Medallion Developments has a deep pipeline of development properties and, unlike some other firms, is actively growing its purpose-built rental apartment portfolio across the Greater Toronto Area and western Ontario.
It's a sector the company knows very well. Medallion started developing small purpose-built rentals in the late 1950s when demand exceeded supply, and moved to increasingly larger projects.
The Toronto-based, fully integrated private real estate development and property management company — its holdings also include single-family homes and communities, office, retail and industrial properties — stopped developing apartments in the mid-‘70s due to taxation issues and rent controls.
However, Medallion rejoined the apartment sector in 2001 and has been building them in and around the Greater Toronto Area and southwestern Ontario ever since. Apartments now account for the large majority of its development activity, and those projects sometimes incorporate ancillary and ground-floor retail as well.
“We’re A-to-Z guys and we’re long-term holders,” director of development and construction Rad Vucicevich told RENX. “We build, zone, approve, acquire and manage. We’re our own contractor, so there are a lot of savings in time and money by doing it that way.”
Many of Medallion’s legacy building sites have excess land and have been, or will be, intensified with new apartments.
Lisgar Street and Vision at Pat Bayly Square
The company also has a history of involvement with municipal housing programs and Canada Mortgage and Housing Corporation (CMHC) funding incentives.
“We go into neighbourhoods where condo developers wouldn’t go into,” Vucicevich said. “Through our urban renewal programs and incentives offered by the CMHC, we can do purpose-built rentals.”
For example, well before Toronto’s West Queen West strip became a trendy area for retailers, restaurants and bars, Medallion constructed an apartment building just south of the area on Lisgar Street.
It was so successful the company has expanded its multifamily development presence on the street.
“A lot of our buildings are condo-quality buildings,” Vucicevich noted. “We have to build higher-quality buildings that compete with condos.”
Medallion has also completed the first two buildings of the now-occupied Vision at Pat Bayly Square apartment complex in Ajax and is constructing two more.
Vucicevich said the company has taken advantage of tax incentives offered by the municipality as well as the CMHC’s Apartment Construction Loan Program for the project.
Emery Crossing, Oshawa and London
Vucicevich said Medallion has built five apartment buildings as part of the large Emery Crossing community in the Finch Avenue West and Weston Road area in northwest Toronto with backing from the city’s affordable housing program and the CMHC.
Three of the buildings are fully occupied, two more are being occupied and another five apartments are making their way through the approvals process.
Medallion will also develop a retail component, including a grocery store, according to Vucicevich.
“It will definitely boost the economy of that neighbourhood,” he said.
Medallion has plans for a multi-phased development that is to eventually include approximately 2,000 apartment units adjacent to Tribute Communities Centre, downtown Oshawa’s 5,000-person-plus arena. It’s now going through the approvals process.
SOHOSQ, located along the Thames River in south London, Ont.'s Soho neighbourhood, is under construction and will have approximately 600 units in its first of two phases.
Incentives are crucial
“Incentives are crucially important, whether they be tax waivers or development charge waivers,” Vucicevich explained.
He said last year’s announcement of the elimination of federal sales tax from apartment construction - some provinces have matched that commitment, including Ontario - will also be a major benefit.
“Sometimes, projects wouldn’t be viable without them.”
Many Medallion projects also have a significant number of units that meet the CMHC’s affordable housing definition, which make them eligible for additional incentives and funding, Vucicevich noted.
Vucicevich pointed out the business models for purpose-built rentals and condos are very different, with apartments having much lower initial profit margins.
He would like to see development charges and property taxes waived permanently for apartments to make them more viable to build.
Well-positioned for future developments
While some developers have been holding back on launching new projects due to higher interest rates and an uncertain economy, Vucicevich said Medallion is in good shape because it had previously bought land in good locations at good prices.
The company has land banked in Toronto, Oshawa, Ajax, Brampton and London for future development.
“We are building large-scale, community-changing projects,” Vucicevich said. “We have a great relationship with municipalities and governments and we're well-positioned to continue building purpose-built rental in the future.”