Ivanhoé Cambridge

Regional synergies are one of the strengths of the approach to retail, mixed-use and office development and acquisitions that is practiced by Ivanhoé Cambridge. “We’re very focused on building upon the established platforms that we have,” Executive Vice President of Development Paul Gleeson emphasizes. “By platform, I mean you successfully have all the disciplines associated with real estate.”

These include development, legal, leasing and operations management expertise. For international development in countries such as Brazil – where Ivanhoé Cambridge has been developing primarily retail properties along with some office space for more than 10 years – local expertise is crucial.

“That’s the key – having a solid working knowledge and understanding of the cultural differences associated with all of the countries that we’re in,” Gleeson stresses.

“We have an established office in place with boots on the ground and people who have expertise in all facets of real estate development and management,” he adds.

Also important is having a local partner. “In Brazil, we have a partner, Ancar, who understands how to get things approved from a government point of view – in terms of getting your zoning and so on – understands where we should be located, the markets and the locational attributes required,” Gleeson says. “Then what we bring to the table is our own development expertise, which we share with them, and our system of cost-control management. It’s a really good collaboration between the two companies in terms of feeding off of each others’ expertise and knowledge.”

Construction Expertise

Ivanhoé Cambridge has a sizable construction department with 65 people in total. “We always hire a general contractor and assign one of our development and construction managers to a project,” Gleeson says. “Depending on the size of the project, we may assign a number of managers. Typically, we’ll have one or two people assigned to it who have construction expertise. On cost control, we have our financial team lined up with that, as well.”

The company selects general contractors through an RFP process and tenders all subcontractors. “What we’re really looking to see is the quality of the team they assign,” Gleeson reveals. “We have a very large construction department here, and our construction managers are working side-by-side with the contractors’ teams, not only to make sure that our interests are being looked out for, but to assure that the quality is there that we’re looking for and that our interests are being maintained.”

Gleeson considers LEED a de facto standard for Ivanhoé Cambridge. “We wouldn’t even think of doing an office building that is not minimum LEED Gold, and ideally, we’d push to achieve a LEED Platinum,” he declares. “In my view, LEED is becoming the universal norm, even if it is not regulated. We take the view that the government regulation will be ultimately put in place.”

Less Parking

Another trend that Gleeson sees is the tendency of municipalities to underestimate parking requirements for projects. “The municipalities are aggressively trying to drive down parking ratios,” he notes. “So in their view, they see the use of the car declining in time as rapid transit improves and fuel prices increase. This represents one of the biggest struggles we have right now.”

For example, if the parking ratio used to be four parking spaces for every 1,000 square feet of retail, Gleeson theorizes, municipalities are pushing to reduce it to three spaces per 1,000 square feet. “The actual demand is still around the four,” Gleeson maintains. “So it’s tough for us to say we’re only going to provide three and not meet the demands.”

Ivanhoé Cambridge expects that parking demand eventually may wane, so it is investigating other uses for parking lots that might go underutilized in the future, such as establishing storage facilities or neighborhood hydroponic gardens on them.

The company also is expanding the Oakridge shopping center in Vancouver, into which public transportation is directly integrated. The center currently consists of 700,000 square feet of retail with office space. The company is adding 2.8 million square feet of residential development, 600,000 square feet of retail and 300,000 to 400,000 square feet of office space, all on a 28-acre site.

Approximately half of Ivanhoé Cambridge’s $3.4 billion of new projects approved, under construction or about to start construction are retail, and the rest are office. “We have a great deal of expertise in retail,” Gleeson says. “We’re looking at building up our office development team to be equally as strong.”

The bulk of the company’s development activity is in British Columbia, with additional Canadian development in Calgary, Ottawa, Toronto, the Niagara area and Montreal. The company is also developing a 900,000-square-foot office tower in downtown Chicago called River Point. Many of the developments are mixed-use that combine retail with office towers.

Five projects are under construction in Brazil with three or four more expected in 2013. “We’ve been very active in Brazil and have had a great deal of success there,” Gleeson asserts. Ivanhoé Cambridge claims to be one of the world's 10 largest real estate companies. Headquartered in Montreal, the company has offices in Toronto, Calgary, Vancouver, Madrid, Luxembourg, Shanghai, Paris and soon in London.The company also plans to aggressively expand its presence in the United States.

“We’re very prudent investors,” Gleeson emphasizes. “Our view is we’re not going to overpay. We look for opportunities where we can buy a building smartly, utilize our expertise, and in certain circumstances where we see strong redevelopment opportunities, we can create added value.

“We’ve had tremendous success in terms of redeveloping, renovating and – where possible – expanding our assets, where we’ve certainly added tremendous value,” he concludes. “It all comes from understanding our markets. We’re continually looking at our existing portfolio and looking for ways to tweak and improve it.”

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