Way back when everyone wanted to buy development land, my friend Jeremiah Shamess of Colliers used to always tell me that the only way to do this was to either (1) pay the most or (2) believe in something that others don’t. This — making non-consensus bets — is something I like to talk about a lot on this blog, but what did that mean back then? 

Well, when sites were seeing dozens of offers and the market was hyper-competitive, you really had to work to find any sort of overlooked value. Maybe it was an assembly. Maybe it was a density opportunity that others were missing. Or maybe it was a rail setback that the market felt would neuter the site, but that you had a solution for. Whatever the case, believing in something different was hard work.

Today, things are a lot different. The consensus bet would be to not buy development land in the first place, and the non-consensus bet would be to buy. But instead of having to believe in unique unlocks for a site, it’s obvious that the greater obstacle is believing that the market will be there to absorb your space. And if it is there, at what price? 

Nobody really knows, and that’s what makes it non-consensus. But as always, non-consensus bets are where the greatest opportunities exist. That was true when the market was booming, and it remains true today.

Cover photo by Alfan Ziyyadan on Unsplash

Jeremiah Shamess of Colliers made the claim this week that land values in some areas of the Toronto region are down 25%. He then shared a chart from Alan Leela showing how various factors have increased or decreased land values since 2020.

Broadly speaking, a revenue increase and/or more development density should increase land values; whereas something like inclusionary zoning, which is a cost to the project, should decrease land values. Indeed, this is one of the arguments in favor of inclusionary zoning: "Don't worry about the additional cost to the project because landowners will simply pay for it through reduced land prices."

In theory, all of this is correct.

Land is (or should be) the residual claimant in a development pro forma. Start with your revenue, subtract your costs, and then see what is left over for the land. (Though keep in mind that what is left over for the land could be $0 or even a negative number.)

But as I have argued before in the context of inclusionary zoning, I don't think things always play out so neatly in the market. Put differently, if the cost impact of inclusionary zoning is

My friend Randy Gladman, of Colliers Strategy & Consulting, recently published this important opinion piece in Urbanize Toronto. In short, it is about how little of our land we dedicate toward high-density housing (about 5%), what that results in, and why it should change:

TenBlock’s efforts are appreciated; more homes are desperately needed in Toronto, especially near transit. Intensification in all forms should be welcome. But there should be a better way to create the homes we need that minimizes demolition of the ones we have. We don’t have a shortage of low-density land near transit infrastructure in our city. Rather, we have a shortage of the political will needed to combat the calcified forces aligned against intensification. Looking at the development process in Toronto, we can see just how inefficient and confused our system of land planning has become when we consider how we treat low-density areas compared to the very small percentage of the city where greater density is accepted. 

I think there's growing awareness in this city and others about why this approach to land use needs to be modernized. And there is certainly