We caught up with Sam for a chat about family tradition, Montreal’s reputation and what new condo owners want.
BuzzBuzzHome: First off, we’d like to offer our congratulations for the Domus Prize win!
Sam Scalia: Thank you very much. We’re the builder of the year for the fourth time and we’re very happy to be able to win this prestigious award.
BBH: And just going back a bit to your roots, how did you first get involved in the building industry?
SS: My father joined his brothers in 1964 in the building industry where they built apartment buildings, triplexes and duplexes in different areas [of Montreal]. His brothers, they actually started in 1956 so he was a banker before that and he joined them when he was 27-years old in 1964.
Even at a very young age, I remember I had a project at school when I was eight-years old and they said, ‘How do you see yourself in the future at 35-years old?’ and I drew myself as a builder. So at eight-years old, I wanted to be a builder. I knew that’s what I wanted to do.
I got involved, officially in 1991. Because before that, I worked for a couple years as a foreman for my father. But in 1991 I saw a small piece of land where I wanted to do it myself and I started a project under Samcon as the first Samcon project.
BBH: You saw yourself going down the building career path from 8-years old. Did you ever consider going a different route?
SS: The majority of my life, I’ve always felt strongly pulled toward the building industry. I know that at one point when I was in high school, this is back in the early 80s, there was a big boom in software development so I had just looked a little bit at that saying, ‘Hmm. Should I get into this new field?’
But it was very short-lived. I had thought about it, but in the end I just stayed with business. And I think part of me said, ‘You have your family tradition in it, my uncles did it all their lives, my father, they worked hard all their lives and were known in the city for it.’
Even though it was on a smaller scale in those days, I think I realized that there was a value in pursuing that field because the work that my parents and uncles had done all their lives so I had felt that I was better off to continue that tradition. And I’m very happy that I did.
BBH: Your work has focused on urban redevelopment. What does that involve?
SS: To me, that’s really what gave me the most satisfaction and still today it does. Cities keep getting older and areas of the city, sometimes they’ve changed due to demographic changes. For instance, the suburban sprawl caused a lot of ideal locations of the city to deteriorate where originally families lived there. Then the families left and it became a rental area that went down, lower and lower and the apartment buildings became dilapidated and the values dropped.
But today’s what happened is a lot of these areas are transforming themselves because they’re so close to the downtown core. And I can give you examples: all of the southwest, which is St-Henri, Point St-Charles and now its even Griffintown, all of that sector for the longest time was not considered very valuable – like places like Point St-Charles were not considered very valuable. Today it’s completely re-transforming itself because it’s so close to downtown. Even places like the Centre-Sud, which is the gay village, being so close to the downtown, has had a new life.
Hochelaga-Maisonneuve, which most of the time we would have never have touched, we started building there in 2001. It has been going through some fantastic growth because of its proximity to public transportation, it brings you straight downtown. And its affordability of course because it’s a lot less expensive than other sectors.
Plateau Montreal in the early or mid-90s, oh my gosh, it just took off. Mile End – I bought a few dilapidated buildings and everything around was kind of run down and now has become tremendously popular, very expensive.
Also it is the areas that do become more and more interesting for buyers. First of all, they’re highly, highly renter-based. There’s about 70 per cent of them paying rent [in these downtown areas]. And today, people want to build up their own equity, they want to invest their money and what better place than real estate, which I think has proven to be one of the best investments, long-term, that people can make even compared to their own skill that they might have on the stock market or various investments. Most as times it’s not as good.
Plus they live in it. If they pay a mortgage, they’re eventually going to pay it off and then they own all the equity.
BBH: That reputation of Montreal being a renter’s city – is that changing now?
SS: It’s starting to change, but we’re probably still more of a renter’s city than any other city in Canada, I’m sure. I think we’re at 45 per cent, we used to be at 55 per cent, but other cities are at 25 per cent.
So it’s still very much a rental city, but the rental stock is very old. There’s not much that’s been built in the past fifteen in brand new rentals. Of course the rental stock is slowly being renovated, but it’s still kind of old rental stock because there’s just not enough demand. Plus we have a very strong Régie du logement that protects the rents and this causes a very strong pressure on keeping rents low and in that respect, you can’t build a new building and make viable sense out of it.
And also, we can’t even transform old buildings into condos where you can in any other city. So all this keeps Montreal a renter’s city fairly strong because rent’s a good deal, you can’t transform old buildings into condos because you’re not allowed and people they just stay renting all the time. And it’s a problem for the society.
So as we build new condos, more condo stock comes into the market because more people become owners. It takes time. If they would lift the restrictions on conversions, I think our city would quickly change into an owner-occupied city.
BBH: Montreal’s the second-largest city in Canada, but people don’t associate it with condos the way they do Toronto or Vancouver even though there seems to be quite a bit of building going on right now. What separates the condo market in Montreal from Toronto and Vancouver?
SS: It’s because Montreal has never had the high-rise and skyscraper condo buildings built like they have in Toronto or Vancouver. In Toronto and Vancouver they build so many condo towers that could be 70 floors or even 50 floors. And here in Montreal, we don’t have that. Now, finally, we’re starting to see that. In the past, it almost never happened. Anytime a skyscraper was going to get built in downtown Montreal, it was an office building. So there was not much product.
The Pointe Royal was built 40-years, 30-years ago. That’s about the biggest condo tower we have in the downtown. We had a few towers built along the way but not as much as Vancouver or Toronto, hardly as much. If you don’t have a lot of stock, then you’re not really known for it. Today, we’re going to have more and more of these types of condo buildings built so it’s going to start to look a bit more like Toronto or Vancouver.
In the past our condo buildings were low-rise. And the problem we had always had was that our population was quite wary of condo projects so they didn’t buy much on pre-sale. And if you don’t have a strong presale buying market, you’re not going to build 400-unit buildings if you can’t presale them enough. So they just never happened. And they’re all low-rise which you can do eight-plexes and sell some units. And the rest were relatively low.
It’s not as familiar a market as it is in Toronto where they open up a sales office and they’ll sell half the building in three months. In Montreal, we have a much lower presale market. And oftentimes we’re stuck in situations where we have to build a lot more equity because the financing doesn’t come in because we don’t get the presales at the same pace because our market is smaller.
We have less condo owners that are switching. And the condo buyers, they often can’t afford to buy in one of these towers because that’s more for that second buyer that’s built up equity if the condos are $400,000 and they can only afford a $200,000 condo. Our market is limited.
Now we’re starting to see more and more of the $400,000 condos coming up into our market and it’ll still be a challenge for Montreal to experience that growth they had in Toronto or Vancouver in the condo market.
BBH: How has the market in Montreal changed in the last five years or so?
SS: We became more of a concrete structure condo market where in the past we were a wood structure and four-storeys and less because of smaller projects. Now, all of the builders, we’ve become more and more familiar with building concrete structures – eight-storey buildings, six-storey, ten-storey, fifteen-storeys and more and more we’re heading in that direction – all the builders.
It’s many reasons. I see for ourselves, for twenty years, we built so many, well, about 4,000 units – so many of them were wood structures. So all of these clients that we sold to were, for all these years before, you know it was just they were happy to have a condo. Like it wasn’t a question of, ‘Oh will it have an elevator? Do I have an underground garage? Do I have a pool?’ It was, ‘No, no I just want a condo. I don’t want to have to pay rent.’ So an eight-plex with a walk-up and parking outside, no pool, no gym – no problem with that. That was selling very well.
Today, those people who bought the eight-plex units are saying, ‘I want more. I want to park underground, I don’t want to park outside. I want to take an elevator. I want to be on a higher floor. I want a pool on the roof.’ They want more.
And they’re understanding also different qualities of condos. They’re realizing, ‘Oh, I like concrete buildings better because there’s a little bit more soundproofing and the quality of the construction will last longer than wood structure buildings. It’s obvious it will.
So now the buyer is becoming more educated in the differences between condo products whereas in the past, they were just delighted to actually own a condo. The last five years has been a dramatic change from just giving the basic condo product to a variety of quality of product.
BBH: What’s your favourite neighbourhood in Montreal?
SS: I love all the neighbourhoods but I guess since I had great success in the early 1996 in the Plateau Montreal. And I lived there also when I first got married back in 1997. I have a lot of good memories there.