I am currently sitting in CDG and running on somewhere between 3-4 hours of sleep. We spent the entire day in Paris on a layover and are now waiting to board for Tokyo. So today's post is going to be two quick announcements related to Junction House. One, we just received the final architectural photos from Double Space Photography, and they turned out great. If you'd like to take a look, most of them can be found here. And two, we just listed suite 607. It's a spacious two-storey and two-bedroom suite, and one of the best in the building. Over the last few months, we've been seeing strong demand from end users (as opposed to investors) and I'm sure this one will go that way as well. For much of the last cycle, it was frankly easier and more profitable to just target investors. But I would argue that the opposite is true today. And that's a positive thing for the market.
Cover photo: Double Space Photography
I spent three years living in Philadelphia for grad school and one of the things that I appreciated the most was its walkability. I walked and took transit everywhere. Much of this has to do with the grid system that was laid out for the city in the 17th century. But there are also lots of more recent developments that help to reinforce this fabric.
CityLab, for example, just published this article on Penn's Landing Square, which is a housing complex in Philadelphia's Society Hill neighborhood. Built in 1970 and designed by Canadian-American architect Louis Sauer, the modernist complex occupies an entire 2.37-acre block and contains an assortment of 118 low-rise homes, many of which are connected through small interior laneways.
In addition to its handsome architecture, what is noteworthy about Penn's Landing Square is that its site plan makes it quite a dense low-rise development. At 118 homes, this translates into just under 50 units per acre. CityLab estimates that this means the development holds about 174 people per acre (~412 people total), which would make it more dense than Stuyvesant Town in New York (~158 persons per acre).
However, this is based on the assumption that there are almost 3.5 people living in each of these homes. While generally large, I don't know if this is the case. It would be higher than the average US household size. But regardless, from a unit per acre standpoint, it remains a great example of dense, family-oriented, and grade-related housing.
For fun, let's compare this to a more intense form of infill development. Our Junction House project, for instance, contains 151 homes and sits on a 0.48-acre piece of land. This translates into about 315 units per acre. I don't know off hand the average number of occupants per household, but I reckon that, given our larger average suite size, we should be on the higher end compared to most mid-rise condominiums. So I would say that we are probably 400+ people per acre.
It's unfair to compare a single development to an entire neighborhood, such as Stuyvesant Town. Circulation and other open spaces will necessarily pull down your average density. But these individual development examples do speak for themselves. There are many parts of North America where you might find 1 home or a handful of homes per acre of land. At Penn's Landing Square, this number is 50 units per acre. And at Junction House, it's 315 units per acre.
Over the years, we have spoken a lot about the role that investors play in Toronto's pre-construction condominium market. In the media, they are often spoken about pejoratively. They are seen as being a well-capitalized group that outbids end-users for a limited supply of new housing.
But on the other hand, we know that (1) they have been a major contributor to new rental housing in this city (they filled the gap after we decided in the 1970s that we didn't like purpose-built rentals) and that (2) they play an important function in getting new housing financed.
For better or for worse, we know that, without an investor market, there would have been far fewer new homes constructed over the last cycle. Pre-sales are generally always a prerequisite for a construction loan. And the fastest, and therefore safest, way to get pre-sales is/was to target investors.
But the world has changed since then. Investor demand has diminished. So much so that you could argue that the opposite is now true.
I was speaking to my friend Christopher Bibby this morning and he reminded me that end-users, who are passionate about specific projects and neighborhoods, are the more resilient demand base during a downturn. Because if you need a place to live, you need a place to live.
Perhaps it's no coincidence that every single sale that we have had at Junction House this year has been to an end-user who moved in.