I think a follow-up to Friday’s blog is warranted for a couple of reasons.
First of all, there’s just so much more to say. What I wrote on Friday barely scratched the surface, and having re-read it, I realized there are some very important items that were left out.
Second of all, there’s a lingering question along the lines of, “How did things get this bad?”
How did we get to this point? How was Urbancorp able to operate for so long, with such terrible customer service, delivering such an awful product? Indulge me for a moment, and allow me to compare it to the Toronto Maple Leafs…
I promise this analogy is going somewhere…
The Toronto Maple Leafs, as things stand right now, are in 30th place out of 30 teams in the National Hockey League, but their future is bright.
They have young talent, a slew of stockpiled draft picks, the inside-track on a number of sought-after free agents, and they are in position to build an exceptionally-strong base that could see them become a powerful National Hockey League team within the next 3-4 years.
A is a complete 180 from where they were a decade ago.
It’s my contention that from 2004 to 2015, the Toronto Maple Leafs organization had no interest in building for the long-term. They had no interest in building a Stanley Cup winning team.
Their interest, as is incredibly evident by their style of management, and their results as we look back, was short-term at best.
Their interest was continuing the status quo, selling out the arena, reaping the rewards of over-priced concessions and top merchandise-sales, and maybe, just maybe, one or two rounds of playoff revenue.
In March of 2003, the Toronto Maple Leafs sacrificed a large part of their future by trading budding 20-year-old star Brad Boyes, and a 1st round draft pick, to the San Jose Sharks for 30-year-old veteran Owen Nolan.
I was a big fan of the move at the time.
In the previous season, 2001-02, the Leafs narrowly missed a Stanley Cup birth – losing to the Carolina Hurricanes in a 6-game series, and I, along with most of Toronto, felt they would build upon that season.
But after acquiring Owen Nolan (not to mention Glen Wesley for a 2nd round pick…) in March of 2003, the Leafs lost a heart-breaker to the Philadelphia Flyers in game-seven, in overtime.
In 2003-04, the Leafs sacrificed their future once again, and this time, I didn’t feel quite as confident, but I went with it. They traded 1st and 2nd round picks for Brian Leetch (who would play less than 15 games for them…), and once again, they bowed out in the playoffs to the Philadelphia Flyers.
That was the end of hockey for a while.
The NHL lockout came in 2004-05 and wiped away the season, and I, as not just a hockey fan, but an astute observer of the game, recognized that it was time for the Toronto Maple Leafs to change course.
The fun had come to an end. The Leafs were aging, their best years were behind them, they had traded away all their prospects and their draft picks, and it was time to rebuild.
I was an avid fan, and I would have stood by and supported them during the rebuild.
It was the only logical option, given the state of the franchise, and I had no doubt that was the direction they would take.
But I was wrong.
Amazingly, the Leafs did not elect to rebuild, but rather they spent the next ten years making bizarre, illogical, thoughtless moves, with no real plan, and no real view of the future.
They signed 39-year-old goalie, Ed Belfour, right before the lockout, even though no other team was signing players, since there was no financial certainty in the league.
Two years later, after buying out the last year of Ed Belfour’s terrible contract, they traded their only viable prospect, goalie Tuukka Rask (who has since won a Vezina trophy), for Andrew Raycroft.
One year later; one year, they traded 1st and 2nd round picks for goalie Vesa Toskala, and acted like the Andrew Raycroft deal was a big “oops,” and 1st round picks grew on trees.
I couldn’t believe what I was watching.
The Leafs were only interested in putting a mediocre team on the ice, continuing the status quo, and had no desire to put an action plan in place.
They seemed to lack any self-respect as a franchise, as any respectable franchise would see the ultimate goal of the sport: winning the Stanley Cup.
They eventually brought in loud-mouthed G.M. Brian Burke, which made headlines, got fans riled up, and sold tickets. But even Burke (although we don’t know if his hand was forced by ownership) refused to rebuild, and infamously traded not one, but TWO 1st round picks, and a 2nd, for Phil Kessel – a player his own Boston Bruins team hated, and without whom those same Bruins would go on to win the Stanley Cup only one year after the trade.
Brian Burke did try a “small” rebuild, moving out some players for draft picks, but you can’t build for the future AND win at the same time.
What good was trading a veteran for a 1st round pick when you sign oft-injured Joffrey Lupul to a 5-year contract, 8-games into a season; a season in which he would miss 66 of 82 games?
Nothing made any sense at all.
In fact, it wasn’t until Brian Burke was fired by the new owners, Bell & Rogers, and David Nonis was subsequently fired, that an actual, viable, identifiable PLAN for the future was put into place.
In 2015, the decade-overdue rebuild of the Toronto Maple Leafs began.
And why did it begin?
Not because it was the right thing to do, not because it was in the best interest of the fans, and not because the franchise was embarrassed, but rather because for the first time, the franchise was losing brand value, losing fans, losing support, and the odd game wasn’t a sell-out.
Fans flocked to TFC, the Raptors, and last year to the Blue Jays.
And it was obvious to the owners of the Toronto Maple Leafs that you couldn’t just serve up the same group of players who clearly didn’t care if they won or lost (which is worse than the guys who did want to win in 2005-2008, but were to old and incapable to do so…), and expect fans to pay the highest ticket prices in the league.
The Leafs rebuilt not because it was time, but because it was necessary.
They rebuilt because the consumer stood up, and said “no.”
Had the consumer not said “no,” and had the consumer continued to blindly support a pathetic, fledgling franchise that sought to take advantage of naive, unintelligent, unsuspecting fans, the Leafs probably never would have changed.
Thank you for indulging me, and my rant about sports on this real estate blog.
But the parallel, in case you don’t see it, is obvious.
Over the last decade, Urbancorp, and many other Toronto condominium developers, have screwed consumers over and over, and not only did they get away with it, but consumers actually lined up to be taken advantage of.
Go back to the time the Toronto Maple Leafs were in the Conference Finals – 2001-02. It was easy to make money, as an investor, buying pre-construction condos. You could throw a dart at a board to pick a property, and you’d make six-figures.
Developers were giving a discount to consumers, as an incentive for those consumers to take on not only the risk of a pre-construction project, but the time involved. Those consumers had to wait three years for the delivery of the product, and thus the only way to attract those consumers was to give a discount.
1-bed, 1-bath for $250,000, available today, close in 30 days, in a 9-year-old condo.
Or, 1-bed, 1-bath for $199,000, available in three years, once the building is finished, in a brand-new condo.
Many consumers opted for the latter, and that’s how condominiums were sold.
Over the next few years, the incentives and the discounts shrank, the quality of the product diminished, and stakes became higher.
It was only natural, of course.
More and more people lined up to buy pre-construction condos, and developers noticed. They didn’t really need to put a great product out there, or incentivize people.
It was easy. And it got easier and easier as the decade came to a close.
Some developers, like Urbancorp, had no interest whatsoever in building for the long-term.
They were after short-term gains, and they took them in, big time.
Developers like Tridel, focused on the long-term, by striving to have the best customer-service in the business (which they do), and by focusing on customer satisfaction, repeat business, loyalty, and rave reviews of their product.
Developers like Urbancorp looked for the quickest way to the nearest dollar, and had no interest in satisfying the customer.
I’ve seen buildings completed by dozens of developers. Urbancorp builds, without question, the worst product out there.
But their customer service, or lack of anything resembling it, makes their poor-quality product seem insignificant by comparison.
I wish the iPhone voice-recorder was around back in 2009 when the construction manager at 150 Sudbury yelled, “F your mother, F your mother, F your mother” at me over and over, as I told him how dissatisfied I was with the condo they had “finished” for me. I went down to ask them to replace the sliding glass doors in the hall closet of my unit, which didn’t fit, and which they had leaned against the wall in this “finished” condo.
They laughed in my face. A group of them.
This is how they dealt with any complaint in the building, from anybody. People basically stopped complaining, and just accepted what was given to them.
Nobody ever stood up and said “no.”
And naive buyers lined up, sometimes overnight, to buy into the next Urbancorp project.
This happened again and again, at every Urbancorp building.
38 Joe Shuster Way made 150 Sudbury Ave look like a pleasant dream.
And despite the complaints, despite the online reviews, despite the knowledge of real estate professionals, buyers still lined up to buy Urbancorp condos.
Urbancorp didn’t need to change their ways. They were building a poor-quality product, they could change contracts as they saw fit with no fear of repercussion, and they could beat up their clients, and ignore their concerns, and people STILL bought their product.
Why would they change their ways?
When Urbancorp wasn’t making as much money as they wanted or needed on the first iteration of 150 Sudbury Street, they simply took all those condos, with 10-foot ceilings, made them 8-foot, and added several “new” floors of units.
They told buyers, “We don’t believe the 10-foot versus 8-foot ceilings constitutes a material change,” and left it up to the buyer to sue them (a classic move by developers). But as is always the case, 99.9% of buyers just rolled over and took it, and Urbancorp went on their merry way.
Urbancorp has done so many shady things, or is rumoured to have, that you have to pick a highlight reel in the interest of time…
Apparently Urbancorp didn’t seek registration of 150 Sudbury Ave as a condominium corporation for almost twelve months after they gave occupancy to buyers. Why would they do that? Well, they had a lot of other pre-construction condos to sell, and one might suggest that if 150 Sudbury was registered, then resale units would flood the market, and sales at Urbancorp’s neighbouring buildings might be a bit sluggish as a result…
Or how about the apparent interest that principals of Urbancorp, and their 17 subsidiary companies, have in Kareg Leasing – the company who installs HVAC units in Urbancorp’s condos, and charges owners $80 to $120 per month?
Imagine buying a condo from Urbancorp, on an Agreement that doesn’t mention leased equipment (somewhere in the fine print, I’m sure it mentions what it needs to in respect to future potential leasing), and then closing on the condo and finding out you pay $120 per month to lease a heat pump that in most other condos, would be owned by the condo corporation.
Imagine if somebody at that company was involved with somebody at Urbancorp.
Wow. Wouldn’t that be something.
Folks, these stories are a dime a dozen.
Urbancorp did so many things wrong (actually, nothing was wrong since the Condo Act gives them full authority to do so) that I don’t have the time or the wherewithal to detail them all.
But the more they did wrong, and the more they screwed buyers, the more buyers lined up to say, “Thank you, sir, may I have another?”
Just as the Toronto Maple Leafs aspired to sell-out the arena and maybe get 3-4 rounds of playoff gate revenues, with no aspirations of building a Stanley Cup caliber team in the future, Urbancorp took and took and took from buyers, without any fear of their non-existent customer service and miserable product eventually impacting their business.
Well, it finally caught up with both of them.
Only the Leafs have enough goodwill to make amends, and we’re seeing that play out as the 2015-16 season comes to a close, and there’s “excitement” about the future.
For Urbancorp, that pig is pooched.
They’re finished, whether they acknowledge it or not, although there’s nothing to stop the principals from staring a new company, with a new name.
Whether or not TARION does, indeed, revoke their registration, I can’t imagine any rational person buying a condo from Urbancorp. If they do, then they deserve what they get.
But as to the question “how did this happen?” there’s your answer, via my somewhat lengthy but on-point analogy to the Toronto Maple Leafs.
How did Urbancorp do what they did, for so long?
Because people let them.
The post Urbancorp: How Did This Happen? appeared first on Toronto Real Estate Property Sales & Investments | Toronto Realty Blog by David Fleming.