Chris Wills ON: Navigating the Complexities of Commercial Real Estate (#134) — Transcript
Updated: Oct 26
THE PICTURE OF WEALTH · EPISODE 134
Chris Wills of Venture Commercial joins Dustin Serviss to discuss commercial real estate, property valuation, tenant mix, interest rates and understanding the decisions behind an asset.
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This transcript was generated from the episode audio and lightly edited for readability. It may contain transcription or speaker-attribution errors. Refer to the recording for exact wording.
Chapters
[00:00:00] Patient ownership and the value of a tenant mix
[00:03:08] Start with the buyer’s or seller’s strategy
[00:06:28] The cap-rate and income conversation
[00:10:27] Land ownership and long-term Okanagan growth
[00:16:37] Leverage and where investment capital comes from
[00:22:44] Leases and rights of first refusal
[00:26:00] Why a buyer needs to read the lease
[00:28:47] Comparing industrial, retail and office assets
[00:32:03] Selling the business while keeping the property
Guest & resources
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Transcript
[00:00:00] Chris Wills: In nineteen ninety seven, people thought he was absolutely crazy for buying a number of buildings. And with his hands, he really redeveloped them and waited and started to build a bit of a tenant mix, which is extremely valuable if you own retail assets, understanding how, you know, putting the right tenants in place brings more people together, and all of a sudden, the asset just beautifully matures. And you couple that with the growth and the interest in, you know, Panagam, now some of these buildings are are priceless.
[00:00:32] Dustin Serviss: Welcome to the picture of wealth or TPAW as we call it. I am your host, Dustin Service. Listener, I'm excited to have Chris Wills who is the leader of Venture Commercial, a division of Venture Realty. Chris, where are you today?
[00:00:58] Chris Wills: Based in Coloma. Yeah.
[00:01:00] Dustin Serviss: Based in Coloma. So thank you for coming on the show, and we're talking commercial real estate. But more importantly, you know, we're talking behaviors of wealthy individuals and corporations because that's what you deal with every day and helping many people fulfill some sort of dream or own some sort of piece of real estate, and I hope to unpack that today. Yin?
[00:01:18] Chris Wills: Excellent. Absolutely.
[00:01:20] Dustin Serviss: So you, again, in the scope of your work, give me and the listener two milestones of what you are dealing with in transactions. Is there a niche that you do your best work for? And I I wanna set the kind of landscape of what we're gonna talk about here in a minute.
[00:01:37] Chris Wills: Yeah. It, I think what we would say we do best is working with clients from start to finish as far as their real estate transaction in life. So, it is great to sell, you know, a property for ten, fifteen, twenty million dollars. But to get it to what it's worth, it's a lot of work and grit behind the scenes, a lot of smaller deals, leasing, understanding the portfolio, and we pride ourselves in working with those type of individuals. So we're not below, doing a four hundred square foot lease if that gets the asset to where that client's goal level we... Whatever if it's a long term hold or if it's a if it's a
[00:02:18] Chris Wills: kind of a burn and turn as far as an investment opportunity, get the rates up. We're part of that whole lifestyle, and that's what we we pride ourselves in.
[00:02:26] Dustin Serviss: In that, you mentioned something that I think is important to just sort of, again, set the foundation. Many listener is curious about real estate, commercial real estate, maybe own some commercial real estate. And in a transaction, there is a buyer and a seller. And anyone can name a price, but to get something transacted on and sold is a whole different ballgame. So in a market like we're in now, is it changing interest rates are higher? Is that something where it isn't the same as the past, or is it just at commercial level, it's pretty much the same kind of traits of a deal?
[00:03:04] Dustin Serviss: Or are there different traits now that someone needs to be aware of on either side?
[00:03:08] Chris Wills: Well, I'll start off with saying I'm extremely biased to commercial real estate, and, and it... It's a fascinating type of investment because it really depends on what the either purchaser or seller looking to do. It's it's it's really about strategy, and everyone's motive is completely different where, outside of maybe income reducing rental properties, residential, commercial has a a lot of different varying factors that come into play, and you really have to understand what the client's looking for. So interest rates right now aren't helping, a lot of the transactions.
[00:03:42] Chris Wills: I think there's a big delta between what the owners of properties believe the property to be worth because they're evaluating maybe on a two or three year, like, last year cycle. But, again, there's huge upside too as far as a lot of these properties, particularly in the Okanagan that may be undervalued. The income's too light on them. So interest rates have affected it, but it depends the scenario on kind of where is the asset and what's happened over the last little while. It depends. Answer, but No. It really
[00:04:13] Dustin Serviss: depends. Listen, don't worry. I'll get this out of them here in a second. So, again, listener, we're talking about a Klowna marketplace that is about four hours inland from Vancouver, British Columbia. I would say it's a... The growth orientated community growing, businesses are growing. The commercial space you see now, you mentioned that prices might be light. So explain what the measuring metrics to figure out a price quickly of a property. I think it's a good recap to give us a... You know, how do we find the price of commercial real estate?
[00:04:49] Chris Wills: Well, it's a very, very good question. There's there's essentially three different appraisal approaches that we would look at a commercial property, and we'd apply one of those commercial appraisal processes, the income approach, comparable approach, or the rebuild price point. Right now, we would notice most of our assets. And I think this would be nationwide. It's not necessarily an Okanagan based metric, but income approach. What is the property currently, collecting in rent? And then, of course, interest rates or cap rates, capitalization rates really come into play on what a potential purchaser would want as a return
[00:05:26] Chris Wills: on that that income stream. So that would be one... That probably be mainly the way that we're assessing commercial real estate right now on the Okanagan and then the comparative approach. Sometimes in Kelowna, and I think you raise a really great point, we are not a Vancouver or a Calgary based market. We're the Okanagan. For the listener that doesn't necessarily know the Okanagan, it is a pretty nice hot spot. We're, you know, really surrounded by lakes and lakes and mountains. So real estate is really defined as some small areas. We don't have this huge sprawling opportunity like, say, Alberta or Saskatchewan does. So,
[00:06:02] Chris Wills: real estate values in commercial real estate have certainly spiked, especially after COVID, with a lot of people wanting to move their businesses from Vancouver, Calgary to have that kind of Okanagan lifestyle. So, really, things have changed, particularly in the downtown and the industrial sectors. If we're speaking specifically to Kelowna, prices have just skyrocketed. And there's still quite an appetite for the investor or owner occupier to be in Kelowna.
[00:06:28] Dustin Serviss: So the owner occupier is one, but I think I wanna push you on the investor because what I hear in the commercial space is, oh, wow. Look at the yield. The the cap rates are up. The yield... You know, your yield is better. Well, listener, I'm gonna... I'll set this up really sort of simple. We'll say, a five hundred thousand dollar property that rents for some amount. And so you get that and you basically take what you're getting in rent, divide that by the price you pay, never mind financing, and you get some sort of percentage. And when you look at that and you compare it to other assets, you could compare that to...
[00:07:08] Dustin Serviss: What I like to compare to is a risk free rate of return, GIC, five percent. So give me the pitch, Chris, on... In your passion for commercial real estate because if I'm getting five percent in a commercial property where I've got a tenant and I gotta worry about whatever, you you know, or I can just put the money in the bank, and currently, the interest rates are five percent or whatever you wanna say. And I got no tenant, and the income tax is kinda the same because it's post income. And I'm paying cash for both those things. I'm either gonna buy GIC cash or buy the property cash.
[00:07:42] Dustin Serviss: How do I get myself more passionate about commercial real estate?
[00:07:46] Chris Wills: Yeah. Absolutely. It... It's a really great question. The benefit of where my passion commercial real estate lies is the opportunity long term. There is an opportunity for an investor to come in, buy a property, if they have a skill set, whether they have a really, really great leasing team, they understand the commercial real estate, what you can and can't do. But let's just say in one example, there's an underutilized asset. Let's just call it a downtown office building where, historically, maybe the old ownership has kept rates extremely low. They just weren't up to market. They weren't aware.
[00:08:20] Chris Wills: You know, let's just use you, Dustin, as an example. If, if I called you and said, look at... Let's buy this building at a current... At a five cap... Five capitalization rate. But over eight months, I can get all of the rents up. I can fill the building. So your value of the building would, you know, increase dramatically because we've increased the rents and the opportunity of the of the asset. So that would be one variable of investing in commercial real estate where there's massive upside. The other is investing in markets where you expect the asset to just mature in valuation. So at one point in Kelowna, industrial land was worth
[00:09:00] Chris Wills: eight hundred thousand dollars an acre. Because of the demand, the way that our market has grown, again, I... I'll use COVID as a really great example of where I think things really changed in the world and people wanted to live and work in, say, our community. All of a sudden, the the values of our industrial land went from one million, one point four, one point six. You know? And and right now, we're we're seeing trades kind of for one acre of industrial line at three million. So if you bought that property of that, say, one acre of land at eight hundred thousand, in three or four years, you've seen a pretty great increase in the value.
[00:09:40] Chris Wills: Mhmm.
[00:09:41] Dustin Serviss: And so you got inflation. And so now if we are in maybe not as much inflation, what does a buyer who's interested in commercial look for?
[00:09:53] Chris Wills: It's hard to find where... What I would reference if I was to, if I have a purchaser or an investor looking, it's hard right now to find a great asset. Again, I think there's a delta between what people still believe their their properties to be worth. And the interest rates, as you mentioned, have really come into play because if you're going to put that, you know, money into a five percent guaranteed return somewhere else without the risk, why wouldn't you do that? I still use the Okanagan as... It's difficult to find great assets and just because we're really limited on actual land value.
[00:10:27] Chris Wills: I think it's important for the listener to understand that in the Okanagan, we have, you know, essentially five families that own the majority of land, and they never sell. These are very, very, very smart business people that, in the fifties and sixties bought orchards, and, you know, the downtown's grown. And, you know, we used to think that Archer Park Mall in Kelowna at one point was the end of the earth. And now all of a sudden with the airport, the way that it's expanded, and Lake Country's growth and Vernon, you know, we're starting to see them all kind of connect these communities, and, you know, there's just not a whole lot
[00:11:00] Chris Wills: of opportunity right now. The only other thing that I would say is that even as a kind of a growing business and adventure commercial here, the opportunity to buy your own real estate, and being owner occupier, I think that that's a really interesting aspect because there's a lot of lease opportunities in town, not a lot of purchase opportunities. So even for us as a as a young and growing business, owning commercial real estate will definitely be part of our strategy.
[00:11:26] Dustin Serviss: Is there... Maybe this is secret stuff we can't talk about. But is there a play there for Joe investor with a hundred thousand that can't buy something but understands something and says, well, maybe I could get into a group of ten people, and we all buy something for a million.
[00:11:44] Chris Wills: Oh, that's the dream.
[00:11:45] Dustin Serviss: Or Yeah. Yeah.
[00:11:47] Chris Wills: Yeah. That's the dream. Part of one of my passions would be to be able to bring smaller sized businesses. Maybe if we all have a little bit of a a common theme where there'd be construction company, a design company, an insurance company, a real estate company, and buying an asset, and particularly one that's maybe on the on the outskirts of town. And there's huge upside if you can build something in a underutilized area. Again, in Kelowna, if you know the Okanagan or Kelowna very well, the north end is seeing this massive growth, and it used to be all industrial. And you're seeing this resurgence of the whole area that's super exciting.
[00:12:24] Chris Wills: So, you know, fifteen years ago, you couldn't buy... Like, you... There was a million opportunities out there for seven hundred thousand. So finding those little markets, if you're speaking to massive upside, I think you've gotta find those peripherals and those kind of... Those outside things, and there is some risk to that. There's no question. And I think that's why it's really important to have a great adviser behind you, a great realtor behind you, some of the understand the trends of commercial real estate because I would not recommend an investor to come into commercial real estate industry and just think that it's easy.
[00:13:00] Chris Wills: There's, a lot of the stuff in the back that you really do need to understand, and some of the greatest clients I've had have had assets where they took massive risk. I think of one that owns a majority of the beautiful Bernard Brick Buildings. And hearing his story, you know, in nineteen ninety seven, people thought he was absolutely crazy for buying a number of buildings. And with his hands, he really redeveloped them and waited and started to build a bit of a tenant mix, which is extremely valuable if you want retail assets, understanding how, you know, putting the right tenants in place brings more people together, and all
[00:13:36] Chris Wills: of a sudden, the asset just beautifully matures. And you couple that with the growth and the interest in the Okanagan. Now some of these buildings are are priceless. I never advised him to sell them in a million years because now they're landmarks. But in nineteen ninety seven, people thought he was absolutely crazy and ludicrous. So it does take a little bit, you know, little bit of risk up there and a little bit of craziness, but, yeah, that's a really great example of something that a good investment.
[00:14:04] Dustin Serviss: I think that you brought up a good point about the the major local families, you know, in the fifties, sixties bought orchards, and, you know, now they look quite smart. So there's always that thing of, like, you never hear about all the people that lost. You hear about people who after the fact. So was there a strategic vision there, or was it just as simple as we should buy land? But... And back then, there would have been all sorts of land everywhere. But, you know, is that just as simple as it is? Because it is as a younger... You know, listener, Chris and I are both the same age, thinking twenty,
[00:14:37] Dustin Serviss: thirty, forty years out in this society nowadays. I kinda wanna live now. You know? Like, to wait that long, I think the investor... Well, I'm gonna ask you. You know, you work with many, many well-to-do families and significant families. What would you say is the legacy the legacy conversation that they have, or does it exist when they're investing in a piece of real estate? Do you ever hear them say anything about, oh, this is for long term, or is it strictly the money?
[00:15:08] Chris Wills: Here, we've got ten agents in the office, and one of the the conversations that continuously comes up is legacy. And not to to be too broad in this answer, but we're noticing there's a lot of investors that want the quick, fast, flipped return. They're not in the long game. And a lot of these great clients and and clients that, you know, I'm very fortunate to represent, they had a different mentality of investing, and it was, I'm going to buy this. I'm going to work hard. I'm going to do the right things. I'm gonna invest in the right people to help develop this asset to where it's gonna be.
[00:15:44] Chris Wills: The legacy thing is probably the the one of the more difficult things with having such a passion for commercial real estate and to understand, you know, how hard these developers have worked to get the asset to where it is, the building, the opportunity. And now they're looking going, jeez. You know? Either I don't have anyone that wants to take it over, you know, son, daughter. It's really interesting to see... There is this change of guard, I think, that's gonna happen over the next ten years with a lot of these families that have, as you mentioned, owned properties for ten, twenty, thirty years, and who's taking it over.
[00:16:22] Chris Wills: And they're also concerned, well, you know, we've done this the right way for thirty, forty years, blood, sweat, and tears. I don't really want my family just to sell it right after, you know, right after our pass or we hand it off. I think the legacy thing is really going to come into play over the next couple years.
[00:16:37] Dustin Serviss: As a a person who feels like they work hard and do pretty well, for age, it is interesting to look around and go, where are all these people coming from, and where is the money coming from? Is it literally just people have had assets, have appreciated, they have figured out some formula to refinance because it is something we haven't talked about that... You know, we've talked about, oh, well, if you had a GIC for five hundred or bought a place for five hundred, well, you wouldn't have to. You could buy a real estate thing, and the bank would finance you two fifty or something.
[00:17:11] Dustin Serviss: And now all of a sudden, if you're only putting two fifty down and getting that same rent, the return goes up even after the mortgage... You know, the principal pay down is considered. So maybe comment on what you see for trends right now versus maybe ten, fifteen years ago when you were doing transactions. Is the money coming from the same places, and is there an answer you can give that kind of alludes to where the money's coming from without giving up names?
[00:17:39] Chris Wills: Over the last five years, we've seen a significant investment from lower mainland from the states and from Alberta. Quite frankly, the secret's kind of out on the Okanagan, and, probably the best example I can utilize is industrial developer who... Let's say there's several based out of Vancouver. They're buying a lot of land. Let's just use the acre example, in Richmond for seven million dollars an acre and still have to develop with the construction costs and all of those things. And industrial tenants on the end side can only afford to pay so much. Right? A lot of those investors have now looked up the Okanagan and said you've
[00:18:17] Chris Wills: got an international airport. You've got a great economy. You know, it's a beautiful place to live, and I can buy that same lot of land for two or three million dollars. And that's where we're noticing significant investment is from the outside markets, peripheral markets that have kind of... They're redlining on the valuations in those markets, and they're looking up to us saying, well, jeez, you know, seven million dollars in Richmond, or we can be up in Kelowna and and buy for two or three million. The interesting thing is is having done this for seventeen years is you still have those local based developers that are still sat in their
[00:18:52] Chris Wills: heads going, what? You know, they bought that land for what? We could never make that. That set on the market ten years ago for six hundred thousand. Nobody wanted it. So it is pretty interesting to see this shift. And the only other one I would comment that I can't necessarily make a lot of sense is some of the larger investors that are buying downtown properties in Kelowna where, you know, on on a localized level, let's just use you as an example. If I called you and said, hey. The building is netting two or three hundred thousand dollars. Let's be super aggressive at a five and a half or six cap. Let's try to tie it up.
[00:19:28] Chris Wills: A lot of those properties over the last couple years have sold for three or four times the max of what I thought we could get out of the rent, and I think they're long term investment plays, for towers and and for high rises and stuff.
[00:19:42] Dustin Serviss: So Right.
[00:19:43] Chris Wills: That... Yeah. That's kind of been a very interesting trend a little while. Some of us locally are scratching our head going, oof, these... I use the word redlining a lot because I I don't know how the numbers work, but I think they're long term asset plays, and they're comparing the evaluation of land to say downtown Kelowna to downtown Vancouver and saying, no. Kelowna is not a bad bet.
[00:20:06] Dustin Serviss: Well, it might be... I'll use your redlining. It might be, as an investor looking at it, the scope of our knowledge isn't deep enough. Like, we're not a developer and know that... It's like me, I'm not a construction guy. I walk into a house, you know, a fixer upper, and you walk in, you're like, holy man. There's a lot of work to do here. Where a carpenter walks in, he's like, oh, that would take me, like, a weekend to move that wall and do that. Or to me, that just is... And so that I'm out. And so then, you know, there is a space for those investors, but if that's where a person needs to find the...
[00:20:42] Dustin Serviss: Whatever you wanna call the arbitrage or the the opportunity, then what resources do you think in a in a commercially interested investor should research or read up on, or that's not an option and they should partner with somebody?
[00:20:59] Chris Wills: That's a that's a good question. I think if you were if you were new into commercial real estate, I I think that you have to understand, a, there's a very, very, very big difference between the, a residential investment property, rental property, and a commercial rental property. In residential... And and my wife and I own both. We own commercial and residential. The Residential Tenancy Act is daunting, and it is extremely favored towards the tenant. My wife who... I'm very lucky to have her. She manages all of them, and she understands the in and outs of the residential tenancy act.
[00:21:34] Chris Wills: Where I understand commercial and bleak commercial, I love it more than anything. So I'm always surprised when, you you know, strategies go up in one of our, you know, residential properties. So great. We'll just, you know, we'll collect that. Oh, no. We can't do that. In commercial, you really... The lease governs so so much. The commercial tenancy act is established, but a commercial lease can have any type of clause in it, and it's... Has to be agreed by both parties. So using an example of a deposit. In commercial real estate, if you're, a landlord, you can apply whatever deposit however you see fit.
[00:22:11] Chris Wills: And if there's a high risk to the tenant, you can say, you know what? For my comfort level, I'm gonna collect six month deposit gross, and I'm gonna keep three months of it. There's a a million different ways that you can approach these type of clauses. So if you're looking to get into commercial real estate, back to your original question, you really should understand commercial leasing because the value of the asset will be tied to those leases. And you just can't make the assumption that there's a standard deposit clause, fixturing clause, use clause, escalation clause,
[00:22:44] Chris Wills: ROFRs for sort of refusals and impact commercial properties dramatically. So if you're going to get into commercial real estate, make sure you understand what a triple net lease is and the origins of that on the way that these clauses have matured over time. When I got into the industry, my dad really mentored me, and he had a passion for commercial leasing. We moved up here because of one of the five families, and he ran that very large development company for all of their real estate and the leasing for twelve years. So he has this quirky, disgusting, fluctuation with commercial leases, which are typically anywhere from sixty
[00:23:21] Chris Wills: to eighty pages. And, you know, I've kind of learned those, and and there's a story to each lease, and every lease is completely different. So I would strongly recommend that if listeners looking to get into commercial real estate, understand leases, first and foremost. And if you don't really partner with somebody that does, whether it be a commercial realtor that has a lot of experience or maybe another investor that has a little bit more experience in that, I think that's critical. Mhmm.
[00:23:49] Dustin Serviss: Maybe in... Give us the layman terms. The lease... When you lease... You own a building, you gotta lease it out to somebody. You can lease it out to your own operating company. But let's say you're investor. You're gonna buy a property. You're gonna have somebody come interested to rent that property, and you're gonna do a per square foot of the space cost, and that's base rent. Explain what triple net is because we just had an experience with a person who said, I've never had a triple net lease, and this is way higher than I used to pay.
[00:24:24] Chris Wills: Yeah. Yeah. And is it... Yeah. How how much time do we have? I think I've had triple leases. Any losses for way too long. Yeah. Yeah.
[00:24:31] Dustin Serviss: Really simple. No.
[00:24:32] Chris Wills: Yeah. There was an evolution of a net lease, a double net lease, a triple net lease over time. But, basically, if you are a commercial landlord, you have the right to recover all of your costs and expenses, through that tenant. So property taxes, any type of common area maintenance, snow removal, utilities, all
[00:24:53] Dustin Serviss: of that.
[00:24:54] Chris Wills: Well, yeah, absolutely. So, really, if you own a commercial asset, you'll be able to pass on all of the costs born to owning that property onto the tenant, and that was the evolution of a triple net lease. So it used to be okay. Well, the tenant would just pay for this. And then, you know, over time, landlords realized, you know, oh, there's this cost. Should we born that, or should the tenant born that? So triple net lease really protects... A good triple net lease, I should say, really protects the landlord to be able to recover all of the cost associated with that ownership back onto the tenant.
[00:25:27] Dustin Serviss: Yeah. So thanks for expanding on that. I think you're right. So then the better your lease listener, the more money you obviously get. And if the person's willing to pay, then that ups the value of your building. So if you're trying to buy a better asset, because I think this is important, and you're gonna compare two assets, either have higher rent or a lower price or both, and then you're gonna create a better thing or buy it and then create that. What did you say, Chris, is that's... Those are, like, the real simple takeaways.
[00:26:00] Chris Wills: Yeah. Yeah. Really simple. And I've I've come across some sort of experiences where you really need to dig into that lease, if you're looking at buying an income producing property because, again, you're not really governed by, you know, the Residential Tax Act where there's standards and rules. So I'll give you one example. There was a strip center, a retail shopping center, and the developer listed it for sale, went through a realtor, and they said, here's the income. Here's the potential. There's a big parking lot. You know, if over time one day, maybe you wanna expand and increase the rentable area, you could add a building.
[00:26:36] Chris Wills: Well, when you dug into the leases, there was actually a number of clauses in some of the major anchor tenants that says you cannot take away parking. And you really do have to understand that because if you bought that asset thinking that over time, you could have thirty or forty thousand square feet of rentable area on the parking lot side, you would have been very, very disappointed. You probably would have gone back to your realtor and to the seller and say, well, this wasn't disclosed, but you gotta dig into those leases. So a good triple net lease from a lawyer or from someone
[00:27:03] Chris Wills: with substantial real estate backing would be very, very important. And And I think when we're talking about investing, I guess I'm... On the other end, if I'm representing a purchaser, I'm looking for assets that have poor leases, to be super honest with you. So you and I say we wanna go buy a building or, you know, you and your partners wanna go buy a building. I'm also looking for maybe that older asset that is stuck in the eighties and nineties, you know, and there's an opportunity to roll the new leases around with better triple net leases, big more recoverable items that are all...
[00:27:35] Chris Wills: You know, we try not to use the word standard, but common practice in commercial real estate. That would be where a potential investor would really find some upside. Kind of the juicy nugget is, oh, these leases are stuck in the old days. Let's modernize them. Let's increase the rents, and let's be able to recover certain areas.
[00:27:54] Dustin Serviss: Would you say that there's one asset, and I'm kinda, like, just envisioning in my head, I guess, there's a few, but, like, office space, retail space, industrial space, developable
[00:28:06] Chris Wills: land. Mhmm.
[00:28:07] Dustin Serviss: Those are the four classifications? Are those the Yeah. Fours or or more?
[00:28:10] Chris Wills: Yeah. It was multifamily. And there's a couple land. I would just... I'd say land in general, whether you wanna do multifamily apartments or develop, that would be one of the asset classes. As an investor, if I was new into commercial real estate or I had a client that said I want to get into commercial real estate, I would start with a, you know, single or or two or three multi tenanted building. I probably would stay away from office, and I'd advise that quite strongly. In every market, there is an office developer, two, three, or four, and they know the game better than anybody.
[00:28:47] Chris Wills: And then I find in my personal opinion, there's a lot more risk to office as an investment right now. It's a little more volatile, and you see massive shifts in the office sector, whether it be COVID or look at what's happening in Calgary where the downtown... There's a bit of a resurgence there, but, you know, oil and gas, they were... Economy really drives office growth or office decline. So I'd probably say with our office, we really do love industrial. Industrial is somewhat solid. I'm a I'm a passion for retail. I'm a bit of a sucker for that. I absolutely love retail.
[00:29:24] Dustin Serviss: And Restaurants. All that stuff.
[00:29:26] Chris Wills: Oh, yeah. Restaurants. I I think I'm just fortunate I represent so many developers that have retail. I think that those leases are way more comprehensive. To give you just an... A kind of a snapshot into what that would look like is you're dealing with restaurants that are gonna ask for restrictive covenants and signage and noise and sound mitigation clauses and all of those things were industrial. My my brother loves industrial, and he goes, well, I walk into a hundred thousand square foot office there, industrial building. The guy signs the lease, and I never hear from him. He doesn't ask me anything.
[00:29:57] Chris Wills: He just has storage or it's, you know, a facility that's just manufacturing. So those leases might be a little simpler than maybe an office or a retail investment.
[00:30:09] Dustin Serviss: Well, I think you're bringing up of, like, what the value of the the client is or what the the driver is or or where they have sort of passion. If they're an owner occupier of, you know, one bay and they bought the second one, it's like having a basement suite, I think, for people is... Yeah. And do you see any sort of, like, shortage coming up or not glut, but a lot of things have been built in this last year, year and a half, but prices aren't seeming to move. So is there... Is a potential opportunity coming up, or is there a signal that you could give the listener, you know, something to kinda, like, sit on and
[00:30:47] Dustin Serviss: and roommate on and maybe watch for for a buying opportunity?
[00:30:52] Chris Wills: I think there's really just two aspects to look at. One is interest rates. Interest rates really do drive where people wanna park their money. And then, of course, I think that there's the the fringe opportunity where you find something and you take the gamble and the risk that you hope the market will mature around it. So I think those are the two variables. In Kelowna, I I don't think there's gonna be a lot of, you know, value add opportunity for downtown buildings technically right now, but, you know, maybe move to West Kelowna or you look at the burn in market. They still have opportunities, but you're really banking on, the maturity
[00:31:29] Chris Wills: of that area or finding an asset that is so under... Underserviced, underutilized, and you've got the secret sauce to get those rents up or you've got a tenant in hand or, as you've mentioned, owner occupiers are really great way. So if you own a business that's leasing space right now, and it doesn't matter if you're an office, a retail tenant, or an industrial, I love those type of clients that said my business is now grown to a point where I wanna own the asset. I find that always a really fascinating transition as far as what we were leasing for five years now. We have the opportunity to buy a facility, buy a building because this will
[00:32:03] Chris Wills: be my retirement plan. So the business has taken care of itself. Some of my... The fun clients too is when they have a exit strategy to sell their business and maintain the real estate. Dentists are really great for that, to be honest. They build these beautiful two million dollar facilities, dental clinics, and over time, they'll sell it to, you know, one of the larger dental conglomerates, but they own the real estate, and that's their legacy plan. And I love that. So those would be the type of opportunities on our occupiers where you might be able to set yourself up for success long term.
[00:32:36] Dustin Serviss: Yeah. I think, you know, we're fresh off working on a file where the person wanted an investment plan. And when we talked to them, their passion was in commercial real estate, and they had already owned some. And so our plan was very unscientific. It was just keep your payments, pay off the commercial real estate you have, and then in twenty five years, you could sell those. Even if your business was worth zero, you're gonna be a fairly multimillionaire, and that can be your retirement. So a retirement plan doesn't have to involve stocks or mutual funds that banks try to sell you or or whatever.
[00:33:08] Dustin Serviss: It could be just as simple as owning a piece of commercial real estate. So thanks, Chris, for for the visit. And where can people find you and keep, up to speed with maybe some of your listings?
[00:33:20] Chris Wills: Our website is w w w venture commercial dot c a. By all means, if you have any questions about commercial real estate, please feel free to give us a shout. There's, a number of agents in our office that all specialize in different asset classes. So my passion is mine, but, if you have a specific question about maybe different asset class, we'll be well covered here.
[00:33:39] Dustin Serviss: Alright, Chris. Thanks a lot.
[00:33:41] Chris Wills: Awesome. Thanks.
[00:33:43] Dustin Serviss: Thank you for tuning in to this episode. If you enjoyed the show, please like and rate the the show, share with a friend, or use your new knowledge in your next conversation. If during the show something gave you a pang of inspiration, motivation, or sense of uncertainty, act on it now. Get the clarity you're looking for. Find the permission you seek. Go to servicewealth dot com to discover how others are learning how to take Fridays off or buying a recreation property or spending more money. If you're an organizer of an event where you believe my philosophy on finance and lifestyle design would be a click Go to service wealth dot com and
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