This is a stretch of College Street (here in Toronto) that I find particularly nice. It's the stretch running west of Bathurst Street to Manning Avenue. What makes it relatively unique is that it's a bit wider than our typical downtown Toronto main street (it's 30m versus the typical 20m) and the buildings are of a scale and height that go beyond the typical 2-3 storey mixed-use structures you'll find all across the city. The extra street width also allows for a nice dedicated cycle track. The result is an urban grandeur that I notice every single time I pass through it.

Now, some of the buildings (and retained facades) are older stock, and some of the buildings are more recent builds. So one could argue, "Hey, this is a built form that Toronto has been building successfully for centuries." But the fact that it stands out to me suggests that it still isn't pervasive enough. Wouldn't it be nice if Toronto had more streets like this? Perhaps there are some lessons if we look to the past.

At the southwest corner of College and Markham sits an old brick-and-beam office building that was (according to this source) designed by Frank R. Cowan and built between 1913 and 1914 to house clothing workshops and space for the Pedlar People Company, a decorative sheet metal manufacturer. For some further history, in 1929 the building was sold for $140,000 (about C$2.5 million in today's dollars) and, at some point in its history, a 6th floor was added on top of the building.

But more important for this discussion is that it is another example of a building built before Toronto had modern zoning. This was a utility building. It was built lot line to lot line, with no setbacks or stepbacks. What Toronto cared about most at that time was whether the building would catch fire and set the block ablaze, not whether it met urban design guidelines. And yet, here we are over a century later and we have urban nerds like me talking about the nice street wall it creates.

The important question for today is how we might best unleash a similar market response along Toronto's major avenues. They may not be for clothing workshops and sheet metal manufacturers, but we have other needs, such as housing, that could be satisfied with similarly unfussy fabric buildings. Ironically, we have policies that now support 6-storey buildings that are roughly of this ilk, but we are not yet seeing a market response at scale.

History tells us that the solution is less complexity and greater simplicity.

Aerial and street view image from Google Maps

Over the years on this blog, we have spoken many times about what Pouyan Safapour, president of Devron Developments, wrote about in this recent Maclean's article: the method of pre-selling condominiums (which is what we customarily do in Toronto) biases the market toward investor buyers and smaller, more cost-effective suites.

Unlike end-user buyers, investors have generally viewed waiting three to five years for their condominium to be complete as a feature in recent years, rather than a bug. It has meant asset appreciation without having to carry or actually manage the property.

The pre-sale model works very well for a number of other reasons, too. Firstly, by pre-selling, developers minimize market risk for both themselves and the construction lender. Now you have contracted revenue to take out the construction loan at the end, as opposed to building on "spec" and hoping the market will be there, which may or may not be the case.

It's also an equity-efficient model for developers. Banks are able to offer higher LTVs because of the contracted revenue, and insured purchaser deposits can be used as a source of funds for the project, reducing the amount of required equity.

But it is certainly true that many, perhaps even most, end-users would prefer to buy when the building is complete. So how might we reorient the model to better cater to these homebuyers? This is especially relevant in today's market, where end-user buyers have overtaken investors.

In the current framework, there are a couple of things that can be done. Developers can just build smaller projects. This minimizes the window between pre-sale and completion. Another option is to segment the project between homes that will sell quickly upfront (and fulfill lender pre-sale requirements) and homes that are geared more toward end-users but won't sell until later. In this case, you're trying to sell enough to start construction, and you're building the balance on "spec."

Changing the entire financing model requires a lot more work. Removing pre-sales means more market risk and more required equity (unless these risks somehow get shifted by the government). If this happens, then there's a reasonable argument that we would see far fewer condominiums getting built, even if the ones that do get built are better suited to end-users.

There are developers in Toronto today that do not believe the investor pre-sale market is coming back, or at least not coming back anytime soon. If that ends up being the case, and I'm not sure it will be, then market participants, whoever they might be, will be forced to meet this demand in one of two ways: building more rental housing (which is by definition on "spec") or getting better at delivering end-user condominiums.

Cover photo by Fernando Strabuli on Unsplash

Here is an interesting study that compares changes in isolation and mental health between people who are able to work remotely and those who cannot. The results indicate that despite many people having a preference for remote work, it's not good for our mental health.

The study found that relative to those in "nonremotable" jobs, post-pandemic remote workers spent about one additional hour per weekday alone, increased the number of days spent entirely alone, and decreased the amount of after-work socializing. This was particularly acute for people living alone.

At the same time, psychological distress was shown to increase — as well as the frequency of depression, mental health care utilization, and antidepressant prescriptions. Importantly, people who were recently, but not currently, employed in a "remotable" job did not show the same mental health deterioration, suggesting that it is very much tied to working arrangements in that moment.

The obvious lesson is that more time in person is almost certainly good for our well-being. But it's also a reminder that one of the reasons why cities exist and are so sticky is that humans generally want to be around other humans. Of course, not all cities are created equal. The most successful ones strengthen connections rather than isolation.

Cover photo by Thought Catalog on Unsplash