Tag: condominium

• Cities without people

  

  Some people believe that cities are all about bricks and mortar. While other people believe that they are first and foremost about people. Though I wholeheartedly believe that our built environment has a profound affect on our lives, I am in the latter camp. 

  Real estate to me is an outcome. It is the result of people needing space. A new condominium is built because people need a place to live. A new office building is built because somebody built a great company and it needs to house its growing workforce. So at the end of the day, what is a city without people?

  Perhaps the best way to demonstrate this point is to show you what cities look like without them. This morning I stumbled upon an interesting series of city photographs where almost all of the people have been removed. They are by artists Lucie & Simon and the project is called Silent world.

  

  The top image is Times Square and the bottom image is Queensbridge in New York.

  Images: Lucie & Simon

  2015.03.23

• Stuck in condoland?

  Toronto Life recently published an interesting article called Stuck in Condoland. A lot of people have mentioned it to me, so there seems to be a lot of interest in the topic. It basically profiles the lives of a few young families who live downtown and are trying to raise young children in relatively small condos (think 700 square feet).

  I thought it was interesting because I like the idea of small and efficient living. The average post-war bungalow in Toronto was probably less than 1,000 square feet. And so this modern notion that you need a big house in order to properly raise a family is a relatively recent phenomenon. Although we’re a richer city today and that’s what happens when people become wealthier: they consume more.

  But the article also makes it seem that developers only want to build small condos and that larger condos and single-family homes just aren’t profitable enough. Thus the reason all these families are being forced to into tiny shoeboxes in the sky. But that’s not really true.

  Look, just like every other for-profit business on the planet, developers are concerned with making money. And so they will always look for ways to increase efficiency, drive down costs, and so on. But there are certain realities of the market that developers don’t have control over.

  First, developers aren’t building new single family homes in the city (at any sort of meaningful scale) because there’s no land to do so. And because the land use policies in place and the current thinking around how we can more sustainably build our cities for the future dictate that we should be building more intensely. In other words, building up. So it’s not a question of developers not wanting to build single family homes; it’s a question of not being able to.

  Second, trust me when I say that if the market wanted large 3 bedroom family units, developers would build them. Mandating them is a useless exercise if people don’t want them or are unable to afford them.

  The challenge we face is that a reinforced concrete condo tower is more expensive to build than a wood-framed single family house. So until land values get to a point where single family homes become the more expensive option (compared to condos), I don’t think we’ll see a huge rush towards 3+ bedroom suites.

  This is my hypothesis at least. Because when you buy house, you’re really buying two things: the house itself and the land. If the house itself (wood) is cheaper to build on a per square foot basis than a condo (concrete), then the variable that will make a difference is the land. And as people like to say: “buy land, they ain’t making any more of it.”

  So what I’m saying is that I just don’t think the situation is as simple as: “developers are bad, all they want to do is build tiny condos and make lots of money.” It’s more complicated than that. But I do believe the question of how families are going to live in the city is an important one.

  2014.06.21

• Opening the doors to a presentation center

  

  This past week we opened the doors to the presentation center for Kingston&Co Condominiums. It was pretty chaotic leading up to the opening, but everything worked out and I think our party was a great success. 

  These early events are an opportunity for the media to see the project and the presentation center, and for the project team to enjoy some of the fruits of their hard work. I think those times are important. When everyone is moving quickly to meet deadlines, sometimes it’s easy for things to get impersonal. So it’s nice to be able to sit back, have a glass of wine, and tell someone that you appreciate all of their hard work.

  Below is another photo from the event. I’m the second from the right, wearing a sweaty pink shirt. I had planned to go home and change before the event, but I instead got wrapped up moving things around and getting the presentation center ready. On a related note, there’s a tree trunk beside the sofa in the reception area that weighs almost 400 pounds. If you can lift it on your own, or even just move it on your own, I’ll buy you a round of drinks.

  

  If you’d like to learn more about Kingston&Co, click here. And if you get a chance to check out the presentation center, make sure you tweet me and let me know what you think.

  Images: BuzzBuzzHome

  2014.05.30

• Dealing with condo complaints

  I’m on the Board for my condo in the St. Lawrence Market. I am one of three Directors. Although, the building is split up into 2 phases and so, in reality, there are other Directors involved. Sometimes developers phase their buildings (even if it’s physically one structure) in order to mitigate risk. That’s what was done here.

  As a result of sitting on the Board, I get to see every single resident complaint. They all go to the management office, but then they get circulated to all of the Directors so that we can address them at our next monthly meeting. We try our hardest to address all complaints but some, quite honestly, can be really hard to resolve.

  The most difficult to address are the ones that stem from people being inconsiderate. They’re related to noise, garbage being thrown off balconies and so on. These are tough because they have nothing to do with the building or the management. They have to do with the people. And it’s bound to happen in any environment where you have a lots of people living in close proximity to one another. In a low-rise neighborhood, it’s dogs pooping on your front lawn.

  We’re constantly trying to come up with different solutions that go beyond just sending out letters–including knocking on doors. But none of them are ideal. It’s often hard to pinpoint who’s doing what and letters are slow. 

  But here’s another idea.

  I think, the answer could be in some sort of private social network for apartment and condo buildings. Think Nextdoor.com for multi-family dwellings. This would personalize the complaints (as opposed to just using management letters) and it could create some societal pressure to better behave. If you threw garbage off your balcony you would then run the risk of getting called out, on the network, in front of the entire building.

  Nextdoor.com says it needs at least 50 households to make a neighborhood viable. That would be easily achievable in a lot of the condo buildings in Toronto. Neighborhoods probably scale better in general, but maybe it would also work for buildings. There’s certainly a need.

  2014.03.08

• Say hello to Kingston&Co

  

  As of today, Family Day Monday, you’re going to start seeing information released regarding TAS’s (in partnership with Main & Main) newest community called Kingston&Co. It’s located on Kingston Road, just east of Victoria Park Avenue, in a neat area called Kingston Road Village. You can already register at kingstonandco.ca. And as part of the registration process, we’re also soliciting feedback as to the types of retail the community would like to see added to the area. Note: There’s already a Starbucks 🙂

  At the same time, we’ve also launched a redesign of our corporate site (tasdesignbuild.com). The biggest change is that we’ve taken the blog—which was hidden under a “Neighbourhoods” tab—and made it front and center on the homepage. We see this as a pretty significant change. One that shows that we would like you to join us in a conversation around city building. We now allow comments on all of our blog posts and you can see right on the homepage who the author of the post is.

  If you have any feedback on either Kingston&Co or the new homepage, we’d love to hear from you in the comment section below.

  2014.02.17

• Condo maintenance fees explained

  One of the objections I often hear from people regarding condominiums is that they don’t like the idea of paying maintenance fees. So I’ve been meaning to do a post for some time now that breaks down and explains exactly where that money goes.

  Here is a simplified example. It ignores some of the miscellaneous income that buildings usually receive (from guest suites, the party room, public parking and so on). And of course, these numbers will vary based on the age of the building, specific amenities, and any deficiencies it may have. Nonetheless, it should give you an idea.

  

  So assuming you pay $400 per month as a common element fee, a percentage of that will—or at least should—get immediately stripped away as a reserve fund contribution. Again this will depend on the age the building and the periodic reserve fund study that’s typically required to be done.

  After that you have the operating expenses. The biggest items you’ll notice are contracts and utilities. Contracts are things like janitorial services, snow removal, property management fees, security/concierge services and so on. They’re contracted items. Utilities are self explanatory. 

  Once all the operating expenses have been paid, any remaining money then goes to retained earnings and sits in the condo corporation to handle any other expenses that may arise.

  Looking at the total operating expenses ($263), you should notice that it’s only about 66% of the total common element fee ($400). A big chunk of your common element fee is actually going towards saving for the future. Assuming the building is being properly managed, I’m okay with this.

  If you have any feedback on my numbers, I’d love to hear from you in the comment section below or on twitter.

  2014.01.05

• Q&A on Toronto’s condo rental market

  Earlier this week I connected with a Ryerson student doing a piece on Toronto’s condo rental market. She emailed me and asked if I would mind answering a few questions. Here are my responses.

  Generally speaking, why is Toronto continuing to see such a rapid increase in the number of condos in development? 

  A lot of what we’re seeing is policy driven. It stems from the Places to Grow Act and the continued push towards intensification. It actually mirrors a similar boom we saw in the 70s. In both cases, it was policy driven and the market responded.

  The other factor is a growing consumer preference for more walkable and urban neighborhoods. People are sick of long commutes and so we’re seeing a return to city centers and downtowns. This is happening across all demographic segments, though Millennials and Baby Boomers seem like particularly strong ones.

  Is that boom, and the consequent rush by developers to create new units for rapid sale, affecting the quality of design and accessibility in new condo developments in Toronto?

  When you have a hot market, you’re going to get lots of people rushing in and trying to make money. Whether it’s real estate, tech or some other industry, it’s to be expected. And I’m sure it impacted some projects negatively. But that market is gone in Toronto.

  And regardless of the pace of development, there will always be varying degrees of quality across builders. The unfortunate thing for consumers is that it’s not always easy to tell which is which.

  One of the things we’re trying to do (at TAS) is integrate consumer education more into our sales and marketing programs. Mechanical equipment, as one example, isn’t the most exciting thing to to talk about, but we want consumers to know what they’re buying into.

  Prices are rising (you could buy a house outside the city for the price of some of Toronto’s tiny bachelor units, if I’m not mistaken…) – So what is making condo ownership so desirable in spite of the high cost relative to space? 

  Again, it’s being driven a lot by lifestyle. People want walkable communities, they want to be close to amenities and they want to drive less. And they’re willing to give up space for that. 

  When considering and comparing the cost of a home, I think it’s important to consider some of the indirect costs, such as transportation costs, travel times, quality life and so on.

  Sure a home in the suburbs may be a lot cheaper, but what’s my total, all-in, cost? If you need to own 2 cars and you spend 2 hours commuting everyday, there’s a real cost to that. If you place a big value on your time (as I do), the cost equation isn’t so skewed all of a sudden.

  Are more people choosing to live in rental condos instead of buying, because of the inaccessible cost? If so – why are we still seeing so many new ‘rental condo units’ being built, rather than purpose-built apartment units?

  Condos are being built because, in most cases, it’s the highest-and-best use for the land. It’s the most profitable. And investors have been more than willing to step up and fill the rental needs of the market. But with the condo market now coming down from record levels, I wouldn’t be surprised if we start seeing more purpose-built apartments.

  Would you say that the majority of condo rentals on the market are owned by foreign investors who depend on building management to liaise with renters? If so, why are they choosing to buy units in Toronto?

  I have no idea. It’s even hard to tell how many units are just investor owned, let alone local versus foreign. Because there are tax implications if you don’t owner occupy a unit, buyers have an incentive not to disclose. Overall, I find it problematic that the marketplace is so opaque. I wish there was a way to bring perfect information.

  With respect to why they choose to buy in Toronto, there are a bunch of reasons. Real estate has been a phenomenal investment in Toronto over the past decade and that’s attracted a lot of investor attention. There are also segments that just want capital preservation in a safe and stable country. Even without great returns, that’s a valuable proposition for some foreigners. And of course, Toronto is a great city. Talent wants to live here and that’s important.

  Generally speaking, is there a certain LOCAL demographic (ie, boomers, post-boomers) that are investing in condos for the purposes of renting them out? What makes that investment so desirable?

  Again, there isn’t great data on this. 

  What I will add to the investor topic is that, despite the fact that investors often get a lot of flack, they do serve two important needs in the marketplace for both developers and consumers. The first one we’ve already talked about. Investors provide rental housing in Toronto at a time when few, new, purpose-built rental apartments are being constructed.

  The second one is that investors help to get projects under construction and built. I’ve heard one developer refer to them as providing a kind of short-term financing. Because consumers don’t always want to commit to a unit that might be built 4-5 years out, developers rely on investors to buy pre-sale units so that the project can get underway. Once construction is complete, these units then often get sold to end users who are now ready to commit and move in.

  2013.12.05

• Panel: Investing in Condominiums

  I sat on a panel tonight for a discussion on investing in condominiums. It was organized by the Six Degrees Real Estate Mixer group.

  My overall position was that we’re now returning to a more balanced market. The days of massive appreciation and overnight riches are gone. But that doesn’t mean we’re going to see anywhere near the correction that the US housing market saw in 2008.

  What I do think it means is that everyone – from developers to small investors – needs to remain focused on fundamentals. Buy quality assets in great locations and make sure the rental income is there. Cash is king. That’s fundamentally what the real estate business is about.

  Overall, the data shows that developers are pulling back with respect to releasing new product to the market and that price appreciation has slowed, almost trading sideways. All of this is good for the market if you’re worried about a catastrophic crash.

  I think the experience in the US has made us all paranoid about our own housing market. But it could end up saving us from repeating their mistakes.

  2013.10.24