23 Apr 2025 | 08:45 | Toronto | by Laura Hanrahan

Since its inception 15 years ago, CentreCourt has become one of the largest high-rise developers in Canada, delivering nearly 2,400 condominium units last year alone. With projects in all stages of the development pipeline, the firm knows the ins and outs of the changing condo market better than most.

Green Street News spoke with CentreCourt managing partner and president Gavin Cheung about the firm’s risk-mitigation procedures, interest in developing purpose-built rentals and the secret to its competitive pricing that has allowed for sales success even in a depressed market.

CentreCourt has a more conservative approach to obtaining financing compared with other developers that look to finance after selling 75% of their units. Can you explain what that is and why CentreCourt has taken that approach?

That specific part of what you’re keying in on, the idea that we would wait until a high sales threshold, it’s part of a broader culture that permeates the company, and that’s a culture of risk mitigation. Historically, we’ve secured 100% sales prior to going to get our funding. We’ve put shovels in the ground more recently on our projects with less than 100%, but in all cases, we’ve only locked in financing after we’ve got the vast majority of sales completed and with large deposits in hand.

If you have a fully sold-out building, it does limit your upside in a rising market, but that’s a trade-off we are OK to accept. We insist on locking in sales and meaningful deposits early because in a flat or declining market, a fully sold-out building gives you an enormous amount of comfort to move forward. We never hold back inventory just to speculate on future price bumps. That’s never going to be part of our approach. Our philosophy has always been to secure as many sales as you can in today’s market, be happy with that, then ensure we have meaningful deposits, and we’ll be happy and content locking in our top line alongside our costs prior to putting any shovels in the ground.

We’ve seen a lot of condo developers offering very flexible deposit structures in order to make sales. Is that something you’ve considered, or does that go against that risk mitigation?

Sales are only really meaningful to us to the extent that they’re associated with robust deposits, so we’ve been really disciplined on our deposit program, including for sales we are marketing today, where we would be an outlier. The natural question that’s on your mind is likely – does that not create big headwinds to sales? And it does, to some degree, but it’s the right type of headwind.

We’re strong believers in attracting buyers that have real covenants and are ready, willing and able to close on their closing date. And conversely, we’ve never believed in chasing sales or securing them by watering down the deposit commitment. Doing that feels like you’re attracting the exact wrong type of speculative purchaser into your project and, frankly, probably just punting a problem down the road. We sleep better at night knowing that we have strong buyers in our projects, and have the confidence that those buyers have the confidence and the conviction in their purchase decision.

How has that affected your construction timelines right now, having to wait for that higher sales percentage to start construction?

Across the board, sales timelines are extending, and this is not a CentreCourt comment, this is just an industry comment. It’s pushing out construction starts and delaying projects. If you wait until 100%, obviously, it’ll take a bit longer, but the idea isn’t to be in a rush to start sales. If you’ve purchased the land on a reasonable basis and you’ve created a structure around the deal so that you can afford to be patient, then it’s a no-brainer to wait for the deposits and to get the sales in place so that you can execute with full confidence.

Your Pickering City Centre project sold 95% of its first phase in the first week, so CentreCourt obviously is still seeing success. With what kind of buildings and in what areas are you finding the most success right now?

It’s important to bring something in today’s sales environment that’s highly differentiated, and the Pickering City Centre project was a perfect example of that. It is a master plan popping up in a centre-ice location, which is really rare — mostly you see these in greenfield locations, but this one, it’s surrounded by amenities you can see, touch and feel: the City Hall, the Pickering City Centre, which is the largest regional mall in the area, featuring its own GO station.

But perhaps most importantly, we met the market with a price that delivered great value relative to any other real estate in the area. It was priced significantly below other pre-construction projects in inferior locations, and only a small premium to existing resale comparables, which is one of the themes that we believe is important in today’s market: If we want to entice purchasers, we’ve got to demonstrate pricing that allows purchasers to capture a lot of value in the future because they’re buying brand-new product delivered three years in the future at pricing locked in very close to today’s resale levels.

And how are you able to do that – offer a more competitive price? We hear from developers that margins are getting smaller.

I would say one of the things that we’ve done that allows us to provide really exceptional price points in the market is our execution across all elements of the development project – acquisition, development, sales, construction, customer care, finance – we’re fully integrated. But what’s attracted the most attention in recent years has been our construction execution – the pace that we can deliver the physical building.

We typically construct a large, 50-storey tower in about half the time it takes our peer set. During that expedited time frame, we delivered a finished product that we’re really proud of. We’re also delivering it at a price point that, on average, is about 16% cheaper on hard costs than our competitors’. When you put all of that together – the expedited time frame, the cost reductions – it allows you to deliver a highly attractive product at a competitive price point – and in the case of Pickering, in an amazing centre-ice location – and to compress our costs so we can pass those savings through to the purchaser and generate sales.

What’s the secret to those faster construction timelines?

You know, it’s a great question. I will chalk it up to the way we’re structured and our culture. We are a culture that allows us to do things in a different way. We have partners in the business at every level of operations, from acquisitions to development to sales to construction to finance. All of them bring an owner mindset to the business and a relentless focus on details and execution, and that comes from the most senior personnel into the most granular type of details. We execute without any silos. We ensure that we’re communicating constantly internally. We’re very detail oriented. We ensure one team is never holding up another – that’s a cardinal sin in our company – and we make sure that there’s great alignment internally.

What’s lender sentiment like right now toward condo projects?

In terms of lender support, it’s there. They’ve continued to support the sector and continue to want to allocate capital to vertical development. But they’ve become more selective in what they can support, and, frankly, the universe of projects that are supportable has shrunk.

For a proven developer and a good project with attractive margins, lender sentiment remains robust. It’s just well known that the volume of good financial deals has shrunk materially over the past 24 months. So, I think the desire of lenders to support good projects and good developers is going to continue, but the volume of deals will be thinner until the condo sales market comes back.

Moving onto everyone’s favorite topic: the trade war. How are you anticipating that tariffs could affect construction costs? Is that something you’re overly concerned about?

Today it’s hard to say. If you ask them, I don’t think most of our trades or our suppliers have a full sense of how much of their own product is sourced from the U.S. and subject to tariffs. So, the uncertainty created by tariffs is definitely a bit of a damper on business activity and consumer confidence, but the actual impact on construction costs remains to be seen.

To date, we’ve not seen huge impacts, although there are areas that we’re concerned about, and we’re monitoring specific suppliers that we know primarily source their raw materials from the U.S.: glass, large mechanical equipment, things like that. It certainly is a concern, but it hasn’t been one that’s fully crystallized yet in terms of our day-to-day pricing.

We’ve seen a number of condo developers delving into the purpose-built rental space over the past year. Is that something CentreCourt is considering?

Over CentreCourt’s history, we’ve been a significant investor in a rental operator, and we’ve helped various public companies execute and build out their own rental buildings via joint ventures, so we’ve always had an interest and an ability to execute on purpose-built rental. But the short answer to your question is, yes, we see ourselves expanding further into PBR in today’s environment.

We’re lucky to have great sites that are bought exceptionally well, so we’re not pressured to act in any specific way. But at the same time, we know we have a machine that can execute and can bring rental product on line rapidly, more cost effectively, with a high level of quality that’s built for the long term. We truly believe in our ability to add value, and have certainly seen a lot of inbound interest on partnering on that type of endeavor.

Looking ahead to the rest of 2025 and into 2026, are there any major changes to the condo market that you’re anticipating?

I don’t have a crystal ball, but I’ll say in 2025 and 2026 what we’ll do is we’ll continue to focus on what we can control, which today means enhancing our industry-leading execution and deploying our committed capital strategically. We think there’s going to be great opportunities in ’25 and ’26 to do that with a long-term lens and to create huge value.

We’re constantly assessing which of our own sites are poised for action. I won’t forecast when any individual site will come on line, but I do think that with our cost structure on our land, our ability to execute going vertically and being a cost leader in the industry, all of that should allow us to bring new projects to market earlier than most, and we should be one of the more active developers once the market shows signs of life again.