Jaime McKenna is optimistic the residential development industry in Toronto has overcome many hardships over the past 20 to 30 years, but the president of Fengate Real Estate sees continued dark days for the industry in the condo sector.
“Right now the thought of launching a condo in the next 18 to 24 months before the current inventory is burned off is not an option for us,” she says.
The collapse of the condo market will deepen the housing crisis, not only for the drop off of units sold but also rented, the latter representing about half of all condo units built.
That condo crisis could pose a problem for a company like Fengate which has 25,000 residential units in a 10-year pipeline but the developer has built enough flexibility to pivot to other housing types such as multi-family, seniors and student rentals, McKenna says.
Developing apartments doesn’t bring the 20 per cent plus returns of a hot condo market but rentals “fit a middle point.”
“You have decent development returns and it provides you with cash flowing assets in a housing market where demand is consistent.”
In 2025 Fengate will be in the ground on five projects in the Greater Toronto Area. The developer’s primary focus is multi-family rental.
While the number of affordable units may vary based on project location and target market, at Fengate’s midtown development at least 20 per cent of the units will be below the average CMHC rent for the GTA, she says.
The CMHC’s recently announced Apartment Construction Loan Program, which offers low-cost loans to support the construction of rental housing projects across Canada, “further enables us to make five, 10 or 20 per cent of units affordable.”
McKenna says shifting from condo to rental development is not as easy as some developers think. It requires two to three times more equity to build a rental building because developers don’t receive deposits on unit sales prior to construction.
“For us, we were very careful when cracks started to emerge in the real estate space three years ago…I knew I needed to reserve equity and capital to keep going which allowed us to pivot to rental.”
McKenna fears that the housing crisis will worsen because so many developers have paused condo and rental projects due to interest rates, lack of equity and other issues.
“Even with a reduction in immigration levels, we have a massive housing gap in this country and it is even worse in the Toronto area,” she states.
While timelines for acquiring land for projects until shovels are in the ground typically takes three to five years, she is pleased that all three government levels are looking into ways of cutting development costs and streamlining project approval periods.
McKenna started her career in accounting as a certified public accountant with the Minto Group and eventually moved into investment and development. She joined Fengate in 2019 as managing director and a group head of real estate.
Her experience in the male-dominated field has been mostly positive.
Many of her allies and the people who helped advance her career have been men if only because “I was often the only woman in the room.”
McKenna says while she faced some challenges because of her gender, she has never felt she had to change her values to pass muster with her male colleagues.
Sadly, she says the representation of women in the real estate space which was growing prior to COVID, has since been in decline.
That needs to change.
“We need a diversity of thought around the table because the biggest decision-maker when you are buying a home is typically the wife. If you don’t have any wives around the table how are you as a company forming the best strategies?”
Advice she gives young women entering the development field is to focus on the work, not gender differences, and “speak up and be heard around the table because you have great things to say and everybody will benefit from your input.”
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