Depending on who you ask, the current condo boom in Toronto might be viewed as either a good thing or a bad thing (most will have an opinion). Some people think we’re simply building too many condos. And that too many of them are small, crappy, and geared towards investors – as opposed to end-users.
While I do agree that we could be doing more to create complete communities – that is communities which serve everyone from young singles to families with 3 kids – I think there are also a lot of positives associated with Toronto’s condo obsession (full disclosure: I’m a real estate developer). It has made us more sustainable, more reliant on alternate forms of (non-car) transport, and it has made us a generally more exciting place to live.
But that doesn’t mean we can’t do better.
Lately I’ve been wondering about how other cities do it. Specifically, those European cities that somehow seem to always be able to build awesome housing projects. So today I thought I would pick one and profile it. What I really wish I had was a financial pro forma to share with you all, but in the absence of that, I’ll try and back into some of the numbers on my own.
Depending on who you ask, the current condo boom in Toronto might be viewed as either a good thing or a bad thing (most will have an opinion). Some people think we’re simply building too many condos. And that too many of them are small, crappy, and geared towards investors – as opposed to end-users.
While I do agree that we could be doing more to create complete communities – that is communities which serve everyone from young singles to families with 3 kids – I think there are also a lot of positives associated with Toronto’s condo obsession (full disclosure: I’m a real estate developer). It has made us more sustainable, more reliant on alternate forms of (non-car) transport, and it has made us a generally more exciting place to live.
But that doesn’t mean we can’t do better.
Lately I’ve been wondering about how other cities do it. Specifically, those European cities that somehow seem to always be able to build awesome housing projects. So today I thought I would pick one and profile it. What I really wish I had was a financial pro forma to share with you all, but in the absence of that, I’ll try and back into some of the numbers on my own.
. I chose this building because I think it’s an attractive one and because it's of the (mid-rise) scale that Toronto is trying to promote along its many avenues. Here are the stats I was able to
Building area: 3,000 square meters / 32,291 square feet (says gross floor area, but I don't know if that means the same thing as it does here)
Construction costs: €3.6 million / C$5,065,691 (as of today’s rate)
Units: 28 (sold within 1 week of launch)
Market: ~70% of buyers in Berlin are believed to be foreign investors
Now, if we were actually building a development pro forma, we’d want to get a lot more granular in our calculations than what I’m about to do. We’d want to know gross construction area, net saleable areas, and so on. But for the purposes of this post (and because I have very little information), I’m going to simplify and do a back of the napkin set of calculations.
Based on above, the FSI (or density) is about 8.65 (32,291 sf / 3,735 sf). That’s roughly in line with many of the residential developments we’re seeing in downtown Toronto. The average unit size works out to be about 1,153 sf (32,291 sf / 28 units), but in reality it would be less if that 32,291 number is truly the gross floor area. You would need to subtract the corridors and other non-saleable areas from it before doing this calc. Either way, that is big compared to most downtown Toronto condos, but small for Berlin standards according to this ArchDaily article. Finally, if we look at construction costs, we get $157 per square foot in Canadian dollars ($5.065M / 32,291 sf). That’s low. I wonder what the land costs were.
Again, these numbers are rough rough. But I wanted to try and dissect a European development project and compare it to Toronto. The most surprising figure seems to be the low construction costs. If you have any additional insights, I would love to hear from you in the comment section below.
Traffic is a big deal when it comes to real estate development. Residents are almost always concerned about the additional traffic that a development might bring to their community. And who can really blame them. They’re frustrated by traffic as it is in the city and so they naturally assume that more residents in their community will translate into more cars on the road.
But as natural as this reaction might seem, I don’t believe that opposing intensification is the right long-term solution. In fact, I would argue that the question of traffic is a bit of a red herring. Because as Toronto’s Chief Planner Jennifer Keesmaat explains in this blog post, density can actually go a long way to reducing traffic congestion. And it does that by placing people closer to where they work, and by creating an environment that’s more conducive to other forms of mobility: walking, biking, and public transport.
So instead of becoming fixated on traffic, I think there’s another, perhaps more relevant, question that we should be asking ourselves: Will this development, over the longer term, help to encourage a modal split that leads to more transit usage and less driving?
Because if it doesn’t, well then we’re not doing anything to correct the problem we already have. In fact, if we don’t allow intensification to happen, it means we’re simply pushing demand outwards, horizontally. And the more you push people out of a city, the more likely they are to drive. In which case we’re only delaying the inevitable – which is more traffic.
The City of Toronto recently started an initiative called “Comprehensive to the Core.” It’s a look at how downtown Toronto–which is growing at 4 times the rate of the rest of the city–should continue to grow moving forward so that it remains a great place to live, work, learn and play.
Here’s a presentation that was delivered last month by the city. It’s mostly infographics and so it’s a quick and fun read. And here’s an infographic that does a nice job of summarizing what’s happening in the core of Toronto.
What it’s saying is that downtown Toronto–which they consider to be bound by Bathurst Street in the west, the Don Valley Parkway in the east, the lake in the south, and Dupont Street in the north–is responsible for 51% of the city’s entire GDP. It’s also responsible for 33% of all jobs in the city and 25% of the city’s entire tax base. And yet in terms of size, it represents only 3% of the city’s land area.
That’s a powerful reminder of the economic potential of density and agglomeration economies. It’s also a reminder that we shouldn’t let politics deprive our economic engine of the services and investments it needs.
. I chose this building because I think it’s an attractive one and because it's of the (mid-rise) scale that Toronto is trying to promote along its many avenues. Here are the stats I was able to
Building area: 3,000 square meters / 32,291 square feet (says gross floor area, but I don't know if that means the same thing as it does here)
Construction costs: €3.6 million / C$5,065,691 (as of today’s rate)
Units: 28 (sold within 1 week of launch)
Market: ~70% of buyers in Berlin are believed to be foreign investors
Now, if we were actually building a development pro forma, we’d want to get a lot more granular in our calculations than what I’m about to do. We’d want to know gross construction area, net saleable areas, and so on. But for the purposes of this post (and because I have very little information), I’m going to simplify and do a back of the napkin set of calculations.
Based on above, the FSI (or density) is about 8.65 (32,291 sf / 3,735 sf). That’s roughly in line with many of the residential developments we’re seeing in downtown Toronto. The average unit size works out to be about 1,153 sf (32,291 sf / 28 units), but in reality it would be less if that 32,291 number is truly the gross floor area. You would need to subtract the corridors and other non-saleable areas from it before doing this calc. Either way, that is big compared to most downtown Toronto condos, but small for Berlin standards according to this ArchDaily article. Finally, if we look at construction costs, we get $157 per square foot in Canadian dollars ($5.065M / 32,291 sf). That’s low. I wonder what the land costs were.
Again, these numbers are rough rough. But I wanted to try and dissect a European development project and compare it to Toronto. The most surprising figure seems to be the low construction costs. If you have any additional insights, I would love to hear from you in the comment section below.
Traffic is a big deal when it comes to real estate development. Residents are almost always concerned about the additional traffic that a development might bring to their community. And who can really blame them. They’re frustrated by traffic as it is in the city and so they naturally assume that more residents in their community will translate into more cars on the road.
But as natural as this reaction might seem, I don’t believe that opposing intensification is the right long-term solution. In fact, I would argue that the question of traffic is a bit of a red herring. Because as Toronto’s Chief Planner Jennifer Keesmaat explains in this blog post, density can actually go a long way to reducing traffic congestion. And it does that by placing people closer to where they work, and by creating an environment that’s more conducive to other forms of mobility: walking, biking, and public transport.
So instead of becoming fixated on traffic, I think there’s another, perhaps more relevant, question that we should be asking ourselves: Will this development, over the longer term, help to encourage a modal split that leads to more transit usage and less driving?
Because if it doesn’t, well then we’re not doing anything to correct the problem we already have. In fact, if we don’t allow intensification to happen, it means we’re simply pushing demand outwards, horizontally. And the more you push people out of a city, the more likely they are to drive. In which case we’re only delaying the inevitable – which is more traffic.
The City of Toronto recently started an initiative called “Comprehensive to the Core.” It’s a look at how downtown Toronto–which is growing at 4 times the rate of the rest of the city–should continue to grow moving forward so that it remains a great place to live, work, learn and play.
Here’s a presentation that was delivered last month by the city. It’s mostly infographics and so it’s a quick and fun read. And here’s an infographic that does a nice job of summarizing what’s happening in the core of Toronto.
What it’s saying is that downtown Toronto–which they consider to be bound by Bathurst Street in the west, the Don Valley Parkway in the east, the lake in the south, and Dupont Street in the north–is responsible for 51% of the city’s entire GDP. It’s also responsible for 33% of all jobs in the city and 25% of the city’s entire tax base. And yet in terms of size, it represents only 3% of the city’s land area.
That’s a powerful reminder of the economic potential of density and agglomeration economies. It’s also a reminder that we shouldn’t let politics deprive our economic engine of the services and investments it needs.
