Patience pays off for Halifax developer
Real estate: Hardman Group's belief in long term rewarded with Saint John Coast Guard project
Published Saturday February 26th, 2011
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rebecca penty
telegraph-journal
HALIFAX - Six years is a long time to sit on a real estate development project that is worth at least $70 million and poised to take a decade to complete.
Bill Hardman, president of development firm the Hardman Group, says a public company might have given up on the Coast Guard project in Saint John.
That's what Bill Hardman was doing until late last month.
The commercial real estate developer was biding his time as the City of Saint John and the federal government negotiated a sale of the Canadian Coast Guard site on the city's waterfront.
Other firms might have walked away, muses the 46-year-old president of Hardman Group Ltd. in an interview at his downtown Halifax office, the headquarters of a family company that employs 60 people across the Maritimes.
"If the city was working with a publicly traded company, maybe they would have moved on," Hardman says.
But the executive doesn't seem rushed to start pouring the foundation of a project that promises to transform six acres of key waterfront space in the Port City, which his company first bid to tackle in 2005.
"We believe in the long term. Maybe it's that family company philosophy," Hardman says, offering a bit of what makes the private firm tick.
The Coast Guard project is one of several - mostly in Atlantic Canada - that the Hardman Group has taken on since the company moved from being predominantly a "fee-for-service" property manager to a developer.
The transition happened shortly after Hardman took the reins 15 years ago from his father, who founded the company in 1965.
The senior Bill Hardman is now in his early 70s and chairs the company while Clayton Hardman - the patriarch's other son - heads up project development as his brother's equal shareholder in the business.
On the Saint John project, The Hardman Group finally got the green light to forge ahead and line up tenants for the mixed-use development at the waterfront site when the city announced in late January it had inked a deal to buy the patch of land in two phases from the Department of Fisheries and Oceans.
By April 1, the city will have paid $832,000, spending another $2 million by June 2012.
"It is the moment that everybody's been waiting for," the younger Bill Hardman says.
"There was always the chance the federal government would not sell the land to the city."
The Hardman Group will buy portions of the block from the city as it develops each of the four phases proposed, which together will mean a complex where residents can "live, work and play," according to Hardman.
Rather than overbuild, Hardman would prefer to meet just less than what the market wants for each phase to create "pent-up demand" for the next stage.
The company wants to build townhouse condominiums, offices, retail space and a hotel attached to the existing pedway indoor walkway, which links various uptown complexes, including Market Square and the Brunswick Square shopping centre.
Condominium units would also be built attached to the hotel to take advantage of some hotel services.
"There are some who don't want to cut the grass on a weekly basis," Hardman says, offering his pitch for uptown living.
Though the hotel industry has floundered over the last two years as an economic recession forced businesses to curb travel budgets, Hardman is hoping to line up three companies to consider moving in, before deciding on the final tenant.
And, despite the fact that some proposed mega-projects for the city and region have been scrapped since 2005, dampening the overall economic outlook, Hardman remains optimistic the Coast Guard redevelopment makes sense for Saint John for the long haul.
Hardman knows what it's like to wait out conditions that are less than ideal and he has a saying to describe the lack of control a developer has over the market:
"The real estate market doesn't lie, it's whether you want to believe what it's telling you," he says.
"You can't convince a buyer to do something if they're not in the right mindset."
He speaks from experience.
In 2003, in a bid to cash in on burgeoning markets outside Atlantic Canada, the Hardman Group bought up property and started developing an 1,100-home retirement complex with a partner in the northern Florida city of Ocala.
More than 1,000 people a day were moving to the Sunshine State at the market's peak, Hardman says, noting his company was selling 300 homes a year at the beginning.
When the U.S. housing crisis hit in 2007, that annual figure dropped to 20.
Florida is slowly bouncing back and Hardman Group is currently averaging closer to 50-60 homes annually, but conditions are still not good for building, which means two pieces of land the company bought will sit undeveloped for now.
At the same time, the firm is eyeing the future and two months ago bought 46 units in a 58-unit building in St. Petersburg, Fla. for "25 cents on the dollar," Hardman says.
Florida now represents 10 per cent of the Hardman Group's business.
Fee-for-service property management, the company's bread and butter when Bill Hardman Sr. started working with the Sobey family companies on their property developments, now means one-fifth of the Hardman Group's business.
The company had little choice but to move to the more lucrative - but risky - development side in the late '90s after the buildings Hardman Group was managing in Saint John were being sold.
At the time, the firm was managing Market Square, Brunswick Square, Place 400, Millidge Place, some assets for the Bank of Montreal and Westman Place on the city's west side.
Fortis Inc. (TSX:FTS) bought Brunswick Square, taking over operations, and Hardman Group decided to pick up Market Square ownership in 1999.
Since then, Hardman Group has turned that asset into a "festival location," Hardman says, pointing out there are five times the number of events now than seven years ago and sponsorship revenue is way up.
Enterprise Saint John CEO Steve Carson, who has known the Hardman Group for a long time, says the Coast Guard project has "synergies" with Market Square and the company's lasting presence in the city has allowed the firm to prove its commitment to building long-term relationships.
Hardman Group's values are "conservative, not flashy and flamboyant," Carson says.
"The whole company really understands what we're trying to do as a community and shares those values."
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Airport CEO says latest doling out of federal cash puts facility at disadvantage
Funding: MP says criteria was not met
Published Monday February 28th, 2011
C1
sandra davis
telegraph-journal
SAINT JOHN - If the federal government doesn't soon pony up cash for the Saint John Airport, passengers will suffer, says Bernard LeBlanc, president and CEO of the Saint John Airport Authority.
Cindy Wilson/Telegraph-Journal
Bernie LeBlanc, president and CEO of the Saint John Airport, is still pressing for federal assistance. Photo: Cindy Wilson/Telegraph-Journal
"We've been seeking government funding for quite a few years," he said, noting that nothing has come from the federal government for the Saint John Airport since they were transferred to local authorities in 1999.
"The challenge we have as one of three national airports in New Brunswick is that our neighbours have received money.
"We've asked, we've asked, we've asked.
"It's putting us at a competitive disadvantage with other airports. Everything we do is paid for by the passengers, but other airports have a chunk of their capital investment paid for by government."
Last Monday, the federal government announced it is investing up to $5.2 million for paving and lighting upgrades for the Fredericton Airport and up to $4 million to extend the Moncton Airport's runway.
The Saint John Port Authority will receive up to $4.5 million to expand berthing to accommodate the largest cruise ships, but there was nothing for the Saint John Airport.
While LeBlanc says he applauds the contribution to the port and the two other airports in the province, he has been asking for the same items for the past three years: centre-line lighting on the primary runway; slight modifications and improvements to the terminal building; and improving access to the airport and relocating parking to relieve congestion. Total cost would be about $8 million.
"We're not looking, at this point, of extending a runway, we're not looking at resurfacing a runway," he said, adding that those renovations will probably have to be done in 2018 and 2019 at a cost of about $20 million and that Transport Canada is aware of the financial challenge the Saint John Airport will face when both runways need to be replaced.
"We try to put money aside for the runways because if we don't, we can't operate an airport. Unfortunately, it prevents us from investing in the infrastructure we need to grow the airport," he said.
In a letter to Keith Ashfield, minister of State for the Atlantic Gateway, LeBlanc says he is interested in continuing discussions surrounding infrastructure requirements.
"We suggest moving these initiatives forward immediately and are prepared to review the infrastructure requirements we have on file with you immediately," he writes.
The letter, dated Feb. 25, 2011, was also sent to other federal politicians and their provincial colleagues, along with Senator John Wallace and Senator Joseph Day. It is signed by LeBlanc and by Saint John Airport Inc. chairman, Wayne Power.
Mayor Ivan Court says he is pleased to receive the federal port money and expects that lobbying will begin to get similar funding for the Saint John Airport.
"Our airport service is just as important as any other city in Atlantic Canada," he said.
"Only recently did the Saint John Airport do their strategic plan. They were a little late getting out of the gate on that one. We're working with them on that and I'm certain that the province and the federal government will be there to help."
That new strategic plan for long-term growth and sustainability has identified the commercial development of its excess land as the key to diversifying its revenue stream; it wants the land designated for commercial or light industrial development in the municipal plan the city hopes to adopt in 2011.
Plan SJ has said it will include the airport as a key piece of transportation infrastructure, but not as a commercial or industrial opportunity area, as requested, but LeBlanc remains hopeful the airport will be able to change people's mind before council adopts a new municipal plan, sometime this year.
"We're developing that plan," he said. "That may be something we'll want to work with different levels of government to try to make it a reality."
LeBlanc expects that within a couple of months, the airport should be in a position to launch the land-use project and says that funding could be sought to help pay for infrastructure, including water and sewer, that would allow for land development, in addition to air-service development initiatives.
Meanwhile, Saint John MP Rodney Weston said he was frustrated when he heard media reports that suggested the airport was overlooked for federal cash in the wake of last Monday's announcement that the Conservative government is investing $4.5 million in berth extensions at the Port of Saint John to accommodate larger cruise ships.
He said he recently met with officials from the airport authority and told them he was willing to work with them to come up with a plan to access federal funding to support the improvements they've been pushing for.
Weston said the airport's application for federal cash to support the improvements did not meet any of the conditions of the federal program that will fund the port's berth extensions.
The proposed airport upgrades, he said, did not have any import, export or trade implications and wouldn't have addressed safety concerns, which he said were among the criteria that would have made the airport projects eligible for funding.
Weston said federal officials relied on the New Brunswick Gateway Council, a private sector organization pushing for better transportation infrastructure, to identify a top funding priority, and the council named the port project.
Ottawa's investment in the port is a major coup for the city, the MP said, given that it will allow officials to continue to compete for cruise business.
"What should have been a huge win for Saint John is being positioned as a loss," he said. "We listened to the people who are in the position to know, and they set the priority. We focused and we worked towards it," he said.
But with both Fredericton and Moncton receiving federal money, passengers flying into and out of Saint John are left paying more for the airport's operations and infrastructure, LeBlanc said.
"The challenge we have right now is that airports in the U.S. get quite a bit of government funding for their operations.
"If all our neighbouring airports get capital funding from government and we don't, then we're at a real competitive disadvantage."
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