Adrian Rocca shares his market predictions
Fitzrovia's CEO answers your questions.
Office Hours is a series where Milk Bag readers interview those who are driving Canadian business and culture. This interview is edited for clarity and length.
You oversee the development and management of your properties. This is more of a statement, but having lived at The Selby, it’s striking to see the difference in the quality of that building compared to my building in City Place. - Milk Bag
For a condo developer that locks their revenue years ahead of delivering a building, their incentives are to value engineer and potentially cut corners. If we make those decisions as a long-term owner, that’s a potential liability that sits in our books, right? The incentives for us are to start with the end consumer and work our way backwards. That’s why we invest in our cafes, lobby bars, and even our school platform. I don’t know if you know this, but I started the multifamily platform at Tricon. I painstakingly designed those suites, the lobby, and the amenity package at The Selby, so I’m glad you enjoyed it. With Fitzrovia, we wanted to turn that up three notches.
With all the highly produced amenities—pools, bars, clinics, childcare—how many are actually used and which ones just look great in marketing but underperform in reality? - Krista
It’s been a positive surprise to see how many people use our pools. If you ask a condo developer, they’re a waste of money because usually nobody does. I also didn’t expect so many residents, about 25%, to take advantage of our partnership with the Cleveland Clinic. Then there’s the ski simulator, which looks really cool but is getting less uptake. We’ll probably pivot away from that in future, but we were excited to try it.
A few weeks ago, Macleans published a piece that made the case for lifelong renting. I think many people are considering renting for longer, but how have the economics have changed? - Mark
When we run the math, it’s about 25% cheaper to rent versus own. But I think the concept of a mortgage as forced savings is the next conversation to have. We’d encourage our residents to put their savings into an index or a bond fund, and they could compound very closely to where home prices have appreciated in a normalized market—not like what we’ve seen over the last couple of years. I think there are ways to get those forced savings, and we don’t have a solution yet, but we’re thinking through a product that deals with that potential issue that I think we’ll roll out early next year.
What would you tell people who might have stretched themselves financially to buy a home, and now regret it? - Gina
Ownership requires unprecedented income levels and large, illiquid down payments. Like any asset class, real estate ebbs and flows, but after a 30-year bull market, which was very unique to Canada, some owners are now facing added risk of declining values and negative equity. For many people, renting makes clearer financial sense than owning and frees up capital to build wealth outside of real estate.
I’m sure there are many people who’d love to live in a Fitzrovia building, but can’t afford it. With some projects sitting at above 20% vacancy, at what point do you reduce the rents? - Peter
It takes time to lease up a very large building. Our assets that are not an ‘active lease up’ are about 95% leased. And we actually think it’s a really attractive price point if you look at the holistic offering. Whether it’s saving you the cost of a gym membership, Wi-Fi, or weekly events.
In markets like Toronto and Vancouver, we often hear about “housing supply” as a core issue. What’s the biggest misconception you think Canadians, and governments, have about what it takes to add supply? - Sonia
This is a super hot topic. The fact is that new starts are down almost 70% and that is going to be a problem two years from today, that will persist for about four years beyond that. That will create a tight, robust rental market, which is not good for the end consumer. And to be honest, it’s not good for developers and institutional investors either. Long term, you want steady supply growth that is in lockstep with immigration and natural household formation. What’s driving that? Look at the economic model. Hard costs (physical construction) and soft costs (project expenses) are up to normal market forces. Nothing you can do to change that. But 30% of our total development costs is government fees and levies. And so we are actively talking to all three levels of government about waiving those for about a year and a half to two years, then bringing them back into play. We have got to get as much new supply in the market, like tomorrow. We cannot wait any longer, because all it’s doing is compounding the supply issue.
What do you think the future of student housing looks like? And does the change in demographics worry you? - Jeremy
They actually don’t worry me. The caps on international students are mostly concentrated to the private colleges, but we target the premier universities in London, Kitchener, Waterloo, Guelph, Hamilton, Kingston. They’re still impacted, but supply is falling off a cliff in those markets, so we think demand will be strong. Amenity-rich student housing experiences very much exist in the U.S., and in Toronto it has resonated: 96% of the people living at the Waverley are University of Toronto students.
What is your opinion on the latest changes to rental regulations in Ontario, and how the Residential Tenancies Act and the LTB impact the rental market in Ontario? - Jan
The Residential Tenancies Act provides important tenant protections, but the Landlord and Tenant Board’s severe backlogs and lack of predictability create uncertainty for everyone. When disputes take months or years to resolve, it discourages reinvestment in existing buildings and makes it harder to attract the long-term capital needed to build new rental housing. This new legislation isn’t about weakening tenant rights, it’s about fixing the system so it’s faster, fairer, and functional.
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