Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.
So 2021 was a pretty good year for condominiums here in the Greater Toronto Area. According to the latest data (Q4-2021) from Urbanation, this is what happened last year:
30,844 new condominium sales. This is a 69% increase compared to 2020, which saw 18,282 new unit sales.
Fourth quarter alone saw 8,361 unit sales, which is the best quarter on record according to Urbanation.
Unsold inventory dropped 26% year-over-year because sales exceeded the number of new project launches by over 4,000 units.
Average price for an unsold condominium unit in Q4-2021 reached $1,322 psf, which is an 18% increase compared to the year before.
Resale condominiums also did exceptionally well with 29,880 unit sales — a 49% annual increase.
All in all, some 60,000 condominium units were purchased last year in the GTA. Of course, some were ready to be lived in and some were future homes.
If you happen to find yourself in Miami or London in the near future, I would highly recommend that you check out Superblue. Neat B and I visited Superblue Miami this past weekend and it was an incredible experience.
Above is a short video of one of the immersive installations (click here if you can’t see it embedded above). This one is by the Japanese art collective teamLab and what you’re seeing is a whole year’s worth of seasonal flowers coming to life and then dying off.
It’s meant to show you the continuous change and cycle of life and death that we all live through every day, and you certainly feel that as you go through the space. The installation itself also responds to how you move and interact with it, with some actions encouraging more blossoms.
It’s, of course, all very Instagrammable.
But I think this descriptor is old news and doesn’t do the work justice. Superblue is a serious cultural experience. One of the other works on display right now is a piece by light and space artist James Turrell. And for this one, there were no photos and talking allowed. The timed experience was meant to be more meditative.
It was the first time that I had seen something by James Turrell in real life and it didn’t disappoint. It made me feel things, as did the entire Superblue experience. So again, a top experience that I would highly recommend.
On a related real estate note, the 50,000 sf Superblue space is located in an area of Miami called Allapattah (which is west of Wynwood and 5 miles east of MIA). I’m an outsider to the city building undercurrents of this city, but I keep hearing people talk about the area as the next Wynwood.
The other cultural institution in Allapattah is the Rubell Museum, which I wrote about in 2019 as it was moving over from its original home in Wynwood. Supposedly the family now has the largest private collection of contemporary art in North America. So that’s something.
Maybe these two anchors will be what does it for Allapattah. When we walked around the area there didn’t seem to be much else going on. But we all know how quickly that can change.
Here is an example of retail signage on Lincoln Road in Miami Beach. The interior signage (behind the glass above the doors) is specific to the brand Osklen (which is a great sustainable fashion company from Brazil). And the exterior soffit signage is specific to the property in that the same design and typeface is used for all of the retail tenants.
I think that this consistency creates a more elevated feel for the overall property, but the obvious downside is that the retailers don’t get to express their unique brands and identities in quite the same way. Still, I think the above approach is a pretty good compromise. What do you think?
I was in a “design charrette” meeting earlier today where the topic of good architecture and why some cities do better than others came up. It got me thinking about my recent post about the quality of Canadian architecture and so I’d like to revisit that discussion today. The Walrus article that I previously cited focused a lot on uninspiring public architecture and the procurement processes that generate them behind the scenes. But here are a few other things to consider.
1/ Design guidelines and planning policies have an impact on our built environment in more ways than most people probably appreciate. For example, there are design moves in some of our projects that I really dislike. But we were given no choice. In fact, in one instance I remember us advocating for less area/density (shocking for a developer) because we thought it made for better architecture. We ultimately capitulated, and the additional area was certainly a nice to have, but it wasn’t our opening position.
2/ Nice stuff does often cost more money. There is no question that a project like One Delisle is more expensive to construct compared to a “typical” building. However, we made the decision to invest in high quality architecture and we built our pro forma around this approach. In this regard, it is helpful to be in bigger and more expensive cities/submarkets so that you can generate the kind of revenues that will support high-quality architecture.
3/ At the same time, there is no reason that thoughtful design needs to cost more. Good design is simply about being creative, responding to constraints, and, frankly, just giving a shit about what you’re doing. You want to see that somebody cared. So while nice things and elegant details do often cost more money, we shouldn’t use this as a crutch. The same is true for climate. Colder climates shouldn’t be considered handicapped. Creativity and thoughtfulness can thrive anywhere. We just have to give them the opportunity.
It has been cold and snowy in Toronto lately, which is great if you’re looking to shred pow on a snowboard, but suboptimal if you’re trying to construct buildings. It pains me deep inside my bone marrow when we lose productive days to weather. But what can you do?
I was, however, thrilled to see this first glimpse (pictured above) of the lobby / co-working space at Junction House this morning. The slightly elevated section (which is the point of view of the above rendering) is the co-working area.
The reason it’s elevated is that we needed the clearance below for our parking ramp. We thought about trying to make it retail, but a place for residents to hang out and work seemed like a pretty good idea.
A lot of us on the team are big fans of a great hotel lobby bar, but that’s kind of challenging to do in a residential condominium. This is maybe the next best thing. It’s been very popular with purchasers so far, but I’m looking forward to seeing how it performs in real life.
The development team at Slate is hiring once again for our Toronto office. We are looking for a coordinator/analyst to join the team and work on all aspects of our projects (which span the full lifecycle of development and are pretty cool if you ask me). If you’ve read some of my past hiring posts (examples here and here), there isn’t a lot more that I can say about our company, our culture, and our approach to development.
But what I would emphasize is that our culture is paramount. I am biased, but I think we have a great team that works well together and that cares deeply about what we do. All of this is important, which is why in the past I have encouraged candidates to go beyond their resume and share something else like their online presence or a link to something that would help us get to know them a little better.
If you would like to learn more about the position and/or apply, please do that over here on LinkedIn. And if you have any questions, feel free to reach out to me on Twitter.
Tracey Lindeman over at the Walrus recently asked: Why is Canadian architecture so bad? Is it because Canadians are too passive and apathetic when it comes to good design? Or is it because we’re too cheap and don’t like our tax dollars being spent on unnecessarily lavish public buildings?
Whatever the case, there is an argument out there that we maybe had this wonderful period between the 50s and 70s where we really excelled in modern architecture and design (including graphic design), but that we kind of stopped caring and have built mostly banal stuff since then.
Part of Tracey’s argument is simply that we’re cowards. We’re more interested in “checking boxes instead of taking chances.” We’ve become too bureaucratic when it comes to procuring new public architecture. And she’s not wrong.
Why we accept it is a patently Canadian phenomenon: our national psyche has us much more interested in checking boxes than in taking chances. Our standard process for contracting buildings often gives projects to the lowest bidders, even if a vastly more beautiful design is just a little bit more expensive. We have become so devoted to frugality and bureaucracy, and are so readily appeased by basic functionality, that we have lost the fortitude to take and demand risks, even if the outcome could be the most beautiful thing we’ve ever seen.
Great architecture requires not only great architects, but also great patrons of architecture. That has generally been the way all throughout history. But here’s the fortunate thing. We have lots of wonderfully talented architects in this country and lots of people who see the value in architecture.
In fact, I think you could argue that over the last 5-10 years we have seen the quality of architecture in our cities step up dramatically. Some of these projects have been designed by top Canadian architects and some have been designed by leading international architects.
In both cases it’s because we see the value proposition and have decided to invest in architecture and design. Now we just need to be bolder across the board and get bureaucracy and checkboxes out of the way of Canadian creativity.
The Canada Mortgage and Housing Corporation (CMHC) recently published its latest data on housing starts, housing under construction, and housing completions. Here are a few of the highlights:
Canada saw 271k housing starts last year (2021). This includes single-detached housing and multiples, which captures semi-detached housing, row housing, and apartments (and other unit types). This is the highest number of annual housing starts that we have seen over the last five years. The range for the prior years has been between roughly 209-220k.
Ontario saw 100k (~37% of the country), Quebec saw 68k (~25% of the country), and British Columbia saw 48k (~18% of the country).
What I was curious about when I first saw these numbers was the split across the various housing types. Single-family homes, for instance, came in at 82k for all of Canada. So that’s about 30% of total housing starts. If you add in semi-detached and row, which I believe would also be all grade-related, you get to 124k or 46% of all housing starts.
Apartments and other unit types make up the balance at about 147k or 54% of all housing starts. This is kind of interesting because they now represent a majority.
Looking at Ontario, the percentage of apartments actually drops to 50%. But the numbers are much higher in both Quebec and BC at 69% and 63%, respectively. Again, this is kind of interesting.
Despite all of our deference to single-family housing, the numbers suggest that we are actually in the midst of building a different kind of country — one that entails people living in “apartments and other unit types.” Maybe it’s time we got more granular with this line item.
Note: CMHC defines “apartment and other unit types” to include not just apartments, but also stacked towns, duplexes, triplexes, double duplexes (whatever this is), and row duplexes. A number of these will, of course, be grade-related. But they still represent more intense forms of land use.
Property rights, whether for real world things or for digital things, are the foundation of developed economies. Because if you don’t feel like your property is going to be safe and secure, why would you bother investing and trying to accumulate assets?
Above is a chart I found, in this great thought piece by Ryan Goldman, showing the direct relationship between “protection against risk of expropriation” and GDP per capita. The more protection, the higher the GDP.
This is, of course, fundamental to the way we live our lives offline. But it is also becoming increasingly important in the way we live our lives online. Because we now have digital assets that people actually care about owning and protecting. You know, like pictures of apes.
This market is only going to continue to grow and the above relationship between rights and economic development will certainly hold true. But I think the big question is whether there will be more distributed and equitable access to opportunities in this emerging world.
The “drive until you qualify” approach to finding housing that you can afford is a well established practice. Anecdotally, I can tell you that I have friends who are right now looking for a grade-related home under the C$1 million mark. This constraint, as most of you know, is pushing them to the outer reaches of Toronto’s suburbs. But if it were up to them, it would be their preference to stay in the city. According to the “two millennials” behind The Habistat, the average distance of an entry level detached house from the Toronto core (defined as a 3 bed, 1 bath under $800,000) is now 81.8km.
There’s a lot to be said about this. For one, home prices across many/most markets are way up. Earlier this week on the blog it was mentioned that the average price of a US home is up about 19% year-over-year. This is likely unsustainable. We are coming off of a period of easy money policies and at some point things will normalize along with the broader economy. Looking at the equity and crypto markets, it may be happening right now, but I don’t really know. (Fred Wilson wrote a post last year calling this “one of the great asset bubbles of modern times.”)
We know that the centralizing forces inherent to most cities have been weakened during this pandemic. For periods of time, they were completely off. So it is no surprise that we have seen greater decentralization (sprawl) than what might have ordinarily happened. I was in a (zoom) meeting this past week with somebody who has spent the last two years traveling around South America while working remotely. It sounded like a lot of fun and I was admittedly a little bit envious of her adventures. But as I argued at the beginning of this year, I think most people are going back to offices and this centralizing force will have an impact on real estate.
Because “driving until you qualify” is a function of an affordability constraint, it tells you certain things about consumer preference, but not all things. What I mean by this is that it tells you that somebody is willing to trade the cost of a commute for more space and/or the housing type of their choice. This has been an easier trade during COVID because the cost of commuting has been relatively — albeit temporarily — low for many people. So less of a discount for distance. But what I think this doesn’t tell you is what true consumer preference would be if all things were more equal and we increased housing supply and options in other areas of our cities.
At the same time, there’s a very real question of whether the measuring stick in the above chart should be a grade-related detached house? Is this a reasonable expectation in the same way it was for prior generations? I am not a fan of dictating what people should and shouldn’t do. But maybe 100km away from the core becomes untenable. And again, maybe if we increased both supply and options, we would find new housing preferences revealing themselves. I am specifically thinking of those who would prefer to stay in the city, but can’t find something they think is suitable.
At the end of the day, we can’t ignore the fact that we are profoundly hypocritical when it comes to the delivery of new housing. We acknowledge that we’re in a housing crisis and we acknowledge that we need more affordable housing (both for sale and for rent), and yet we continue to make it systematically more difficult and more expensive to deliver it. The development charges, parkland fees, and many other costs that continue to increase and get applied to new housing are a real worry to those in the industry.
It is a worry because we’re all wondering how much price elasticity is left in the market. That is, how much more can consumers afford before they stop buying and renting? It is a worry because it means that new rental housing, which has always been a challenge to pencil in our market, is now completely infeasible in many more submarkets. Our solution to all of this is to mandate a certain number of affordable units in new developments. But this is yet another tax on new housing.
To be fair, the delivery of new housing is subject to countless competing interests. This is arguably why it is such a tricky problem to solve and why there are no easy answers. But that’s what we do around here. We explore new ideas. And maybe, just maybe, there are other options besides just driving until you qualify. Next up (or soon up): A look at the competing interests behind new housing.
