Wes Myles engineered his rapid rise into the upper echelons of Toronto’s real estate industry from the ground up — literally.
Arriving from Sault Ste. Marie in the mid 1980s with little more than ambition and stick-to-itiveness on his side, he worked as a carpenter for eight years in midrise construction from Etobicoke to North York to Scarborough before starting his own construction business.
“It was a great way to get to know the industry and the city,” says Myles, president and chief investment officer at Toronto’s Clifton Blake Group, a vertically integrated developer and private REIT (Real Estate Investment Trust) that builds and manages purpose-built rental (PBR) communities on the periphery of Toronto’s downtown core.
“Carpentry had a wider scope then and I worked across a number of specialty trades from conventional wood framing, loose material concrete forming to acoustics and soundproofing,” he adds. “My specialty was anything that needed to support weight.”
Myles jumped to the corporate side of things after finishing his Schulich School of Business MBA, working for GE Capital and KPMG’s real estate advisory where he got a front-row seat for some of the biggest real estate deals of the day.
“I was the go-to guy in the office for any construction related questions because I had worked on sites for many years.”
Myles then hopped over to private equity at Slate Asset Management, a global real estate investment company, helping acquire, renovate and lease some four million square-feet of office space in Canada over 36 months in the aftermath of the dot-com bust in 2001.
Along the way, Myles completed a post-MBA program in real estate and infrastructure from Schulich and Harvard University’s leadership program in real estate.
“Both challenged my assumptions about the business,” says Myles, “and were great networking opportunities.”
He partnered with fellow Schulich alumnus KC Daya to create Clifton Blake Group in 2011, his third attempt at launching a private equity real estate fund.
Today, the company has more than $1 billion in gross assets under management, says Myles, and is one of the leading drivers of the rental construction boom across Toronto.
With more than 16 projects completed or underway, Myles says Clifton Blake plans to bring about 550 new purpose-built rental units to market in the next 18 months and more than 1,500 by 2028 — a number of which will be supported by Mayor Olivia Chow’s rental housing initiative.
The PBR market as a whole experienced record growth in 2024, as total inventory of units under construction in the Great Toronto and Hamilton Area (GTHA) jumped to a multidecade high of 23,376, according to analytics firm Urbanation. A further 159,176 were proposed for construction, with about half that number approved and in pre-construction.
Meanwhile many condo developers were forced to either delay, cancel or flip projects from condo to rental as a result of higher interest rates, dwindling investor demand and a growing willingness among gen-Zers and millennials to look at renting as a long-term option.
The Star recently sat down with Myles to discuss the latest boom in PBR construction starts, whether the real estate industry is on the cusp of a reset after decades of focusing on condos and the outlook for rental starts in 2025.
Clifton Blake’s REIT drives much of your rental development. What makes your REIT different from others?
Our focus is to blend our properties into existing communities adding to and enhancing what is already there. We believe in this boutique approach, and frankly so do many of our tenants, investors and supporters.
Two good examples are The Carvalo at 871-899 College St. near Little Italy and Cricket Park at 1886-1928 Eglinton Ave. W. near the future Fairbank subway station.
Both properties are mid-rises located in what we like to call inner suburbs, which are walkable neighbourhoods along transit corridors where public transit, bike-share and rideshare services are typically more popular than cars.
They have purpose-built rental as a long-term investment product and smaller format community retail. Not a lot of this has been built over the past several decades.
Purpose-built rental starts eclipsed condo starts in Toronto and GTHA in 2024 for the first time in decades. What are the main reasons for the surge?
A combination of population growth driven by immigration, stable rent growth and most importantly developers willing to take on the risk associated with PBRs.
The Ontario government’s decision to lift rent controls on apartments built after Nov. 15, 2018 and the recent softening of the condo market have also played a role.
The upswing in PBR housing is mainly being driven by developers like Clifton Blake who are backed by private equity or those backed by institutional investors and pension funds. Why is that?
I think the housing shortage has changed the industry calculus and PBRs are starting to receive attention from larger capital players.
Residential rental has become a sought after asset class, but it’s hard to find because most rental housing today was built in the 1960s and ‘70s.
It has not kept up with the times in terms of design and energy management, which makes it a less productive asset than new construction.
As a result institutional capital and professionally managed money, including pension funds, are helping get rental stock built.
This new supply of PBRs coming online is the first time in a long while that a meaningful volume is being introduced.
But it’s still well below what this type of capital could likely absorb over the next ten years or so.
Is the real-estate industry on the cusp of a reset after decades of focusing on condos?
A portion will reset, but it’s all about where investors want to be over the long run.
As capital markets get more comfortable with an ownership model of 10-plus years and if demand remains strong, the PBR sector will continue to see robust growth.
Having a certain size of portfolio matters in order to gain efficiency, so I suspect Clifton Blake and others will keep our foot on the gas for the next several years.
Ultimately the condo market will return and will still contribute to the housing stock because some capital prefers a shorter time horizon where you take your money and run after five years.
There seems to be a willingness among Gen Zers and millennials to look at renting as a long-term option. How is that changing the real estate business?
A large number of our tenants are younger professionals, but we’re seeing a shift to renting among all age groups for different reasons.
Mature and older folks may want to sell their house and rent so they can travel more. Or a retired couple may be moving from Winnipeg to Toronto because their kids and grandkids are here, but they’re not interested in home ownership.
Also as retirement homes become increasingly expensive we’re seeing a need for multi-generational apartments where mom has her own room with an ensuite that is a comfortable distance from the main bedroom.
We take these changing needs and lifestyles into consideration as we bring new product to market.
Governments are now incentivizing new rental housing, including favourable financing and reduced development charges. How important is this support?
Absolutely important. In order to have long-term solutions you need policies, and I mean long-term policies and incentives from all levels of government.
A full-blown housing policy involves market-based solutions, market-based partnerships with government, and government housing solutions with help from the private sector for the marginalized of our society.
Mayor Olivia Chow’s decision to invite builders to submit applications to deliver 7,100 new rental homes, including over 1,000 affordable rental, with support from the City of Toronto is a case in point.
Clifton Blake is one of the builders selected for the first phase of this program.
We chose to participate by re-densifying an existing development application that will add over 50 new units based on the city’s definition of affordable.
What regulatory changes would you like to see?
Development and construction cost escalations pale in comparison to the cost of time delays in the PBR development model.
Our capital and financing requirements are much more time sensitive than a typical condo developer, but regulatory bodies have not quite figured that out given how long condos have represented the bulk of supply.
Also, thinking needs to change around development charges and I mean the timing of the payment for those charges, not just the level.
There was some pullback in rental housing starts in the latter part of 2024. What was the reason and can we expect another record year in 2025?
Capital markets are taking a breather from real estate as a category for a few reasons, foremost among them the record number of completed condos coming to market.
There is some concern this new inventory will drive rents down temporarily for everyone.
That’s obviously not a positive if you’re thinking of starting a new PBR project, but we take a longer view and look past these transitory issues.
We recently bought a condo-approved site we’re taking back to the drawing board to develop as a rental property.
However, we are seeing certain PBR projects being shelved or deferred by our peers.
Despite the popular narrative about development profits, margins in the industry are in fact very thin and require intense management to ensure the risk-reward equation is balanced.
That’s the reason we are vertically integrated, operating development, construction and leasing in-house. We do everything, including property management.
As for 2025, our opinion is that PBR starts will slow down, but come back strong with another blip beyond normal as a result of rent increases in 2026 and 2027.
After that long-term growth should stabilize at about two or three per cent annually.
There’s still plenty of room for rebalancing the rental market away from investor owned condos as the main housing driver.
