In British Columbia, there are not too many developers with the name recognition of Polygon Homes. That may be because of the prominence of Founder and Chairman Michael Audain, but it may also be because of the company's history and consistency.
Polygon Homes had a team of about 35 people in the '80s and that number has since grown to around 250 — including many who have been with the company for decades. The privately-held company has also become fully vertically integrated to include its own sales team and interior design team, among other things, and has completed over 34,000 units to date.
After joining the company in 1987, Neil Chrystal was appointed President & CEO in 2003 and has helmed the company ever since, including through the 2008 financial crisis and now the ongoing trade war with the United States.
In an interview with STOREYS this week, Chrystal reflected on the evolution of the company, some of the past projects that stand out to him, and the current development landscape.
Responses have been lightly edited for both length and clarity.
You've been with Polygon since 1987. How has the company evolved over the years?
The company was started in 1980 by our Chairman, Michael Audain, and I joined in 1987. Leading up to that, they were sort of a company that dabbled in a lot of different things. They did office, industrial, retail, some residential, but it was very eclectic. It was more driven by opportunities that arose than a strategic plan. And in 1989, Mr. Audain decided, quite wisely, that it would be a great idea to focus on multi-family residential for-sale product. And so, in 1989, we geared up and built out a residential team and basically started building condos in the inner suburbs — Richmond, Burnaby, North Vancouver, Vancouver — and just started growing the business from there.
Looking back at all the projects Polygon has completed, are there a couple that stand out to you?
One of my favourites is a community that we did in the City of Vancouver called Quilchena Gardens. It was basically a transformation of an older rental community into a mix of a new rental. It was a mix of low-rise, mid-rise, and townhouses, but in a very thoughtful way with a lot of tree preservation. It's just a very beautiful community to look at today.
Oftentimes it's the master-planned communities where we built over 1,000 homes on a 10- or 15-acre parcel [that stand out]. I think of Klahanie in Port Moody, which is lovely, and Sunstone in North Delta. We're actually working on a new one in Coquitlam called Coronation Heights, which will be spectacular. We're also working on a very large one out in Mission, which will have upwards of 10,000 homes on a 1,400-acre site. It's the biggest one we've ever done by far. We're calling it Highlands, but it's been commonly referred to as Silverdale. Over the years, different people have worked on it, but we took over about six years ago, and our first phase is currently being serviced, so it's brand new from that perspective.
A rendering of Polygon's Coronation Heights development in Coquitlam. storeys.com
On the flip-side, is there a project that comes to mind as being one that created a lot of challenges or headaches?
Well, they all have headaches; they're always a challenge, right? You're either working through a difficult time in the marketplace, or they're controversial in terms of their approvals. I think of Squamish, where we're building a number of townhouse communities — one of the challenges there is that we were converting an old golf course into a number of townhouse pockets. The golf course was being closed and it was quite controversial for a lot of reasons, but at the end of the day, we're turning over 90 acres of park that we're sort of restoring for the community. It's going to be stunning when it's finished. We finished the first of three townhouse communities, which we sold out last year; we've got the second project, called Terrain, that's under construction; and we've got a third one that will come early next year. So sometimes when it's so challenging to get your approvals, when you finally get to the product, it's that much more rewarding.
You mentioned the broad range of locations. Has that been a conscious effort?
I think we made the decision that if we're going to grow, we want to grow within Greater Vancouver, and that means doing more in more places and so we're very active across, really, all suburbs, whether it's Coquitlam, Port Coquitlam, Langley, Surrey, Port Moody, Maple Ridge, Mission. We haven't done anything in Chilliwack, but we've got active projects at UBC in Vancouver, Burnaby, North Vancouver, and Coquitlam. Our footprint is pretty large across the region, but we're also looking at unique opportunities and we like to build townhomes. We probably build more townhomes than most developers in the city. We do a lot of woodframe apartments, and a lot of high-rises too, but we're spread out across those three sectors. Abbotsford is another place where we're quite active too.
And there's also your affiliate company Morningstar, right?
They're our single-family arm. There's less single-family subdivisions that are being created, so it's harder for them to find neighbourhoods where they can build out a community. They've got two active [communities] right now — one is in Maple Ridge and one is in Abbotsford. I think the move is, you've got to move further up the valley. And they, of course, will be involved in our Mission project, which will have a lot of single-family.
You've been in the industry for a long time. Do you remember what the challenges of the day were back when you first joined the company?
Growing is always a challenge in terms of finding the right people to join your team. I'm really proud that we've got a lot of people who've been with us for a long time. They started young and we see a lot of these people retiring that have been with the company for over 30 years, so that's something that we're quite proud of.
Every real estate developer will tell you the challenges and the different cycles, whether it's high [interest] rates, working our way through the leaky condos crisis in the late-90s, the financial crisis in '08 and '09. We're in a tough market today. It's really quite challenging to sell homes these days, where there's so much uncertainty. People have come off from the bottom of a very low rate period and they're wondering when is a good time to get back into the housing market. The tariff situation has created more clouds of uncertainty.
We've always had this philosophy that when we deliver good value, buyers will come. We opened up a new project this weekend and we sold 30 of 32 townhomes over two weekends. We're not hearing a lot of those success stories in the market, but I do think it's important that people hear about it just because it does give people confidence that it's okay to go out and buy a home. The reality is that there's many people on the sidelines and they're waiting for a sign, they're leading their lives, they're getting married, they're having children, they're growing their families, they're getting new jobs, which gives them more money, and eventually they kind of have to come to this conclusion that it's time to move forward. How long are we going to live with our parents or how long are we gonna live in a basement suite? Eventually, people crack and they may say, okay, it's time to move forward, and I think we're kind of on the edge of that happening.
Which project are you alluding to that sold 30 of 32 townhomes?
That was one called Ridgewood in Coquitlam. It's a community of about 100 townhomes in the Burke Mountain neighbourhood of Coquitlam. It's a relatively new community. We had people line up last Saturday at 5:45 in the morning to be first in line to get a first opportunity to buy a home. That hasn't happen in a long time. It used to happen quite a bit, but it has not happened in a long time, and you would think that would be crazy to happen in today's climate. But again: good value, great location, and people are maybe tired of waiting for the right time to move forward. Maybe the stars aligned for us, but I'd like to think that good homes at a good price will sell in any market.
You talked about the various communities Polygon has worked in. How do you think the relationship between developers and governments has changed over the years?
Governments control how quickly we can move a project forward, whether it's the municipal government or sometimes the provincial government. They are the hurdles for us to move from the idea of buying a piece of land and designing housing for that land. There's a lot more regulations in place [now]. There's a lot more consultants involved in the design of a new home and the building of a new home, and everything has just gotten way longer. A lot of the problem is the time it takes and cost of the investment dollar that you put up to buy a piece of land. You've got a long period of time when you're paying interest on that.
Everyone complains about the [development] fees and I don't want to join the chorus of complainers, but the reality is over 20% of the cost of a new home is tied to taxes and development fees, and — quite frankly — it's too high, especially at a time when we're concerned about housing affordability. As developers, we all pass on these costs to new buyers. I understand that municipalities need money for infrastructure and community services, but there's a lot of times when those fees are a burden that can be shared across the broader community, but they're placed upon the new homes, which I particularly think is unfair. I think many community amenities — the cost should be borne across the existing community and not entirely on new homes. I also think there's a role for senior government — federal or provincial — to help invest in infrastructure, to open up more land for development, and take that burden away from municipal governments.
We're in the middle of an important federal election right now. At the end of the day, what do you think developers really want senior levels of government to understand about how they can help? Is it to just get out of the way? Cut fees?
I think both parties have put out a platform that includes waiving the GST on new homes, and I think that's a really good idea. They're both a little different. One is restricted to first-time buyers. The other is restricted to all buyers. They both have different amounts, but whatever it is, it's a spark, it's a catalyst to encourage buyers to move forward because if you can save the GST, then it's a really good incentive to buy a home today. I think the Conservatives have the better platform in terms of not being limited to first-time homebuyers and a higher amount of $1.3 million.
As a homebuilder, of course, I like that, but I do think that it's a solid idea, because there's too many taxes on housing. The GST alone on a $1,000,000 purchase is $50,000, and that's just not fair for homebuyers. I think the other component of the challenging market today is developers are required to have pre-sales on a tower and one of the key [segments] in getting a tower pre-sold are the investor markets. But, unfortunately, the investors have sort of shied away from buying homes in recent years, for a variety of reasons. Number one is, obviously, the tax that you pay. Number two is, although it wasn't [ultimately] introduced, the capital gains tax. Once you buy the home, you've got restrictions now on how you can choose to rent it out — many cities have gotten away from nightly rentals. There's speculation taxes on investors. For a lot of people, they buy a vacation home and they use it part-time through the year. For a lot of international buyers, they buy a home and, in many respects, it's their vacation home when they come here. Part of the problem is, if they don't live in it full-time, they pay a speculation tax and a vacancy tax. There's just too many taxes on buyers and it's really robbed our market of an integral component of how we move forward with these very large and risky developments. We need these buyers to help get projects started. There's just so many barriers to creating investment in Canada and that affects investment in housing, which is a real shame.
Across Canada, there's a lot of talk about, "We need more housing." To be fair, I think a lot of developers are actually ready to deliver more housing. What we need is the economics to make it financially viable. That's a story being told across the country, right? The cost of producing the housing is high. Can we limit that? Can we make timelines shorter? Can we eliminate some of the barriers? Can we create opportunities for buyers to join the market by eliminating the different taxes or buying bans? There are simple things that we could do. Politically, they may not have the appeal, but I think they're really important to kickstart our industry. I think the challenges in the market these days are less about supply and more about how we can deliver affordable homes. I think it's not just developers, it's also municipalities. We all need to work together to somehow to come up with ways to reduce the timeline of approvals and the fees and taxes associated with new homes. If we're able to do that, it will help to address the affordable delivery of new homes.
