124: Turning Diamond in the Rough Structures Into Iconic Kelowna Properties with Worman Commercial's Shane Worman

00:00:00 Taylor Atkinson
Welcome back to the Kelowna Real Estate Podcast. I'm your mortgage broker host, Taylor Atkinson. And I'm your commercial real estate agent host, Matt Glenn. What's happening today, Taylor? Man, what a show today. Yeah. You know, Scott Butler from High Street a couple months ago told us we should have Shane Warman on the show. Man, he has done some cool projects in town.


00:00:18 Matt Glen
I know, you just drive around. It was like, that's full building. Oh yeah, Shane's. Oh yeah, Shane did that.


00:00:22 Taylor Atkinson
And like even after the recording, yeah, you know, like B &A, yeah, we did that. It's like, what? Like, it's just like all my favorite spots. Maybe I'm just super biased, but like the barn owl that to me, like every time I'm in that place, I'm like,


00:00:35 Matt Glen
yeah, you have your annual fundraiser there. Charity event. Yeah. Did not know that he did that. Yeah. Insulated the outside just so you could have that beautiful ceiling. Yeah.


00:00:47 Taylor Atkinson
So yeah, a huge takeaway that I had was sure at the last five years. in real estate has been tough.


00:00:55 Matt Glen
Specifically for like developers, home builders, investors. Homeowners, renters. Yeah. Anybody. Yeah. Like living in a house or in property.


00:01:06 Taylor Atkinson
Yeah. But it's like his approach to it. I think we've all been asking the same question. Like, Hey, where's the opportunity? You know, is this the bottom of the market? How do you make things pencil? Like how do you figure out an investment? His approach is finding value where I think people aren't looking. you know like if you listen to the show you understand what i'm talking about but his approach isn't just about the bottom dollar it's about finding value in a you know just a completely different approach and it's obviously working for him you know and you know i think you have to be knowledgeable enough and comfortable enough to sit back and let deals pass by and say you know what no this doesn't work this isn't financially a good move it's not good for the industry it's not good for the tenant it's not good for the city and it allows him to take on projects and do something beautiful when the opportunity does present itself so I guess the point there is like you know figure out a bit of a niche be an expert in a you know one area build your knowledge on that build your experience and your reputation on that and play the long game like go do something really cool and yeah he's a perfect example of that so it was an awesome show i loved it all right let's stand to and talk so right now i'm reading this book i read it before the psychology of money and it's talking in the book about like everybody has different timetables and different strategies for themselves so like she's talking about the stock market that works for real estate too where like most homeowners are by the house they're going to live in it long term like prices are going to gradually go up but some people like speculators like he was talking about this episode when the prices start spiking up fast


00:02:13 Matt Glen
was an awesome show i loved it all right let's stand to and talk so right now i'm reading this book i read it before the psychology of money and it's talking in the book about like everybody has different timetables and different strategies for themselves so like she's talking about the stock market that works for real estate too where like most homeowners are by the house they're going to live in it long term like prices are going to gradually go up but some people like speculators like he was talking about this episode when the prices start spiking up fast speculator will buy it and quickly renovate it like a flipper or something and sell it and the prices make no sense for the long term but it doesn't matter to them because they're still making money right just because the price difference is there from way up but when you're buying for the long term you have to buy in fundamentals because you're buying in the same market that the speculators are driving up the price right so then if you're going to live in the house or buy the asset or like the commercial property if you're going to have it for a long time like You have to know about fundamentals. You can't just buy it because other people are buying the same thing because they have different goals in it. You know what I mean?


00:03:12 Taylor Atkinson
Yeah. And that's the hard part. It has been in the market, right? Because other people are still investing. So other people are still closing on those properties.


00:03:18 Matt Glen
Everybody's still buying the same property. You're in the same market. Yeah.


00:03:21 Taylor Atkinson
So he made a point where like, you know, we're talking about opportunities in the market. It's like, hey, if there's a building that pencils and it makes 4 % and you're happy with 4%, then you buy it. If it doesn't. You don't. And I guess that the external pressure that you get as an investor is like, if I don't take a bit more risk and I don't make this deal happen, I'm going to be sitting on the sidelines forever. And I think, you know, unfortunately for our industry, a lot of people have felt that pressure and a lot of people are taking on that extra risk, which just keeps to elevate the risk for everyone. right? Like if everyone's willing to say, you know what, I'm going to not cashflow for a couple of years, then the next guy is going to say, I'm okay for three years. I'm okay. I'm going to, you know, buy this property when I know that it's going to lose money, like, and that's the issue. So if, you know, we can all be a little more like Shane in that scenario, which is tough to do, but be patient, sit on the sidelines and like, go back to the fundamentals. It'll actually like help us as a collective, you know, like bring things back into balance, which I feel like we're there. I feel like we're getting close back into balance.


00:04:21 Matt Glen
balance. Yeah. I think we still have a bit to go, but we're heading in the right direction. I think the man has ever sucked with a lot of people's stress over him. So yeah, but it does feel like it's almost necessary to get back into something that's sustainable.


00:04:35 Taylor Atkinson
Yeah. You know, I think the other thing that we've talked about this on the show before is expectations, which he hit the nail on the head. So kind of the first bit of the show, you know, we talk a little bit about that, which is, is awesome. But I think what I'd like to just point out is like, he is kind of one by one giving. Kelowna a bit of a facelift like there are some really cool properties we have to try and like support these type of developers any capacity we can so you know to kind of self plug our show like we're trying to also promote you know people we think are good in the industry locally as well so you know share this show with friends hit like subscribe leave reviews youtube spotify whatever it takes like we'd love a little bit of extra support to get out there as well because it allows us to connect with you know our guests and push out their product as well so my new role as a commercial realtor like really embracing the connection aspect and then you kind of like look back and like this podcast is basically what we do right we're connecting everybody like that's how we met jane warman came on he had scott brother he told him to come on so yeah we love the support very much appreciate it we love being the connectors putting the dots together


00:05:22 Matt Glen
new role as a commercial realtor like really embracing the connection aspect and then you kind of like look back and like this podcast is basically what we do right we're connecting everybody like that's how we met jane warman came on he had scott brother he told him to come on so yeah we love the support very much appreciate it we love being the connectors putting the dots together connecting people with like other people that they need to know and yeah it really helps us too we get help from the audience with like taylor said like subscribe comment on our instagram wherever you listen to this podcast like all those things help and obviously we've been doing a great job we just won gold in the best of colonna colonna now thing which was awesome to see like huge lift for us and we'll appreciate that yeah thank you for support keep it up yeah okay well


00:06:05 Taylor Atkinson
well enjoy the show guys it's an awesome one and yeah we got many more good ones coming throughout the summer absolutely enjoy the show okay shane warman thank you for joining us on today's show how are you doing pretty good starting the reason we're here i like it where is your office shane where are you sitting right now i give you two guesses but south pendozy would be the first yeah i'm thinking in a brick building somewhere yeah well i mean there's a pretty good answer that probably


00:06:16 Taylor Atkinson
shane warman thank you for joining us on today's show how are you doing pretty good starting the reason we're


00:06:22 Shane Worman
here i like it where is your office shane where are you sitting right now i give you two guesses but south pendozy would be the first yeah


00:06:27 Taylor Atkinson
i'm thinking in a brick building somewhere yeah well i mean there's a pretty good answer that probably Yeah, no, we're on the corner of Tutton and Caleb. Well, do you want to give our listener just kind of a quick pitch? It doesn't have to be quick, actually, just who you are, where you've come from, kind of what your company is doing in Kelowna. Hi,


00:06:47 Shane Worman
my name is Shane. I'm addicted to building things. My parents moved out here actually in 1990 while I was in university and I came out one summer and went, holy crap, this place exists, right? I could go skiing in the morning, come down for water skiing in the afternoon and... I don't know, pick your sport. You could still do it on the same day. And I went, wow. So when I finished the university in Edmonton, I came out here and no idea what I was going to do. I had a business degree and thought, oh yeah, whatever. And I was really lucky. I applied for a job at Big White, got an interview, got down to one or two people and didn't get the job. And on his crop, like I'd still be working for beer and t -shirts probably if I worked up there. But yeah, I didn't get it. That meant I had to figure something else out and I was pretty crushed at the time. And so I started building houses at that. point in my career, I was probably the best educated ditch digger in Cologne because I was doing all the things that we else wanted to and putting big O around foundations. And back then we didn't have all these mechanized things. So I was moving, you know, rock around in basements in a wheelbarrow and learning to drive a bobcat that was mechanized, I guess. But yeah. And then just over the years, steadily built a building home company and was really lucky. My dad, once he finished the job he was working on here, came back to work with me for six or seven years before he retired. When he retired, we got, I won't say completely out of housing, but moved more into commercial building and then, you know, working for clients. And then in 2001 or 2002, we built our first commercial building that we kept. And so then over the years, we've always maintained kind of two sides of a business where we would work for clients. And then every now and again, we do a project for ourselves. Been a really nice mix. Met some really great people and I have a little game like the Kevin Bacon game with seven degrees of separation. And most people are within seven degrees of something we built, whether they're a tenant or, you know, we built. So it's pretty cool. It also means I'm getting old.


00:08:29 Matt Glen
You got out of the house builder game in the 90s. Did I understand that?


00:08:32 Shane Worman
No, we still build houses. We're just finishing one now. Actually, it's the first house I built in about six years. Timing happened to work. It was a client that we already knew as a tenant. So it was in our neighborhood in South Mendozy. So we said yes. We probably stopped trying to do housing intentionally 2013, 2015, somewhere in that range. Some years we wouldn't do any houses because we had bigger commercial jobs. But the way we've always built our company is we didn't try and do everything. We settled limit on what we would do. There was one point in the late nineties, I guess, where we were doing over 50 houses a year. And I hated it. I was just an administrator. All I was doing was dealing with HR issues. And so we went kind of more back to our roots and said, look, we'll have two to three crews and we'll build it. We can build. And if you want to build with us and it fits in a time slot that works for you and us, great work together. If we don't, if you're in rush, we can't help you. And so it's good. You know, it's allowed us to maintain or me and my family to maintain a really nice lifestyle. still having a life outside of work.


00:09:30 Taylor Atkinson
So did you move away from residential just because it was more of a chaotic style of business and there was demands from clients and it was not as profitable or you just enjoyed the commercial side more?


00:09:43 Shane Worman
Yeah. I mean, I think one of the things that, you know, I've been very fortunate in my career to do is I like chasing new ideas and new things and not the building house was easy, but it was always. you know what at some point was fairly cookie cutter right like i've always enjoyed the design process with customers and then you know i would hand over my team to build the design is always the fun part for me and so when we got into commercial what that allowed me to do is explore a whole other realm so even in commercial we built everything from wood frame to you know four to six story to foreign ties concrete to hambro to open web steel and you know it's probably You know, a little bit counter to what you talked about with Scott, where he's doing the same thing over and over again to get those efficiencies to scale. Yeah, we blow the dude every time because we're always trying something new.


00:10:25 Matt Glen
Probably not as worthless way to build a business, but you know. Getting a little too efficient here. You know,


00:10:30 Shane Worman
know, to your point though, I mean, we did move away from housing a little bit because we did find that the expectations of clients were getting, I mean, honestly, out of hand to the point where like, you know, I say the worst thing out there was home and garden TV. Right. You see these people and they come in and they do a reno in three weeks and it changes everything. Yeah. Yeah, sure guys. That was a nine month shoot or whatever. Right. So yeah, I think that the expectation change just made it much harder to build homes for sure. That wasn't necessarily why we got out. It was just one of the things that happened.


00:11:00 Taylor Atkinson
That's come up on this show multiple times, right? There's a ton of reasons why, you know, housing is an issue in, in Canada and BC specifically. I think expectations are like one of the top five and we're all guilty for it. You want this. beautiful house in a location with a three bay heated garage and you know and then it's like oh the cost is that much i but i only have two hundred dollars for my budget right yeah yeah yeah i mean you know one of the things that i reflect on a lot and you know i've had done a fair bit in my time with looking into affordable housing i spent a bit of time on the journey home task force for a little while and looked at that side of things and when i left floyd minster you know as a 22 year old kid my parents sold warehouse you know they had a


00:11:21 Shane Worman
i only have two hundred dollars for


00:11:22 Matt Glen
my budget right yeah


00:11:23 Shane Worman
yeah i


00:11:24 Matt Glen
yeah i mean you


00:11:24 Shane Worman
know one of the things that i reflect on a lot and you know i've had done a fair bit in my time with looking into affordable housing i spent a bit of time on the journey home task force for a little while and looked at that side of things and when i left floyd minster you know as a 22 year old kid my parents sold warehouse you know they had a Pretty big house for Lloydminster, and it was 1500 square feet. And, you know, when we moved out here, that's some of the first work we did actually was a subdivision called Ritchie Court. And we were building bi -level homes that were probably 11, 1200 square feet, including your basement ended up at 2200 square feet. Yeah. And those were considered small homes that we were doing. We did another one at the end of Gordon called Mission Hollows. And like in 1999, we were doing house and lot package for 239. And like, that's a brand new home. on a brand new lot, 50 by 120, I think they were, they were all the same size. Double car garage, unfinished basements. And yeah, we were $239 to start. And I think even an expensive one in there at the time was $299. And that's really one of the first times that I started to see clients' expectations not meet with reality. Like our whole idea with that subdivision was to say, look, we can still build a beautiful house at a reasonable price. So we were doing things like vinyl siding. The time was being really proposed. We did wood corners and wood trims around the windows. So really we were changing one thing on that house to make it less expensive. They still look great today. They look just as good as Hardy panel in my opinion. One fake product's as good as the next. But what we were having is clients that came in and they'd already stretched their budget to get into that house. And then they were mad that they couldn't have the heated floor or the brick on the fireplace behind or the solid surface countertop. Yeah. And it was really disheartening for me as a builder to say, look, do you guys realize what you're getting here? You're getting a brand new home and a brand new subdivision. Yeah. not very far from schools and you're whining because you couldn't put whatever bobble on your kitchen tap. Like you were upset about that. Yeah. Yeah. Just the fact of that reset of expectations. Right. And you know, I don't know where you guys are, but when we built our house, we made our kids share a bathroom. I know kids should have on suites. Yeah.


00:13:29 Taylor Atkinson
Yeah.


00:13:30 Shane Worman
You know, or. Kids don't need en suites. It's probably a better, right? You know, when we look at affordability as a problem, I think a lot of it comes to expectations. You know, I don't know what you guys see, but if you buy a car today, like we tried to buy a work truck. Yeah. Good luck. A work truck to us is a two door, eight foot cab. Yeah. Should be 25 ,000 bucks. You go to the Ford lot. Oh, we have these super duty, whatever, quad cabs and they're 119, but it's only so much amount. Yeah. And we actually find something that we find a used one in Alberta and bring it over for us. Cause we drive it from the job site to the hardware store and that. To the dump couple of roads. Yeah. You know, back to expectation.


00:14:10 Taylor Atkinson
I mean, how much like responsibility or the onus is on. like homeowners compared to builders compared to designers architects whatever you want to call it but like yeah the standard now is like oh yeah well you need to build a home and it has to come with you know security cameras and indoor sound system and heated floors and automatic blinds like it's so easy for a homeowner to sit there and go okay yeah i'm keeping up with the joneses but also it feel like sometimes it's presented from architects or designers like yeah this is kind of the standard package that everyone's using and like your point to the ford dealership like there aren't any baseline models like do you think we'll go back there at some point like affordability's kind of hit the peak in terms of like difficulty i think it's death by a thousand cuts right when it comes to costs


00:14:55 Shane Worman
thousand cuts right when it comes to costs I think it's also, you know, if you get married or have a kid, everybody's got an opinion on how you should do that. Yeah. And if you build a house, it's really the same. And so what happens is you get an expectation put on you and, you know, I've seen it. I've watched clients, right? Like, you know, they're going, oh, this is what I want, or this is all I can afford. And I'm going, that's great. I'm not a believer in solid surface tops because they're going to go out of fashion way sooner than a laminate will. And you're going to spend a quarter of the money on it. But you're right. If you list a house down and it doesn't have solid surface tops, oh, oh. Yeah. And yet if I said, okay, well, I can make the house $8 ,000 if I put the loan in tops, you might make a different decision. And so I think there's a bit of that pressure. There's a bit of, like I said, the home and garden TVs where everything is the way it is. There's a bit of that expectation that you should build that way. And so, I mean, it comes from all sides. You know, the problem is that some of those niceties, they'll help. But, you know, when a house is taxed like cigarettes, that's where the problem is. People or policymakers forget every time the cost of a new home goes up, who benefits? Guess what? The existing homeowners that their houses go up in price. So if you're in the market, it's a great system for you. But if you're not in the market, the way our system is set up is just awful. Yeah. Right. And, you know, look at city council. They make decisions to build things. And if they have to raise taxes to the general public, they don't do it. but if they can add a little bit to the dcc fund and we as builders can pay for it on the new houses we build guess what that's okay and i think if we started to really prioritize affordable homes and housing as a right then we need to look at how our system is delivered and come up with a different way to do yeah the conversation's still there but i don't think it's taken as seriously as it should be like you know to your point like cousin is really not in like the need column for


00:16:41 Taylor Atkinson
i don't think it's taken as seriously as it should be like you know to your point like cousin is really not in like the need column for Kelowna right it is more of like a luxury like hey what can I do to my house to make it more comfortable and you know a little bit extravagant but I guess maybe switching gears a little bit onto the commercial side it's kind of an interesting segue I'm on your website and like beautiful buildings like if anyone hasn't you know seen your buildings go into warman .ca and like You have some of the most, I would say like iconic structures in Kelowna. Like I've driven past a dozen of these and they're gorgeous. So talk about blowing the budget. I guess what's the approach on the commercial side then? It comes to an overall philosophy, I guess.


00:17:23 Shane Worman
comes to an overall philosophy, I guess. What I've always said is that in 50 or 75 years from now, when somebody wants to tear down my building to do something else, it should be cool a bunch of people stood up in front and picketed, right? Yeah.


00:17:33 SPEAKER_00
Yeah.


00:17:34 Shane Worman
That is a good way. I love that. In order to do that, you have to build something. that the neighborhood appreciates and likes, and I think stands the test of time. And a lot of what we do is really based on heritage architecture for exactly that reason, right? You know, it doesn't matter where you travel in the world, you go to see historic buildings that were built well, with detail and with interest. And, you know, we've always taken great pride in it. And I think the tenants that choose to work in our buildings, or live in our buildings, feel that sense of pride when they can enter our buildings. And so I believe that, yes, okay, I've spent a little more money building it. than I might have needed to, but hopefully that comes back. And really, you know, the number of repeat tenants we have that move from one building to another for us, you know, as they get bigger or whatever. But I also think it creates a sense of identity. I mean, how many hours a day do we all spend in our workplaces? And it's kind of fun to have something that you're proud of that you go to. That's kind of how we work towards it. And, you know, yes, I would say we spend more money than we need to for sure. But, you know, I look at the long term and if I'm owning this building for 40 or 50 years, a brick building never needs to be repainted. It doesn't need to be resided. It doesn't have, oh, that was when they were doing this kind of siding.


00:18:42 Matt Glen
You know, one of my pet peeves right now is the four by eight sheets of hardy panel that everybody's putting on buildings.


00:18:44 Shane Worman
of hardy panel that everybody's putting on buildings. What's important to me on a building is if it's supposed to be wood, it's going to be wood. I go down quite a few spots with the city over the years because the city has a design guideline that I picked on for years. And it says something to the effect of buildings will use natural materials wherever possible. Things like hardy panel. And I can't remember the other things. And I'm sort of like, okay, just a minute. You found this cement board made to look like wood. Oh, sorry. And actually it goes on to say that stucco should not be used. And if you'll notice a lot of what we do is brick and stucco. Stucco is one of the most widely used forms around the world to finish buildings. The Romans used stucco to make buildings look like they were marble. The Italians are famous for it. A mud hut in Africa is built out of... It's usually a mixture of dung and mud. I actually watched the Les Mieux and she invited me over to scomp in it with her. And I fought that for a lot of years because I think done right, it's good and it's a better and longer lasting material. It's made of cement and natural materials that are actually natural. But the city was backlashing against the 90s pink stucco. You guys are... Probably too young to remember when those were all the rage, but that was one of my first houses. That's the house I grew up in. Yeah, they're still there. Yeah. Don't get me wrong. Because they haven't had to be replaced. Because the stucco held up so well. Those are the same houses that had like rounded drywall corners. Yeah, exactly. That's the ones. That's when I started my building career, man. I was good at building. Yeah. So, you know, I think when it comes to buildings, I think that's just what's important to us, right? It's just, it's building something that looks real and authentic. And I think, you know, when you do that, hopefully over time, when you do enough of a mass of them, people notice and respect it. And you know,


00:20:24 Matt Glen
know, the compliment you paid at the start, it makes me very proud that we've done something well.


00:20:26 Taylor Atkinson
proud that we've done something well. Yeah. Well, I mean, I drive through South Pan -Nose every day and I'm like, these buildings are beautiful. And then here I'm looking at your website being like, Hey, I know that building.


00:20:37 Shane Worman
I've been in that. It's funny because a couple of things happen. One is when I build a building that isn't brick, people don't realize it's ours. or when somebody else builds one in brick, they think it's ours. You corner the brick market. I'm really excited. One of the ones that we've just done, it's actually for a client, but the new one we're doing at the old United Church on Pandozzi, it's got these big arches and it was pretty cool. We had, we had the footings done Monday morning last week. We stood up with precast walls and by Wednesday we had all the walls standing.


00:20:58 Taylor Atkinson
Okay.


00:20:59 Shane Worman
I drove past that in the morning and came back in the afternoon.


00:21:00 Taylor Atkinson
morning and


00:21:01 Shane Worman
in the afternoon. I'm like, wow, that went up incredibly fast. So you're building that. That is cool. And we got another one coming to the side of the same process in I think a week and a half. They'll start on Monday and by the end of the week, we'll have a building stack. And you're, you're building that for a client or is that yours to keep? That's a building for a client. So that's a family we've worked with for years in town and several projects for, and yeah, they've had that site actually since the United Truth sold it.


00:21:23 Taylor Atkinson
Amazing.


00:21:24 Shane Worman
And I mean, the precast stuff goes up.


00:21:24 Taylor Atkinson
stuff goes up. Like incredibly fast, I guess. Why are more builders not taking the same approach? Like, obviously you're finding an opportunity in the market to provide like beautiful structures. Precast comes incredibly quickly, efficiently. Like how have you found opportunities where I'm not saying nobody else is doing this, but it seems like you've kind of cornered the market. Like what are the opportunities you're finding here? I think we just get more credit for it than others. Well, because of the podcast, obviously now we'll go through.


00:21:52 Shane Worman
go through. Yes. Thank you.


00:21:55 Shane Worman
So again, back to what is normally done. And so one of the things that's really cool, like our very first commercial building actually was the building at spa used to be quality greens. Now it's a spa and has T bones and cobs. So that was our very first building and that's a precast building. And when we did a retail building with canopies on it in precast, like the precast guys didn't even think we could do it. Yeah. And so I've been very lucky to work with a local company, advanced precast now for. 25 years. It's kind of fun, actually, because now I'm dealing with the sun and my son's coming into the business. So we're going to make those two work going forward. But we've always been able to kind of push the envelope with what they can do. And like they're scratching their heads over these arches. Like if you see these arches, they're across the front, like especially with raw concrete and especially that they built them and put them up in three pieces, like the farming and the workmanship that went into them is really incredible for me. I just love it. And they're like, never again, Shane, don't do that to us ever again. You got two weeks off. I know they'll say, but I really like using things that people haven't used it in a way that hasn't been used. And it's really, again, that's back to that exploration and fun. I know they'll walk away being very proud of that building and it will probably be the only one they'll ever do like that. And maybe we spent more money than we needed to on it. But again, I just think it's cool and interesting and it will be a landmark building in my opinion. It's a single story commercial building. We could have built out a wood and concrete block.


00:23:11 Matt Glen
What's the vision process like? Do you like find a piece of land that you like and then make a plan or you think what the community wants and then go do that? How do these things come up? You know,


00:23:19 Shane Worman
everything for me starts with a piece of sketch paper. Yeah. So, you know, I just start noodling. So for that arch building, I have a paper that's probably twice that long. And, you know, I basically drew about 18 to 20 different shapes, basically, on that sort of size of what the building needed to be. ended up on the one that i liked and you sort of refine it and then you get to a point where it's like okay i got it you know i'll start with an idea board a little bit of images yeah and most of the time i don't go for images of buildings i go for details yeah and so you know someday when you walk around that site with that arch building look at the finer details and it's really quite interesting because you know we built the precast panel we're going to cover most of it in brick ironically yeah but you know there's a detail at the bottom that holds the brick that's concrete then the arch that comes out is another detail on the arches deeper it's not even with it right it sticks forward and you know the windows will look quite recessed because the depth we've created out of that and all of those things for me are what makes a building unique and interesting yeah my family and i have done a lot of traveling over the years we travel generally by bicycle i think that's something like 65 000 kilometers or something that we've ridden around the world traveling Cool. We've ridden through most major cities in Europe and around the world. And, and I just spend a lot of time looking at buildings and details on our family photos. When you get home, it's like, okay, there's a, oh, here's six buildings. Again, that comes back to the fun. That's the part that drives me is coming up with those ideas. It seems obvious now that you say that,


00:24:45 Taylor Atkinson
now that you say that, because there might've been like a Castanet article with you in it, but did you do, it's across from like Water Street by the park. Is it Ford Salon? Is that a property you wrote? Yeah. Do you own that lease it out? Or did you do that for a client? Okay. Cause like you look at buildings like that and again, you know, anyone that knows the area, you probably drive by that. And for years you're like, wow, like such a great location. So run down. And then boom, within a few months, you're like, that is such a beautiful building. Like who is kind of behind it, but you are really like, you're finding these. Diamonds in the rough, maybe like the facelift that's going on within Kelowna is awesome. I guess, what is your vision for Kelowna? Like, do you feel like it's more powerful, like having kind of that diversity, like these little standout buildings?


00:25:35 Shane Worman
I mean, I think, you know, one of the things that I do when I look at a site may be different. So we operate on our own. You know, I don't have partners or JVs or other people's money that I have to work with. So I have a lot less pressure on me to a, keep the machine alive and moving. I have the ability to do things that aren't necessarily maximizing the density or the profit on the site.


00:25:57 Shane Worman
the density or the profit on the site. And so, you know, the challenge in today and the last five to seven years have been a really good example. Like we've hardly bought it. We've done a couple of new land deals over the past seven years because people were just spending way too much money on the buildings and everybody got into it, right? It's like, if I'm buying Nortel stock, it's too late. Because I'm so far out the line to understand how that works. You can really see that now. You guys don't realize the answer really well. You know, all these amalgamations for sale. And, you know, people were paying a million dollars a lot or a million two for these lots because there was this development potential. You could build six stories. And did anyone do the math on whether that worked once you got the land? Because I can tell you, you wouldn't have paid a million two a lot. You wouldn't have paid 600 a lot. You did the math and played it all out. I have this one realtor in particular that keeps bringing ideas to me. And I finally sat down with him and I said, look, I'm not a speculator. I'm an investor. And he brought me a deal once and he's like, oh, you should buy this land. But it doesn't make any sense. I've done the math. He's sending my spreadsheet, man. It's perfect. There's like $700 a square foot profit. Okay. So he had the sales price at a thousand and the build price at 300. Okay. Well, I could build a spreadsheet that looks like that too, but it's not reality. Yeah.


00:27:13 Shane Worman
So, you know, I think part of what we've done, and so 310 Leon is a perfect example. It sat vacant for what, 15 years? Like a crazy amount of time. Yeah. Nobody went inside. And I went inside that building and it was built with board form concrete. So board form concrete is back in the old days when they poured concrete, they used like one by four boards as the form. So when you peel it off, it shows all the wood patterns. Great. And it was 14, 15 foot ceilings inside, all covered, of course, with a drop T bar ceiling from the eighties. Right. I started poker and this face inside is amazing. So we went ahead and made the deal on the land. When we took the stucco off the outside, I'm really, really wanted to save the board form concrete on the outside. The challenge was, is that the stucco stuck to the concrete and to get it off, we had to wreck it. So what we did was the best second thing we could do, which is we put insulation on the outside, stuccoed it, which is fairly plain, but inside we've been able to maintain the board form. And so inside you can actually still see the old building that's there. And it's sort of something we did similar at the Barnell Brewery down in the Michener.


00:28:25 Taylor Atkinson
Oh, you did Barnell too.


00:28:26 Shane Worman
Yeah. So Barnell was a really fun project. Got my name and Derek Edstrom who works for the city. He was in the real estate department. He took me out to the site and he's like, Jane, we've got this problem. We've got these two heritage buildings. We don't have any money to do anything with. What do you got? And so through a really fun collaborative process, you know, we came up with what we'd ended up doing there. I said, well, I can do this. I'll fix the buildings up and, but I need to get, you know, in order to make a living at it, I need to be able to add more spare footage. And so we saved the old house, we saved the old barn and then we built it, but a new commercial behind it. But the really fun part about the barn that I really had to fight for, if you've been inside Barnum, you know what the ceiling looks like, right? It's called a gambrel ceiling. It's the old inside of the barn. It's stunning. But even when I met with the heritage consultants initially. In order to do that and keep the inside visible, we had to add insulation on the outside of the roof and then put the shippers on. The heritage consultant didn't want me to do it because it changed the thickness of the fascia board on the outside of the building. So the fascia board is the part of the E where you see the gable end kind of thing. Otherwise, what I would have had to do is put the insulation on the inside and cover all that beautiful ceiling. And so, you know, I like to think that we kind of look for those, you know, those are two heritage examples, but. I look for those nuggets or what's interesting or salvageable and not just store everything in the garbage. You know, I struggle when the city is going to say, we're building a new Parkinson's wreck. So we're going to tear down the whole building. Yeah. That's value. Okay. The pool doesn't work anymore. Fill the pool in. Right. Fix the roof. The structure to me of that building is still sound. And I, you know, love to see them go, Hey, we've got a homeless issue. Let's rent it to those guys. You know, like, like there's just so many other ways you can repurpose things. Yeah. But it's not highest and best use a lot of times. And so you have to be willing to give something up. So if you want to, you know, like we are giving up that 310 Leon site, right? We could have built 24 stories there. Yeah. Yeah. We really couldn't. It's a 60 foot wide lot. Come on, where am I going to park it?


00:30:14 Taylor Atkinson
am I going to park it? It's such a cool approach. Like, I mean, yes, we do our like a Christmas charity party at a Barn Owl every year. And honestly, I don't know how many times I've looked at the ceiling and I'm like, I wonder how they did that. Did they insulate the outside? And I just never really gave it much more thought than that. So very, very cool to me. Yeah.


00:30:34 Taylor Atkinson
And then, I mean, yeah, something you've raised there is like, it screams to me. I'm sure there's obviously valid reasons and I don't think through any of this, but I look at Costco, right? They built the new Costco building. Literally to me, it seems the exact same and they tore down the old one and I'm like, way better parking spots. Just like some of that stuff to me seems absurd. I guess your knowledge is where, I don't want to say the profit margin is, but if you can approach it and seize value where other people can. Like that's maybe how you're making some of these work.


00:31:04 Shane Worman
You know, one of the nicest compliments, again, that people can say to me is, you know, they combine and they go afterwards and they go, I wish I'd have thought of that. I love that.


00:31:10 Matt Glen
love that.


00:31:11 Shane Worman
The old Ford garage is a really good example of that, right? Is it sat on the market for several years and, you know, you had the BMW dealership, you had the Ford dealership and you had the Honda dealership and then the massive dealership, whatever. So everybody was looking at it as a car dealership. And when you did the math on what they were asking, it didn't work. and i looked at it and went oh i got an 18 000 square foot building and three acres of land and so you know we said hell with cars let's put up a new building in the front and salvage this building in the back you know we added a lot of density within our city without changing the street or road that's also part of the philosophy which is the more efficient we can be at doing things the better as well so yeah i mean something you said before that resonates with me is you know in the last


00:31:37 Matt Glen
in the back you


00:31:37 Shane Worman
know we added a lot of density within our city without changing the street or road that's also part of the philosophy which is the more efficient we can be at doing things the better as well so


00:31:48 Taylor Atkinson
i mean something you said before that resonates with me is you know in the last five, six, seven years. I've personally like been really struggling with investments in terms of real estate. You're like, it doesn't pencil. It doesn't make sense. You know, I have to look at myself being like, okay, am I just being ultra cynical at this point? Am I like, you know, 10 years ago, I could really make any investment. And it was like, oh, this just works. I analyzed myself a lot. I'm like, did I just not know enough back then where I was just taking the risks and I was being profitable and I need to kind of get back to the basics of just, you know, getting out there and making offers and analyzing things. But I haven't been able to, cause none of it makes sense. Even the, you know, the middle -class housing and the fast track program and the MLI select on a 50 year M I'm like, it still doesn't pencil to me. I like, but how are people doing it? Like I'm a little bit paralyzed being like, okay, on one side of me, there's obviously people that are still doing this successfully. You know, why can't I do it? But you know, if someone like you is also taking a backseat to it and, you know, taking a completely different approach than other people. Like maybe that's the room for opportunity. I think it's a bit back to what we talked about before with housing,


00:32:53 Shane Worman
think it's a bit back to what we talked about before with housing, right? Which is everybody starts talking about it and thinks it's the right way to do it. It's amazing to me. I hear people that, you know, I hear really bad stories about the builder they used to build their house. And yet I'll be out in public with them and they'll start recommending their builder. So I think that safe, right? And so I think it's like real estate, right? I mean, you know, we had a guy in our world, you know, he'd come to me and say, oh man, you know, I should do this. Okay. You know, maybe you should. It's like, yeah, I go to soccer and I talk to this guy at soccer and he's building a spec houses and he makes them whatever. And he hardly works. Oh, it looks really good. Okay, sure it will. Until it doesn't. I mean, I've been saying it for probably seven years and maybe even longer, 2018, 2019. It's just saying that the fundamentals are wrong. And when somebody that works here and makes a decent living can't afford to buy a home here, something eventually has to give. And I think, you know, the whole COVID and all the extra money that came into the economy through the government at that point in time. extended it for a couple of years, you know, we can see it snapped, right? It's broken. And most people in the industry, you guys too, weren't here in 08. And you certainly weren't here in 2003 or 98. And, you know, as good as I probably look, I was here for all of those. You keep looking on the first part. And I think people have forgotten that there is always this major correction. It happens because of momentum. When everybody is doing something, we all want to do it. And it's hard to say no when it's not so you know just what you're saying which is when all your friends are buying houses and flipping them to a year later and making a buck you're going to see them those are some of those guys that were so smart they bought one and they flipped it they bought two and they flipped it now they bought three and oh they can't sell it and now they're sitting on you know real estate they paid 3 .6 million dollars for that's worth 1 .8


00:34:36 Matt Glen
know real


00:34:36 Shane Worman
estate they paid 3 .6 million dollars for that's worth 1 .8 So it's why there's all these signs around town. And, you know, in fact, what I said before, the math doesn't work. Bigger problem I think we have now in the scope of the market is that when I first started, especially land costs was probably 30 to 40 % of a deal.


00:34:51 Matt Glen
probably 30 to 40 % of a deal.


00:34:54 Shane Worman
Taxes are now 30 to 40 % of a deal. And I'm talking municipal and DCCs and PST and GST and all of these things. And the land has come down to being in the 10 or 15 % range. So even if I could buy the land at half the price it used to be. Yeah. It's still doesn't pencil because it's still not enough to get a margin. Like, you know, we're not, when it was 30 % and the price could come down to 15%, you know, oh, it was 15 % margin. Great. I can move that project. Yeah. But if it's tight and you're going from, you know, four or 5 % to 12, it's still not enough to move anything.


00:35:28 Taylor Atkinson
So Chris, the ball, obviously you've seen, you know, the market, you've seen that cycle. Where do you think we are right now? Like, do you think. you know, we're, we're in the bottom. Do you think we still have further to go? Obviously, you know, geographically, we just want to kind of focus on Kelowna kind of single family houses. Like we can stay away from condos probably cause they're getting crushed, but like, what would you do as an investor? Like in opportunity in the next five years, where do you see the market going?


00:35:55 Shane Worman
So again, invest your money. Don't speculate. Yeah. So, you know, if you can look at a deal and you can make a 4 % return on it, and you're happy with that 4 % return, because it's still more than you're going to get if you put it in a GAC, go for it. But if the only reason you're buying it is because you expect it to earn and change in value over the next few years, then you're doing it for the wrong reason, in my opinion. Are you going to buy SpaceX stock when it comes out? Or are you going to buy the TD Bank? Right? The TD Bank has a history of paying dividends and... going up over time. SpaceX would be like this, and then it'll do, you know, like, again, it's momentum, it's hype, it's all of this stuff. And I think it was our hype. It really was. I went to a presentation by an economist not so long ago, a month or two ago, and I thought he had a really good chart, and he showed the top coming in. It was 2022, 2023. You know, he was saying that, you know, it was really a combination of mass immigration. We got really low interest rates and we got all the COVID money. And when all of that changed, you know, we've debt. I don't know where the bottom is. I still believe that, again, the hype over the last seven years, especially when you talk about the condos and those bigger projects, has been driven by fees. And so what I mean there is it's driven by developer fees, builder fees, real estate fees, mortgage broker fees, all of those things to keep the engine flowing. And people were putting money into real estate like it was. Never going to be a problem. And when that money stopped blowing in, there's been a reckoning on all those projects. And, you know, you've got funds that have stopped not only disbursements, but you can't even get your money out anymore. It's because they're not liquid enough. They don't have cash flow. They were never investing, they were speculating. So where does that come? I don't know. I mean, it'll be interesting to see. You know, I've had several conversations with bankers lately and I've just said, how come you guys aren't taking more projects back? We don't want them. As long as they can keep feeding us the interest only. We'll keep the finance place because otherwise, what are we going to do with them? Right? We don't want those empty units any more than they do. At least the story we're making. Where does it come back? I think it comes back. We do need a correction. And I don't think billing costs are going to come down enough. Plywood costs with plywood. I mean, I guess it's somewhat cyclical, but in pipe costs with pipe costs, installation costs, wages are probably going to go down substantially. We'll get a bit of a drop because people will be more competitive in bidding. Sorry, back to the economist. What he said that I thought was really smart and interesting is that basically when you have a cycle is you basically have to wait for wages and inflation to catch back up with what things cost. And so... What does that look like? And he put on the, the OE recession. He put on one in Calgary and I can't remember the nineties, I think, and someone in Ontario from the nineties too, I think. And you know, those cycles were between seven and 12 years. So it got back to where it was. And so, you know, if it was 2022, are we in year four of that? I don't know. We in year three of that. The beauty is Kelowna has always been slightly isolated from that. Right. We're still a good place to live, but I'm a framer or a nurse or. whatever working in telona and i got to spend a million two on a house i can go back to calgary medicine had or left bridge or red deer and buy the same house for 350 000 and make exactly the same money it's too high a price to pay to live here right we've always had that sunshine tax piece but yeah so i think the sunshine tax spread needs to come down before we get that massive well you know selfishly the next barn owl or you know any property you're going to walk through and taking a different approach


00:39:18 Taylor Atkinson
you know selfishly the next barn owl or you know any property you're going to walk through and taking a different approach yeah give us a heads up we'd love to like it is very cool what you're doing to some of these buildings so you know as a consumer of craft beer and uh you know i'm not getting my hair cut or anything but like yeah i uh i appreciate what you're doing to the city so thank you and we'll leave the charge for the crying folks in front of any building that's getting torn down we'll bring the kids too okay well thanks so much for coming on shame we appreciate it man and we'd love to have you back on when you're breaking ground on the next building


00:39:30 Matt Glen
as a consumer of craft beer and


00:39:33 Taylor Atkinson
uh you know i'm not getting my hair cut or anything but like yeah


00:39:35 Matt Glen
i uh i appreciate


00:39:36 Taylor Atkinson
what you're doing to the city so thank


00:39:38 Matt Glen
you and we'll leave the charge for the crying


00:39:40 Taylor Atkinson
folks in front of any building that's getting torn down we'll bring the kids too okay well thanks so much for coming on shame we appreciate it man and we'd love to have you back on when you're breaking ground on the next building