Madison Pacific Properties Inc.

After nearly two decades, Madison Pacific Properties Inc. has earned a reputation for providing a high level of value in its portfolio, CEO Marvin Haasen says. “We’re highly focused on customer service in our business,” he says. “We want to ensure that our tenants are happy with the facilities we own and that we’re responsive to their needs.”

Based in Vancouver, British Columbia, Madison Pacific focuses on acquiring and developing income-producing real estate properties located primarily in its home city of Vancouver and the Lower Mainland region. The company started operations 16 years ago, and today has a portfolio of industrial, office and retail properties worth $366 million, Haasen says.

“We are most known for our industrial portfolio,” he says, noting that many have approached the company about buying its properties. However, Madison Pacific is in it for the long term, he asserts.

“We don’t look to buy and flip properties,” Haasen states. “We look to buy properties that may be in ‘path of growth’ areas in Vancouver and the Lower Mainland, that might have future re-development potential. We also focus on properties, or portfolios of properties, that are underutilized from a site coverage or zoning perspective.”

The company also has formed joint ventures with some of its industrial tenants, Haasen adds. “They have space needs,” he describes, noting that Madison Pacific will design/build the project based on the tenant’s specifications. “We have done several deals where the tenant stays in as a co-owner of the property and enjoys the upside with us.”

Team Effort

Haasen is proud of his team at Madison Pacific. “It’s a definite team effort,” he says, noting that this collaboration is essential when keeping its tenants happy.

Madison Pacific keeps close to them with tenant appreciation functions and frequent site visits. “We want to get to know our tenants on a personal level and make sure they’re satisfied with their facility, and that the building is meeting their needs,” he says.

“We visit our tenants on a regular basis, making suggestions on how to improve their premises,” he says. “If the tenant has a building-related issue, we’ll be quick to make a recommendation on how it can be improved and then implement.”

Madison Pacific also has assisted on the interior layout of the office portion of several of its industrial tenants’ spaces. Through this process, the company let its clients use its in-house architect at no additional cost, Haasen says.

“We have also provided recommendations on cost savings initiatives for tenants,” he adds. “For example, for several of our industrial tenants, we have installed T5 lighting, the cost of which is amortized over the remaining term of their lease. This energy-efficient lighting system also provides lower utility costs to the tenant.”

Outside the Box

For the most part, Madison Pacific has focused on keeping its properties local in Vancouver or the Lower Mainland, due to its principals’ familiarity with the region and the sheer convenience, Haasen says. “We’re generally of the opinion that you should be able to commute by automobile to the property you’re developing,” he says.

“Having said that, it’s a very tight market right now in Vancouver,” Haasen admits, explaining that it has become more challenging for Madison Pacific to find deals with decent returns. “If you’re not looking outside of Vancouver, it’s hard to maintain a higher-yielding portfolio.”

The company has found success by going outside its comfort zone. Last year, Madison Pacific acquired a portfolio with 12 industrial properties in British Columbia, Alberta, Quebec and Ontario. “The returns were quite good,” Haasen says, noting that the properties have a significant amount of undeveloped land.

This may not be the last acquisition Madison Pacific makes outside of Vancouver, Haasen says. “We’re open to it,” he says. “Alberta is of interest as demand for industrial space has been outpacing supply.” 

Ready for the Comeback

From an acquisition perspective, Madison Pacific is of the opinion that the Lower Mainland market is experiencing a disconnect between what price sellers expect for their properties and what purchasers are willing to pay, Haasen says. “At the same time, the industrial leasing side of the equation is a little bit off,” he states. “Due to a sluggish economy, tenants have been apprehensive to take on new space.” 

In the meantime, Haasen predicts that Madison Pacific will continue growing. While it acquired approximately $96 million worth of assets in the past year, “In 2014, we are  mostly focused on asset management,” Haasen says.

“We’re working on our existing assets, expanding and retrofitting,” he says. “2015 may be a mix of acquiring additional assets and retrofitting existing [ones]. We continue to be focused on ‘path of growth’ opportunities, design/build and sale leasebacks.” 

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