The Strategic Group

It's good to talk┬áWill Smith, vice president of development and construction for The Strategic Group, AlbertaÔÇÖs largest private owners and developers of commercial real estate, explains to Gay Sutton why this young company is both a long-term player and an expert communicator.  The Strategic Group has been in existence for a little under six years, and during that time its activities have mirrored the property boom in Canada.  Growing from a startup property development company in Calgary, AlbertaÔÇöwhere it began with two propertiesÔÇöit now owns and manages over 60 office and retail properties that total over 5 million square feet of real estate. Still owned and managed by its founder, managing director Riaz Mamdani, it has headquarters in Calgary and a branch office in Edmonton, employing over 160 staff members between the two cities.┬á ÔÇ£WeÔÇÖre not merchant developers,ÔÇØ explains the firmÔÇÖs vice president of development and construction, Will Smith. ÔÇ£We donÔÇÖt develop for the purpose of sale. We invest in the properties we develop as a long-term hold position, which is why weÔÇÖve amassed the total square footage we have.ÔÇØ As a long-term property owner, most development decisions are made with the longevity, maintenance and environmental performance of the property in mind, as well as the comfort and convenience of the tenants. And unlike many developers, the company avoids decisions aimed purely at making a quick return on its investment. ÔÇ£This means we take a harder look at the mechanical systems, electrical systems, life expectancies and lifecycles of our buildings. I think thatÔÇÖs one of the things that have made us attractive as a landlord,ÔÇØ says Smith. ÔÇ£Our tenants know we own our buildings and take pride in that ownership.ÔÇØBecause Strategic acquires and develops property for long-term ownership, it also makes an effort to build long-term relationships with the business community and with the local residential communities. ÔÇ£We try to tie the naming of our developments to something that is local or significant in the geographic area. We encourage local businesses to take leases in our retail outlets wherever we can, and we try to engage with the local community so that we truly become their neighbor rather than just a business entity,ÔÇØ Smith says. ÔÇ£One of our best examples of that is the new development in the Mission area of CalgaryÔÇö2004 4 Street.ÔÇØMission is one of the older residential districts of Calgary, and the development is an interesting one. The site was acquired from a previous developer who had gone bankrupt and was ÔÇ£a bit of an eyesore for the community, as it had sat vacant for a number of years,ÔÇØ Smith says. Not only was the abandoned site unsightly, but it had been recognized as something of a health hazard and had angrily been dubbed ÔÇ£the hole in MissionÔÇØ by the local community. Strategic has had a mountain to climb in overcoming this local distrust and cynicism, but it has now reached the stage where the community looks upon Strategic as the company that has ÔÇ£filled the hole in Mission.ÔÇØ And it has achieved this by spending time and resources in working closely with the local business and residential communities.Piloting a new program called the DeveloperÔÇÖs Code of Conduct, in conjunction with the city of Calgary, Strategic has also been instrumental in developing a city-wide blueprint for reducing the impact of development projects on the local community. ÔÇ£We initiated the project because we strongly believe in it. We now provide feedback to the city on the program and assistance in helping develop or tweak it to make it more effective.ÔÇØ Ultimately the city would like to see all developers abide by the code. ÔÇ£One element of this project is keeping the community informed,ÔÇØ Smith says. ÔÇ£We let them know, for example, if and when weÔÇÖre going to be doing noisy work, we keep them informed about lane closures on the roads for things like concrete trucks or crane deliveriesÔÇöbasically giving them a fairly decent heads-up for what might or might not impact them as a community.ÔÇØDuring this pilot project Strategic interacted with the community in many ways, including monthly reports in the community newsletter providing updates on progress and on what to expect during the month ahead, and the more traditional activity of supporting local events such as the Lilac Festival. But some of the more innovative initiatives have proved very effective. For example, the site itself has become a major communication tool. The company has created an email account that anyone can send to at any time if they have questions to ask about any of the companyÔÇÖs current projects. ÔÇ£We publish that email address, in addition to our phone number and information, on our hoardings around the site. We likewise publish the contact information for our general contractors should they have any concerns or complaints. So rather than hiding behind the hoardings, we use them as a public billboardÔÇöa way of providing information as opposed to advertising,ÔÇØ Smith explains. ÔÇ£The program has been incredibly successful for us as a learning experience in terms of better ways to communicate with the public,ÔÇØ he says. ÔÇ£But at the end of the day, the true winner is the community.ÔÇØIn recent years the LEED certification process has brought environmental concerns racing up the construction industry agenda, and Strategic has an unusual view on the concept. ÔÇ£While LEED is an excellent checklist and an excellent guideline, itÔÇÖs important that weÔÇÖre not blinded by the pursuit of the certification alone,ÔÇØ Smith says. ÔÇ£It is our firm intention not only to pursue LEED certification criteria but also to go further and incorporate additional sustainability measures.ÔÇØWith a company-wide commitment to the environment led by Smith and founder/managing director Riaz Mamdani, the company employs sustainability consultant Enermodal to oversee its projects from day one, working in conjunction with the architect and engineers. ÔÇ£We have a new landsite in the city called Heritage Station located on an LRT [rapid transit line],ÔÇØ says Smith. ÔÇ£When fully developed it will support 800,000 square feet of office space.ÔÇØ The company has already received a lot of interest from the business community and is expecting it to be very popular because of its proximity to the transport link. ÔÇ£The total site will comprise four buildings, and as part of our concept drawings and brainstorming sessions weÔÇÖve already begun to examine how we can deal with the sustainability issues such as harvesting of rainwater for reuse for toilets and irrigation, and how we can minimize energy consumption through such technologies as automated building systems and best practice HVAC systems.ÔÇØStrategic is not only applying this philosophy to its office projects but also to its retail sitesÔÇöincluding the latest retail project located on the Chinook Lands at 58 Avenue and Macleod Trail S. Similar environmental considerations will be given to this new, enclosed retail environment. On greenfield sites the aim is to make the smallest impact on the environmental footprint, while on brownfield sites the first question to be tackled is how to reuse and recycle materials from the existing buildings. ÔÇ£We have a project that weÔÇÖre piloting at the moment called Strategically Green,ÔÇØ Smith says. This looks beyond the choice of building materials, technology and construction techniques to the day-to-day running of the buildings. ÔÇ£So weÔÇÖre looking at recycling programs and how we can enhance them in our existing buildings, right down to examining landscape planting from the ÔÇÖ80s or ÔÇÖ90s that may not be the right solution for todayÔÇÖs environment. In this case weÔÇÖre looking at plants that require less water and are indigenous and naturally hardy.ÔÇØStrategic is also a great believer in building and maintaining strong relationships with its business partners. Wherever possible the company likes to retain consultancy partners from one project to the next. So the architects, the electrical, mechanical and civil engineers, and the environmental consultants remain the same wherever possible. ÔÇ£This provides continuity in terms of understanding where we hit and miss the mark,ÔÇØ Smith says. ÔÇ£At the end of every project we do a postmortem on that project. We take a look at what we were able to achieve, how the technology has changed and what we might have done differently. Then we create a new benchmark: what we can do better. We very rarely just duplicate a project.ÔÇØ This is true even in the companyÔÇÖs largest ongoing project, the prestigious Sundance Business Park in Calgary, which is spread across a 17-acre site and is being built in phases. Part of it is already occupied, and the rest will be progressively handed over to tenants between now and 2011. Although the development consists of a multitude of office buildings, shops and a hotel that are all very similar in appearance, ÔÇ£Each one is becoming more environmentally sensitive as the technology available to us improves and lessons are learned from previous projects.ÔÇØ The third and perhaps most important relationship for the company is the one that it builds with its tenants. Very early on in StrategicÔÇÖs history, it decided to retain all the property leasing and management functions in-house rather than entrust them to a third party. ÔÇ£These functions have a huge impact on how our tenants are treated, so we didnÔÇÖt want to hand over something so valuable to someone else.ÔÇØ As a result, the company is operating as a fully integrated real estate company. In-house leasing teams work with the brokerage community to lease the properties, and a property management group oversees their management.Excellent customer service is driven through all levels of the company through a program called Strategic Excellence. ÔÇ£This forces us to think of our tenants as our guests, as opposed to being the source of business transactions that occur every five or ten years. We encourage all our people to get to know the tenants and to maintain contact with them, to ensure that no problems go unnoticed and that their issues are always addressed. We also continue to redevelop and reinvest in our buildings to maintain them in a modern and clean manner,ÔÇØ Smith explains. ÔÇ£Our hope and goal is that we will create such an environment for the tenants that when it comes time for renewal thereÔÇÖll be no reason why they would want to leave.ÔÇØItÔÇÖs this philosophy of partnershipÔÇöforging strong relationships with tenants, suppliers, vendors, consultants and constructorsÔÇöthat the company hopes will see it through despite the current global economic situation.┬á The construction industry in many regions of Canada and the US has been badly hit, but Strategic is still seeing a great demand for its properties. ÔÇ£We are cautiously optimistic,ÔÇØ Smith says. However, the company is responding to the situation and adapting its strategies to the new climate. ÔÇ£We will no longer be building speculatively. WeÔÇÖll be building for a tenant that we already have in place.ÔÇØ And success in this future world will, he believes, be ÔÇ£based on the relationships weÔÇÖve forged and how weÔÇÖve treated our business partners.ÔÇØ┬á