From Park Place to King Street: How Monopoly sparked a condo career
Barry Fenton is co-founder and CEO of Lanterra Developments, a condo developer based in Toronto. He ruffled feathers last month with a comment at the Bloomberg Canada Economic Summit in which he suggested that Toronto condo developers are punching bags. “I almost know what Rob Ford feels some days because people are always taking runs at the guy,” Bloomberg News quoted him as saying.
Reporter Tara Perkins spoke with him Thursday as part of a new question-and-answer feature with Canadian real estate movers and shakers.
How did you become interested in real estate?
I gravitated to real estate in my teens. I was a monopoly champ in high school in Toronto, and I ended up going to competitions across North America. That’s actually how I figured out I liked real estate.
What was your first real exposure to the industry?
Cutting grass for somebody who owned apartment buildings in my teens. Then I ended up borrowing $30,000 from my father in my early 20s and buying real estate – actually, I was buying parking stalls in condo buildings. In those days there was no requirement to actually own a unit.
Later I started to amass apartment buildings. I had to be creative. I couldn’t afford to buy Boardwalk on Monopoly so to speak, so I had to be more creative.
At one point you spotted an opportunity in Toronto’s south core?
Back in the early 2000s, literally from SkyDome to the Air Canada Centre all you could see was parking lots and grass. I remember driving with (business partner Mark Mandelbaum) down the Gardiner, overlooking the land. I couldn’t figure out why no one else had taken it. We, Lanterra, acquired most of the land from Fairmont, who owned it at the time.
How many condos have you built?
I have or am delivering more than 9,900 units, and I have another 5.5-million square feet I’m rezoning in downtown Toronto, which equates to about another 8,000 units.
What’s your take on the market right now?
I think the market over the next three to four years will go up 30 to 40 per cent. Vacancy rates are very tight right now. There are actually increases on what a purchaser can charge to a renter. The economics of low interest rates helps to create more value. And over the last 10 to 15 years we’ve created a different canvas for people who want to purchase. In the old days people would buy houses in the suburbs because it was the right thing to do. Today we’ve created such great infrastructure in downtown Toronto that people want to live downtown. People are also prepare to live in smaller spaces.
Condo prices up 30 to 40 per cent from where they are now? We would expect to hear a developer say prices are going up – do you own units yourself?
Mark and I own Lanterra Developments equally, we have a lot of skin in the game. Most of our business is repeat business and appreciation is one of the ways you obtain repeat business. We also do keep some inventory that we hold onto as long-term investments. If we felt the market was coming to a slowdown, we wouldn’t be doing what we’re doing.
There is such a large number of units coming on stream right now.
There is a lot of product coming on now, but we’re not going to see a lot of new starts. Banks aren’t wanting to put out financing to a lot of the B and C players now, they’re being cautious. That’s going to put some pressure on the amount of units being delivered.
This interview has been edited and condensed.
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The Globe and Mail