to work with municipalities like the City of Colwood, whose staff have been first-class partners in helping create a complete community. Their dedication has been key to making the West Shore a place where people now choose to live rather than feeling pushed out of other areas.
Is there a particular project you’re especially excited about?
We have a number of interesting projects in planning and under construction. This summer we were especially excited to launch our Park at Royal Bay community. This four-phase condo project will feature 334 one- and two-bedroom units across four buildings, all centered around two acres of green space with bocce courts, community gardens, and a clubhouse that includes a gym, sauna, hot tub, cold plunge, and entertainment area. We think it sets itself apart on the Westshore.
Park’s first building, Bella Park, is currently selling, with construction slated to begin in Winter 2025.
We recently hosted a realtor event with our sales and marketing partner, Rennie. We were lucky to host Bob Rennie, founder of Rennie and a well-known real-estate expert, as he addressed over 100 realtors, sharing his insights on the current market.
What else does PCRE have on the go outside of Royal Bay?
We have a number of active projects outside of Royal Bay and continue to pursue new multi-family opportunities, many on Vancouver Island. We’ve recently acquired a 2+ acre site in Nanaimo, currently in design with another Nanaimo site in due diligence. We have an approved purpose-built rental project on the Sunshine Coast in Gibsons, an infill townhome business in the Okanagan and a light industrial development in Squamish.
Our Calgary subsidiary, Apex Excel, continues to thrive, building over 600 homes annually and solidifying its reputation as a leader in Alberta's land housing market, with a strong executive team driving its growth.
In Washington State, our partner, Continental Properties, has delivered over 4,000 multi-family units in the Seattle area and continues to provide high quality rental apartments.
It’s a tricky time in the market, but where do you think things are headed?
Despite some of the recent headwinds and headlines, we remain confident in the market in BC and especially on Vancouver Island. Interest rates are trending in the right direction and we know there are lots of buyers on the sidelines waiting for the right time. Even in the last few weeks we have seen the market pick up steam, with a significant increase in visitors to our PCs. We see activity continuing to build over the next few months and into early 2025 with further interest rate reductions and new listings already stabilizing. The recent government announcement to increase the insured mortgage price cap from $1 million to $1.5 million is another positive sign.
We’ve seen these market cycles before and will see them again. We continue to focus on building high quality product in desirable locations. People ultimately want to live in BC for so many reasons and Vancouver Island is often top of their list. C
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