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Small suites — responding to the market or social engineering?

Let’s talk some more about floor plan designs and the economic constraints that form part of the decision making process. There continues to be a narrative out there that for-profit developers only want to construct small apartments (a form of social engineering perhaps) and that they aren’t focused on livability. So let’s dig into some of the constraints.

Consider that the average price of a new construction condominium in downtown Toronto last quarter (Q1 2021) was $1,419 per square foot. And I bet that this number has already increased. Now consider that, in the City of Toronto, the “growing up guidelines” suggest that an ideal family-sized three bedroom suite should be around 1,140 square feet.

When you multiply these two numbers together, you get an “ideal” three bedroom suite that costs just over $1.6 million. Of course, this is without parking. So if you want downtown parking, add another $100-200k (which, at this price point, is still almost certainly going to be a loss leader for the developer).

All of a sudden, you’ve now got a $1.7 – 1.8 million residence. This will work in some submarkets and in some locations, but certainly not all.

So what happens is that the end price becomes a constraint. And in order to make the suite more affordable, the developer will naturally look for ways to make it smaller. Turn this into a 900 square foot three bedroom and all of a sudden you shave off over $300k from the price.

The point I am hoping to make is that developers generally aspire to respond to what the (sub)market wants. If the (sub)market wants a certain price point, developers will try and meet that need. If the (sub)market wants massive apartments, developers will gladly deliver. (We’re working on combining some supremely awesome suites at this very moment in fact.)

It is “what if” instead of “should be” thinking.

Photo by Loewe Technologies on Unsplash


  1. I live in a 1962 350-unit building. We have separate kitchens and dining areas. Today, to save space, these are all almost a single room, with maybe a dining “island” to demark the kitchen area from the combined living and dining areas. This is supposed to be “modern.” Overall, in NYC, 2BRs are $1-2m for maybe 700sf. My junior 2 is 900sf with a terrace, and probably worth 800k at this point. They don’t make them as they used to. Who wants to stare at a kitchen with unwashed dishes? That is how people actually live, not in “show” apartments.
    The inadequate tradeoff is more amenities in the building – gyms people barely use, common community rooms that are used when too close living couples need to get away from each other, etc.
    We need more intelligent zoning, to open up areas to build in (my own modeled example is here: – pro forma just revised to show a $10b EBITDA profit after 68 months, even with 30% of the units marked down 50% to $1000psf for a 60% of AMI, but of course, city authorities don’t care about that, only “density” or shadows (on the East River?)).
    Recently, there was a shouting protest over a local business that wanted to increase it height from 4 stories to 15, in midtown Manhattan, where nearby buildings are at least that high. Hundreds of neighborhood residents came out to protest. It was a hot day. They all congregated in the shadow of the building, out of the sun on the opposite side of the street. Logic and honesty have left the building.


  2. Randy Kerr

    The City needs to impose an efficiency tax on higher than “reference” price per sq ft developments to reclaim the marketing concentration costs that the “guys next door are doing this” Developers who can’t think outside the Box. Re-direct the taxes raised to planned low cost purpose built NEW areas for the Homeless and Home Challenged Renters with all the requisite public services in place. The Free Market has obviously failed the Toronto Home market.

    PS. Brandon…your email signup is defective as a our legitimate web URL is rejected by your email engine. Not the First time this has happened.


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