Lists & Rankings

How real estate firm Marlin Spring snagged the No. 1 spot in the 2020 Growth List

The winners of Growth List 2020 made spectacular growth by looking sideways in a city where everyone else is looking up, up, up

Growth 500: Canada’s Fastest-Growing Companies
Marlin Spring CFO Elliot Kazarnovsky (left) and CEO Benjamin Bakst believe it’s hard to see opportunity when you zero in on one type of development (Photograph by Christopher Katsarov)

Marlin Spring CFO Elliot Kazarnovsky (left) and CEO Benjamin Bakst believe it’s hard to see opportunity when you zero in on one type of development (Photograph by Christopher Katsarov)

Toronto rises up like a heat map. Storey upon storey of sparkling glass and steel stretches skyward, and sells, on average, for $1,200 a square foot. Even as the pandemic pours a little cold water on the broader condo market, hunger for the ultimate status symbol—a two-floor penthouse apartment looking down on the little people—persists. And most developers are tripping over themselves: building the bigger, better, more glamorous skyscraper, with at least three in play in Toronto heading up past 90 storeys in the next few years. But not Benjamin Bakst. “We’re not the guys that are focused on building a landmark,” says the CEO of Marlin Spring Investments of his outlier approach. Bakst runs his company from the 16th floor of a modest 1960s building at Yonge and St. Clair in midtown Toronto. The building was restored in 2018 and has a flashy Buca restaurant on the ground floor. It wasn’t a Marlin Spring project, but it’s the kind of development Bakst is bullish on. Let the other guys race into the clouds; Marlin Spring is focused on building value.

Succeeding in development, says Bakst, 42, is more than putting up buildings. It’s about understanding market trends and impacts like interest rates or COVID-19 and how different sectors (residential, commercial, rental) inform each other. “We were condo developers by background,” Bakst says of himself and co-founders Elliot Kazarnovsky and Zev Mandelbaum (his brothers-in-law). “But we started wondering, How can condos keep going up and low-rise stay the same? Or, how can commercial office buildings be going up, but existing multi-residential are trading at the same? What can we learn from the gap?

You can’t mind the gap if you can’t see it. And it’s hard to see it if you are zeroed in on one type of development. Traditional developers tend to become more specialized as they grow: pick a focal point and build up infrastructure and expertise around it. That kind of singular focus builds expertise, but it can put you at odds with your investors.

“We do have a specialty,” notes Bakst. “It’s value-add real estate.”

The results have been staggering, placing Marlin Spring at No. 1 on the Growth List 2020 ranking of Canada’s Fastest-Growing Companies. Over five years, the company has soared to a mind-numbing 57,144% revenue growth. To date, Marlin Spring has acquired over 30 residential projects (over 8,000 residential units) in various stages of development, construction and repositioning, with a completion value of $4 billion. It’s a long way from their opening gambit: the purchase of three acres of land in Markham, Ont., with the intent of redeveloping to permit the construction of 44 homes. Instead, they acquired the necessary permits and zoning requirements and sold the property to another developer—a good example of how Marlin Spring isn’t locked into any one formula. Their portfolio emphasizes flexibility and diversification across regions, build forms and types of investments. They run a successful multi-family division (industry speak for rental apartment buildings), which accounts for about 35% of overall revenue, and have thus far built a mix of low-rise, mid-rise and even high-rise—though not the kind that are going to kiss the CN Tower.

Rather, the community-friendly mid-rise project in the under-served neighbourhood has become a Marlin Spring signature. “There is this idea that what is going to make money and what is good for the city can’t be compatible,” says Sasha Cucuz, a partner at Greybrook Capital, a large investment development firm and a frequent Marlin Spring collaborator. “Canada isn’t just the people who work at King and Bay,” says Cucuz, which is truer now than ever. “We want to invest in all different types of product that suit all different types of people.”

Greybrook and Marlin Spring have partnered on the Stockyards District Residences in west-end Toronto, north of St. Clair. The 10-storey, mixed-use, mid-rise development located in the historic hub of Ontario’s former meat-packing industry won a BILD Association Award for best project branding and identity for their marketing campaign that emphasizes “Authentic Urban Living.” Look at renderings of the communal lobby—concrete floors, exposed brick and industrial-chic light fixtures—and you’d swear you were on Queen Street West. But with 236 units starting at $400,000, millennial buyers might just be able to squeak into the ever-unaffordable Toronto real estate market.

“There is a lot of livability in mid-rise,” says Pauline Lierman, director of market research at Urbanation, a Toronto real estate consulting firm. “With a high-rise development, it can be like you are making a location, whereas with mid-rise, you can fit into an existing neighbourhood.” At Stockyards, the layouts are customized and the design, by Graziani + Corazza Architects Inc., fits in with the neighbourhood’s industrial character. “It’s the opposite of the cookie-cutter effect,” says Lierman. “These are places that feel more like individual homes.”

It’s the kind of development you didn’t see as much of 15 years ago, when Bakst moved to Toronto. A native New Yorker, he grew up in Brooklyn and graduated with an accounting degree from Ocean County College. He’s a natural numbers guy, but Bakst hoped a CPA would position him well for future business opportunities—which is exactly what happened when his father-in-law invited him to join the family business. Less than having a passion for real estate, Bakst was driven by the chance to build his toolbox, to be part of a growing company and to learn from the very best.

The Mandelbaum family are Canadian development royalty. Bakst’s wife, Rivki Mandelbaum (Marlin Spring’s director of communications), is the granddaughter of Sandor “Sandy” Hofstedter, a Holocaust survivor who came to Canada in the ’50s and played a major role in Toronto’s post-war expansion with H&R Developments. The dream was the white picket fence: people had space and community in the suburbs, and commuted into the Big Smoke for work and the joys of urban life. But as the city evolved, so did development. In the 1990s, Hofstedter’s son-in-law Mark Mandelbaum (Rivki’s father) struck out with his partner Barry Fenton to form Lanterra Developments, specializing in high-rise projects in the downtown core, including Maple Leaf Square, ICE Condominiums and One Bedford.

Bakst joined the team and spent eight years working in every department, while also getting a feel for his new home city. Moving to Toronto from New York gave him a crystal-ball peek into the GTA’s future. “In New York, there was always this sense of being city-centric,” he says. The Big Apple was ahead in terms of a diverse population, driven by immigration, suggesting it might be a good reason to look outside of the downtown core, but not as far as the ’burbs. A commonly espoused bit of wisdom around the Marlin Spring office goes: “People are willing to trade their two-car garage for proximity to a good pub.”

Family roots are never far from mind. The name Marlin Spring is a reference to Bakst’s in-laws, Mark and Lindy. And if the development bug took a second to enter his bloodstream, Bakst is now a total convert—the kind of guy who is never entirely off the clock. Before COVID-19, he and his family were avid travellers, but there was always a bit of business with pleasure. He loves Europe, home of “the ultimate liveable cities—people walk everywhere, they pop into the museum on their way home from work.”

Bakst is not one to self-aggrandize (he texts you a funny GIF during a phone interview). In real estate, you’re never going to be the only ones doing something. Instead, you need to be the fastest or figure out the financials: “The demand for mid-rise is something the development community has understood for a while now,” he says. “The question was more, how do you make it profitable?” The answer? Do a lot.

In the last five years, Marlin Spring has launched eight mid-rise residential projects, including the Canvas Condos (eight storeys, 156 units) in Danforth Village, the Tailor on the Queensway (10 storeys, 140 units) and WestBeach (six storeys, 89 units) in Woodbine Beach. Individually, these projects tick all the boxes on the Marlin Spring checklist: investment opportunity in an up-and-coming but under-served neighbourhood, proximity to transit, green space and urban amenities. Together, they equal the scalability and profit potential that comes from building monster towers.

Strategic investment in rental properties across North America has taken Marlin Spring to Montreal, Miami, New York and Houston. There aren’t a lot of companies with a Yonge and St. Clair address who are going to take investor funds south of the border. “We wanted to fill that void and to capitalize on the trust people have in us,” says Bakst.

“I think Bakst is a visionary,” says Jeremiah Shamess, an investment broker with Colliers International, a global commercial real estate services organization. “To move more quickly, you need a lot of ideas. Meritocracies allow innovation, which allows new ideas to flourish in what is generally a very slow-moving industry.” It’s the future of business, he says. And Marlin Spring is leading the way.