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A history of success and 70 years of experience gives Jim Spatz and Southwest Properties the confidence to build the most expensive apartment buildings in the region.
In the lobby of Southwest Properties on Wednesday sat a wooden box that a courier had delivered, large enough and rough enough that just about everyone who went in or out made a comment.
“That looks like a box you’d deliver a Tasmanian devil in,” said one person.
Also in the lobby is a full trophy case, which recently got a particularly shiny addition when Southwest won the National Rental Development of the Year award for Curve, its development on South Park Street in Halifax.
Southwest had become the first-ever Halifax developer to earn the award, when it won in 2018 for Maple, its downtown mixed-used building.
Jim Spatz, executive chairman of Southwest Properties, said the creativity that leads to such awards combines “what comes out of our own heads and what we see in the wider world.”
“We want to bring the very best to Halifax, that’s where it starts, because this is where we do it,” said Spatz, who described himself as obsessive about designing buildings well. “And, beyond that, we have a lot of experience, we’ve been in the apartment business for well over half a century, 70 years maybe, with my dad. We’ve got a good sense of where value resides.”
Spatz was an infant when he arrived in Canada, and spent some time as a youth working in his father’s grocery store on Morris Street. His dad wanted him to get an education, and Spatz worked as an emergency room doctor in Montreal for 15 years before returning home to join the property business his father had started.
The smell of freshly poured concrete is what hooked him on the development business.
“All there is is a structure, and nobody has messed it up yet,” he said. “The wrong windows aren’t yet in the wrong place.”
Spatz said the average size of apartments is coming down everywhere, and that Southwest polished the skill of making the most out of a little during construction of Maple.
“What I said to our team is that I want our 550-square-foot one-bedroom to be a better unit than somebody else’s 700-square-foot one-bedroom,” he said. “We get pretty obsessive about that, we actually mock them up. We don’t build them, but we mock them up with steel studs and plastic. We always find somewhere to create value; it could be eight inches that was going to get buried next to a column where we can make the vanity that much bigger.
“If we can create as good a unit or better in 550 square feet, that’s value for our customer because the rent is lower than if it was 700 square feet.”
The Curve building is at the other end of the market, with some luxury apartments renting for $5,000 per month.
Spatz lives there, with a view of the rooftop pool and the Public Gardens.
Other features that are “unusual for the market” include a hot tub, a fire table, “not just a gym, but a great gym,” a yoga room, a huge common space and a theatre that seats 10.
Every unit is rented, and not just by retirees who’ve sold a big south-end house. About a third of the people who live there are under 35.
The next project on the books is called Cunard. It’ll be on the Halifax waterfront, with construction slated to start early next year and finish in 2023. There will be 260 units, and more than 300 people have expressed interest in living there. The 20 most expensive units are already spoken for.
“And $5,000-$6,000 a month doesn’t bother them,” Spatz said, adding that each project has included progressively more of the most expensive apartments. “Could we have done those buildings 10 years ago? I don’t think we would have had the confidence, there wasn’t enough momentum in Halifax, there wasn’t enough economic growth. There was old wealth, but there wasn’t enough new prosperity.”
COVID-19 has “had a lot of operational impact” on the way Southwest Properties operates, but “in terms of the buildings themselves, and our occupancy and our revenue, it didn’t budge us.”
Spatz said only a handful of residential tenants couldn’t pay their rent because of COVID.
“If somebody lost their job, we’d work with them, we don’t boot them out, but it was a very small percentage, I’d say one or two per cent,” he said. “We held our breath for a few months, but that’s what happened.”
On the commercial tenant side, Southwest, which is a landlord to restaurants and retailers, and owns the Bishop’s Cellar wine store, has been participating in the federal rent subsidy program.
“First of all I don’t understand why you wouldn’t, unless you believe that if you don’t participate, that person is going to be able to not only pay you the rent when things get back to normal, but pay all the back rent. I think that’s fiction,” Spatz said. “The government support is 50 per cent of the rent, we need to forgive 25 per cent of the rent and the tenant needs to pay 25 per cent of the rent. So, why wouldn’t we do that? I’d rather have 75 per cent than somebody vacating, and having the space for rent again. I couldn’t see the downside.”