The City of Toronto requires amenity spaces to be provided in new housing developments of a certain size. Here, for example, is the relevant excerpt from the recommended zoning by-law amendment that is expected to allow small-scale apartments along all major streets:
The triggers are 20 and 30 dwelling units, which represents a housing scale that Toronto doesn't build a lot of. I mean there's a reason it's called the missing middle. That is, of course,
Firstly, because it's not feasible at this scale. Think of it this way: two square meters of indoor amenity space x 20 dwelling units = 40 square meters of indoor amenity space or ~430 square feet. Multiply this by an average rent of $5 psf (and then 12 months) and that's nearly $26k of foregone revenue for the project.
This may not seem like a big number for a development project, but consider that at an NOI margin of 77% (i.e. if you deduct operating expenses), this revenue number works out to a net operating income of just over $20k. Capitalize this at 4% and you've just removed $500k of value from the project.
Another way to look at this would be to divide the $26k of foregone rental revenue by the 20 dwelling units. This works out to nearly $1,300 of annual revenue per suite — revenue that will then need to be made up by everyone who lives in the building.
The second reason why I think this requirement needs to go is because it's a suburban way of thinking. In the suburbs, people tend have their own backyards. And so the logic goes that in multi-family buildings, people should also have their own private (albeit shared) amenities.
That's fine if it makes sense for the project. But we shouldn't forget that the reason cities are so wonderful is that they are rich in amenities, culture, and the myriad of other things made possible by collective contribution. World-class museums and galleries, for instance, almost always require big city resources to be viable.
On some level, I think you could argue that there's an irony to this planning requirement. We mandate amenity spaces because amenities are of course good. But it hurts project feasibility, especially at smaller scales, which then limits the amount of new homes, density, and people we have in our existing neighborhoods.
And because we are limiting density, we are indirectly limiting the kind of private and public amenities that might otherwise be feasible if only there were more humans to support them. So I would strongly encourage the city to rethink its position on required amenity areas. At the very least, the triggering unit counts should be raised.
For more on this topic, here's a recent article from the Globe and Mail by John Lorinc.
Photo by Filip Mishevski on Unsplash
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