North Drive Investments Inc.

Canada has enjoyed a long, hot housing cycle that has been a boon to many industries – residential development and construction, obviously, but also home renovation and even retail.

The real estate market in Toronto, Canada’s largest city, is one of the strongest in the world right now. Tower cranes fill the downtown skyline as builders work to satisfy tremendous demand for condos in the city center. There are 55,000 condo units currently under construction in Toronto, and condo prices there have jumped 25 percent since 2009.

Taylor Morassutti, a partner at Toronto real estate developer North Drive Investments, explains that there are several factors driving the city’s condo market. For one, “Toronto ran out of available land to do much new single-family home development, so everyone transitioned to urban high-density development – condos,” Morassutti says.

Plus, young professionals want to live downtown, he explains, as do empty-nesters who are looking to downsize. And Toronto is experiencing a huge influx of immigrants who need housing. These various groups tend to want to buy more affordable condos, rather than more expensive single-family homes – or they’re looking to rent, and the options there are limited.

There is rent control in Toronto – the province of Ontario imposes regulations that limit the amount by which rent can be increased over time. “Because of rent control, no one wants to build apartments anymore, even though there’s demand,” Morassutti says. “A huge secondary market for condos has evolved. Investors are buying them and renting them out.” Rent control doesn’t apply to these arrangements.

Small and Selective

The getting has been good throughout Canada for almost a decade-and-a-half. Housing has generated an astounding $1.7 trillion in net new wealth for Canadians since 2000. The country survived the real estate bubble that burst the United States’ economy because, in large part, Canada has stricter lending practices. Investment in Canadian residential real estate continues, for now, unabated, adding up to $128 billion last year alone.

North Drive Investments is a small player in this big market –and that’s exactly how the partners like it.

“Our preference is to keep our company lean,” Morassutti says. “We don’t want to take on projects just to feed the machine.”

The firm is a partnership between two families – the Fidani and Morassutti families – who have deep roots in the Canadian real estate industry going back 90 years. From modest beginnings as bricklayers, the families have built, owned and managed more than 75 million square feet of office, industrial, retail and multi-residential properties.

There are three principals at the three-year-old firm: Taylor Morassutti, his brother Jordan Morassutti and their childhood friend Robert Fidani. They named the company after the street on which they grew up.

North Drive Investments works exclusively in Toronto and has no plans to expand beyond it. “We specialize in contextually responsive high-rise condo developments, with an emphasis on architectural excellence, in mature, established, desirable neighborhoods,” Morassutti says.

What that means is the buildings stand out, but also fit in. “It’s important to integrate the structure correctly with the surroundings to be more modern or more traditional,” he says.

North Drive is currently working on two major condo developments: The High Park and 4 The Kingsway.

The High Park is an 11-story, 100-unit building with ground-floor retail. It is located across from a 480-acre park, the city’s largest green space, and adjacent to High Park subway station. It is a boutique residence that uses a modern interpretation of traditional elements – for example, warm woods contrasting with glass, brick and stone cladding. Construction is set to begin this summer; units are 80 percent sold. North Drive anticipates construction will be finished 18 months after it begins.

Sales will begin at 4 The Kingsway in the fall. North Drive expects construction will begin in the spring. European-inspired and surrounded by historic homes, this nine-story residence combines five townhomes and 40 units. A second phase of The High Park, a couple blocks west of the first project, is in the planning stage.

North Drive works exclusively with Toronto-based Accel Construction Management. “They actually found us,” Morassutti says. “They heard we acquired our first property and sought us out. We met with other construction managers, but Accel has such a great reputation that we went with them. Having them with us from the very beginning has been valuable, and we think it will pay off substantially in the end.”

Adaptable to Change

All positive trends must come to end – and North Drive Investments is ready to capitalize on that, as well. Analysts are predicting an eventual slowdown in the Canadian housing market. However, strong population growth, a healthy job market and low borrowing costs should keep real estate sales from softening too much.

“It’s tough to say when the market is going to tap out,” Morassutti says. “For now, we see a proper match between supply and demand.”

But, he explains, every future investment opportunity the firm considers must have retail potential. “As residents and offices have returned to downtown Toronto, retail has really lagged,” Morassutti says. “Retail is next.”

The firm has had discussions with some big-box retailers that are looking to experiment with urban format stores, and North Drive is looking at sites that could be developed into multi-level retail properties. 

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