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EPISODE DESCRIPTION
Episode 95: Matt and Taylor are joined by twin brothers Chris & Jason Wills, both from Kelowna, BC. Following in their dad's footsteps of commercial real estate, Chris, the Managing Partner of Sales & Leasing, and Jason, a Partner of Sales & Leasing, founded Venture Commercial in 2020, which is now one of the largest commercial real estate brokerages in the Okanagan.
Having extensive knowledge of the local retail, office, and investment market, Chris has successfully completed hundreds of real estate transactions, including Centre 97, and expanding both Chopped Leaf and Wok Box locations throughout North America. One of the most prominent industrial brokers in the market, Jason has been involved in thousands of transactions amounting to over two million square feet of commercial real estate sold, acquired, or leased.
Chris & Jason are here to discuss: → Founding Venture Commercial and their business model, what it takes to work in commercial real estate, and the benefits of commercial vs residential leasing. → Different commercial client types, how to get into commercial investing, and how you can invest in your tenants businesses. → Finding opportunities in client's existing leases, the evolution of office & retail spaces, and where there are potential opportunities and pitfalls in the Okanagan for commercial real estate right now.
Venture Commercial Website: www.venturecommercial.ca
Venture Commercial LinkedIn: @VentureCommercial
Venture Commercial Instagram: @venture.commercial
Chris Wills' LinkedIn: @ChrisWills
Chris Wills' Instagram: @chris_wills_kelowna
Jason Wills' LinkedIn: @JasonWills
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Kelowna Real Estate Podcast: @kelownarealestate
Kelowna Real Estate Podcast YouTube: @KelownaRealEstatePodcast
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CONNECT WITH MATT
Matt Glen's Website: www.mattglen.ca
Matt Glen's Email: matt.glen@century21.ca
Matt Glen's Instagram: @mattglenrealestate
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CONNECT WITH TAYLOR
Taylor Atkinson's Website: www.venturemortgages.com
Taylor Atkinson's Email: taylor@venturemortgages.com
Taylor Atkinson's Instagram: @VentureMortgages
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome back to the ColonialEstate Podcast.
(00:01):
I'm your host, Taylor Atkinson.
Borgers broker too, I heard.
Yeah, I missed that part.
And I am your real estate agent
host, Matt Glenn.
I thought you were the one that
was supposed to have no brain.
I honestly do not have a brain.
I have done some questionable shitin the last few days.
Yeah, well, kids will do that toyou, right?
Yeah, honestly, it's real.
You get told about it, then it
(00:23):
happens, and it's real.
Yeah, yeah.
Well...
Only another eight months and then
you'll be like in the next phase.
another eight months and then
you'll be like in the next phase.
Yeah, exactly.
Yeah.
How's everything outside of that?
Honestly, it's awesome.
Being a father to two kids has
been awesome.
It's been great, but my brain is
still getting eaten away, it feelslike.
(00:44):
But it's been great.
Work has been pretty good.
Tariffs have sucked, honestly.
Hearing about this all the time.
I have showings booked.
Like I had a fourplex for sale.
Actually, half of it is still forsale.
We had like showings booked,right?
So we had, I don't know, 12showings over the weekend.
Tariffs get announced coming inagain.
Like half the show is canceled.
So we haven't talked about this at
(01:04):
all.
been we haven't talked about this
at all.
I've spoken to a couple other
people, but I know you and I werelike, and everyone was pumping
busy through the winter, which wasreally strange.
Spring, I was prepared just tolike.
you know keep going i thought itwas going to be a crazy market it
has been much quieter like firstyeah it's gotten pretty quiet like
super thankful i still have quitea bit of stuff going on but yeah
it has been like noticeablyquieter and it's just because yeah
(01:25):
it's gotten pretty quiet likesuper thankful i still have quite
a bit of stuff going on but yeahit has been like noticeably
quieter and it's just because theuncertainty people don't know are
you gonna buy a house and oureconomy collapses next month yeah
right like it's just like there'snot a really good answer for that
because nobody knows yeah i agreeit's not really the house price
what people were yeah scared ofbefore like oh am i gonna buy at
the peak or i want to buy at thebottom yeah now it's just like am
i gonna have my job am i gonna beable to be invaded in a couple of
months you know like there's somuch uncertainty and it's just
(01:46):
hard when you're making thebiggest decision of your life yeah
it sucks and you can sympathizewith it but uh yeah i agree it's
not really the house price whatpeople were yeah scared of before
like oh am i gonna buy at the peakor i want to buy at the bottom
yeah now it's just like am i gonnahave my job am i gonna able to be
invaded in a couple of months youknow like there's so much
uncertainty and it's just hardwhen you're making the biggest
decision of your life yeah itsucks and you can sympathize with
it but uh yeah yeah It just kindof is what it is.
Yeah.
Time will tell, I guess.
In a few more weeks, maybe thingswill balance out.
I'd say overall, I'd say overall,I'm pretty optimistic about the
future.
It's just like, tell me to get
some answers here.
Yeah.
Yeah.
I think right now.
Tariffs too, they affect so manydifferent things.
So I have a friend who has a localtool business, Snap -on Truck.
(02:08):
Nice.
I'm talking to him.
He's like, yeah, so all of ourtools are made in the US.
Yeah.
So it's like, okay, so I guess
Snap -on is taking on the tariffsfor a while, but I don't know how
long they can sustain that for.
That's, yeah.
Yeah.
Crazy.
You think about this foreverything, right?
There's things you don't evenknow.
I just happen to know that becausehe's like one of my best friends.
(02:31):
Yeah.
So you think about the tariffs and
it's not just the 25 % tariff.
Like you have all these trucks,
like for building material, ifyou're renovating your house or
building a new house, all thematerials, like let's say all the
faucets or whatever are all fromthe US or whatever it is.
So they've been getting shipped upfor a century, it feels like.
And then you have all thesethings.
But then when the tariffs come in,all of a sudden those trucks
(02:51):
aren't coming in as much, right?So now to ship the one thing that
you need from the States, even ifyou buy everything else from
Canada.
You think about You don't just put
it on the trucks that are going inthe U .S.
anyway.
So now your shipping costs go up.
Yeah.
It's the 25 % tariff and then
that.
And I feel like there's a ton more
of those kinds of things that youdon't even really know.
Well, and to magnify it, and thisis what we spoke about with
(03:12):
Brandon Augvanson a coupleepisodes ago, was like, so
inflation's going up because allthese tariffs, but GDP is going
down because economically peopleare struggling, you know, job
losses, people aren't spending asmuch.
So it's like the divide is justgrowing on both sides.
Yeah.
Like there's not like the.
the lever to pull of the interestrates because he might go up.
Yeah.
So like, at least in the short
term, I don't know what long term,but yeah, like all these things
just add to uncertainty.
(03:33):
Yeah.
So like, you just don't know.
Well, today's guests that we had
on two guests, Yeah.
guests that we had on two guests,
twin brothers, Jason and ChrisWills.
Boucherie Boys represent.
Thank you.
Although they played basketball,so I can't get on board with that.
I got cut in grade 10.
I'll never forget that.
But yeah, awesome guys.
Really enjoyed the chat with them.
And funny enough, we're talkingabout tariffs now, but they really
started out venture commercial,which you guys will see their
signs everywhere.
(03:53):
They started that in COVID.
So we're talking about tough timesright now and tariffs and
uncertainty.
Well, here's two guys that...
started in a very difficult time,especially in the commercial
market with leasing and have beenwildly successful.
When you talk to them, theyobviously know what's going on.
They are extremely knowledgeable.
I knew they were brothers.
I didn't know they were twins.
(04:14):
And then when they came and they
looked the same, I was like, man,they must be close in age.
And it turns out it's likeminutes.
Yeah, they were awesome.
And like you said, I mean, they
just, they seem so passionateabout the commercial side and like
they're into leasing and salepurchasing side.
Like it just, it's a goodcombination, but like you really
(04:34):
need to know how to structureleases or how to read them to set
up the opportunity.
My other big takeaway on this is I
need to get to.
the mall to get some outfits i
can't believe we broke that newsto you i know when did this come
out the bay is closing like screwtariffs like this is more
important to me this is the onlyplace i shop once every four years
i told emily i'm like i can't shopat all now these are the clothes
(04:56):
for the rest of my life i hope youlike the things i have because
i'll never get yeah and she doesnot so but yeah i think you guys
are going to find a ton of valuein this show if you want to know
you know more about commercialstuff reach out to them they're a
great resource also Apparentlyreally good basketball players.
So we'll see them on the courts.
And this episode, like every
episode, sponsored by Century 21Assurance Realty, best brokerage
(05:17):
in town.
We are growing, building agents.
So if you're an agent looking fora more cooperative brokerage or
looking for some help, we're agreat brokerage to talk about.
Or if you're a buyer or sellerlooking for an agent, give us a
shout.
Love to help you.
All right.
Enjoy the show.
Okay, welcome to the Kelowna RealEstate Podcast.
Wills Brothers, how are you doing?Excellent.
Well, we normally like to startour show with like, hey, what's
your perfect Friday look like?But since we have... twin brothers
(05:38):
here.
We assume that answer may be
similar, may be different, butlet's just start with like venture
commercial.
How'd you guys start and tell us a
bit of the background story?Yeah.
Venture commercial has reallystarted just more out of
necessity.
I've been in the industry for
quite some time.
Been fortunate to learn from a
couple of great mentors, includingmy father, and we had built a
(05:59):
company up.
to something that was pretty cool
in the Okanagan.
We joined forces with a national
brokerage for four years.
And really at that point, I was
really kind of yearning to have abit of a brokerage and commercial
real estate brokerage that wasmore approachable and had the
opportunity to market the way thatwe wanted to and try to think
outside the norms a little bit.
(06:20):
And I felt that organization we
were with, we were in a bit of abox and quickest way for me to
want to.
Be inspired.
Is it to be told no?And I love the opportunity to
start something where we couldactually be our own bosses.
And if we had really cool ideas orwe wanted to do certain drone
elements, we want to do that, thatnobody could ever say no. And
Venture Commercial was started inMarch 2020.
Yeah, we're really, reallyexcited.
(06:41):
What we learned was that we werevery lucky to be in the Okanagan.
And it really is about therelationships we have, not
necessarily the business card.
You know, so when we decided to
leave Collier's, we knew that wehad a pretty good grasp on
relationships here in the Okanaganand kind of what propelled us to,
I think, our success.
Were you guys doing residential
before as well, or was it alwaysall commercial?
you guys doing residential beforeas well, or was it always all
(07:02):
commercial?No, always all commercial.
Like our family's always been incommercial real estate.
Our dad has worked for one of thelargest developers in the
Okanagan.
Prior to that, he helped redevelop
Gastown down in Vancouver.
So commercial real estate's really
in our blood.
As far as we can remember, our
first jobs were power washingstrip centers in Langley.
So to be honest, we've been doingit for a really long time.
I wouldn't know how to sellresidential for the life of me.
(07:24):
We didn't even know where tostart.
even know where to start.
March 2020 is a funny, great time
to start for you guys.
Yeah.
Well, actually.
Yeah.
You know.
Most difficult month in history to
start.
Yeah.
You know, at that time, you know,no one knew kind of had the
crystal ball of what was about tohappen.
However, we left the week of themandatory shutdown.
And, you know, we laugh and joke,but the reality was, was we leased
an office space.
We were sitting there putting
furniture together.
(07:44):
And as of Monday, the mandatory
shutdown hit and our world'schanged.
It really turned from us buildingour business to supporting our
clients and having a lot ofconversations with landlords and
with tenants on how to navigatethrough the COVID crisis.
Gives you some credibility too.
you some credibility too.
going through it yourself.
Yeah, I think that it keeps you
honest, to be quite honest withyou.
I like the adversity.
I think that, you know, no matter
where venture commercial goes andsuccess that either we see or
people that we work with see,there's the humbleness, the
(08:06):
grassroots and the way that itstarted.
And a lot of it was just basicallybuilding a website.
you know, ourselves or coming upwith some marketing initiatives
and drone footage or gimbalfootage, all ourselves.
I do look back and I'm kind offond of those days because it was
like, okay, you either, you know,lie down and you just give up or
you say not today.
And if I had maybe 20 or 25 active
(08:27):
deals, I think I lost half of themwithin one week.
You probably had some experience.
It didn't even really matter if
they're binding or not.
People said, I'm not moving
forward with this.
Nobody knew what that world looked
like as far as what can weenforce?
You know, is there any penalty?It was a really weird time.
Yeah.
So what's your brokerage like now?
How is it set up?Do you have a managing broker?
Are any of you guys a managingbroker?
No, no, no. So we have a managingbroker.
(08:49):
We've got actually our executiveassistants working to get her
managing brokers.
So we'll have two managing brokers
by the end of the year.
We have eight full -time active
commercial agents in -house.
So they're all dedicated only to
commercial real estate.
So with venture commercial, we
only do commercial real estate.
We stay exactly in our lane.
We actually don't even sellbusinesses.
We really try to stay with what wedo really well and what we're
passionate about.
We've got an office down on
(09:10):
Bernard.
We've got two full -time support
staff.
And we do have a couple of people
who might be joining as well onthe brokerage side.
the Cool.
I see your signs everywhere, which
is kudos to you guys.
A lot of them are leasing signs.
Can you tell us about the businessmodel, like percentage wise or
just high level, how much leasingyou guys do and how much in sales?
Like, how's that split up?Yeah, we've been asked that a lot
lately.
I have a passion for leasing, but
(09:32):
it's not the only thing we do.
In Kelowna particularly, I see
there's a lot more opportunity forleasing when you're an active
agent, where in Vancouver, youmight see a little bit more major
markets, you might see a littlebit more of a balance.
Our brokerage in the last twoyears have done about 60 % leasing
to 40 % sales.
It's changed with some of our
brokers.
Some of our brokers are staying a
little bit more in certainwheelhouses as far as investment.
(09:52):
But I'm not going to lie, likesome of my top tier clients own
major strip centers that I've beenfortunate to represent for.
17, 18 years.
I'm a sucker for it, but I love it
more than anything.
So I think a lot of that signage
you'll see, you know, if they'recommercial properties, they're a
little bit more, you know, highexposure.
You do get to see them a littlebit more often.
Yeah.
And I think within the Okanagan
(10:13):
being in the Valley we're in, it'shard to specialize in one asset
class or into sales and orleasing.
The reality is, is, you know,we've really pride ourselves on
service and our clients.
And I think that's why we've had
success.
But that also comes with some of
the smallest, you know, leasedeals that can turn into some of
the largest sales.
Right.
You never know where the businesscomes from.
So we're very fortunate to haveclients that trust us on both
leases and sales side of it.
(10:34):
And naturally, it works for us
when, you know, in fact, we alwayslike to say there's no deal too
small, you know, and knowing thatthat small group who might just be
open, you know, a software companycould turn into buying a whole
block down in a major city.
Yeah.
Can you kind of highlight a littlebit, triple net lease, gross
lease?Obviously, a lot of landlords that
are in the residential spacereally love the commercial space
because BC Tenancy Act is kind ofhandcuffing us.
Why is it so beneficial in thecommercial space?
(10:56):
How does that look for a lease?Well, yeah, you raise a great
point.
I guess going back a step in
commercial real estate, you caneither own the buildings, you can
lease the buildings.
As a commercial agent, you can
make money doing both, which isnice.
I'm fortunate to own bothresidential and commercial
properties, and I absolutely steertowards being a commercial
landlord over residentiallandlord, just because you can get
two parties that can agree on.
pretty much any terms.
There's no tenancy act that'sgoverned to exactly the way that
(11:18):
deposits are held or terms can beterminated or possession dates.
Everything is pretty fluiddepending on what a commercial
lease looks like and who isnegotiating on both sides.
So really, when you're acommercial landlord, you have a
lot more say in the way that youwant to deal with your buildings,
dictate how things are being ran,deposits that you can be held,
monthly rents or annual rentsincreases.
They're not governed or capped.
(11:39):
That's all fair market.
A commercial landlord has theoption of just doing a gross
lease, which is fine.
You do notice more in commercial
real estate, the evolution of atriple net lease, which allows a
landlord to be able to recoup anycosts or controllables that change
over the years.
Property taxes, no removal of
common area maintenance andeverything can actually be charged
back to the commercial tenants,typically on an annual basis
through camera conciliations.
(12:00):
So being a commercial landlord is,
in my opinion, a very good thingto be.
Yeah, I think to oversimplify, theresidential is governed by the
Residential Tenancy Act, whereasthe commercial transaction is
governed by the lease.
And the lease can differ from any
type of landlord or developer.
Awesome.
So are you guys, are you involvedevery year with a renegotiation of
(12:21):
the lease or are you just?It depends.
Yeah.
And typically a term will be set
between three, five, four years.
It doesn't really matter.
It depends what the two partiesagree on.
We'll help facilitate that.
transaction upfront.
If we're fortunate to representthe landlord, a lot of the times
they'll engage us to actually workthrough the whole process of the
life term, which is something thatwe've seen a lot of success with.
(12:41):
It's representing not just theinitial deal, but if there's
issues that come up with thelease, how can they be solved?
What do renewal terms look like?Extensions, approvals, process
throughout the whole.
We can be part of that whole
process.
We can talk about like
opportunities in the market in asecond.
I guess this would be a goodsegue, but do you see a lot of the
(13:02):
opportunities in the lease?Like when you're going to analyze
to list a building?or I guess to buy either end, do
you look at it and go, okay, well,you know, they're on a gross
lease.
If we were able to switch this
over to a triple net, there wouldbe a value add there because I
have commercial as well.
And it has been more difficult to
switch tenants over to a triplenet.
(13:24):
Mostly I think because, you know,they're a little bit nervous of
those expenses that are going up,you know.
pretty high with inflation oninsurance or property tax or
anything that you really don'thave control over or even just
general maintenance costs.
So I feel for the tenant in that
regard, but also it shouldn't bethe burden of the landlord.
But yeah, I guess to rewind andget back to the question, is
leasing the majority opportunitythat you guys see to value add?
(13:46):
Oh, it's such a good question.
Loaded question.
I think that if you've got aclient that has an existing
portfolio, where we've seen a lotof success.
The reason why we've been able torepresent some of these developers
and clients that have had long-term runs is a great commercial
agent.
Typically, we'll find an
opportunity if they know whatmarket trends are.
fortunate to work in other marketsand they see what other landlords
are doing and ways to improvetheir leases or prove the
(14:07):
situation.
So I think there's a huge upside
on that.
But leases are always evolving and
changing.
And we brought up COVID.
COVID changed commercial leasingin so many different ways.
As a landlord, when I representlandlords, the way that we look at
deposits and security, wescrutinize that so much more than
we ever did before COVID.
So there's a lot of evolution.
I think where there's a lot ofopportunity on the commercial side
is when you've got clients thatmaybe have kind of historically
(14:30):
owned the building and they justthought that's the way to do it.
They inherited leases or theythought, well, you know what, when
the market was down, we inheritedgross leases or we loved gross
leases because it was stable rentand clients were happy, tenants
were happy.
Where we really kind of like our
lips is when we find anundervalued.
opportunity that the marketschanged around it.
Actually, a really great exampleis the way that billions are
(14:51):
calculated for measurements.
We had one client on Bernard that
didn't realize that they couldactually gross usable and rentable
up.
As the leases matured and we got
them onto a new program, theirbillions expanded by 15%, just to
be able to collect areas that theyactually had the right to
incorporate back into the leases.
That'd be one really great example
of...
You know, I think the client was
quite happy as the market evolved,particularly in this example,
retail.
(15:12):
Bernard shifted over the last 15
years.
So all of a sudden you got a lot
more national tenants actuallywanting to be downtown.
So they brought thatsophistication of what they'd
expect from other markets.
So there was an evolution in the
way that commercial real estategrew.
And if you're able to find clientsand portfolios that have done it
historically an older way, that'swhere we get to create a lot more
(15:32):
value, which is stuff we reallylove to do.
Yeah, it's such a funny thing.
I've been thinking about it a lot
lately because I guess the mostopportunity I see is when I'm
buying a property because exactlythat.
You're scrutinizing it.
You're flipping every stone being
like, oh, here's a value add.
Here's where I could cut costs.
Here's where I could do anythingdifferent.
Once you own the property for afew years, you get super
(15:55):
complacent.
So do you guys generally like, I
mean, Matt did ask kind of theannual renegotiation, but do you
guys have any kind of... offer interms of like, we'll just do a
review and tell you where thevalue add is and then...
Absolutely.
And that's mostly our bread and
butter is just having discussionswith owners and seeing what our
opinion is to how to increasevalue and or attracting this to
(16:16):
the building.
I think one of the big ones, when
we talk about different assetclasses, there really are five
families that own a lot of thelandmass here.
So when we're looking at otheropportunities, as the valley has
grown, places where traditionallyit may have been industrial
sections that now all of a suddenhave that... the large residential
components built around it.
How can we convert those?
Looking at those leases andsaying, hey, if we were to demise
(16:38):
these areas here in industrial,for instance, we are able to build
mezzanines.
And that's something that we've
seen a huge trend on moving in theOkanagan is the cost of land is
expensive.
The cost of construction is
expensive.
And landlords want to maximize the
amount of buildable air they canhave.
So we're seeing mezzanines beingbuilt into these spaces, which
traditionally would have been avalue add, whereas now it's
actually just increased on thesize that you can.
(16:59):
lease or sell, and they canactually charge for that, you
know, just as much as they are inthe ground floor area.
That'd be a good example of allthose evolutions in our market.
And it typically is trends fromother markets that have also
experienced.
were you know, this kind of growth
and the land getting so expensive,what are the finding ways to find
value out?I think to one of your questions
was our involvement with thoseclients typically isn't as, you
know, a consultant on an hourlyfee or anything.
(17:20):
We've been fortunate and it's justkind of the way that we were
raised is if you can bring valueup front and not just be a
transactional agent, someoneactually that is part of that
relationship from start to finish,whether it's a tiny little.
lease project at first, if you cankind of create value and you can
show that expertise and you becomepart of that little family, that's
the stuff that we've always lovedto do.
(17:42):
So it happens to work out, you doa couple of leases and all of a
sudden they want to acquire acouple more buildings or they want
to sell one or two and stuff.
And that's kind of how our bread
and butter has been.
It's not really through consultant
fees or charging.
And quite honestly, the developer
and the investor also has to buyinto a little bit of the value add
that we have.
(18:02):
We have lots of clients that say,
We're good.
We don't care how other people do
it.
This is the way we've done it.
The absolute truth is we probablydon't create much value for that
client in that relationship.
So maybe we just move to someone
that actually sees that valuebecause you also don't want to
have to retrain the whole program.
Like if you're happy with it and
it works, I'm going to confuse itcompletely by changing.
(18:23):
Let's just use usable versusrentable.
And I start telling you, you gotto read all the BOMA standards.
You might say, look, I've got afull -time job somewhere else.
This is a passive income producingproperty for me.
Chris, stop it.
You're confusing my world.
You're creating chaos.
You mentioned there's five
families in Kelowna that probablyown the majority, which is totally
fair.
But there are a lot of smaller
landlords that maybe own one ortwo spaces.
You cannot be up to speed oneducation of even just square
(18:45):
footage, how much it's leasingfor.
So to have somebody that's fullyinto it as well as writing the
leases, yeah, there's huge valuethere.
I think Matt and I have beenreached out.
quite a lot in the last year,probably from residential
landlords getting annoyed towanting to switch over to
commercial.
So can we kind of talk about...
asset classes in the Okanagan.
What are they?
And geographically, where you seethe opportunity?
Obviously, Kelowna Central is apretty hard place to make things
pencil.
I mean, I'm just putting words in
your mouth.
I'll let you guys talk.
(19:06):
But yeah, maybe we can just startwith what are the asset classes
for commercial?And geographically, where do you
like them right now?now?
Yeah.
I mean, where we've seen a big
trend here is, to answer yourquestion, is you've got your
retail asset class, industrial,office, and multifamily.
what we specialize in, becausewe're in a valley and there's only
so much land, what we have seen isthe trend outwards to the north
and south of Okanagan, so Vernonand Penticton, where there was a
(19:27):
massive demand and boom actuallywas in the industrial sector.
And that was throughout the COVIDperiod.
And we saw some prices justabsolutely skyrocketing Kelowna.
And so investors, A, COVID didchange the way the world looked.
A lot of people knew that theycould start to work remotely.
And so the focus then said, well,where can... we find affordable
land, and that was in Vernon andPenticton.
It was a 35 -minute drive foranyone that was in Calgary or
Vancouver.
That was a normal commute.
(19:49):
By the way, you've got a beautifuldrive.
It's a nice commute.
That's where we started to see a
huge shift.
Again, because a lot of the five
families own a lot of the landmass, they had to get creative.
Lake country, we've seen a massiveboom in the industrial sector out
there.
Vernon and Penticton is awesome.
Because I have certain clients,I'm personally more focused on the
(20:10):
opportunities of finding abuilding that's underutilized
rather than finding a multifamilysite and really going balls to the
wall on a major development thathas so much risk up front.
I tend to be a little bit more,especially with clients looking
for value -add properties, as Ilike existing.
I like markets that have almost ahistory of established market
(20:30):
rents.
And I know that sounds a little
odd, but when you can find... amarket that hasn't had huge rental
increases and you understand andyou can look at a building and
say, well, if I do this and I dothis, maybe I can attract a
certain type of tenant.
You build off a tenant mix and you
get a bit of a cool little vibeand hub going.
Then all of a sudden you're beingdeveloper in a unique way opposed
(20:51):
to we have had so many clientsthat say, you know what?
I've been a successful doctor formy life.
I want to build an apartmentbuilding.
To me, I feel like that is sorisky and there's so many players
in that market.
You guys probably know more than
we do, but you're so governed byso many external forces.
To me, it's too much risk for meto say, yeah, with an expert
(21:13):
advice, this is how I do this.
Right now, I've been focusing
heavily on the Vernon upside.
I think Vernon is a beautiful
downtown setting.
Reminds me of what Bernard used to
be 15 years ago, which wasbeautiful buildings, some historic
kind of characters, you know, somecool tenants and some vibe and
stuff.
But it hasn't really evolved to
the next stage.
We're starting to see that
downtown on Bernard.
Let me be really clear that I'm
(21:34):
well aware that there arechallenges with downtown, where
there's challenges with retail.
There's definitely challenges in
the restaurant industry right now.
A lot of my closest friends own
some of the nicest restaurants intown, and I hear it.
But from a commercial standpoint,from a commercial opportunity,
some of that land in thesedowntown markets will only mature
(21:54):
in price.
And if you have that right
strategy on how to... to find goodtenants, you know, even just, you
know, upgrades to the exterior orlike listening to some of the
challenges that other retailershave had in that unit before and
say, why don't we upgrade this?Why don't we bring more power?
Why don't we add a better HVACsystem, which maybe allows for a
(22:15):
cafe to be here instead of, youknow, a bridal store, which it's
been for 15 years, like ways toevolve.
And I think if you can create atenant mix, that's the kind of
stuff I love.
You know, one starts.
Now you get that cool littletrendy bar, then you get that cool
little clothing retailer, and allof a sudden you've got a hub that
people want to drive from allaround town or wherever to come
see.
That's stuff I love, passionate
about.
That's awesome.
What are you guys seeing in theoffice space in Kelowna, Emory?
(22:37):
It's not as bad as everyonethinks.
I guess we did an article inCastNet where it wasn't the death
of the office.
It was just evolving and it just
changed.
The absolute truth is, you know, I
have one side of my shoulder thatsays everyone wants to work from
home.
Everyone wants to work remote.
Everyone wants extremely flexiblehours.
But then, you know, we're one ofthe largest commercial brokerages
in the Okanagan doing asignificant volume of the deals.
(22:59):
And the office market has beenreally busy.
There has been.
a lot of new product that's been
put on the market over the lastcouple of years.
There's an expectation because ofthat land value and because of the
construction costs that there'sgot to be, you know, a performant
rent that's targeted and hit.
So there's some certain pressures
on some of the newer stuff, whichis, I think, why we see a little
(23:20):
bit of agency.
You've done some of the largest
transactions on the office side.
There's still quite a demand for
people wanting to be out of homein a nice professional office
setting.
Yeah, and I think to add to that,
that's a great question becausePeople have to evolve, right?
And I've seen that in banks, forinstance.
You know, when you look at theiroffice, traditionally, it would be
(23:41):
and you go into the CEO's office,it's a big boardroom, you know,
couches on the other side.
They have adapted, they have
changed, and they've gone lean andmean, which is just fine.
I mean, a lot of the other things,as Chris alluded to, one of the
larger deals we did was convertingan entire floor with a patio to a
daycare.
facilities.
So, you know, having to evolve,getting creative on those types of
deals are helping in that officeasset class.
Awesome.
The bay closing at the ball.
(24:02):
Like what is that going to do?This is a really interesting one,
a really interesting one, to bequite frank.
Yes, it's a big hit.
However, I think landlords are a
little bit happy about that.
Those leases were secured at very
low net rent.
Some of them were a lot of land,
right?And now we're seeing the rezoning
applications for higher density.
I think this is an opportunity for
landlords to recapture a big chunkof their properties and be able to
(24:24):
service and intensify.
or create what we see maybe at
Orchard Park Mall where they startdemising and leasing to other
types of tenants that maybe have alittle bit more of a longevity to
them.
I have a close friend who's a golf
pro.
He has nothing to do with
commercial real estate.
Every time we're playing golf,
he'll say, I want to be in theparking lot business.
That is what I want to be in.
(24:46):
And I know we're kind of dodging
because there's some sensitivityto the Hudson Bay stuff.
I've seen a lot of the projectswhere there's some Okanagan -based
shopping centers that are listedfor sale right now.
And the clients that we areworking and looking and doing the
performance and the backwards mathsee it as a massive opportunity
rather than a liability that oneof the largest kind of retailers
in Canada are going down.
They're looking at it going, wow,
there's a lot of area right there.
(25:08):
And that property allows for
height.
And they get a little excited.
Yeah, I think companies shouldlook at this and figure out a way
that they're changing theirbusiness model.
I mean, e -commerce is a huge one,right?
People can typically just click abutton and have something show up
the next day.
And I think this is going to be a
kind of a rude awakening for thoselarge big box shops to sit there
and figure out how can we get...
(25:29):
this to a point where we can still
make a profit.
See, we can talk about this for
hours.
We just get excited about it.
But that's the interesting thingabout being in our industry.
And I don't want to...
My wife is a residential realtor.
There's so much value in what thatside does in commercial for us.
you have an opportunity to almostlearn a lot about how businesses
(25:50):
operate.
And you have to start to
understand that in your assetclass that you particularly stay
with to say, okay, how have thingsevolved?
And trying to be above and beyondthat.
Like if Jay is reallyunderstanding 40 % mezzanine gross
ups, like he has to understandwhat that means, you know, on both
sides of his clients that own theproperty, but also the tenants,
(26:12):
what the impact might have, whatcan you do?
For me, retail, like which I justlove, it's not the only asset
class I do.
I just happen to have a passion
for it.
You start to learn how businesses
evolve and you start seeing, forthe most part, like an example,
you don't see 8 ,000 square footrestaurants anymore.
COVID changed that, right?My best friend owns one of the
largest franchises in Canada.
(26:32):
We sat on the beach during COVID
and we talked about ghost kitchensand we talked about what Skip
meant.
Do we like Skip?
Do we hate Skip?The way that we had to start to
evolve because historically youjust did.
120 chopped leaf locations.
You just bread and butter.
You know exactly where it was,what you needed, parking ratio,
tenant mix.
And all of a sudden, we're like,
we've got to change the way welook at real estate.
We started... I say we, he did,but I got to be involved.
(26:55):
Started looking at 800 square footspaces instead of 1200.
And we learned how to be lean andmean and build the kitchens a
little more economically andstuff.
So I love it because you get kindof not just what are commercial
lease rates, what are retailrates, what are, you know, land
selling per acre.
You start to evolve the client's
business and you start tounderstand that.
And then if you're smart, you canfigure out ways to create value
add on that side.
(27:16):
There's so much to unpack there.
First off, I am floored.
I did not realize the bay was
closed.
That's where I get all my jeans
from, which I've got a hole in myknee and I need more jeans.
Yeah.
Okay.
Well, I'm headed there after this.
When does it close?
there after this.
One thing I wanted to ask there,
and I've been doing this for yearsnow at my building, is investing
in the business owners.
If they're successful, you'll be
successful.
If their profits go up, up, no,
(27:37):
they can afford the higher leaserates.
And you just, you want thatcohesive community.
I'm happy to invest in it.
I guess the hard part for most
people might be, how do youquantify what the return's going
to be?Like you said, paint the exterior.
I know my building needs to bepainted.
We did the roof.
We did the boiler system.
Like we're doing a bunch of workon it.
Those things I can't turn aroundand go to tenants and say, Hey,
(27:58):
you know, we, we just replaced theroof.
we're upping your rate, I guess,if you're on a triple net lease.
Yeah, exactly.
Yeah, I'm answering my own
question.
Okay, so I inherited a lot of
gross net leases.
So I didn't have that ability
then.
But I guess, do you guys, do you
do comparables like residentialreal estate?
Would you go say, hey, you knowwhat, this building three blocks
away has a beautiful exterior,updated this and updated that.
(28:18):
And that's why their lease ratesare higher than yours.
This is probably nowhere near assophisticated as the residential
side is.
I admire the stats and the data
and how easy it is to get in theresidential side.
In fact, I still don't know allthe tools available on the matrix
system because in residential,there's so many transactions
happening in two bedrooms, twobathrooms in this market.
(28:39):
You get to start seeing somewhattrends and you can build a bit of
a case for a client.
Like let's just hypothetically say
you've got a restaurant, a cafeand a retailer.
The parking is going to come intoplay.
The location, there's so manyother variables and we don't see
so many transactions happen on amonthly basis that you can say,
look, you're off by 22 cents.
If you're fortunate to have
commercial real estate, and I dowant to touch a bit about the
point of entry of commercial realestate at one point, but I find
(29:02):
there's landlords that see alarger picture and they say, okay,
you know what?I could do this deal right now.
It's going to pay me exactly whatI want, but is this going to be
the benefit to the community, tothe existing tenant mix?
If it's a mixed use building, howdoes this actually compliment the
immediate area versus, okay, I'vegot this really cool, you know,
use, but maybe they're a startup,but I can see they're going to
work their butt off, but they wantme to invest in a little bit of
(29:29):
paint outside, or they want tohave channel led signage, or they
want something that's going torequire a little bit more of an
investment that I've historicallyever had to do with other tenants.
That's an evolution.
And I think.
The thing that frustrates me themost with my industry, with some
of my colleagues, with some of thelandlords that I've worked closely
that don't want to deal withcommercial agents, or they just
have their own system, is whenthey do lazy deals.
(29:51):
That's what really bothers me, isthere's an opportunity to evolve
and to bring something to a marketthat could be a really good thing
for not just the nickels and dimesof the rents.
could be a building block off ofthe rest so in your instance like
there's nothing wrong with thefact that you've inherited those
things and this is kind of the waywe've done it but if you take a
(30:13):
flyer on maybe that you know andi'm just using way examples but
that gluten -free bakery couplethat's really working hard at the
farmer's market but they're goingto bring something that's been
unique and shake it up like That'spretty cool.
And all of a sudden you get thatnext use that goes, you know, I'm
a cool hair salon that reallywould love to be beside this youth
and energy.
That's the opportunity.
(30:35):
Like that's where you start.
I don't ever advise clients to
just go buy something, putlipstick on it and just say, hey,
hopefully they come.
Like there's got to be a strategy
of how you get there instead ofjust spending clients cash because
that never really works well foragents as well when you just start
saying, well.
build it and they will come.
There's got to be somethoughtfulness to it.
Yeah.
Another point, you know, you
(30:56):
touched on there is entry level.
So yeah, I get people reaching out
to like, Hey, what am I approvedfor, for a commercial mortgage?
It's like, well, it's based on thedebt coverage ratio.
Right.
So do you guys want to talk a
little bit about that?How do you, I guess, not pre
-approved, but like vet apotential new client that's coming
in that wants to buy commercialspace?
Like how does that conversation?Yeah.
Yeah.
First and foremost, patience.
Like us, along with other greatcolleagues that we work with other
(31:18):
brokerages that kind of do a lotof commercial real estate.
There's no such thing as a quick,fast, easy, brainless transaction.
I think that you have tounderstand the client a little bit
about what their risk toleranceis.
capitalization rates and someother things, there is risk in any
type of commercial real estate orany type of real estate in
general.
I think patience and I think that
your point of entry is difficultin the Okanagan.
Quite frankly, it's not cheap toget into commercial real estate.
You don't commonly find a $200,000 little tiny office strata
(31:39):
unit.
That's very, very rare.
You're talking probably multiplemillions of dollars.
If you're talking aboutacquisition of land and
developing, there's, as I'vementioned, better have some
experience with that or at leasthave the end.
user or your home business thatyou're evolving, like you've got
to have some of the cards readyfor that.
What I find really interesting inthe Okanagan is there's a lot of
historical money.
There's clients and developers
that have owned stuff forever andthey have no succession plan.
(32:01):
So for me, I was trying to kind ofthink like, what would be ways
that I would encourage people toget into commercial real estate
that have no experience whatsoeverin it?
And unless your family's givingyou a building.
Which, congratulations, that'sawesome.
But it doesn't happen a whole lot.
I think there's a lot of clients
out there that are starving for amentor or for a mentee.
Like something to say, hey, like,I built this.
I worked my butt off since the60s, 70s, 80s.
(32:24):
I went through crazy times.
I went through COVID all by
myself.
And now I have no legacy.
And I think you'd be surprised onhow many developers are out there
that if somebody wanted to getinto the industry and learn and
really work, there would be kindof a unique approach into that.
So I know that's a littleholistic, but I've got several
clients.
that don't have any succession
plans and they just lovedcommercial real estate and they
(32:44):
just loved developing and theyloved owning those buildings.
I'm surprised that they don't havesomebody that's just ready to take
them over.
So I've asked a lot of questions
out there.
If I was just somebody wanting to
get a commercial real estate,maybe an uncle or neighbor or...
Something like that.
And I think maybe if I could add
to that, Taylor, because it's agreat question again.
And the first thing I'm going toask that client is, are you an
owner occupier or are you aninvestor?
That is going to let me understandtheir risk profile.
(33:06):
And then I'm going to say, forinstance, as an investor, we're
going to do a deep dive into theleases.
We're going to say, what incomeare you buying?
Where's the upside?Where can we create value?
What are the limitations of thatlease that you need to be aware of
moving forward before you sign onthe dotted line?
Because for instance, there mightbe a fantastic tenant in place.
They might have 15 lease renewalsthat have already identified those
lease rates.
Well, then you need to put that in
(33:26):
your reforma and understand thatthis is the max income you're
going to get versus somewherewhere it's, hey, we got a couple
of year leases in here, butthey're incredibly under market.
They have no renewal periods.
And here's the opportunity for us.
Oh, by the way, realize that Iwould advise that this maybe you
do want to do a little bit of abuilding upgrade here.
I might have someone in my backpocket would be a perfect tenant
(33:47):
looking for that space, but weneed to do X, Y. to get you there.
But that's the value add that weprovide to, I'd say, an investor
buyer.
If it's somebody who's an owner
occupier, that's pretty simple.
But what I would say is if you
want to become an owner occupier,you may want to look at building a
larger facility that we could thentenant and you can become a
(34:08):
landlord as well.
Use portion as in your investment.
So if you're going to be buildingsomething, you might as well build
it to its max potential than justwhat you need.
And who knows, you either leasethat space out or your business
then grows into it.
Jay's answer is better than mine.
I like both of them.
To your point, Chris, I can act as
a nephew.
Like if you have some uncles that
(34:28):
are looking to pass down the torchand for you, Jay, I think
something that like a light bulbwent off there for me is.
Do you guys ever, I'm assumingthis doesn't happen frequently,
but is there ever an opportunityduring the purchase where you
would do like a lease buyout or ifthere's an existing tenant, that's
part of the condition of like,hey, you know, you have to find a
way to terminate this because thatlease is so undervalued.
Like we can't even be approved,you know, for financing because
(34:49):
the lease rate is so low.
Absolutely.
Yeah, absolutely.
And those are difficult
conversations to have.
And there's sometimes you can see
the writing on the wall for abusiness who might just be looking
for a way out too.
So yeah, we get really creative.
You know, one thing we haven'treally chatted about commercial
real estate is we wear many hats.
You know, anyone that's looking to
get into this business, it'sreally challenging.
It's not as simple as finishingyour solder school business degree
(35:09):
and then walking in.
We need to understand the art of
the deal.
We need to understand what hat am
I wearing that day?So am I wearing a tenant rep or
lease?Am I a landlord rep for a lease?
If I'm buying for a purchaser orselling for, you know, somebody,
every one of those deals are adeal.
different type of direction andstrategy as to how we approach
them.
So, you know, when you get into
this business, there's a lot tolearn.
We're always constantly learning,but this is where we get excited.
(35:30):
And I think we've been fortunateto develop some pretty great
relationships with owners that Iwould say, Chris is a really good
example of two or three of hisclients that people would line up
for days to get to meet.
But, you know, Chris has them on
their cell phone because he's donea great job of looking through
those, doing a deep dive andunderstanding, hey, how can I
create value?new portfolio, which then puts us
(35:51):
in their inner circle.
So it's really neat and something
that the reason why I lovecommercial real estate.
Yeah.
And I think one thing that you
raise is ways to get a lease'spotential, right?
A lease can be four pages.
It can be 60, 70, 80 pages.
Like there's just a whollydifferent types out there.
What I do love about it is thatleases are pretty enforceable
though.
Like they're not easy to get out
of.
There's ones that are a little bit
easier than others, but there'salways unique clauses.
(36:13):
You know, when we talk aboutbringing on new licensees, we're
like, you're not going and you'renot like swinging for the fences
for the home runs with the big,you know, 30, $40 million land
transactions.
Yeah, You do need to understand
commercial leases.
Even if that's below you and you
don't want to, like we wouldn'tbring them on in our brokerage if
that was below them, to be quitehonest with you.
You have to understand what you'reselling.
And what's happened really cool iswhen I was, you know, kind of a
(36:36):
baby in this industry, I did tinylittle leases, but you kind of
learn this huge repertoire oflike.
oh, that's an interesting clause.
That's an interesting clause.
I wonder how I can use that forlandlords or for tenants.
We've come across portfolios forsale where we question if the
leases were red because if theywere red, you realize that what
they've been valued at, you can'tmake those numbers make sense.
I saw one portfolio sale where itwas promoting the fact that you
(36:58):
could build on vacant land.
National Anchor had a no build on
all of its parking.
And, you know, you have to
understand that kind of stuff.
And I think that a really great
landlord understands theintricacies of tiny little leases,
because that's kind of, you know,the building blocks of most of
commercial real estate.
There are other asset classes,
don't get me wrong, like, youknow, multifamily, if you're just
selling land and all of thosethings.
But where we nerd out is kind ofthe small little details.
(37:21):
Is there any class, I mean, wekind of spoke about opportunities.
Is there any class that you feelis saturated right now?
I'll go first.
I think multifamily.
Probably why we haven't brought itup.
Yeah.
Okay.
Yeah.
Yeah.
I mean, specific to the Okanaganright now, I feel there's a lot of
units coming on.
online.
I mean, we just had a podcast withJeff Hancock and we kind of
disclosed that, but any other likecommercial asset class that you're
(37:41):
like, this has had like a prettygood runway for the last couple of
years, but I feel, you know, atleast per square foot.
Let Jay speak to what he'snaturally going to say.
Let Jay speak to what he'snaturally going to say.
I would say I've met a lot ofreally smart developers, people
that have dealt with hugeportfolios and other markets come
to Kelowna saying, I'm going toapply my secret sauce.
to the okanagan and i think theyquickly realized you know those
(38:04):
five or six families that we weretalking about have a very good
staple and kind of a grapple onwhat happens in this market like
to answer your specific question iwouldn't be building an office
building if i had you know 50million dollars understanding this
market i would know that there'ssome pretty big developers that
are in that game And I don't thinkthat I'd want to go head to head
with them because I think thathistorically they've owned that
(38:24):
land since the 50s and 60s.
They've built construction
companies that can facilitatethose builds and the tenant
improvements on everythinginvolved.
I think I'd stay away from office100%.
I think Jay's probably got more ofa natural, easier answer.
Ask the class to stay away fromright now.
Yeah, I mean, I love industrial.
That's my world.
And I would say that the market isgoing to be completely
oversaturated.
Small Bay Industrial coming in the
next two to three years.
About five years ago, there was a
(38:45):
massive demand and there was a lotof success on airport business
park being converted from gravel.
Lots of divided to one acre
parcels that had built Small BayIndustrial on it.
And I know of at least threeother.
projects have now put that on holdit's really slowed down in terms
of the demand for small bay onething i will add to that too when
we talk about value add is aboutseven years ago developer came out
of vancouver and they startedcreating these small bay
(39:05):
industrials with 40 mezzaninewhich they charged on this was
fantastic it really kind of caughtwind of all the other developers
and now that is essentially howyou build these they're cookie
cuttered to be the exact sameproduct and what we're seeing from
the feedback from market is wedon't want mezzanines we want We
want four walls where we canoperate high racking, you know,
warehouse logistical servicesversus having a mezzanine, which
most of the time just compilestires and poker room.
(39:26):
So many poker rooms.
I love that.
Yeah.
Thank you for the authenticity.
There's probably a lot of emptyspaces that are costing money and
people are losing money and themplaying poker.
But yeah, before we kind of justwrap this up, is there anything
you wanted to touch on?we haven't led the conversation
to?I'm really excited for, really
excited for, as Jay alluded to,the North and South Okanagan.
(39:48):
I think that major developers havebeen focusing really hard on
Kelowna.
And I think that as far as an
opportunity for somebody that'sgetting new into commercial real
estate as an investment, I thinkthere's got to be a little bit
more risk tolerance, but a littlebit more of an opportunity to look
into, say, West Kelowna, which isalready probably missed.
Penticton, which is kind of nowsaturated as far as lots of
interest.
I think Penticton, it's already
evolving.
But I think that, you know, you're
(40:09):
starting to see a lot moremultifamily down there.
Residential typically comes iswhen the commercial seems to
benefit.
As I mentioned, I love Vernon, to
be quite honest with you.
I don't know why I'm, you know,
walk through your listing.
I love that building.
I think there's so much coolupside and potential.
I would say that I'm reallyexcited about the Okanagan in
general.
There's some pretty cool things I
still think that could be done.
We're really fortunate to be here.
And I mean, the Okanagan is alittle bit of a bubble.
And we're really fortunate to behere and to be a part of this
(40:31):
community because it's somewhereeveryone wants to be.
And I think the sky's the limitfor us.
Yeah, I mean, you guys kind of,it's cool.
You get to kind of shape theculture a little bit, right?
Of like the type of tenant classand like who's, yeah.
Can you tell my wife that?I'll drive by and say, hey, look
at that.
And she goes, I don't care.
Every day's new, which is reallycool.
You get someone that calls andsays, I've got this really cool
(40:55):
concept and I'm hoping you canhelp me.
And then all of a sudden that kindof takes foot in plants and stuff.
So I do love the fact that we candrive down and my daughters will
say, hey, you did that deal.
Or, hey, I know you've been trying
to get them to come to Kelowna.
By the way, Olive Garden is not
coming to Kelowna.
We've tried a trillion times.
I love that song.
Ikea.
I mean, everyone tries to get anOlive Garden.
(41:17):
We've tried a trillion times totalk off time.
Yeah, and the brand of theFelberta too.
Yeah.
You don't have the land.
That's the problem.
You start to look at the ALC and
agricultural land.
And again, there's only small
land.
A couple of goats out in the
field.
Yeah.
out in the field.
Yeah.
They caught on to that, actually.
Yeah.
You can't sell a llama wool.
Jane and I are a sucker for
(41:37):
traveling every Topgolf weekend.
I know.
that, Topgolf weekend.
I know.
I guess also weather is a bittougher here.
Yeah, just picking up the golfballs and six inches of snow would
be a little...
Trust us, Trust us, we have worked
with quite a few people looking tobring those brands here.
It's a bit of a challenge.
Yeah, yeah, I could imagine.
Well, it's been awesome.
Appreciate it.
Talking to you guys.
(41:58):
Yeah, honestly, thank you guys so
much for coming by.
It was a blast chatting to you.
If anyone does want to reach outto you to talk leases, selling,
buying, how do they reach out?What's the best way?
You can view us on our website,can view us on our website,
adventurecommercial .ca.
Probably easiest way to connect us
through there or call any one ofour signs.
Yeah.
Yeah.
(42:18):
No kidding.
Like every second block.
That sounded rude.
That sounded rude.
I didn't mean for that to comeoff.
Yeah.
You guys are everywhere.
I love it.
So thanks again for coming on.
Really appreciate it.
Thanks.
Welcome back to the ColonialEstate Podcast.
(00:01):
I'm your host, Taylor Atkinson.
Borgers broker too, I heard.
Yeah, I missed that part.
And I am your real estate agent
host, Matt Glenn.
I thought you were the one that
was supposed to have no brain.
I honestly do not have a brain.
I have done some questionable shitin the last few days.
Yeah, well, kids will do that toyou, right?
Yeah, honestly, it's real.
You get told about it, then it
(00:23):
happens, and it's real.
Yeah, yeah.
Well...
Only another eight months and then
you'll be like in the next phase.
another eight months and then
you'll be like in the next phase.
Yeah, exactly.
Yeah.
How's everything outside of that?
Honestly, it's awesome.
Being a father to two kids has
been awesome.
It's been great, but my brain is
still getting eaten away, it feelslike.
(00:44):
But it's been great.
Work has been pretty good.
Tariffs have sucked, honestly.
Hearing about this all the time.
I have showings booked.
Like I had a fourplex for sale.
Actually, half of it is still forsale.
We had like showings booked,right?
So we had, I don't know, 12showings over the weekend.
Tariffs get announced coming inagain.
Like half the show is canceled.
So we haven't talked about this at
(01:04):
all.
been we haven't talked about this
at all.
I've spoken to a couple other
people, but I know you and I werelike, and everyone was pumping
busy through the winter, which wasreally strange.
Spring, I was prepared just tolike.
you know keep going i thought itwas going to be a crazy market it
has been much quieter like firstyeah it's gotten pretty quiet like
super thankful i still have quitea bit of stuff going on but yeah
it has been like noticeablyquieter and it's just because yeah
(01:25):
it's gotten pretty quiet likesuper thankful i still have quite
a bit of stuff going on but yeahit has been like noticeably
quieter and it's just because theuncertainty people don't know are
you gonna buy a house and oureconomy collapses next month yeah
right like it's just like there'snot a really good answer for that
because nobody knows yeah i agreeit's not really the house price
what people were yeah scared ofbefore like oh am i gonna buy at
the peak or i want to buy at thebottom yeah now it's just like am
i gonna have my job am i gonna beable to be invaded in a couple of
months you know like there's somuch uncertainty and it's just
(01:46):
hard when you're making thebiggest decision of your life yeah
it sucks and you can sympathizewith it but uh yeah i agree it's
not really the house price whatpeople were yeah scared of before
like oh am i gonna buy at the peakor i want to buy at the bottom
yeah now it's just like am i gonnahave my job am i gonna able to be
invaded in a couple of months youknow like there's so much
uncertainty and it's just hardwhen you're making the biggest
decision of your life yeah itsucks and you can sympathize with
it but uh yeah yeah It just kindof is what it is.
Yeah.
Time will tell, I guess.
In a few more weeks, maybe thingswill balance out.
I'd say overall, I'd say overall,I'm pretty optimistic about the
future.
It's just like, tell me to get
some answers here.
Yeah.
Yeah.
I think right now.
Tariffs too, they affect so manydifferent things.
So I have a friend who has a localtool business, Snap -on Truck.
(02:08):
Nice.
I'm talking to him.
He's like, yeah, so all of ourtools are made in the US.
Yeah.
So it's like, okay, so I guess
Snap -on is taking on the tariffsfor a while, but I don't know how
long they can sustain that for.
That's, yeah.
Yeah.
Crazy.
You think about this foreverything, right?
There's things you don't evenknow.
I just happen to know that becausehe's like one of my best friends.
(02:31):
Yeah.
So you think about the tariffs and
it's not just the 25 % tariff.
Like you have all these trucks,
like for building material, ifyou're renovating your house or
building a new house, all thematerials, like let's say all the
faucets or whatever are all fromthe US or whatever it is.
So they've been getting shipped upfor a century, it feels like.
And then you have all thesethings.
But then when the tariffs come in,all of a sudden those trucks
(02:51):
aren't coming in as much, right?So now to ship the one thing that
you need from the States, even ifyou buy everything else from
Canada.
You think about You don't just put
it on the trucks that are going inthe U .S.
anyway.
So now your shipping costs go up.
Yeah.
It's the 25 % tariff and then
that.
And I feel like there's a ton more
of those kinds of things that youdon't even really know.
Well, and to magnify it, and thisis what we spoke about with
(03:12):
Brandon Augvanson a coupleepisodes ago, was like, so
inflation's going up because allthese tariffs, but GDP is going
down because economically peopleare struggling, you know, job
losses, people aren't spending asmuch.
So it's like the divide is justgrowing on both sides.
Yeah.
Like there's not like the.
the lever to pull of the interestrates because he might go up.
Yeah.
So like, at least in the short
term, I don't know what long term,but yeah, like all these things
just add to uncertainty.
(03:33):
Yeah.
So like, you just don't know.
Well, today's guests that we had
on two guests, Yeah.
guests that we had on two guests,
twin brothers, Jason and ChrisWills.
Boucherie Boys represent.
Thank you.
Although they played basketball,so I can't get on board with that.
I got cut in grade 10.
I'll never forget that.
But yeah, awesome guys.
Really enjoyed the chat with them.
And funny enough, we're talkingabout tariffs now, but they really
started out venture commercial,which you guys will see their
signs everywhere.
(03:53):
They started that in COVID.
So we're talking about tough timesright now and tariffs and
uncertainty.
Well, here's two guys that...
started in a very difficult time,especially in the commercial
market with leasing and have beenwildly successful.
When you talk to them, theyobviously know what's going on.
They are extremely knowledgeable.
I knew they were brothers.
I didn't know they were twins.
(04:14):
And then when they came and they
looked the same, I was like, man,they must be close in age.
And it turns out it's likeminutes.
Yeah, they were awesome.
And like you said, I mean, they
just, they seem so passionateabout the commercial side and like
they're into leasing and salepurchasing side.
Like it just, it's a goodcombination, but like you really
(04:34):
need to know how to structureleases or how to read them to set
up the opportunity.
My other big takeaway on this is I
need to get to.
the mall to get some outfits i
can't believe we broke that newsto you i know when did this come
out the bay is closing like screwtariffs like this is more
important to me this is the onlyplace i shop once every four years
i told emily i'm like i can't shopat all now these are the clothes
(04:56):
for the rest of my life i hope youlike the things i have because
i'll never get yeah and she doesnot so but yeah i think you guys
are going to find a ton of valuein this show if you want to know
you know more about commercialstuff reach out to them they're a
great resource also Apparentlyreally good basketball players.
So we'll see them on the courts.
And this episode, like every
episode, sponsored by Century 21Assurance Realty, best brokerage
(05:17):
in town.
We are growing, building agents.
So if you're an agent looking fora more cooperative brokerage or
looking for some help, we're agreat brokerage to talk about.
Or if you're a buyer or sellerlooking for an agent, give us a
shout.
Love to help you.
All right.
Enjoy the show.
Okay, welcome to the Kelowna RealEstate Podcast.
Wills Brothers, how are you doing?Excellent.
Well, we normally like to startour show with like, hey, what's
your perfect Friday look like?But since we have... twin brothers
(05:38):
here.
We assume that answer may be
similar, may be different, butlet's just start with like venture
commercial.
How'd you guys start and tell us a
bit of the background story?Yeah.
Venture commercial has reallystarted just more out of
necessity.
I've been in the industry for
quite some time.
Been fortunate to learn from a
couple of great mentors, includingmy father, and we had built a
(05:59):
company up.
to something that was pretty cool
in the Okanagan.
We joined forces with a national
brokerage for four years.
And really at that point, I was
really kind of yearning to have abit of a brokerage and commercial
real estate brokerage that wasmore approachable and had the
opportunity to market the way thatwe wanted to and try to think
outside the norms a little bit.
(06:20):
And I felt that organization we
were with, we were in a bit of abox and quickest way for me to
want to.
Be inspired.
Is it to be told no?And I love the opportunity to
start something where we couldactually be our own bosses.
And if we had really cool ideas orwe wanted to do certain drone
elements, we want to do that, thatnobody could ever say no. And
Venture Commercial was started inMarch 2020.
Yeah, we're really, reallyexcited.
(06:41):
What we learned was that we werevery lucky to be in the Okanagan.
And it really is about therelationships we have, not
necessarily the business card.
You know, so when we decided to
leave Collier's, we knew that wehad a pretty good grasp on
relationships here in the Okanaganand kind of what propelled us to,
I think, our success.
Were you guys doing residential
before as well, or was it alwaysall commercial?
you guys doing residential beforeas well, or was it always all
(07:02):
commercial?No, always all commercial.
Like our family's always been incommercial real estate.
Our dad has worked for one of thelargest developers in the
Okanagan.
Prior to that, he helped redevelop
Gastown down in Vancouver.
So commercial real estate's really
in our blood.
As far as we can remember, our
first jobs were power washingstrip centers in Langley.
So to be honest, we've been doingit for a really long time.
I wouldn't know how to sellresidential for the life of me.
(07:24):
We didn't even know where tostart.
even know where to start.
March 2020 is a funny, great time
to start for you guys.
Yeah.
Well, actually.
Yeah.
You know.
Most difficult month in history to
start.
Yeah.
You know, at that time, you know,no one knew kind of had the
crystal ball of what was about tohappen.
However, we left the week of themandatory shutdown.
And, you know, we laugh and joke,but the reality was, was we leased
an office space.
We were sitting there putting
furniture together.
(07:44):
And as of Monday, the mandatory
shutdown hit and our world'schanged.
It really turned from us buildingour business to supporting our
clients and having a lot ofconversations with landlords and
with tenants on how to navigatethrough the COVID crisis.
Gives you some credibility too.
you some credibility too.
going through it yourself.
Yeah, I think that it keeps you
honest, to be quite honest withyou.
I like the adversity.
I think that, you know, no matter
where venture commercial goes andsuccess that either we see or
people that we work with see,there's the humbleness, the
(08:06):
grassroots and the way that itstarted.
And a lot of it was just basicallybuilding a website.
you know, ourselves or coming upwith some marketing initiatives
and drone footage or gimbalfootage, all ourselves.
I do look back and I'm kind offond of those days because it was
like, okay, you either, you know,lie down and you just give up or
you say not today.
And if I had maybe 20 or 25 active
(08:27):
deals, I think I lost half of themwithin one week.
You probably had some experience.
It didn't even really matter if
they're binding or not.
People said, I'm not moving
forward with this.
Nobody knew what that world looked
like as far as what can weenforce?
You know, is there any penalty?It was a really weird time.
Yeah.
So what's your brokerage like now?
How is it set up?Do you have a managing broker?
Are any of you guys a managingbroker?
No, no, no. So we have a managingbroker.
(08:49):
We've got actually our executiveassistants working to get her
managing brokers.
So we'll have two managing brokers
by the end of the year.
We have eight full -time active
commercial agents in -house.
So they're all dedicated only to
commercial real estate.
So with venture commercial, we
only do commercial real estate.
We stay exactly in our lane.
We actually don't even sellbusinesses.
We really try to stay with what wedo really well and what we're
passionate about.
We've got an office down on
(09:10):
Bernard.
We've got two full -time support
staff.
And we do have a couple of people
who might be joining as well onthe brokerage side.
the Cool.
I see your signs everywhere, which
is kudos to you guys.
A lot of them are leasing signs.
Can you tell us about the businessmodel, like percentage wise or
just high level, how much leasingyou guys do and how much in sales?
Like, how's that split up?Yeah, we've been asked that a lot
lately.
I have a passion for leasing, but
(09:32):
it's not the only thing we do.
In Kelowna particularly, I see
there's a lot more opportunity forleasing when you're an active
agent, where in Vancouver, youmight see a little bit more major
markets, you might see a littlebit more of a balance.
Our brokerage in the last twoyears have done about 60 % leasing
to 40 % sales.
It's changed with some of our
brokers.
Some of our brokers are staying a
little bit more in certainwheelhouses as far as investment.
(09:52):
But I'm not going to lie, likesome of my top tier clients own
major strip centers that I've beenfortunate to represent for.
17, 18 years.
I'm a sucker for it, but I love it
more than anything.
So I think a lot of that signage
you'll see, you know, if they'recommercial properties, they're a
little bit more, you know, highexposure.
You do get to see them a littlebit more often.
Yeah.
And I think within the Okanagan
(10:13):
being in the Valley we're in, it'shard to specialize in one asset
class or into sales and orleasing.
The reality is, is, you know,we've really pride ourselves on
service and our clients.
And I think that's why we've had
success.
But that also comes with some of
the smallest, you know, leasedeals that can turn into some of
the largest sales.
Right.
You never know where the businesscomes from.
So we're very fortunate to haveclients that trust us on both
leases and sales side of it.
(10:34):
And naturally, it works for us
when, you know, in fact, we alwayslike to say there's no deal too
small, you know, and knowing thatthat small group who might just be
open, you know, a software companycould turn into buying a whole
block down in a major city.
Yeah.
Can you kind of highlight a littlebit, triple net lease, gross
lease?Obviously, a lot of landlords that
are in the residential spacereally love the commercial space
because BC Tenancy Act is kind ofhandcuffing us.
Why is it so beneficial in thecommercial space?
(10:56):
How does that look for a lease?Well, yeah, you raise a great
point.
I guess going back a step in
commercial real estate, you caneither own the buildings, you can
lease the buildings.
As a commercial agent, you can
make money doing both, which isnice.
I'm fortunate to own bothresidential and commercial
properties, and I absolutely steertowards being a commercial
landlord over residentiallandlord, just because you can get
two parties that can agree on.
pretty much any terms.
There's no tenancy act that'sgoverned to exactly the way that
(11:18):
deposits are held or terms can beterminated or possession dates.
Everything is pretty fluiddepending on what a commercial
lease looks like and who isnegotiating on both sides.
So really, when you're acommercial landlord, you have a
lot more say in the way that youwant to deal with your buildings,
dictate how things are being ran,deposits that you can be held,
monthly rents or annual rentsincreases.
They're not governed or capped.
(11:39):
That's all fair market.
A commercial landlord has theoption of just doing a gross
lease, which is fine.
You do notice more in commercial
real estate, the evolution of atriple net lease, which allows a
landlord to be able to recoup anycosts or controllables that change
over the years.
Property taxes, no removal of
common area maintenance andeverything can actually be charged
back to the commercial tenants,typically on an annual basis
through camera conciliations.
(12:00):
So being a commercial landlord is,
in my opinion, a very good thingto be.
Yeah, I think to oversimplify, theresidential is governed by the
Residential Tenancy Act, whereasthe commercial transaction is
governed by the lease.
And the lease can differ from any
type of landlord or developer.
Awesome.
So are you guys, are you involvedevery year with a renegotiation of
(12:21):
the lease or are you just?It depends.
Yeah.
And typically a term will be set
between three, five, four years.
It doesn't really matter.
It depends what the two partiesagree on.
We'll help facilitate that.
transaction upfront.
If we're fortunate to representthe landlord, a lot of the times
they'll engage us to actually workthrough the whole process of the
life term, which is something thatwe've seen a lot of success with.
(12:41):
It's representing not just theinitial deal, but if there's
issues that come up with thelease, how can they be solved?
What do renewal terms look like?Extensions, approvals, process
throughout the whole.
We can be part of that whole
process.
We can talk about like
opportunities in the market in asecond.
I guess this would be a goodsegue, but do you see a lot of the
(13:02):
opportunities in the lease?Like when you're going to analyze
to list a building?or I guess to buy either end, do
you look at it and go, okay, well,you know, they're on a gross
lease.
If we were able to switch this
over to a triple net, there wouldbe a value add there because I
have commercial as well.
And it has been more difficult to
switch tenants over to a triplenet.
(13:24):
Mostly I think because, you know,they're a little bit nervous of
those expenses that are going up,you know.
pretty high with inflation oninsurance or property tax or
anything that you really don'thave control over or even just
general maintenance costs.
So I feel for the tenant in that
regard, but also it shouldn't bethe burden of the landlord.
But yeah, I guess to rewind andget back to the question, is
leasing the majority opportunitythat you guys see to value add?
(13:46):
Oh, it's such a good question.
Loaded question.
I think that if you've got aclient that has an existing
portfolio, where we've seen a lotof success.
The reason why we've been able torepresent some of these developers
and clients that have had long-term runs is a great commercial
agent.
Typically, we'll find an
opportunity if they know whatmarket trends are.
fortunate to work in other marketsand they see what other landlords
are doing and ways to improvetheir leases or prove the
(14:07):
situation.
So I think there's a huge upside
on that.
But leases are always evolving and
changing.
And we brought up COVID.
COVID changed commercial leasingin so many different ways.
As a landlord, when I representlandlords, the way that we look at
deposits and security, wescrutinize that so much more than
we ever did before COVID.
So there's a lot of evolution.
I think where there's a lot ofopportunity on the commercial side
is when you've got clients thatmaybe have kind of historically
(14:30):
owned the building and they justthought that's the way to do it.
They inherited leases or theythought, well, you know what, when
the market was down, we inheritedgross leases or we loved gross
leases because it was stable rentand clients were happy, tenants
were happy.
Where we really kind of like our
lips is when we find anundervalued.
opportunity that the marketschanged around it.
Actually, a really great exampleis the way that billions are
(14:51):
calculated for measurements.
We had one client on Bernard that
didn't realize that they couldactually gross usable and rentable
up.
As the leases matured and we got
them onto a new program, theirbillions expanded by 15%, just to
be able to collect areas that theyactually had the right to
incorporate back into the leases.
That'd be one really great example
of...
You know, I think the client was
quite happy as the market evolved,particularly in this example,
retail.
(15:12):
Bernard shifted over the last 15
years.
So all of a sudden you got a lot
more national tenants actuallywanting to be downtown.
So they brought thatsophistication of what they'd
expect from other markets.
So there was an evolution in the
way that commercial real estategrew.
And if you're able to find clientsand portfolios that have done it
historically an older way, that'swhere we get to create a lot more
(15:32):
value, which is stuff we reallylove to do.
Yeah, it's such a funny thing.
I've been thinking about it a lot
lately because I guess the mostopportunity I see is when I'm
buying a property because exactlythat.
You're scrutinizing it.
You're flipping every stone being
like, oh, here's a value add.
Here's where I could cut costs.
Here's where I could do anythingdifferent.
Once you own the property for afew years, you get super
(15:55):
complacent.
So do you guys generally like, I
mean, Matt did ask kind of theannual renegotiation, but do you
guys have any kind of... offer interms of like, we'll just do a
review and tell you where thevalue add is and then...
Absolutely.
And that's mostly our bread and
butter is just having discussionswith owners and seeing what our
opinion is to how to increasevalue and or attracting this to
(16:16):
the building.
I think one of the big ones, when
we talk about different assetclasses, there really are five
families that own a lot of thelandmass here.
So when we're looking at otheropportunities, as the valley has
grown, places where traditionallyit may have been industrial
sections that now all of a suddenhave that... the large residential
components built around it.
How can we convert those?
Looking at those leases andsaying, hey, if we were to demise
(16:38):
these areas here in industrial,for instance, we are able to build
mezzanines.
And that's something that we've
seen a huge trend on moving in theOkanagan is the cost of land is
expensive.
The cost of construction is
expensive.
And landlords want to maximize the
amount of buildable air they canhave.
So we're seeing mezzanines beingbuilt into these spaces, which
traditionally would have been avalue add, whereas now it's
actually just increased on thesize that you can.
(16:59):
lease or sell, and they canactually charge for that, you
know, just as much as they are inthe ground floor area.
That'd be a good example of allthose evolutions in our market.
And it typically is trends fromother markets that have also
experienced.
were you know, this kind of growth
and the land getting so expensive,what are the finding ways to find
value out?I think to one of your questions
was our involvement with thoseclients typically isn't as, you
know, a consultant on an hourlyfee or anything.
(17:20):
We've been fortunate and it's justkind of the way that we were
raised is if you can bring valueup front and not just be a
transactional agent, someoneactually that is part of that
relationship from start to finish,whether it's a tiny little.
lease project at first, if you cankind of create value and you can
show that expertise and you becomepart of that little family, that's
the stuff that we've always lovedto do.
(17:42):
So it happens to work out, you doa couple of leases and all of a
sudden they want to acquire acouple more buildings or they want
to sell one or two and stuff.
And that's kind of how our bread
and butter has been.
It's not really through consultant
fees or charging.
And quite honestly, the developer
and the investor also has to buyinto a little bit of the value add
that we have.
(18:02):
We have lots of clients that say,
We're good.
We don't care how other people do
it.
This is the way we've done it.
The absolute truth is we probablydon't create much value for that
client in that relationship.
So maybe we just move to someone
that actually sees that valuebecause you also don't want to
have to retrain the whole program.
Like if you're happy with it and
it works, I'm going to confuse itcompletely by changing.
(18:23):
Let's just use usable versusrentable.
And I start telling you, you gotto read all the BOMA standards.
You might say, look, I've got afull -time job somewhere else.
This is a passive income producingproperty for me.
Chris, stop it.
You're confusing my world.
You're creating chaos.
You mentioned there's five
families in Kelowna that probablyown the majority, which is totally
fair.
But there are a lot of smaller
landlords that maybe own one ortwo spaces.
You cannot be up to speed oneducation of even just square
(18:45):
footage, how much it's leasingfor.
So to have somebody that's fullyinto it as well as writing the
leases, yeah, there's huge valuethere.
I think Matt and I have beenreached out.
quite a lot in the last year,probably from residential
landlords getting annoyed towanting to switch over to
commercial.
So can we kind of talk about...
asset classes in the Okanagan.
What are they?
And geographically, where you seethe opportunity?
Obviously, Kelowna Central is apretty hard place to make things
pencil.
I mean, I'm just putting words in
your mouth.
I'll let you guys talk.
(19:06):
But yeah, maybe we can just startwith what are the asset classes
for commercial?And geographically, where do you
like them right now?now?
Yeah.
I mean, where we've seen a big
trend here is, to answer yourquestion, is you've got your
retail asset class, industrial,office, and multifamily.
what we specialize in, becausewe're in a valley and there's only
so much land, what we have seen isthe trend outwards to the north
and south of Okanagan, so Vernonand Penticton, where there was a
(19:27):
massive demand and boom actuallywas in the industrial sector.
And that was throughout the COVIDperiod.
And we saw some prices justabsolutely skyrocketing Kelowna.
And so investors, A, COVID didchange the way the world looked.
A lot of people knew that theycould start to work remotely.
And so the focus then said, well,where can... we find affordable
land, and that was in Vernon andPenticton.
It was a 35 -minute drive foranyone that was in Calgary or
Vancouver.
That was a normal commute.
(19:49):
By the way, you've got a beautifuldrive.
It's a nice commute.
That's where we started to see a
huge shift.
Again, because a lot of the five
families own a lot of the landmass, they had to get creative.
Lake country, we've seen a massiveboom in the industrial sector out
there.
Vernon and Penticton is awesome.
Because I have certain clients,I'm personally more focused on the
(20:10):
opportunities of finding abuilding that's underutilized
rather than finding a multifamilysite and really going balls to the
wall on a major development thathas so much risk up front.
I tend to be a little bit more,especially with clients looking
for value -add properties, as Ilike existing.
I like markets that have almost ahistory of established market
(20:30):
rents.
And I know that sounds a little
odd, but when you can find... amarket that hasn't had huge rental
increases and you understand andyou can look at a building and
say, well, if I do this and I dothis, maybe I can attract a
certain type of tenant.
You build off a tenant mix and you
get a bit of a cool little vibeand hub going.
Then all of a sudden you're beingdeveloper in a unique way opposed
(20:51):
to we have had so many clientsthat say, you know what?
I've been a successful doctor formy life.
I want to build an apartmentbuilding.
To me, I feel like that is sorisky and there's so many players
in that market.
You guys probably know more than
we do, but you're so governed byso many external forces.
To me, it's too much risk for meto say, yeah, with an expert
(21:13):
advice, this is how I do this.
Right now, I've been focusing
heavily on the Vernon upside.
I think Vernon is a beautiful
downtown setting.
Reminds me of what Bernard used to
be 15 years ago, which wasbeautiful buildings, some historic
kind of characters, you know, somecool tenants and some vibe and
stuff.
But it hasn't really evolved to
the next stage.
We're starting to see that
downtown on Bernard.
Let me be really clear that I'm
(21:34):
well aware that there arechallenges with downtown, where
there's challenges with retail.
There's definitely challenges in
the restaurant industry right now.
A lot of my closest friends own
some of the nicest restaurants intown, and I hear it.
But from a commercial standpoint,from a commercial opportunity,
some of that land in thesedowntown markets will only mature
(21:54):
in price.
And if you have that right
strategy on how to... to find goodtenants, you know, even just, you
know, upgrades to the exterior orlike listening to some of the
challenges that other retailershave had in that unit before and
say, why don't we upgrade this?Why don't we bring more power?
Why don't we add a better HVACsystem, which maybe allows for a
(22:15):
cafe to be here instead of, youknow, a bridal store, which it's
been for 15 years, like ways toevolve.
And I think if you can create atenant mix, that's the kind of
stuff I love.
You know, one starts.
Now you get that cool littletrendy bar, then you get that cool
little clothing retailer, and allof a sudden you've got a hub that
people want to drive from allaround town or wherever to come
see.
That's stuff I love, passionate
about.
That's awesome.
What are you guys seeing in theoffice space in Kelowna, Emory?
(22:37):
It's not as bad as everyonethinks.
I guess we did an article inCastNet where it wasn't the death
of the office.
It was just evolving and it just
changed.
The absolute truth is, you know, I
have one side of my shoulder thatsays everyone wants to work from
home.
Everyone wants to work remote.
Everyone wants extremely flexiblehours.
But then, you know, we're one ofthe largest commercial brokerages
in the Okanagan doing asignificant volume of the deals.
(22:59):
And the office market has beenreally busy.
There has been.
a lot of new product that's been
put on the market over the lastcouple of years.
There's an expectation because ofthat land value and because of the
construction costs that there'sgot to be, you know, a performant
rent that's targeted and hit.
So there's some certain pressures
on some of the newer stuff, whichis, I think, why we see a little
(23:20):
bit of agency.
You've done some of the largest
transactions on the office side.
There's still quite a demand for
people wanting to be out of homein a nice professional office
setting.
Yeah, and I think to add to that,
that's a great question becausePeople have to evolve, right?
And I've seen that in banks, forinstance.
You know, when you look at theiroffice, traditionally, it would be
(23:41):
and you go into the CEO's office,it's a big boardroom, you know,
couches on the other side.
They have adapted, they have
changed, and they've gone lean andmean, which is just fine.
I mean, a lot of the other things,as Chris alluded to, one of the
larger deals we did was convertingan entire floor with a patio to a
daycare.
facilities.
So, you know, having to evolve,getting creative on those types of
deals are helping in that officeasset class.
Awesome.
The bay closing at the ball.
(24:02):
Like what is that going to do?This is a really interesting one,
a really interesting one, to bequite frank.
Yes, it's a big hit.
However, I think landlords are a
little bit happy about that.
Those leases were secured at very
low net rent.
Some of them were a lot of land,
right?And now we're seeing the rezoning
applications for higher density.
I think this is an opportunity for
landlords to recapture a big chunkof their properties and be able to
(24:24):
service and intensify.
or create what we see maybe at
Orchard Park Mall where they startdemising and leasing to other
types of tenants that maybe have alittle bit more of a longevity to
them.
I have a close friend who's a golf
pro.
He has nothing to do with
commercial real estate.
Every time we're playing golf,
he'll say, I want to be in theparking lot business.
That is what I want to be in.
(24:46):
And I know we're kind of dodging
because there's some sensitivityto the Hudson Bay stuff.
I've seen a lot of the projectswhere there's some Okanagan -based
shopping centers that are listedfor sale right now.
And the clients that we areworking and looking and doing the
performance and the backwards mathsee it as a massive opportunity
rather than a liability that oneof the largest kind of retailers
in Canada are going down.
They're looking at it going, wow,
there's a lot of area right there.
(25:08):
And that property allows for
height.
And they get a little excited.
Yeah, I think companies shouldlook at this and figure out a way
that they're changing theirbusiness model.
I mean, e -commerce is a huge one,right?
People can typically just click abutton and have something show up
the next day.
And I think this is going to be a
kind of a rude awakening for thoselarge big box shops to sit there
and figure out how can we get...
(25:29):
this to a point where we can still
make a profit.
See, we can talk about this for
hours.
We just get excited about it.
But that's the interesting thingabout being in our industry.
And I don't want to...
My wife is a residential realtor.
There's so much value in what thatside does in commercial for us.
you have an opportunity to almostlearn a lot about how businesses
(25:50):
operate.
And you have to start to
understand that in your assetclass that you particularly stay
with to say, okay, how have thingsevolved?
And trying to be above and beyondthat.
Like if Jay is reallyunderstanding 40 % mezzanine gross
ups, like he has to understandwhat that means, you know, on both
sides of his clients that own theproperty, but also the tenants,
(26:12):
what the impact might have, whatcan you do?
For me, retail, like which I justlove, it's not the only asset
class I do.
I just happen to have a passion
for it.
You start to learn how businesses
evolve and you start seeing, forthe most part, like an example,
you don't see 8 ,000 square footrestaurants anymore.
COVID changed that, right?My best friend owns one of the
largest franchises in Canada.
(26:32):
We sat on the beach during COVID
and we talked about ghost kitchensand we talked about what Skip
meant.
Do we like Skip?
Do we hate Skip?The way that we had to start to
evolve because historically youjust did.
120 chopped leaf locations.
You just bread and butter.
You know exactly where it was,what you needed, parking ratio,
tenant mix.
And all of a sudden, we're like,
we've got to change the way welook at real estate.
We started... I say we, he did,but I got to be involved.
(26:55):
Started looking at 800 square footspaces instead of 1200.
And we learned how to be lean andmean and build the kitchens a
little more economically andstuff.
So I love it because you get kindof not just what are commercial
lease rates, what are retailrates, what are, you know, land
selling per acre.
You start to evolve the client's
business and you start tounderstand that.
And then if you're smart, you canfigure out ways to create value
add on that side.
(27:16):
There's so much to unpack there.
First off, I am floored.
I did not realize the bay was
closed.
That's where I get all my jeans
from, which I've got a hole in myknee and I need more jeans.
Yeah.
Okay.
Well, I'm headed there after this.
When does it close?
there after this.
One thing I wanted to ask there,
and I've been doing this for yearsnow at my building, is investing
in the business owners.
If they're successful, you'll be
successful.
If their profits go up, up, no,
(27:37):
they can afford the higher leaserates.
And you just, you want thatcohesive community.
I'm happy to invest in it.
I guess the hard part for most
people might be, how do youquantify what the return's going
to be?Like you said, paint the exterior.
I know my building needs to bepainted.
We did the roof.
We did the boiler system.
Like we're doing a bunch of workon it.
Those things I can't turn aroundand go to tenants and say, Hey,
(27:58):
you know, we, we just replaced theroof.
we're upping your rate, I guess,if you're on a triple net lease.
Yeah, exactly.
Yeah, I'm answering my own
question.
Okay, so I inherited a lot of
gross net leases.
So I didn't have that ability
then.
But I guess, do you guys, do you
do comparables like residentialreal estate?
Would you go say, hey, you knowwhat, this building three blocks
away has a beautiful exterior,updated this and updated that.
(28:18):
And that's why their lease ratesare higher than yours.
This is probably nowhere near assophisticated as the residential
side is.
I admire the stats and the data
and how easy it is to get in theresidential side.
In fact, I still don't know allthe tools available on the matrix
system because in residential,there's so many transactions
happening in two bedrooms, twobathrooms in this market.
(28:39):
You get to start seeing somewhattrends and you can build a bit of
a case for a client.
Like let's just hypothetically say
you've got a restaurant, a cafeand a retailer.
The parking is going to come intoplay.
The location, there's so manyother variables and we don't see
so many transactions happen on amonthly basis that you can say,
look, you're off by 22 cents.
If you're fortunate to have
commercial real estate, and I dowant to touch a bit about the
point of entry of commercial realestate at one point, but I find
(29:02):
there's landlords that see alarger picture and they say, okay,
you know what?I could do this deal right now.
It's going to pay me exactly whatI want, but is this going to be
the benefit to the community, tothe existing tenant mix?
If it's a mixed use building, howdoes this actually compliment the
immediate area versus, okay, I'vegot this really cool, you know,
use, but maybe they're a startup,but I can see they're going to
work their butt off, but they wantme to invest in a little bit of
(29:29):
paint outside, or they want tohave channel led signage, or they
want something that's going torequire a little bit more of an
investment that I've historicallyever had to do with other tenants.
That's an evolution.
And I think.
The thing that frustrates me themost with my industry, with some
of my colleagues, with some of thelandlords that I've worked closely
that don't want to deal withcommercial agents, or they just
have their own system, is whenthey do lazy deals.
(29:51):
That's what really bothers me, isthere's an opportunity to evolve
and to bring something to a marketthat could be a really good thing
for not just the nickels and dimesof the rents.
could be a building block off ofthe rest so in your instance like
there's nothing wrong with thefact that you've inherited those
things and this is kind of the waywe've done it but if you take a
(30:13):
flyer on maybe that you know andi'm just using way examples but
that gluten -free bakery couplethat's really working hard at the
farmer's market but they're goingto bring something that's been
unique and shake it up like That'spretty cool.
And all of a sudden you get thatnext use that goes, you know, I'm
a cool hair salon that reallywould love to be beside this youth
and energy.
That's the opportunity.
(30:35):
Like that's where you start.
I don't ever advise clients to
just go buy something, putlipstick on it and just say, hey,
hopefully they come.
Like there's got to be a strategy
of how you get there instead ofjust spending clients cash because
that never really works well foragents as well when you just start
saying, well.
build it and they will come.
There's got to be somethoughtfulness to it.
Yeah.
Another point, you know, you
(30:56):
touched on there is entry level.
So yeah, I get people reaching out
to like, Hey, what am I approvedfor, for a commercial mortgage?
It's like, well, it's based on thedebt coverage ratio.
Right.
So do you guys want to talk a
little bit about that?How do you, I guess, not pre
-approved, but like vet apotential new client that's coming
in that wants to buy commercialspace?
Like how does that conversation?Yeah.
Yeah.
First and foremost, patience.
Like us, along with other greatcolleagues that we work with other
(31:18):
brokerages that kind of do a lotof commercial real estate.
There's no such thing as a quick,fast, easy, brainless transaction.
I think that you have tounderstand the client a little bit
about what their risk toleranceis.
capitalization rates and someother things, there is risk in any
type of commercial real estate orany type of real estate in
general.
I think patience and I think that
your point of entry is difficultin the Okanagan.
Quite frankly, it's not cheap toget into commercial real estate.
You don't commonly find a $200,000 little tiny office strata
(31:39):
unit.
That's very, very rare.
You're talking probably multiplemillions of dollars.
If you're talking aboutacquisition of land and
developing, there's, as I'vementioned, better have some
experience with that or at leasthave the end.
user or your home business thatyou're evolving, like you've got
to have some of the cards readyfor that.
What I find really interesting inthe Okanagan is there's a lot of
historical money.
There's clients and developers
that have owned stuff forever andthey have no succession plan.
(32:01):
So for me, I was trying to kind ofthink like, what would be ways
that I would encourage people toget into commercial real estate
that have no experience whatsoeverin it?
And unless your family's givingyou a building.
Which, congratulations, that'sawesome.
But it doesn't happen a whole lot.
I think there's a lot of clients
out there that are starving for amentor or for a mentee.
Like something to say, hey, like,I built this.
I worked my butt off since the60s, 70s, 80s.
(32:24):
I went through crazy times.
I went through COVID all by
myself.
And now I have no legacy.
And I think you'd be surprised onhow many developers are out there
that if somebody wanted to getinto the industry and learn and
really work, there would be kindof a unique approach into that.
So I know that's a littleholistic, but I've got several
clients.
that don't have any succession
plans and they just lovedcommercial real estate and they
(32:44):
just loved developing and theyloved owning those buildings.
I'm surprised that they don't havesomebody that's just ready to take
them over.
So I've asked a lot of questions
out there.
If I was just somebody wanting to
get a commercial real estate,maybe an uncle or neighbor or...
Something like that.
And I think maybe if I could add
to that, Taylor, because it's agreat question again.
And the first thing I'm going toask that client is, are you an
owner occupier or are you aninvestor?
That is going to let me understandtheir risk profile.
(33:06):
And then I'm going to say, forinstance, as an investor, we're
going to do a deep dive into theleases.
We're going to say, what incomeare you buying?
Where's the upside?Where can we create value?
What are the limitations of thatlease that you need to be aware of
moving forward before you sign onthe dotted line?
Because for instance, there mightbe a fantastic tenant in place.
They might have 15 lease renewalsthat have already identified those
lease rates.
Well, then you need to put that in
(33:26):
your reforma and understand thatthis is the max income you're
going to get versus somewherewhere it's, hey, we got a couple
of year leases in here, butthey're incredibly under market.
They have no renewal periods.
And here's the opportunity for us.
Oh, by the way, realize that Iwould advise that this maybe you
do want to do a little bit of abuilding upgrade here.
I might have someone in my backpocket would be a perfect tenant
(33:47):
looking for that space, but weneed to do X, Y. to get you there.
But that's the value add that weprovide to, I'd say, an investor
buyer.
If it's somebody who's an owner
occupier, that's pretty simple.
But what I would say is if you
want to become an owner occupier,you may want to look at building a
larger facility that we could thentenant and you can become a
(34:08):
landlord as well.
Use portion as in your investment.
So if you're going to be buildingsomething, you might as well build
it to its max potential than justwhat you need.
And who knows, you either leasethat space out or your business
then grows into it.
Jay's answer is better than mine.
I like both of them.
To your point, Chris, I can act as
a nephew.
Like if you have some uncles that
(34:28):
are looking to pass down the torchand for you, Jay, I think
something that like a light bulbwent off there for me is.
Do you guys ever, I'm assumingthis doesn't happen frequently,
but is there ever an opportunityduring the purchase where you
would do like a lease buyout or ifthere's an existing tenant, that's
part of the condition of like,hey, you know, you have to find a
way to terminate this because thatlease is so undervalued.
Like we can't even be approved,you know, for financing because
(34:49):
the lease rate is so low.
Absolutely.
Yeah, absolutely.
And those are difficult
conversations to have.
And there's sometimes you can see
the writing on the wall for abusiness who might just be looking
for a way out too.
So yeah, we get really creative.
You know, one thing we haven'treally chatted about commercial
real estate is we wear many hats.
You know, anyone that's looking to
get into this business, it'sreally challenging.
It's not as simple as finishingyour solder school business degree
(35:09):
and then walking in.
We need to understand the art of
the deal.
We need to understand what hat am
I wearing that day?So am I wearing a tenant rep or
lease?Am I a landlord rep for a lease?
If I'm buying for a purchaser orselling for, you know, somebody,
every one of those deals are adeal.
different type of direction andstrategy as to how we approach
them.
So, you know, when you get into
this business, there's a lot tolearn.
We're always constantly learning,but this is where we get excited.
(35:30):
And I think we've been fortunateto develop some pretty great
relationships with owners that Iwould say, Chris is a really good
example of two or three of hisclients that people would line up
for days to get to meet.
But, you know, Chris has them on
their cell phone because he's donea great job of looking through
those, doing a deep dive andunderstanding, hey, how can I
create value?new portfolio, which then puts us
(35:51):
in their inner circle.
So it's really neat and something
that the reason why I lovecommercial real estate.
Yeah.
And I think one thing that you
raise is ways to get a lease'spotential, right?
A lease can be four pages.
It can be 60, 70, 80 pages.
Like there's just a whollydifferent types out there.
What I do love about it is thatleases are pretty enforceable
though.
Like they're not easy to get out
of.
There's ones that are a little bit
easier than others, but there'salways unique clauses.
(36:13):
You know, when we talk aboutbringing on new licensees, we're
like, you're not going and you'renot like swinging for the fences
for the home runs with the big,you know, 30, $40 million land
transactions.
Yeah, You do need to understand
commercial leases.
Even if that's below you and you
don't want to, like we wouldn'tbring them on in our brokerage if
that was below them, to be quitehonest with you.
You have to understand what you'reselling.
And what's happened really cool iswhen I was, you know, kind of a
(36:36):
baby in this industry, I did tinylittle leases, but you kind of
learn this huge repertoire oflike.
oh, that's an interesting clause.
That's an interesting clause.
I wonder how I can use that forlandlords or for tenants.
We've come across portfolios forsale where we question if the
leases were red because if theywere red, you realize that what
they've been valued at, you can'tmake those numbers make sense.
I saw one portfolio sale where itwas promoting the fact that you
(36:58):
could build on vacant land.
National Anchor had a no build on
all of its parking.
And, you know, you have to
understand that kind of stuff.
And I think that a really great
landlord understands theintricacies of tiny little leases,
because that's kind of, you know,the building blocks of most of
commercial real estate.
There are other asset classes,
don't get me wrong, like, youknow, multifamily, if you're just
selling land and all of thosethings.
But where we nerd out is kind ofthe small little details.
(37:21):
Is there any class, I mean, wekind of spoke about opportunities.
Is there any class that you feelis saturated right now?
I'll go first.
I think multifamily.
Probably why we haven't brought itup.
Yeah.
Okay.
Yeah.
Yeah.
I mean, specific to the Okanaganright now, I feel there's a lot of
units coming on.
online.
I mean, we just had a podcast withJeff Hancock and we kind of
disclosed that, but any other likecommercial asset class that you're
(37:41):
like, this has had like a prettygood runway for the last couple of
years, but I feel, you know, atleast per square foot.
Let Jay speak to what he'snaturally going to say.
Let Jay speak to what he'snaturally going to say.
I would say I've met a lot ofreally smart developers, people
that have dealt with hugeportfolios and other markets come
to Kelowna saying, I'm going toapply my secret sauce.
to the okanagan and i think theyquickly realized you know those
(38:04):
five or six families that we weretalking about have a very good
staple and kind of a grapple onwhat happens in this market like
to answer your specific question iwouldn't be building an office
building if i had you know 50million dollars understanding this
market i would know that there'ssome pretty big developers that
are in that game And I don't thinkthat I'd want to go head to head
with them because I think thathistorically they've owned that
(38:24):
land since the 50s and 60s.
They've built construction
companies that can facilitatethose builds and the tenant
improvements on everythinginvolved.
I think I'd stay away from office100%.
I think Jay's probably got more ofa natural, easier answer.
Ask the class to stay away fromright now.
Yeah, I mean, I love industrial.
That's my world.
And I would say that the market isgoing to be completely
oversaturated.
Small Bay Industrial coming in the
next two to three years.
About five years ago, there was a
(38:45):
massive demand and there was a lotof success on airport business
park being converted from gravel.
Lots of divided to one acre
parcels that had built Small BayIndustrial on it.
And I know of at least threeother.
projects have now put that on holdit's really slowed down in terms
of the demand for small bay onething i will add to that too when
we talk about value add is aboutseven years ago developer came out
of vancouver and they startedcreating these small bay
(39:05):
industrials with 40 mezzaninewhich they charged on this was
fantastic it really kind of caughtwind of all the other developers
and now that is essentially howyou build these they're cookie
cuttered to be the exact sameproduct and what we're seeing from
the feedback from market is wedon't want mezzanines we want We
want four walls where we canoperate high racking, you know,
warehouse logistical servicesversus having a mezzanine, which
most of the time just compilestires and poker room.
(39:26):
So many poker rooms.
I love that.
Yeah.
Thank you for the authenticity.
There's probably a lot of emptyspaces that are costing money and
people are losing money and themplaying poker.
But yeah, before we kind of justwrap this up, is there anything
you wanted to touch on?we haven't led the conversation
to?I'm really excited for, really
excited for, as Jay alluded to,the North and South Okanagan.
(39:48):
I think that major developers havebeen focusing really hard on
Kelowna.
And I think that as far as an
opportunity for somebody that'sgetting new into commercial real
estate as an investment, I thinkthere's got to be a little bit
more risk tolerance, but a littlebit more of an opportunity to look
into, say, West Kelowna, which isalready probably missed.
Penticton, which is kind of nowsaturated as far as lots of
interest.
I think Penticton, it's already
evolving.
But I think that, you know, you're
(40:09):
starting to see a lot moremultifamily down there.
Residential typically comes iswhen the commercial seems to
benefit.
As I mentioned, I love Vernon, to
be quite honest with you.
I don't know why I'm, you know,
walk through your listing.
I love that building.
I think there's so much coolupside and potential.
I would say that I'm reallyexcited about the Okanagan in
general.
There's some pretty cool things I
still think that could be done.
We're really fortunate to be here.
And I mean, the Okanagan is alittle bit of a bubble.
And we're really fortunate to behere and to be a part of this
(40:31):
community because it's somewhereeveryone wants to be.
And I think the sky's the limitfor us.
Yeah, I mean, you guys kind of,it's cool.
You get to kind of shape theculture a little bit, right?
Of like the type of tenant classand like who's, yeah.
Can you tell my wife that?I'll drive by and say, hey, look
at that.
And she goes, I don't care.
Every day's new, which is reallycool.
You get someone that calls andsays, I've got this really cool
(40:55):
concept and I'm hoping you canhelp me.
And then all of a sudden that kindof takes foot in plants and stuff.
So I do love the fact that we candrive down and my daughters will
say, hey, you did that deal.
Or, hey, I know you've been trying
to get them to come to Kelowna.
By the way, Olive Garden is not
coming to Kelowna.
We've tried a trillion times.
I love that song.
Ikea.
I mean, everyone tries to get anOlive Garden.
(41:17):
We've tried a trillion times totalk off time.
Yeah, and the brand of theFelberta too.
Yeah.
You don't have the land.
That's the problem.
You start to look at the ALC and
agricultural land.
And again, there's only small
land.
A couple of goats out in the
field.
Yeah.
out in the field.
Yeah.
They caught on to that, actually.
Yeah.
You can't sell a llama wool.
Jane and I are a sucker for
(41:37):
traveling every Topgolf weekend.
I know.
that, Topgolf weekend.
I know.
I guess also weather is a bittougher here.
Yeah, just picking up the golfballs and six inches of snow would
be a little...
Trust us, Trust us, we have worked
with quite a few people looking tobring those brands here.
It's a bit of a challenge.
Yeah, yeah, I could imagine.
Well, it's been awesome.
Appreciate it.
Talking to you guys.
(41:58):
Yeah, honestly, thank you guys so
much for coming by.
It was a blast chatting to you.
If anyone does want to reach outto you to talk leases, selling,
buying, how do they reach out?What's the best way?
You can view us on our website,can view us on our website,
adventurecommercial .ca.
Probably easiest way to connect us
through there or call any one ofour signs.
Yeah.
Yeah.
(42:18):
No kidding.
Like every second block.
That sounded rude.
That sounded rude.
I didn't mean for that to comeoff.
Yeah.
You guys are everywhere.
I love it.
So thanks again for coming on.
Really appreciate it.
Thanks.
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