Kevric reinforces its trendsetter reputation

Kevric reinforces its trendsetter reputation

By Robert Frank , Editor Michel Remy

From funky to fashionable, Richard Hylands has a knack for spotting Cinderella properties and giving them the glass slipper treatment. In the process, he has consistently delivered what the market wants, by identifying and repurposing underused assets.
 
 
 The Kevric CEO has a proven instinct for turning these dusty handmaidens into attractive tenant-magnets.
“We’re opportunistic developers,” Hylands told the Square Foot. “We have taken properties that are underperforming like Montreal’s Place Bonaventure and its Mile End district, and Toronto’s Liberty Village.
 
“In Oct. 2008, we acquired an empty office building at Bloor and Avenue Road in Toronto,” he said, “an inauspicious time to close a deal there.”
“It was a great location, but it came with challenges,” Hylands acknowledged. “The Bloor office market was quite depressed, with most space leased by the Ontario government at very low rates. So we decided to turn the property into a trendy, boutique office space.”
 
In a bold move, Kevric gave tenants carte blanche to do what they wanted with their space.
“If they wanted to grind down the concrete floor, we let them. If they wanted to remove their ceiling and put in funky light fixtures, we let them,” he recalled. “This created a unique, distinctive environment. Suddenly, people started to look at the building with fresh eyes. We were able to take office rents from about $14 to about $24, by dint of the new environment that we had created for tenants.”
“Then we attacked retail,” Hylands continued. “We had to redo the entire ground floor structure to open it all up. It might have cost as much as $5 million to do it, but in the process we gained major retail spaces of 10,000-20,000 sq.ft.—and get very high rent in the $300 range.”
Adequate space alone wasn’t enough to secure top rents, though. First-tier tenants are sensitive to the property’s status. At the time, high-end retailers were at the other end of Bloor. So Hylands set about luring them westward.
 
“To move to the high end, we needed someone willing to do a phenomenal design job—and was willing to pay the rent,” he said. “It boiled down to convincing Louis Vuitton that we could reverse the trend of the street, because there wasn’t much happening there any more.”
 
“They built one of the few large Maison Louis Vuitton stores on the world there,” Hyland continued. “Then Burberry moved in next door to us, so our remaining 10,000 sq.ft. space was anchored on each side. We considered a lot of people before ending up with Tiffany’s. We wanted the right people to send the message that this was a true, carriage-trade location. Likewise with HSBC. The bank redid a huge branch on the ground floor that conveys the image of the high-end wealth with which it is widely associated.”
“Everything came together,” he enthused. “Everyone in Toronto now knows the building because of who’s in it. It was pure pleasure dealing with these people. They knew what they were doing, were very sophisticated and really knew their markets.”
 
“Ultimately you need to be creative,” Hylands suggested. “Thinking outside the box is something that we do quite well. It permitted us to acquire a buiding for less than $100 million that today is worth nearly $300 million.”
 
“You need to be able to look beyond what a property has always been and see what it could be,” he concluded. “It takes guts, but we’re not reckless. REITs can’t reinvest in their buildings, and most institutions aren’t organized to do so. We go at it steadily, very much hands-on, and we don’t take on more projects at a time than we can execute properly.”
 

on July 17, 2014