Borrower Perspectives Revisited: Louis Lawen, The Lawen Group
Louis Lawen oversees Dexel Developments, the development, design and construction side of The Lawen Group business. An esteemed player in the Halifax real estate market, The Lawen Group also includes Paramount Management, which owns and operates apartment properties. Dexel develops, designs and constructs mixed use, urban, multi-unit buildings, which are entirely owned by the Lawen family.
We first spoke with Louis in 2017 about the Halifax market, where he saw opportunities and why First National’s relationship focus was so vital to his business. Two years later, Louis shares insights on Halifax’s tremendous growth, project updates, business goals and what he values most about his 5-year relationship with First National.
Q: What has changed most in your industry and business since we last spoke in 2017?
LL: Halifax has seen double its typical growth in the past year, which has had a huge impact on the ground. Double the people means double the demand for new housing. A lot of buildings have gone up, owners have been achieving higher rents, the properties have been filling quite quickly and vacancy is very low. The city’s growth has outpaced the development growth. I don’t think anybody expected those types of numbers. Immigration certainly played a part. But so did the affordability squeeze in other markets across the country, which means that people start to look eastward for opportunity.
The city has also matured significantly. New retail is popping up on once stagnant streets, which attracts people and is changing the small town feel. In addition, we are also seeing an increase in construction costs. However, the rise in average rents is offsetting those costs. In certain projects, average rents are up close to 30 per cent. Purpose-built rental is an excellent opportunity currently, with buildings renting more quickly than they did in the past.
Q: What are your business goals and what types of opportunities are you pursuing?
LL: Our average project is approximately five years of planning. Since we last spoke, we’ve had three out of four projects approved – one eight-story building, one 15-story building and two 30-story towers on Spring Garden Road. With the Spring Garden project, there was intensive public participation and engagement, and it marks a big win for the city and for us. We also have a major project in the ground now. Construction on that 22-story property will commence in January.
We have always and will continue to focus on good locations. As the city grows and becomes denser, location becomes more important than ever. For example, we are very excited about the Dennis Building, which is an old heritage property in the middle of downtown between City Hall and Province House. This fall, we plan to apply to the Halifax Regional Municipality for a development permit and proceed through the entitlement process for approval.
Strategically, we are investing a lot of time and effort into our partnerships. We work very closely with some of the best consultants, suppliers and contractors in the business. We plan on continuing to refine that process and evolving our already strong relationships. As the city grows, competition is intensifying. Our product demands attention, and as our projects become larger, more complex and more sophisticated, our partnerships become even more critical. If you want to consistently raise the bar on the quality of your product, you need qualified people to help you deliver on your vision.
Q: How is First National supporting you in your goals beyond financing?
LL: Our main business is multi-unit residential, so everything that we do is CMHC insured. First National is undisputedly the leader in CMHC. The company’s experience across the country and its understanding of trends help us to improve our end product. First National is also on the ground here in Halifax, so we have that vital extra set of eyes and receive insightful advice about our end product and the market in general.
In our business, time is of the essence. First National’s accuracy in diligence and quick responses to our questions help us be more nimble. I also appreciate the product innovation and the willingness to take smart risks. In working through deals, First National does sometimes suggest financing alternatives. We are always confident that those alternatives are proven and sound. Working with First National, we are able to achieve our goals, mitigate risk and reduce our financing costs.
The professionals behind the scenes that analyze the numbers are accurate and knowledgeable. They are extremely good at what they do. We obviously understand our own financials, and we can have educated discussions with First National. Investors know that the analysis is solid as well, which helps us in securing competitive rates and loan to value.
Q: What do you value most about your relationship with Jody?
LL: We work very closely with both Jody and Jeremy. With both of them, there is a deep level of trust almost instantly after one meeting. They are hard working and bring a level of trustworthiness that is just innate to their personalities and character. Over time and many discussions, their advice has always been clear and precise. And the caring that they have for me, my team and my business is genuine. There have been times when Jody has said no to a deal, but still offered advice on it. That type of integrity reflects the overall company culture.
Q: What do you believe motivates First National within your relationship?
LL: Passion. The people that I deal with love what they do and are passionate about the service they provide. If you love what you do and do it well, success inevitably follows. We have a 5-year relationship with First National at this point. Without fail, there are certain people at First National that I meet repeatedly who are more excited to see me than the time before.
I also think that consistency is a significant factor. There is no company more consistent than First National. People there don’t move around much. So as we grow and change, we can rely on the precedent of knowledge that First National has about our business. First National has seen every deal and has grown with us, so we don’t need to explain our evolution. Jody and Jeremy know how we’ve gotten to this point and understand what motivates our vision. The enduring nature of our relationship definitely strengthens our confidence in it and our desire to keep fostering it.