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OBJ talks housing with Minto Communities president Brent Strachan as Minto celebrates 100,000 homes built

October 5, 2023
1:50 PM
ET

Organizations: Mercury Homes, Minto Group, Minto REIT

People: Brent Strachan

OBJ sat down with Minto Communities president Brent Strachan to discuss the challenges facing the housing industry, how the public and private sectors can help, and what the future holds for Minto.

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In 1955, Minto Group, then called Mercury Homes, was founded in Ottawa. In 1968, it built the first condo in the city. Last week, the developer realized its 100,000th home in Canada. OBJ’s Sarah MacFarlane sat down with Minto Communities president Brent Strachan to discuss the challenges facing the housing industry, how the public and private sectors can help, and what the future holds for Minto.

What are the biggest challenges that you see facing the industry at this time?

I think the costs, number one. There’s that escalation that we’re seeing everywhere across everything, whether it’s food prices, labour costs or hard costs for construction. But also just the market today and the overall economy is just making people nervous about where the economy is today and where it’s going. There’s a lot of hesitation from people to even put their house up for sale or to buy a new home. Hopefully, with some rate holds and, ideally, some rate drops later this year or early next year, it could provide a bit of positivity for people to get back into the real estate market. With the interest rates comes the financing, too. So, of course, the financing and the cost to carry is a factor as well.

How do you see the recent announcement about the federal government’s changes to the GST impacting the industry?

It’s a positive step in the right direction that will certainly help. There’s lots of headwinds in the industry today, from hard costs, development costs and labour costs, to financing costs, and with today’s interest rates, all of those are making development that much harder. So incentives like this will definitely help. We hope the governments and the industry continue to talk to see what other opportunities there are, but it’s definitely a step in the right direction to get purpose-built rentals under construction.

What can various levels of government do to support and streamline housing development?

I think the approval timelines are always a challenge, right from purchasing a parcel of land and getting it through approvals. We continually work with the city, for example, to try and streamline the process and the city is always focused on it as well. That’s probably one of the biggest areas just to keep things moving quickly and keep them on. There’s also the issue of land availability for development. Ottawa has just gone through an urban boundary expansion, but those lands that were just brought in won’t see development for about six years. It does take a long time to get it to development. So I think the land availability increases the supply and the supply definitely helps to address the demand in the market.

How can the private sector contribute?

The private sector, as far as owning land that is developable, is finding ways to bring it to market. But that’s easier said than done, especially in today’s market. In particular, the Ottawa market is down significantly year over year. I don’t think that comes as a surprise to anyone, just with the current state of interest rates today. But one thing that would also help is the stress test. What people need to qualify to get a mortgage these days, eight to nine per cent, is definitely limiting people. To even qualify for a mortgage, let alone buy a house, is a challenge that hopefully the different levels of government are looking at. From an industry perspective, we need to be innovative with the product. For us, we brought on this year in Kanata new homes under $400,000 and we’re just launching in Barrhaven this weekend with new homes under $400,000 as well. These are stacked condos with underground parking but they’re under $400,000. So I think from an industry perspective, it’s about getting innovative with product design and land use to try and bring in a product that is attainable for the average consumer … which is hard to do with today’s land values and all these costs.

How has the industry changed in Minto’s lifetime?

It’s evolved. With land prices the way they are, it takes a lot of capital to be able to just buy land to build houses — not that it was cheap before, but it could be financed. It’s also how the business has grown and the competitiveness of it. Coming back to the constrained land supply, it really comes down to the land-planning principles that are used, as well as all the costs that are associated with it. It has all just shot up, in particular in the last five years, significantly, which just makes everything that much tighter through the whole process. One point to how things have changed is we’ve done a number of net-zero homes in Ottawa; we just opened one in Markham as well. From a build form and building perspective, houses are built way better today. Stricter code, stricter performance. The drive towards net zero is, I think, accelerating for high-performance homes, so a home built today is quite a high-performing home compared to 68 years ago when we started. But that is where I think the industry is going and, quite honestly, where I think the housing industry has to go.

How has Minto been working to achieve its goal of building net-zero homes?

It’s definitely a priority. We’ve done at least eight demonstration homes over the last number of years and each one gets a bit better, but what’s important is that each one costs a little bit less, which means it starts to get a little bit more attainable for the average purchaser. These extra components do add costs, obviously, but with technology and advancements, it’s getting within reach. When we get there will be determined, but that’s positive news. In the meantime, our approach is for our homes being better than code and high-performing. Obviously, most consumers are very interested in their cost to carry, whether it’s their heating bills, their gas or electric bills. So high-performing homes, as well air quality within those homes, we feel are very important to buyers these days.

That’s no small feat, 100,000 homes in Canada. What does this milestone mean to Minto?

Well, it’s a homegrown Ottawa success story; what’s not to like? One hundred thousand homes across the company is a significant milestone that only a select few companies — definitely in Canada and even in the United States — can achieve, so I think it’s a testament to the team over the last 68 years to deliver so many homes. But it’s not just the homes, it’s the communities as well that have been built. Operating in originally just Ottawa, Toronto and Florida, but now closing homes in Calgary and soon Vancouver and Texas, shows the expansion that Minto has been through and the growth in the last decades. Moving into the future, towards the next achievement, the next 100,000 probably will be a lot quicker. With the expansion, we’re not only growing in the market that we build in today, but we’re expanding into new markets. We’re building more where we are operating and we’re moving into new markets to build a diverse offering of building types, from townhomes to single-family homes to condos and everything in between. We’re really just trying to find that diverse market and appeal to many different types of buyers.

You’ve been at the company for 24 years, and Minto has been around since 1955. What does it take for a developer to survive and succeed to this degree?

It all goes back to the original founders of the company, the founding Greenberg family, and the shareholders who have sustained and built the business over the years. I think how they’ve done it is impressive. The company started in Ottawa, but how they diversified geographically, as well as with different build forms — going back to the first highrise condominium in Canada that was built in Ottawa in 1968 — it’s always been a company of firsts. You know, in our industry, you’ve got the peaks and valleys, and you’ve got the real estate cycle, so it really does take a vision and a strategy to survive all of the down times and maintain success throughout what we call the strong markets.

You say that Minto is already looking ahead to the next milestone. How do you plan to accomplish the next 100,000 homes?

In today’s real estate market, as we’re all seeing, the biggest challenge is affordability and attainability, so how we design not only our homes but our communities and all the different build forms will be essential. Of course, we have the large rentals division and (real estate investment trust), as well, which is separate from the 100,000, but also from a residential perspective, we’re offering all build forms. Leveraging everything that’s been established and built over the 68 last years to continue on the tradition and legacy of building firsts, trying new things, and pushing the envelope to deliver a product for consumers that they want and can afford, will be the key moving forward.

First as Mercury Homes and now as Minto Group, the company has been around for 68 years. How has Minto responded to the challenges it has faced in the company’s lifetime?

Going back, there would be periods, significant downturns, where the company, in a down cycle, shifted over to building rentals. It wasn’t the case that, when houses weren’t being sold, Minto shut down. Minto shifted over to building rentals in Ottawa and Toronto. So people were kept busy and the product was still being built. There’s the example of 2008 in Florida in the United States with the market crash. Again, our Canadian operations were able to help out and sustain that Florida operation to make it through the downturn, to a point where now our Florida division will close over 2,000 homes this year alone, which is impressive for a private company in the U.S. So, I think those are examples of navigating through the ups and downs, but also on the employee base, keeping everybody busy and the fiscal prudence of not overextending. Also, partnering, and good partnerships with our trade partners, has been key over the 68 years. Trade partners have been literally a partner with Minto. They were treated fair and treated honestly and a number of those companies that were partners years ago, even decades ago, are still trade partners today. I think that approach to the business helps toward the success, as well as the stability, of the ongoing legacy at the company.

What are some of the most significant advances and victories that you’ve seen in the industry over your career?

I think one thing Minto has always been proud of is we’ve been been recognized as Ontario’s Green Builder of the Year from the province, as well as Ottawa and Toronto, for our advancements towards net zero, our leading buildings from a highrise perspective, and our performance across the board, so I think that’s something that is closest to all of us as a team. But also, the way that the company and founding family give back to the community, recognizing that. To be successful for 68 years is not something that just happens. It’s about recognizing that giving back to the cities we operate in is important because a healthy, vibrant city is key to everybody. That’s something everyone is proud of over the last 68 years, for sure. There have been generations of Minto employees. This milestone is a celebration not only of employees today, but every employee who worked over the years and helped build the company up to the size that it is today. So it really is a team effort and team recognition dating all the way back for all the employees. I’m getting close to a quarter-century club here at Minto. People say, ‘Wow, you’ve worked at the same place,’ and I think… one job, but many different careers at Minto. It’s a testament to the company and what it stands for.

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