Toronto-based QMW Corp. was created as a multifamily property owner and manager about five years ago, but two of its latest ventures are taking the firm into the industrial condominium space.
QMW Corp. chief executive officer Samuel Werner and president Avrohom Marder launched QMW Corp. in September 2018, but both have had interests in, and involvement with, real estate for many years.
Werner’s family has been in the textiles business in Toronto since the 1950s and also invested in real estate, which became a passion for the young man who purchased his first investment property at age 24 and left the family firm to form QMW with Marder, a childhood friend.
Marder’s family was involved in electrical contracting but also invested in real estate. His interest in the field led to stints with Emery Investments, V!VA Retirement Communities and Firm Capital before moving on to QMW.
The company has grown quickly and has eight employees in its Toronto office and others off-site.
QMW does its own property management for a portfolio comprised of 25 multifamily assets in Toronto and two early-stage commercial condominium developments in Burlington, Ont.
There’s more to come from both arms of the firm.
“We've continued to acquire multifamily assets in Toronto with strong value-add potential, but we also saw them as very strong long-term assets that will continue to appreciate,” Werner told RENX.
QMW’s early multifamily purchases involved five- to 10-unit apartment buildings and grew larger, working up to the acquisition of a four-building, 115-unit complex on 1.5 acres at 31 Clearview Heights from Marlin Spring about a year-and-a-half ago.
The property is close to Eglinton Avenue West and Keele Street and a stop on the still-under-construction Eglinton Crosstown light rail transit line. It’s viewed as a redevelopment candidate five to 10 years down the road.
“Whether we buy a building, or whether we can take down smaller buildings to put up a bigger purpose-built rental, it’s all about keeping the property long-term and extracting as much value as possible,” Werner said.
QMW plans to construct a 61-unit purpose-built rental on a retail/apartment property it owns in Toronto’s Seaton Village neighbourhood.
It also owns a small site near Davenport Road and Keele Street where it plans to build a three-storey, six-suite upscale condo building.
“Over the last couple of years we’ve bought a lot of street-front retail properties that we were able to stabilize at a five cap (five per cent capitalization rate),” Werner explained.
“By doing that, we had cash flow and then we're able to build out.”
Future multifamily acquisitions
Werner said QMW expects to close on the acquisition of a Toronto multifamily property valued at approximately $100 million in three months, but he can’t reveal more details at this point.
“We're very active in looking at sites, and not necessarily where there's additional density on the multifamily parcels, but a lot of them that we're picking up happen to have that,” Werner said.
“We’re very focused on if it’s stable today, if there’s value in the current asset, and if we can make money even if development falls through.
“We're much lower-risk than a typical developer. We don't consider ourselves a residential developer, we consider ourselves multifamily guys that will either partner or figure out a way to build out on the excess land.”
QMW is only interested in multifamily properties in Toronto at this point, as Werner said “we don't feel there's enough continuous value-add on the appreciation of the value of the property as well as the rents” in other cities.
Burlington commercial condos
QMW is waiting for a building permit and recently launched pre-sales for a two-storey, approximately 100,000-square-foot commercial condo on a seven-acre site at 3170-3200 South Service Rd. that was acquired in September 2020.
It will be comprised of 70 per cent industrial units and 30 per cent office and medical office units. About 40 per cent of the units have been sold.
QMW is awaiting approval for its recently submitted site plan for a two-storey, approximately 150,000-square foot commercial condo on 8.8 acres at 4301 Palladium Way, near Highway 407, which were acquired in May 2022.
It will have a similar unit ratio to the South Service Road property.
The Palladium Way property will also have shared boardrooms, kitchen facilities and washrooms.
QMW’s side of Palladium Way is zoned industrial, while there’s a master-planned residential community on the other side of the road.
“We have residential towers going up at the end of our block and there are a couple of submissions for long-term care facilities,” Marder told RENX.
“Our vision on industrial is really to continue doing sites like that, where we see a lot of value in taking land and building good, beautiful product for end users, especially with rents continuing to rise,” Werner said. “Most guys that are buying from us were tenants somewhere else with rents going to close to 20 bucks (per square foot), so it makes sense for them to buy something.”
Industrial shell units average around 2,000 square feet and prices are clearing $500 per square foot on South Service Road, while the office shell units range from approximately 500 to 1,300 square feet.
Second-floor office space is selling for $625 per square foot while ground-floor medical office space is going for about $700 per square foot.
Units can be combined for purchasers looking for more space and some are already doing that.
QMW’s industrial pipeline
They could also include such things as a self-storage facility, a small hotel or an automotive dealership.
“The philosophy on the larger parcels, which we like, is we're able to fill out the industrial condo and hold the other assets on the property long term, which is in line with our multifamily long-term philosophy,” Werner explained.
The Whitby site will have larger bays and truck-level loading. It hasn’t been decided whether the units will be sold or leased.
Marder said the value of QMW’s industrial sites keeps increasing and it has received offers for its land, but plans to move forward with development.
“We're excited to be building this type of product, as it's not so much an industrial park but a business community,” said Marder. “We're trying to incorporate more of a retail plaza feel for the industrial or business community, so we incorporated office and medical along with that industrial to help everyone feed off each other.”
Capital pool is broadening
Capital for QMW’s acquisitions and developments initially came from personal savings, as well as high-net-worth individuals and family offices that shared the company’s vision, but Werner said discussions also began with institutional investors interested in partnering on projects six months ago.
“The leverage that we're taking on these sites is very reasonable and we're not overextending ourselves,” Werner said.