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Ten on the 10th: real-estate development Q&A with Luke Mari and Ryan Goodman of Aryze Developments

Ross Marshall of CBRE Victoria speaks with Luke Mari (pictured) and Ryan Goodman of Aryze Developments about Victoria's real-estate development industry.  Citified.ca

Ten on the 10th: real-estate development Q&A with Luke Mari and Ryan Goodman of Aryze Developments
Ten on the 10th, CITIFIED.CA
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.
 
December's Ten on the 10th features Luke Mari and Ryan Goodman of Aryze Developments, a Victoria-based real-estate development firm with a focus on infill residential projects in established urban neighbourhoods.
 
Asking the questions is Ross Marshall, 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.
 
Before we get started, can you bring us up to speed on who and what Aryze Developments is?
We’re a local Victoria based group of millennials trying to build urban homes in the walkable neighbourhoods just outside Victoria’s core. We like to think of ourselves as as entrepreneurs with an underlying goal of building better communities: this includes experimenting with a fledgling coffee shop, restoring historical heritage projects and engaging in Victoria’s political conversations. Naturally this expanded to include tackling the mystifying real estate industry, where we see an opportunity to build homes which are more inline with our creative and social values.
 
Aryze was born out of our craft of construction; we’ve been building custom homes and projects for over 10 years. Our focus to build homes with high standards to craft, quality, design and efficiency has distinguished our homes from others on the block.
 
What type of housing is most needed in the city of Victoria?
Missing middle urban housing. The Missing Middle is the kind of not-single-family, not-condo-tower-apartment style of housing that provides enough room for a couple parents and kids and has some kind of ground-level front door. Most of the development in Victoria over the past decade has been downtown and other post industrial lands. This has created a lot of condominiums and apartments, but continues the trend of zoning cliffs as condominiums exclusively drop to expensive single family homes. There needs to be housing to meet people halfway, and like great cities all over the world, we believe that missing middle typology is ground oriented townhomes.
 
What’s it like to be a builder/developer doing infill projects in Victoria?
The short answer: It’s super hard.
 
While the region has grown quickly over the past decade, growth hasn’t been allocated equally across the CRD. We fundamentally believe that Victoria should be a place where there are strong, inclusive neighborhoods that celebrate diversity. Population diversity requires a mix of housing types for different income ranges, family sizes, ages and we feel it's time to start looking at growth opportunities within the city's borders. This means building inner city infill density on vacant, under-utilized, or well connected lots.
 
But change is hard and we face a lot of push-back from well organized, active members of our community who strongly resist change.
 
So it’s hard - what motivates you?
We love Victoria and this is one of the few industries where we can truly build a legacy of our work. We care deeply about people and feel the spaces we build should facilitate healthy lives and interactions. This is more important to us than the building itself. We have sourced the best team, and work with the best architects, consultants and craftsmen to create spaces that are a framework which people house their lives. In this sense, our homes will be the backdrop or environment, and the experience people have is the foreground. We want to build homes that create better, more diverse communities and enhance the lives of the people who live in them.
 
Your projects are all fairly modern, and different from what’s been done in the past. What’s your strategy?
We are very passionate about architecture so we've been partnering up with leading Canadian Architects to add beautiful and interesting buildings into the city's housing stock. While our designs don’t always look like what is here now, we think that our high quality, visionary projects will be unique assets to the character of our future city. Let’s not forget, cities are always changing and you might remember the days of “bungalow disease”. We now call those homes neighbourhood character. Fundamentally, we believe with Hector Bremner when he said that “it's not the spindle on the porch or the pitch of the roof that defines character, it's the people who live there.”
 
You’re launching a case study on transparent homeownership, where you show your input costs as well as the development revenue as part of your latest project, Pearl Block. Why are you doing this?
Part of the mission of Pearl Block is also to bring transparency to the real estate process: to this end, we have decided to educate on the true cost of each component which went into Pearl Block, complete with our revenue earned. As aspiring young homeowners ourselves, we believe that the value of one of the biggest purchases of any of our lives should not be an ambiguous number. Through our transparent homeownership mission, we hope to make the value of Pearl Block apparent: the legacy of craftsmanship from our 10 years of experience in custom home building, married with the intelligence behind D’Arcy Jones Architecture, executing on details together that will integrate seamlessly into the lives of the people who will eventually live there.
 
How important is community consultation and whose voice matters the most?
Community engagement is at the heart of our Talk to Aryze initiative. City staff are there to apply existing policy framework in order to weigh applications for compliance but they are not there to champion the projects. So when we go to Council, we should be able to explain why the city needs what we are building, and why diverse housing types are so important to the fabric of the community. We’ve worked hard to showcase demographic and city level data on Talk to Aryze to show where the city really needs new housing, who need it (young families!) and why.
 
Our data deep dive has lead to some interesting observations, that are important for our approach to consultation. For example, we looked at the share of people 5 years of older who lived at a different address over the last census period. In all neighbourhoods except Oaklands and Gonzales, a majority (greater than 50%) of the population had lived a different address. When people say that “the most important feedback on development is from people who currently live in the neighbourhood”, the data shows that those who reside in a given area today are unlikely to be there when the housing project, neighbourhood plan or bike lane is completed. This is why city-wide input on new housing projects should be accepted and embraced.
 
What is the most concerning thing you are seeing?
Ooof, how much time do you have? By far, the premise of our current practice of exclusionary zoning. Across Victoria as a whole, almost 70% of the city is restricted to single-family dwellings but only accommodates 24% of households. In a city where 60% of households are renters, 86% live in multi-family housing. We are essentially saying that the vast majority of the city is off limits to 23,900 renter households or people who can’t afford the average home price of $1,100,000 (August 2018). Rather than primarily looking to rezonings for revenue to fund an inclusionary housing program, council should adopt zoning measures that in and of themselves, will increase housing choice and affordability.
 
It’s also how you grow a good city! Between 1962 and 2018, if you look at the zoning comparison, industrial and commercial lands have been reduced by over 60% whereas lands zoned exclusively for single family housing have decreased by 7%. This means that protecting these low dense neighbourhoods have a cost and the cost to our city is the loss of economically productive employment lands and demographic diversity.
 
We see a lot of cranes downtown which is great, downtown needs revitalization but to grow a sustainable city, you diverse housing options and the neighbourhoods are essentially untouched. 63% of millennial households with no kids live apartments, as soon as they have kids, this drops to 29% so the preference for ground oriented dwellings is persistent. The areas of the CRD with a less than 25 minute commute time have seen a 4% loss in families whereas the areas of the CRD that have a greater than 25 minute commute time have seen a 21% growth in families. Shouldn’t we be fighting to keep families in the core?
 
That sounds grim, what is the solution?
Zoning reform. By limiting where housing can be built, zoning restricts the total number of new homes in a given neighbourhood to far fewer than the market would otherwise provide. Let's look at basic economics, if you allow the price of a product to rise, it incentivizes the creation of more of that product. If you allow the price of a product to rise but restrict the supply, you aren't allow market pricing to work, its price rationing.
 
By artificially capping production, all the fears that generate community opposition to densification then occurs in other areas because intense pent-up market demand is concentrated like a fire hose, and that development is undertaken primarily at large scales (giant apartments) and in needlessly expensive ways. The antidote to the disruptive effects of big change is gradual change. The next increment of development — from single-family homes to duplex, duplex to townhouses, townhouses to small apartment buildings — should always be available, everywhere.
 
What is next for you guys?
Continuing to advocate for sustainable communities aka compact, walkable neighbourhoods with great urban design. Our development projects are a reflection of our values as they range from affordable partnerships with the CRD/BC Housing to higher end urban homes. Some call it a spectrum but we like to think of the housing market as a ladder. Each rung is a price point which largely reflects income and also housing typology. You can never go up the property ladder unless you make more money but you can always go down it. So if the person that can afford a $900,000 townhouse doesn’t have available product at their income rung, they will go down and bump the people that can only afford $750,000 as that may be the next available price point. The same is true for renting, so our focus is to develop diverse housing in the walkable neighbourhoods around the core for different income levels and tenures. This is hard because our planning systems have eliminated incremental change from most corners of our city. Neighbourhoods composed of single- family houses are declared almost entirely off-limits to development.
 
Together, let’s consider the radical idea that how much money you have shouldn’t determine whether or not you get to live in walkable neighbourhoods near public amenities, public transit and jobs. Low, modest, and high income people deserve healthy communities. Every neighbourhood should be for everyone; diverse neighbourhoods are strong neighbourhoods.
 
If you agree, we encourage you to connect with us through ​www.talktoaryze.ca.
 
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