Tag: apartment

• Manhattan apartment rents post biggest decline since 2011

  A friend of mine sent me this article earlier today with a sarcastic comment about the relationship between housing supply and rents.

  The article talks about how rents in almost every Manhattan neighborhood have fallen compared to a year ago because of a flood of new apartment supply coming online. The median rent dropped 3.6% (year-over-year) which is the biggest decline since October 2011.

  

  There has also been a spike in the number of leases with some sort of incentive attached to it (see above). As a landlord you typically want to use incentives, such as free rent, before resorting to lower face rents. Because lower rents mean a lower overall net operating income, which in turns depresses the value of your property.

  But sometimes you have no choice:

  “Landlords have finally realized, ‘OK, we have to adjust these prices because the concessions aren’t doing as much,’” said Hal Gavzie, who oversees leasing for Douglas Elliman. “Customers are looking past the concessions being offered and just looking for the best deals they can find.”

  A few weeks ago I wrote about a similar story playing out in Seattle. It’s almost as if excess housing supply is driving down rents.

  2018.02.14

• Toward more family condos

  The Ryerson City Building Institute and Urbanation recently published a terrific report called: Bedrooms in the Sky. Is Toronto Building the Right Condo Supply? 

  Here is a quick synopsis: The 35-44 year old age bracket in this city will see significant growth over the next decade; single family homes are really expensive; and we’re not building enough family-friendly condo units.

  When Urbanation looked at the data for all condo units currently under construction they found that the unit mixes still skewed toward 1-bedroom units, but that the number of 3-bedroom units is starting to trend upward. That feels right.

  The report also talks about the affordability gap between condos and houses. The average condo in the Greater Toronto Area costs about $511,000, while the average detached house costs $1,134,000.

  However, this isn’t exactly an accurate comparison because the average condo is smaller in size than the average house. I think a better metric is to look at price per square foot.

  Also, houses give you the flexibility of a secondary suite. Right now that usually means a basement apartment, but pretty soon it’ll likely include a laneway suite. That creates an additional income stream and helps with overall affordability.

  In any event, up until maybe recently, houses generally looked cheaper on a per square foot basis. And my view – which I have written about extensively on this blog – was that as soon as houses become “more expensive”, we’ll see an uptick in larger family-oriented condos.

  A few weeks ago I went to an open house in a desirable area of Toronto. It was for a 1,300 sf semi-detached house with good bones, but in need of a full gut. Basement was low, only suitable for humans around 5′ tall. It sold for $1 million.

  Let’s say that house needs $300,000 to bring it up to the level of a new condo. If that doesn’t include some sort of extension, now you’re in for $1.3 million or about $1,000 per square foot. You can still find a condo for less than that.

  Which is one of the reasons why I think we’re now starting to see an uptick in larger/family units. (We are trying to do it at Junction House.) 

  But like all things in real estate, these things move slowly. The condos under construction today were designed years ago. Changes take time to work themselves through the system.

  2017.11.08

• My old Philly apartment

  I’m in Philly right now for a good friend’s wedding. 

  I always feel nostalgic when I come back to this city. Some of my most memorable years were spent here. I grew a lot in those 3 years. I also think that Philly is a highly underrated city – such an intimate urban scale.

  I’m staying at the newly renovated Warwick Hotel in Rittenhouse Square. The lobby is beautiful, as are the corridors, but the rooms already feel a bit a dated to me. However the Barcelona Chair in my room is a welcome addition. That thing will never go out of style.

  My hotel happens to be two blocks away from my old apartment at 17th and Spruce. So I decided to do a walk-by while I waited for my room to be ready. My roommate and I had the entire second floor of this building:

  

  It was palatial, especially given the bargain price and its location in Rittenhouse Square. 

  The graffiti you see above is located on the north wall of the kitchen. I think that’s a recent addition. The fire stair you see provided access to the roof of the building (as well as the street, I hope). I’m not sure we were supposed to go up there, but we obviously used it for parties.

  Grillmaster Deli is still next door. They kept me fed when I was studying at home and too busy to cook. That was often. And across the street is the Italian restaurant with its sidewalk patio that I used to look out onto from my bedroom.

  This walk-up apartment was by no means fancy. Though it did have ensuite laundry, which was a nice improvement from my previous place. But it was unabashedly urban. My kind of place.

  2017.09.17

• The Hong Kong window ledge

  

  My friends at the architecture practice Valente Rodgers told me something fascinating about the Hong Kong real estate market last night. Both partners worked as architects in Hong Kong for a number of years.

  In Hong Kong, you’re allowed to deduct certain projecting windows from your calculation of Gross Floor Area. 

  This is provided they’re a certain height above the finished floor level, they don’t project beyond certain distances from the outer face of the building’s structural elements, and so on. The precise measurements seem to vary depending on things like the building’s use.

  Since space is such a precious commodity in Hong Kong, it shouldn’t surprise you that lots of developers and architects take advantage of this. The result being a proliferation of these projecting window ledges all across the city. 

  It’s a phenomenon that happens in many cities when a perfectly legal loophole is found in the land use policies.

  In Toronto it used to be solariums. You could also deduct these from your overall GFA, which means a lot of them them got built in condos and apartments of a certain vintage.

  In New Orleans it was the camelback house. These were houses with a single storey toward the street and a second storey toward the rear of the property. This was done because property taxes were assessed based on the height of the house as it met the street. Pushing the density toward the rear of the lot meant homeowners weren’t taxed more. 

  I find these outcomes fascinating because they have absolutely nothing to do with architectural intent and everything to do with trying to optimize within a given framework.

  But what’s even more interesting about the Hong Kong example are some of the downstream externalities.

  Firstly, it sounds to me like these projecting windows have become a normal part of underwriting projects in Hong Kong. Meaning, if you don’t factor in these projections, you’re effectively giving up free GFA. (Can anyone familiar with the HK market confirm this?)

  However, building these projections also means you can’t do unmodulated and clean floor-to-ceiling windows. And if that’s the desired aesthetic, somebody has got to be willing to pay for that “luxury.” So arguably there’s a socioeconomic dimension to having and not having this ledge.

  Secondly, because space comes at such a premium, these ledges are fully taken advantage of and furniture makers have responded by designing pieces that can dovetail with them.

  Below is a photo of a bedroom in Hong Kong that I found on bohemia.life:

  

  This may be a custom bed and I don’t know how deep that window projection is, but it begins to show you how valuable these ledges can be from a space perspective.

  I think we should try and come up with a name to describe these sorts of built form phenomena. If you have any ideas, please drop them in the comments below. And if any of you are familiar with the HK market, let me know if I’m off the mark with any of the above.

  Photo by Jason Wong on Unsplash

  2017.08.12

• Toward larger condo units

  

  One of the things that I’ve been following over the years (and writing about a lot on this blog) is average condo/apartment sizes, specifically in Toronto. I’m interested in this topic because I think it tells you a lot about what’s going on in the market and who is buying/renting.

  Developers are often criticized here for building tiny “shoebox condos.” It wouldn’t be unusual to see a building with an average unit size somewhere in the range of 600-700 square feet.

  But it’s important to keep in mind that the pull toward smaller units is largely because of one important reason: affordability. All things being equal, I’m sure that most people would gladly take an expansive 2,000 sf apartment. But how many people can actually afford a place that large? And for those who can afford it, many seem to opt for ground-related housing instead. So for the most part, the market has said: not many.

  But I’ve suspected for awhile that it was only a matter of time before we saw unit sizes start to creep upward. And indeed today there seems to be a trend toward larger units. I can’t tell you the exact percentage increase for average unit sizes across the city, but you don’t have to look very hard to find a proposed project with average unit sizes in the range of 1,000 to 1,500 sf. I spent this morning looking many of them up and going through their data sheets. If any of you have a larger sample size, please share it in the comment section below.

  To me this feels like a maturation of the market. More of us are deciding to move up, instead of out, which is absolutely what we need to do. Affordability, perhaps more than ever, is still a concern. But the confluence of a couple of factors seem to be expanding the multi-family market in this direction.

  One, empty nesters are starting to cash out of their large houses and they still want/need space. Two, the price of low-rise housing has increased so dramatically that it’s now out of reach for many and/or it no longer feels cost competitive on a per square foot basis. Three, Toronto’s status as a global city continues to increase and this is making it more of a magnet for foreign capital. And four, central and transit-adjacent housing is incredibly desirable for a large segment of the population. Horrible traffic is probably helping this one.

  If there’s any truth to my logic, then I wonder if we won’t see a bit of a bifurcation in the market, if we aren’t already. On the one end, there will still be the pull to shrink unit sizes and maximize affordability. See micro-units. But on the other end, there will be a product segment that now acts as a substitute for low-rise housing.

  I’ve said this before, but I’ll say it again: I think more families in condos and apartments would be a positive thing for the city.

  2017.06.16

• Deep thoughts on apartment layouts

  This morning while I was having a bowl of cereal and fruit, I came across this floor plan from 75 Portland Street, Toronto by CORE Architects:

  

  It’s a 2-storey unit with a den and double height living room on the main floor and 1 bedroom and 1 media lounge (that could act like a 2nd bedroom, but doesn’t have a window so it can’t be called that) on the second floor.

  This floor plan is a perfect example of what I was getting at with my post: The long and narrow of property affordability. 

  Rough rough, the overall dimensions look to be about 4.3m wide x 12m deep. It’s a fairly deep plan, which means you have to be careful how much “frontage” you give it. If the apartment gets too wide, then it could quickly become too big and potentially unaffordable.

  With the above dimensions, and if you didn’t go 2 storeys, you’d be forced to do an inset/recessed bedroom. The living room would get all of the windows. And if you made the apartment wider to accommodate that main floor bedroom, then you’d likely end up doing an inset/recessed 2nd bedroom, anyways, because of how big the unit had become. So there are trade-offs to consider.

  I’ve seen this layout first hand and I like it a lot. I think it’s an elegant solution to the challenge of deep floor plates. 

  But what do you think? It may not suit everyone’s needs, so I would be really curious to hear your thoughts in the comment section below or on Twitter.

  2017.01.22

• One becomes four

  The New York Times posted an interesting article today talking about how roommates in the city are dividing and conquering expensive rentals using temporary walls. This is obviously not a new practice. But it’s a good case study in what people will do in order to make living in a specific location affordable – in this case, Manhattan.

  The first example is a one bedroom apartment that was converted to a 4-person apartment. Here is the floor plan (from the New York Times):

  

  The living/dining room was divided up using a T-shaped partition wall – which is required to stop 2 feet shy of the ceiling – to create two additional bedrooms. The original bedroom is then shared via two twin beds. Et voilà. Now you have an apartment where the $3,750 per month rent becomes less than $1,000 per person.

  Probably the most annoying thing about this setup would be the lack of acoustic privacy. Since the partition walls don’t go all the way up to the ceiling (photo here), you’d obviously hear everything. One person in the article described it as living in the same room as all of your roommates, but not being able to see anyone.

  Of course, there’s also a space consideration:

  Mr. Meyer, 23, has the smallest room by far. “It kind of feels like you’re living in Harry Potter’s cupboard,” said Mr. Meyer, who is in his freshman year at Columbia after serving for three years in the Israel Defense Forces.

  The roommates, three of whom grew up together in Toronto, don’t mind the close quarters or the lack of privacy. “It’s definitely not for everyone,” Mr. Meyer said. “When you live with your best friends, it couldn’t be better. We hardly spend time in our rooms.”

  I saw a lot of this here in Toronto while I was in undergrad. 55 Charles Street West was always a great candidate for these sorts of hacks because the units are large and because the building is filled with solariums. Inevitably, they became additional bedrooms. 

  (Sidebar: My understanding is that there was a period of time in Toronto where solariums were excluded from gross floor area calculations. So developers used to always put them in to capture more area. That’s why buildings of a certain vintage always seem to have them.)

  In any event, the above certainly makes the case for more micro units and co-living arranagements. Many people seem willing to deal with a variety of living situations in order to live where they want to live. Urban affordability is certainly a global concern.

  2016.12.09

• Urban migration, household type, and housing supply

  Here is an interesting discussion paper on the Toronto region’s economy, demographic outlook, and its land use. It was recently published by IBI Group and Hemson Consulting to support the 10-year review of our regional transportation plan.

  I wanted to share a couple of charts from the report that I thought were interesting. If you’re not in the Toronto region, I would be very curious to hear how your city might compare in terms of the way it is trending.

  The first chart is net migration by age group. Like Vancouver – similar chart posted here – people have been moving into the city/Toronto when they’re young and then moving out to the suburbs once they start having families. 

  Will that continue? The oldest Millennials are now hitting their mid-30′s and I am very interested to see if there will be any reversal in this.

  

  Given the above trend, people in this region are not surprisingly also swapping apartments for ground-related housing as they get older. The crossover point seems to be (or at least has been) when people hit their mid-30′s. Again, I am curious how this may evolve as the city matures.

  

  Because if you look at housing completions from 2001 to 2016 (chart below), the only municipality that was able to meaningfully increase its housing supply was Toronto. 

  Every other municipality – except for Hamilton, which posted modest gains – experienced significant declines in the number of new homes delivered to the market over the last census periods. 

  Of course, the only reason Toronto was able to increase its housing supply was by building up – in other words by building condos and apartments. (Shown in the purple below. For some reason the legend is incomplete in the report.) 

  

  If you look at the share of housing completions, over 80% of new homes in Toronto are now in apartment form. 

  

  Intensification is a deliberate policy choice. And we can certainly debate whether it’s a good or bad thing (I believe it’s a good thing). 

  But putting that aside, the above charts are a great answer to the perennial question: “How is it that Toronto is building so many condos?” This is why.

  2016.08.19

• Rentberry brings open bidding to rental market in San Francisco

  A new startup out of San Francisco, called Rentberry, has just launched, allowing tenants to openly bid on rentals in the city. Think of it like a rental auction. Landlord lists property. And then tenants compete for it by submitting offers. 

  Not surprisingly – especially since we’re talking about San Francisco – there’s concern that this will do nothing but drive up the city’s already high rents.

  But I think the key detail is that the platform will make public the total number of applicants. As a tenant, it’ll even tell you how your credit score compares to those of the other bidders (presumably, so you can gauge how aggressive you might need to be on your bid).

  The real estate industry is rife with information asymmetries. So anything that improves transparency is something that catches my attention. If you’ve ever bought or rented a place in a competitive market, you know that one of the worst things you can hear from the broker is: “We have another offer.” (Even worse: “We have 12 other offers.”)

  It’s frustrating because it now means you’re competing. But even more frustrating is the fact that you have no way of assessing whether or not that statement is fact or fiction. Yes, I realize that there’s a code of ethics that’s supposed be followed, but you and I both know that games are played all the time.

  In fact, I think someone could easily make a full career out of just trying to correct the information asymmetries inherent in the real estate industry. Who knows what sort of impact they might be having on the market. So I’m excited to see how things pan out for Rentberry.

  2016.05.17

• What’s in a word? A lot.

  

  One of the things I try to be aware of is the language that I use to describe things. Because the words and conventions we use can impact how we perceive things and they can also reinforce certain inherent biases. (I have a good friend who is an expert on this topic, so he has heightened my awareness.)

  For instance, I find that we tend to equate home and house. In other words, we’ll use the descriptors detached house and detached home interchangeably. And when we say that someone is a homeowner, it can sometimes, or often, mean that they have purchased a house.

  The same does not seem to be true for apartments and condominiums. Rarely do I hear people say that they live in an apartment home or a condominium home. It’s just an apartment or condo.

  This is meaningful because the emotionally charged word is home. It signifies a subjective (and usually comforting) experience, whereas the word house, I would argue, represents a building typology. And so by conflating the two, I often feel that we’re promoting a cultural bias that privileges houses as the ideal building typology. A true home is a house.

  The other word that I often think about in my business is unit. When we talk about multi-family buildings we often – and I’m definitely guilty of this – refer to each suite as a unit. We’ll say things like: “This is a 200 unit building and the unit mix is as follows…”

  Again, I am absolutely guilty of this. But at the same time, I often think about how this word, unit, is probably the furthest thing away from a home. Who wants to live in a unit? That doesn’t sound very pleasant. In fact, it sounds clinical. People want to live in a home. Now that’s a word with positive psychological associations.

  And so by reducing each home to a unit, I think it could be making us lose sight of the fact that each suite will eventually be lived in by someone who will then make it their home. Yes they can be considered a customer who are paying for a product (a great place to live), but I don’t think that should take anything away from its homeyness. 

  I live in a condominium and it is my home. What about you?

  Image: Flickr

  2016.05.14