Another day in the life of the ‘serial and unrepentant’ entrepreneur who is Atlantic Business Magazine’s CEO of the Year
It’s 11:30 a.m. on Wednesday, May 27, 2015. Jim Spatz, the chairman and CEO of Southwest Properties, and Gordon Laing, his president and COO, sit on opposite sides of a small round table at one end of Laing’s utilitarian, far-from-luxurious office on the ground floor of Southwest’s signature Bishop’s Landing condo-retail project. This morning, they’re casually working their way through the more than half-dozen items on the agenda of their weekly meeting.
I am a fly on the Southwest wall, listening while they talk.
Earlier in the month, Atlantic Business Magazine had selected Spatz, a self-described “serial and unrepentant entrepreneur” as its “2015 CEO of the Year.”
The magazine’s top CEO is picked by a panel of independent judges from among the ranks of the Top 50 CEO Hall of Fame or that year’s Top 50 CEOs, who have each been singled out for “their corporate, community and industry involvement; their company’s growth in recent years; and, their responses to various managerial challenges.” The CEO of the Year is first among that group of sterling equals.
Spatz is no stranger to this exclusive club. In 2010, he was named to Atlantic Business Magazine’s CEO “Hall of Fame” after five consecutive years as one of its Top 50 winners. The man across from him is no slouch either. In 2014, Gordon Laing was inducted into that same Hall of Fame, in part for his successes at Southwest, which he joined in 2006, but also for his earlier accomplishments as CEO of Truro, N.S.’s Crossley Carpet Mills. Southwest itself has been ranked among Canada’s top 50 managed companies for the last four years.
How better to see how a top CEO thinks (and acts) than to hang out for a day at Southwest? The ground rules were simple. I was allowed to sit in on all Spatz’s meetings and follow him as he went about his business, but there would inevitably be conversations — personnel matters, for example, and confidential business matters — he wouldn’t want reported publicly, or in detail. I agreed.
I didn’t begin my day with Spatz until his 11 a.m. meeting with Laing. Spatz, a trim athletic 66-year-old (he has a cycling path in Tel Aviv named in his honour, and is soon to start training for an Italian cycling adventure with a few close friends in October), sometimes begins his days by swimming laps in the backyard pool at his family’s “ultra-modern” $1.8-million home on a quiet cul-de-sac in south end Halifax. Not today. “It was cool this morning,” he tells me. Instead, he listened to a CBC radio interview with the authors of a new book on the rise and fall of once-iconic Canadian smartphone maker Blackberry, then promptly emailed the members of his book club to suggest it as their next book. After that, he had private meetings to go over the details of his will and estate planning. “Boring stuff,” he tells me.
“Where are you off to?” asked his partner and soon-to-be wife, Val, as Spatz headed out the door.
“How’s that going for you?” she responded lightly.
Another possible answer: very, very well, thank you very much.
Southwest, which was launched in the 1950s by Spatz’s Holocaust-survivor father, Simon, with a modest investment in one small Halifax apartment building, currently has close to $1-billion worth of real estate projects at various stages of development in various parts of the city. But that barely skims the surface of the company’s many and various corporate currents.
Southwest is piloting the double-digit-growth evolution of Premiere Executive Suites, Canada’s largest provider of “highquality temporary residences for professionals and families,” currently boasting 1,600 units in 38 cities across Canada. Southwest acquired majority interest in the company in 2007.
And then there’s Bishop’s Cellar, the popular specialty wine, beer and spirits store in Southwest’s Bishop’s Landing project. Though more labour of love than key piece of the Southwest empire, it — like Premiere — is separately managed and also enjoying double digit growth.
And then there’s The Algonquin, the iconic St. Andrew’s, N.B., resort hotel Southwest and its partner, NewCastle Hotels, acquired from the New Brunswick government in 2012. Last year, Southwest completed a “rafters to registration” retrofit of the property. It’s just one of several joint-venture hotels Southwest owns in the Maritimes.
And then there are 600 Florida condo units the company owns and is currently renting out as apartments. What to do with them?
Not to forget some other potentially developable local properties Southwest has been invited to make an offer on. Should they?
And then… There is still, of course, the mundane matter of managing Southwest’s local portfolio of 1,250 rental units of all shapes, sizes and price levels, some of which date back to Spatz’s father’s earliest days in the business, and some of which are newer jewels in the corporate crown (like the LEED Gold-certified Grainery Lofts in south end Halifax, which opened in 2012 and continues to boast near full-house occupancy). And there’s more, including Southwest’s ongoing management role at Atlantic Place, the largest office building in St. John’s, N.L.
So there’s plenty for Spatz and Laing to talk about today.
Before we return to this morning’s agenda, however, it’s worth drilling down for a closer look at the impressive, ongoing, overlapping, all-certifiably-sustainable real estate development empire Spatz and Laing are juggling… Just to give you some idea of what’s at stake.
First, there’s Maple, a $102-million, 21-storey, 300-unit apartment complex — “the largest [downtown Halifax] residential rental building ever built” — currently rising from the hollowed out shell of the former Bank of Canada building on Hollis Street. It’s scheduled to open in the spring of 2017.
Then there’s the Cunard, a $120-million, 300-unit residential and retail waterfront complex just south of Bishop’s Landing. It is scheduled to begin construction this fall.
And then there is South Park, a $140-million mixed-use condo/apartment/retail/new-YMCA project on the former YMCA and CBC building sites across from the Public Gardens and Citadel Hill. Although Pavilion, the condo portion of the development, isn’t scheduled to open until 2018, 90 per cent of its 92 condo units have already been spoken for.
And then there is the Motherhouse motherlode — a $500-million project to turn 63 acres of former Sisters of Charity land on the edge of Halifax into a “created community” for 4-5,000 people. That project will take at least a decade to come to fruition.
Much of what the two men talk about at their meeting this morning, however, focuses on specifics.
Including the specific question of how to strategically stage the South Park site’s demolition and development so as to not only complete the overall project as quickly as possible but also do so in a way that the project will begin generating income — from apartment dwellers in one tower, or condo buyers in the other — sooner rather than later.
The original plan was to complete the demolition of both the old YMCA and the CBC buildings before work began on an underground parking garage across the entire site. Once that was in place, they would build the condos above the CBC site first, and finally add the apartment complex over what had been the Y.
The YMCA facility is already history. But the CBC building — well, that’s another story. “It’s like a fortress,” Jim marvels. Because it was originally built to accommodate a new car lot on its roof, it’s a “hugely robust structure” engineers estimate will take at least eight months to completely demolish.
Alan Greenberg, the Toronto developer with whom Southwest is partnering on this and the Cunard project, recently suggested changing up the schedule and begin by staging construction on the YMCA half of the site even as the contractors tear down the CBC building. That way, they can then begin work on the apartment building above it and Southwest can begin renting those units sooner while the rest of the condo tower takes shape next door.
“Interest rates are really low now,” Spatz explains, “so we want to build quicker to take advantage. In an ideal world, we want to finish sooner and lock in interest rates earlier.”
But what about?… And why not?…
They agree to add the questions to the agenda for this afternoon’s biweekly executive group project management meeting.
Who among the head-hunted finalists should they hire to be the new regional president of Premiere Executive Suites’ western operation? “They’re both strong candidates,” Laing says. They quickly agree on who to offer the job to first — in the back and forth between Spatz and Laing, you sense a complete-the-other’s-sentence chemistry — as well as how to manage his salary expectations, not to forget answer possible questions about that salary from other executives. “People make more money in Calgary than in Halifax,” Laing notes. That said, they agree salaries in Calgary don’t reflect the current economic reality of Calgary. “We need to create some ownership [options for the winning candidate],” Spatz concludes, “more back-ended upside.”
They also discuss who to hire to manage the sale of those Florida condo units. Southwest bought them with its Halifaxbased partner Armco at fire sale prices after the American housing meltdown in 2008, then successfully rented them out as apartments (98 per occupancy) while they waited for the market to recover. They’re now ready to peddle them for what Spatz hopes will be three times their purchase price. “Ideally, we’d put up the ‘for sale’ sign and sell,” he says, but he knows it won’t be that simple. There are mortgage insurance complications, not to mention the critical need for someone on the ground to manage the whole process. He and Laing discuss potential hires. “Why don’t you reach out and make her an offer,” Jim says of the most promising candidate. While he is clearly the ultimate boss, Spatz — unlike his father who liked to run everything to do with his business — seems willing and able, even eager, to delegate.
They have a tougher human relations decision to make about how to deal with a situation that is threatening to push a project over budget and past deadline. “If something isn’t going right,” Spatz allows, “it’s best to make changes as quickly as possible.” It’s clear that decision has already been made. “Why don’t you arrange a meeting,” Spatz says to Laing, “a half-hour chat to let him know we’re moving forward” without him, but also without creating hard feelings or possibly generating a law suit. In all its years in business, Spatz says proudly, Southwest has only dealt with one actual lawsuit.
On another unrelated matter, Laing reminds Spatz, there’s “60 pages of lawyer stuff” someone needs to wade through. It’s a proposed legal agreement with one of their project partners. “The clause you were asking about is not there,” Laing says. Should he ask their Halifax lawyers to draft a separate document, or just run the Toronto lawyers’ version past the Halifax ones? “You decide,” Spatz says.
It’s not yet noon and they’ve accomplished a lot. Time for lunch.
“Do you want to see the new offices first?” Laing asks Spatz.
Thanks to a pressing need for offices and meeting space to accommodate the company’s growth, Southwest has just completed an office reorganization. Staff began relocating Friday. Southwest will eventually move again to new and spiffier corporate offices in the Cunard once it’s built.
“We’re going back to our roots,” Spatz jokes as we tour the area. When he returned from a career as a Montreal emergency room doctor to join his father’s apartment rental business in 1988, Spatz remembers Southwest’s entire head office was squeezed into one small, vacant ground-floor apartment. Today, with 140 employees, the company needs considerably more space.
We eat at a nearby small Vietnamese restaurant about halfway between Bishop’s Landing and the long-gone independent grocery store where Spatz’s father began his business career.
We’ve already told the Spatz family story — from Simon’s arrival in Halifax in 1950 as a penniless 37-year-old Holocaust survivor through his evolution from grocer to landlord to successful contractor to property developer, and then Jim’s own progress from the dutiful immigrant son who becomes the professional his father wanted (in his case a respected Montreal emergency room doctor) only to realize his real place is the family business, so he returns home to join his father, the inevitable tensions that follow, the eventual transition and, ultimately, the spectacular growth and expansion of today’s Southwest Properties — in our March-April 2014 issue. Still, sitting in this restaurant today, it comes as a shock to realize just how close — and yet so far — are the bookends of this family enterprise.
The woman who runs the restaurant comes over to chat briefly with “Jim,” who is clearly a regular, and welcome, customer.
Over lunch, we talk less about Southwest’s big projects and more about a creative idea currently animating Spatz and several of his executives. The still-in-the-dreaming-stage concept is to tear down an old, two-storey brick apartment building on a lot Southwest owns downtown and replace it with a small-footprint mini-tower of compact, highly designed apartments aimed at university students ready to move out of residence, or single, first-time apartment dwellers who want to live downtown, but for a reasonable rent. If the model works, Spatz thinks the concept could easily be replicated on a larger scale in cities like Toronto or Calgary.
Back at the office, seven members of Southwest’s executive group — an eighth is on vacation — gather in the too-small boardroom for their bi-weekly project management meeting. On off-weeks, Spatz and Laing hold one-to-one sessions with the leads on their various development projects.
Besides Spatz and Laing, today’s participants include Eric Burchill, vice president in charge of planning and development, Paul Murphy, vice president and chief financial officer, Ben Young, vice president of land development, Louann Scallion-Morine, planning analyst, and Alison Winsor, Spatz’s executive assistant. With the exception of Spatz and Laing, most appear to be in their thirties or forties. It is probably not lost on any of them that they are ideally positioned to grow into more senior roles in the future, and that Laing and Spatz are monitoring their progress.
Despite that, the atmosphere is relaxed, casual. Although he sits at the head of the conference table, Spatz — dressed today in blue jeans and an open-necked pale blue shirt, no tie — sets the “flat-organizational-structure” tone the company boasts about on its web site. Everyone appears free to speak their mind. Spatz himself speaks softly, sometimes too softly, and his voice occasionally trails off as he reaches the end of his sentence. “People sometimes complain I mumble,” he admits. Though he occasionally slips out of the room to take a quick call on his cellphone, Spatz never seems to lose the thread of the discussion and marks each completed agenda item with a large check mark.
As organized as it is, the conversation sometimes seems to zing randomly from aside to aside: from the “rough ride” another developer got during a recent community meeting about a proposed high rise near a property Southwest is considering buying (“It was all NIMBY,” one says); to upand- coming architects who might be worth considering for future projects; to questions about whether Southwest should try to source some construction materials more cheaply than in the past. While some developers do use cheaper materials, Burchill points out, “they don’t care what happens in year two. We do.” End of that discussion.
But the big issue around the table remains the same as it was this morning: the Pavilion construction schedule at South Park.
They discuss the various complications around how to “stagger” the development of the condos and apartments at the Pavilion, including what changing the process might do to the timing of when already eager-to-be Pavilion condo owners can actually take possession of their new digs. In the end, Spatz simply says: “Let’s explore [rejigging the construction schedule]. If it works, it works. But let’s try to figure out what makes the most sense.”
“I have an idea and I’d like to pick your brain about it.” It’s shortly after three o’clock and Spatz is back in his own office on the speakerphone, chatting up a senior staff member at the Nova Scotia liquor commission.
Spatz has an idea for a project he’d like to see in the retail base of the new Pavilion. The problem is that it would involve serving individual glasses and also selling bottled alcohol on the same premises, a combination that could violate existing liquor commission regulations.
The liquor commission staffer on the other end of the line listens patiently as Spatz outlines his idea. “That would certainly be different,” he says when Spatz has finished. “But” — and you can sense the smile in his voice — “let me noodle it around for a while and get back to you.”
They agree to talk again in two or three weeks. The Pavilion isn’t expected to open for business for at least another three years, but it’s never too soon to get your glasses — and bottles — in a row.
“That’s it, then,” a disembodied voice says as Gordon Laing declares the 2014 annual general meeting of the Montreal branch of Premiere Executive Suites adjourned. “We’ll never look back at 2014 again.”
It’s shortly after 3:30 and we’re back in the board room where Laing is presiding over a series of online official general meetings for Premiere’s Montreal operation. Spatz, CFO Murphy and Sue Bachur, the president of Premiere’s Atlantic operation, join him in the Halifax boardroom.
Last year was not a good one in Montreal. Political instability, coupled with layoffs at Bombardier, a key employer, pushed down demand for the temporary business accommodation Premiere specializes in.
But the situation, Premiere’s Montreal executives reassure those listening in Halifax, is improving. They’re at 60 per cent occupancy and pushing for 75. They finally have a French website that’s up and running—
“Are we in the right locations?” Spatz interjects. “Should we have more suites closer to downtown?”
The problem seems to be that too many of Premiere’s Montreal suites are away from the downtown locations corporate executives crave. They talk about the prospects for acquiring more downtown spaces. There’s a woman with some properties in prime downtown locations who may be interested in selling, someone suggests. And she may have other properties as well.
“Let’s do a deal,” Spatz says finally. “And, if we can do this deal with her, it would be natural for us to take over her leases…”
Laing shakes his head. “Why would she?” he asks. “We should buy the entire business.” There is no deference here.
Spatz shrugs, smiles. “OK, then, let’s see if there’s a quick deal downtown, and let’s do that.”
“Ben [Young] wants to know if you want to have a look at the new board room,” Laing says as he and Spatz make their way back to their offices. It’s now 4:30. Carpenters are already busily carving a new and larger meeting room out of ground floor space recently vacated by accounting workstations.
The windowless boardroom has been framed and drywalled so it’s possible to get a sense of what it will look like. “This wall,” Young says, pointing to an unfinished wall facing the hallway, “will be all glass, and frosted up to here.”
He and Spatz go over the drawings. Spatz is worried about a potential chokepoint where one end of the 20-seat board table may be too close to the big screen TV and its various audio and telecommunications components to allow someone to pass by easily.
“Could we put some of that sound stuff over here?” Spatz says, pointing to a far wall.
“Sure. That could work… Do you want to see the final colour palettes.”
“No, that’s fine,” Spatz says.
“Perhaps we could put the Southwest logo on the frosted glass,” Young suggests, “as a finishing touch.”
Spatz considers a moment, smiles. “Let’s do that,” he says.
So let’s rewind back to near the beginning of this article, to that exchange between Spatz and his partner Val, when she asked him where he was off to, and he said “Southwest,” and she said, “How’s that going for you?…” and he replied, “Pretty good.”
I’d initially seen that as kind of an ironic moment, the how’s-thatgoing- for-you a joke, and Spatz’s “pretty good” reply an understated punch line to emphasize just how well everything is actually going.
Spatz has a different interpretation. “What it means, I think, is that Val is reminding me to try to maintain balance in my life, and letting me know, in a light way, that perhaps I don’t need, at the age of 66, to necessarily punch the clock at the office every morning.”
Which kind of fits. It’s not yet 5 p.m., and Jim Spatz’s official day at the office is already winding down. That’s not to suggest there won’t be another/one more/next/now issue that pops up unexpectedly and requires his immediate attention, or that Spatz’s own hyperactive mind won’t continue to fill up his awayfrom- his-desk-hours solving today’s problems or plotting tomorrow’s triumphs. That comes with the territory of being a “serial and unrepentant entrepreneur.”
But Spatz allows he is trying to achieve a better work-life balance as he glides past what used to be considered retirement age. He’s asked Alison, his executive assistant, to schedule his meetings and appointments in the Tuesday- Thursday window as often as possible. That will leave him more time to spend time with his family, to travel — “I want to see as much of the world as I can before I die” — perhaps even write that book he’s been thinking about forever, and generally enjoy the rewards his success has brought.
Atlantic Business Magazine’s 2015 CEO of the Year has earned that — and more.