Yesterday evening I visited the future of Toronto's neighborhoods. It is located at 367 Howland Avenue. And it takes the form of 10 homes on a lot that previously used to house only 1. Developed by Green Street Flats and designed by Craig Race Architecture, it is a near perfect example of what Toronto hopes to achieve with its new multiplex policies. As Craig put it last night, "we found the missing middle!"

Now to be fair, this is a double lot, measuring about 10m wide in total. And so this is twice the size of what the new policies now allow on a single lot -- a fourplex plus a laneway suite or garden suite (4+1). But it is still generally consistent with what you could do today if you had two contiguous lots.

That said, this project predates the new multiplex policies, meaning it required a long list of zoning variances and it led to an inevitable fight with the neighbors. This small project required an 8-day contested hearing before it was granted approval! Start to finish, Howland took over 3 years.

That is ridiculous and so I think all of us should view the new multiplex policies as meaningful progress in our city. What was once contentious and a huge pain is now permissible as-of-right. Isn't it funny how rules and perspectives change? "No, you can't do this! Okay, now you can. Please do a lot of it." So for the purposes of this post, let's talk about Howland as if it were built on an as-of-right basis and you could do the same on your own lot if you were so inclined.

From a design perspective, the homes are organized as follows:

There's a full-floor basement suite, a full-floor suite on the main level, two back-to-back two-storey upper suites, and then a laneway suite at the back. One reason for this configuration is that it means you never have to walk up more than one flight of stairs to get to your main living space. This was one of the design criteria and I think it works very well. Here's an example of what this looks like (this is a suite #3):

For this particular site, the entrance to suite #4 is at the back of the fourplex and accessed via an adjacent laneway. But for the "inboard" fourplex, each suite is accessed via the main street. Once again, I think this all works very well. I just wonder if there could be an opportunity to shave additional costs by moving some of the circulation outside (kind of like this). I guess it would depend on the width of the lot.

Of course, the big question remains: Do projects of this scale actually make any money? Because if they don't, then people aren't going to continue building them. Though, I would say there are two ways to think about underwriting a project like this.

The first is from a 100% investment standpoint: build 5 homes, rent 5 homes, and then collect a reasonable risk-adjusted return. The second is a hybrid approach. Maybe it's build 5 homes, rent 4 homes, and live in the other one. In this case, the math is likely a bit different. It could just be about subsidizing your living expenses as opposed to generating a commensurate return.

But in both cases, we know that these are very skinny projects. You need to be extra careful with your costs. And from what I gleaned last night, 6 or more suites is a better underwriting starting point (compared to 5). We also know that these projects only pencil with CMHC financing. Period. Full stop. If CMHC financing were to go away or meaningfully change, so to do these missing middle projects.

So as we look toward the future of housing in Toronto's neighborhoods, we need to keep in mind that these projects happen very much on the margin (as does all development, but it's an even thinner line here). Meaning it remains to be seen whether these will happen at scale across the city, which is now the hope. It'll also be interesting to see if developers like Green Street don't scale up over time. I suspect they will.

Congratulations to Green Street Flats, Craig Race Architecture, and the rest of the team on helping to pioneer this new housing typology. It's a glimpse of the future and, judging by the turnout at last night's open house, Toronto is ready for it.

The thing that we have been talking about for many months on this blog finally happened: Toronto City Council voted (18-7) in favor of allowing fourplexes as-of-right across all residential areas of the city. (If you're curious, here is a map of which Councillors voted yes and which ones voted no. It's not all that surprising.)

This is a major accomplishment and milestone for Toronto. So congratulations to everyone who has been working to make this happen. But of course, now is when the rubber hits the road: Will the market actually build this new housing typology (for Toronto) at scale? Is it actually feasible?

Jeremiah Shamess of Colliers came out this morning saying that the answer is no. These multiplexes aren't feasible and it is "not going to solve our housing crisis or even come close." He may be right, but I think a lot of people -- myself included -- are now looking closely at their feasibility.

In fact, this morning I ran into a lender on the street -- look what happens when you come into the office -- that is seeing if these can be built using CMHC financing. And this is just one example of the work happening all over the city right now.

There is also the question of scale. Small development projects are challenging. The general rule of thumb is that if you have the resources, you should build as big as you possibly can to drive economies of scale. So if these are actually feasible, who will want to build them?

The margins on a build like this are almost certainly going to be somewhere between negative and marginally positive. But I still think there's something to be said about being directionally right. There's more work to be done and these policies will likely get adjusted, but I think that's just fine as long as we're moving forward.

And that's what we're doing today.