Cameron McNeill (CM): Good morning I’m Cameron McNeill. I’m here with Kari Henshaw from Insight Design. Kari welcome.

Kari Henshaw (KH): Good morning, thank you for having me.

CM: We’re in our Yaletown office and today we are talking about real estate. So just quickly here now, let’s get into what’s happening in the market. We’ve come through 2008-2009 which were very slow years, difficult on the whole industry. Professional service organizations, the work dried up because there was just not a lot of new projects coming forward.

You know we’re seeing now more of a push towards value. We are seeing the market recover quiet quickly in Vancouver, there is demand, and supply is trying to catch up with that demand. The world has changed, what are you seeing with your clients?

KH: Well, I agree that things are starting to pick up again and as soon as the light switched off last year, that’s what we called it in our office, all of a sudden things changed and it is almost like the light is just going on, the dimmer switch is coming up and things are slow just brightening up again, which is great. And I agree with you about the trend more to value with any of the new multi-family projects that will be coming up. I think things will be a lot different than they were.

CM: We see it on designs, the home sizes are about the same, but construction costs have come down. We’re trying to deliver real estate at reasonable prices. There used to be back in 2006-2007 people trying to outdo themselves with better spec and better spec and better spec, and now it’s completely reinvented itself. Now people are more concerned with who the developer is, what the location is and that the overall look and feel feels good.

KH: I think it’s going to go back to how it used to be. We were just having this conversation just a while ago and we were talking about the fact that when so and so did this on their project so now we have to do this and it kept going going going. Whereas before, back in the day, it was a pretty basic spec and we would offer upgrades to that spec and the upgrades have gone by the way side it seems and I think that may be something that might be coming back where with a project you can buy in at that base level spec and this is what you get but if you do want to spend a little more you’re going to be given that option if it’s on a presale product.

CM: I was doing a tour on Tuesday with one of my big developers and we probably went through eight projects and I must admit I saw a bunch of spec packages that they obviously spent a lot of money but the actual delivery wasn’t that great. They didn’t have the mojo is my word and then I saw probably two of the eight that weren’t necessarily more money but the way they where put together was more thoughtful, better selected and just really had it.

KH: Was it about finishes specifically or about the project in its entirety.

CM: I would say the same comment about the project but what I meant was in the finishes specifically.

KH: Ok.

CM: I walked into a project and it was like oh my gosh this is terrible you know. It’s either bad taste or to over value engineered sometimes, you know what I mean by that, of course the developer got their hands on the interior designer and really messed it all up. So just give me a sense for when you get that package and it all fits together versus just picking expensive things.

KH: Expensive things doesn’t always make it look like you’ve spent more money necessarily. By spending more doesn’t always look like you’ve spent more, do you know what I mean?

CM: Yeah.

KH: So we always call it the best bang for your buck. So we want it to look like you’ve spent a lot but really we’ve creatively solved the problem of spending too much by just injecting things where it really matters.

CM: I know when we do projects together you are always asking MAC to really paint a picture of who the target market is. Who is going to live in this spot, and so sometimes I can walk into a project that is finished or they are trying to sell and you can say they’ve put a great package together but they’ve missed the mark as to who is going to buy this stuff.

The MAC ESP process where we try to envision whom the buyer is going to be, we ask you to participate in that. Is that a valuable thing for you guys?

KH: It is. I think when we’re doing a design it just helps us a lot to know exactly who our target market is and who that person is that’s going to be living there. And for us when we are doing a design I think it always tells a better story if you can walk in that presentation centre and you immediately get it as you walk in, what that project is all about, who is going to be living there. You walk in; you walk through, everything right down to the brochures and the graphics within that space, and you walk through the display home. You get it, it’s cohesive. It makes a huge difference I think.

CM: 2010, from your perspective what are we going to see.

KH: Well I think interior design for new developments are going to be more critical than ever. But it’s got to be well thought out and well planned and creatively resolved. I do see it going back to maybe a little more of the basics as far as product is concerned but with interior design we’re just going to have to be clever with how we choose our finishes and the end product.

CM: We’re finding that the industry was getting a little bit crazy back in 2006-2007, a lot of irrational decision making was happening and now we’re finding that every dollar really makes you know a dollar spent per suite really makes a difference. The difference between a $35 door handle and a $40 door handle now actually means something. It was getting a little crazy where a 1000 little decisions where all just made in a very casual way. That’s what I’m seeing as well, there is much more attention to the cost side of it and that all adds up so that they can deliver product at a lower price.
We’ve got a few projects open now that you’ve been working with us, M1.

KH: I’ve heard you guys have been having great success.

CM: Great success… I think that a project should take a year to sell out, not a weekend to sell out.

KH: Well I have a question about that, do you think that we’re going to be doing as much presale or is it going to be more end product that you are going to be selling from?

CM: The reality is that banks are getting very tight so when the fiscal boot straps are getting really constrained developers need presales in order to come to market. The problem with a banking industry is Vancouver is painted with a bay street brush. Unfortunately presales are going to be required, the good news is our supply is so low and demand is still strong that I think we are able to achieve presale targets as long as you say the whole cohesive package is well thought out and really brought forward and developers are very realistic with their pricing.

I’m very confident that presale targets can be met in order to get financing rolling and projects started. There really isn’t that many developers that have the capacity to self-finance. There are a few and they will have the benefit to be able to get there projects rolling but the majority of the market will still require presales and those targets are actually are becoming or have become more difficult then easier.

Its kind just like you said when we started this reminds me of 2002 all over again when presales should sell out at a slight discount to brand new fully finished product.

There is not a lot of speculators, we do sell to investors but these investors are now long term. I am much more confident with the stable market that we have now then the hot and feverish market we had 2 years ago.

KH: It was a little crazy.

CM: A little crazy, it wasn’t sustainable. Anyways thanks so much, we’re going to have you back again.

KH: Sure.

CM: Next time I’m going to ask you about secrets for small spaces.

KH: Ok.

CM: I know you are phenomenal for making small spaces sing. Thanks so much, thanks for listening, we’ll see Kari again. Bye.