Tag: greater toronto area

• 11th Annual Land & Development Conference

  Today I spent the day at the 11th Annual Land & Development Conference here in Toronto. I found it particularly good this year, but it’s now late, I’m tired, and I want to go watch game 6 of the NBA finals. So I think this is going to be a fairly short post.

  Here’s a summary of some of my key takeaways from the day (a lot of it is Toronto-centric):

  • Increasingly, the commercial and residential sides of the real estate development business are converging. And it’s being largely driven by the focus on urban intensification and mixed-use.

  • This is leading to an “institutionalization” of the residential side, which has historically been the domain of smaller private/local companies and rich families.

  • Merger is creating complexity around asset valuations: Is it about the income (cap rates) and/or the future development potential?

  • Low rise house prices in Toronto continue to skyrocket. Supply is highly constrained. This has been the story for a number of years now.

  • High rise condo prices in Toronto continue to be more or less flat (modest increase). The industry is going to need to figure out how to work with and compliment the current surge in rental apartment development. There is an element of competition between the two asset classes.

  • According the RealNet’s new home price index, the spread between low-rise and high-rise housing in the Greater Toronto Area widened to $326,659 as of this past April (2015).

  • Rental Apartment Case Studies: Motion on Bay by Concert Properties (Bay and Dundas) was underwrote at $2.60-2.80 psf rents back in 2009. Rents are now in the $3 range. The Heathview by Morguard (Bathurst & St Clair) had $2.80-2.90 psf rents in its pro forma. It achieved and beat these numbers.

  • There’s a flood of Asian money coming into (1) Vancouver and then into (2) Toronto looking for development projects. There appears to be a lot of impatient and/or dumb capital out there. Challenge remains finding good development sites.

  • Vancouver is well ahead of Toronto in terms of transit oriented development. The initial intent in Ontario was to create a link between the greenbelt that surrounds Toronto + land use (intensification) + transit. But we haven’t been doing a good job of building transit and developing around it. This ties in nicely with a post I wrote called: The case for planning transit around minimum population densities.

  I will end by saying that I found there to be greater transparency at today’s conference. There was a lot of talk about deal specifics and I don’t remember seeing this much detail at past conferences. 

  Maybe I just wasn’t paying attention closely enough before or maybe the industry is slowly becoming more transparent. I hope it’s the latter.

  If you were there today and I missed something groundbreaking, please share it in the comments below!

  2015.06.17

• A few thoughts on Toronto’s rental resurgence

  

  Condos in Fog by Richard Gottardo on 500px

  Earlier today I attended a lunch and learn talking about the renewed interest in rental apartment development here in Toronto. Since this is a topic I’ve written about a few times here on Architect This City, I thought I would summarize some of my key takeaways from the panel discussion:

  • Market fundamentals are strong for purpose-built rental apartments. Vacancy is very low and demand will likely outstrip supply for many decades to come given the barriers to building (land availability, planning/approvals, and so on).
  • As of September 2014, CMHC reported 2,212 purpose-built rental units under construction in the Toronto region. And yet the annual demand for new rental housing is likely somewhere between 10,000 to 30,000 units (clearly some of this demand is being absorbed by condo rentals – the secondary rental market).
  • Millennials and retirees are seen as core markets for new rental apartments. Millennials want to live in urban centers and they like the flexibility that renting provides. Retirees want to know that they won’t be asked to move out because the owner wants to sell their condo unit.
  • It’s almost impossible to compete against condo developers when it comes to buying land (despite the next point). They (condo developers) will pay more. Therefore intensifying our “tower in a park” building stock is going to be a critical component of meeting rental demand in the region.
  • Part of what’s driving this interest in purpose-built rental (on the part of developers) is a softening condo market. So don’t be surprised when some developers flip back to condos when it makes financial sense to do so.

  It was interesting to hear this last point. It’s something that has been on my mind, but for whatever reason wasn’t really being talked about by the industry. That’s not to say that I think the condo market is in trouble though. It has just become more balanced. And ultimately that’s probably a good thing.

  Either way, I think that more rental and more housing options are a positive for the city and for consumers.

  2015.05.27

• 3 stages of intensification

  

  We all know that the Greater Toronto Area is growing and intensifying at an incredible pace. In fact, last year the region set a record with 25,571 new condominium units completed.

  If you listen to industry experts, such as George Carras of RealNet, they’ll tell you that this level of intensification — which usually means condominiums — is really a decade in the making. That’s when the government set out to explicitly encourage this type of growth.

  But in the decade since that decision, we’ve seen both government and the market evolve in terms of what that intensification should look like. It started out with a largely high-rise building typology. Tall buildings were to be allowed in the downtown, as well as in specific growth nodes throughout the region. But for everything in between — the officially designated “neighborhoods” — there was to be no development.

  This is what I’ll call the first stage of intensification.

  Then, we started to think about mid-rise intensification along the avenues. Most of these “avenues” (also an official term) cut through those same stable neighborhoods, but the main streets were seen as an appropriate place to allow additional growth. It makes perfect sense and so guidelines were created to help dictate what this new building typology should look like.

  This is what I’ll call the second stage of intensification.

  And it’s one that I’d argue we’re currently living through with new mid-rise projects like DUKE in the Junction (TAS project), Kingston&Co in Kingston Road Village (another TAS project), Abacus Lofts on Dundas West, and The Hive in Etobicoke. These are all mid-rise buildings going up in established neighborhoods.

  With the recent decision to also allow wood frame buildings up to 6 storeys in Ontario (instead of 4), we’ll probably see an even greater surge in mid-rise buildings once the private sector gets its head around this shift.

  So what’s next?

  I think it’s inevitable that we’ll eventually see low-rise intensification within our established neighborhoods. We started by avoiding them altogether, and then deciding that it was desirable to build along their periphery. But as demand for urban housing continues to increase, I believe it’s only a matter of time before we start to loosen the reins on our single family neighborhoods.

  Some of you might be thinking that this is going to be a bad thing, but I actually think the opposite. Projects such as Vancouver’s Union Street EcoHeritage prove that it’s entirely possible to intensify existing neighborhoods through sensitive and beautiful infill interventions. And of course, let’s not forget about laneway housing.

  The fact of the matter is that Toronto has already been intensifying its neighborhoods for a very long time — likely since the beginning — by converting single family homes into duplexes, triplexes, and other multi-family dwellings. We just haven’t been doing it in any sort of structured way.

  I don’t know when this will change, but I think it’s only a matter of time. And that will be the third stage of intensification.

  Image: Flickr

  2015.01.27

• Is Toronto’s urban growth boundary really making the city less affordable?

  

  This morning the Globe and Mail published an article by Toronto’s chief planner, Jennifer Keesmaat, called Greenbelts make cities more livable, affordable and transit-friendly.

  The headline immediately caught my attention because conventional economic wisdom would suggest that supply constraints – whether natural or artificially created – generally have a negative effect on housing affordability.

  To be clear though, I support Ontario’s greenbelt. I think an urban growth boundary is the right thing to have if we want to build sustainable, walkable, and transit-oriented communities. But I’m also not blind to some of the potential (negative) externalities.

  However, Keesmaat’s article got me wondering just how prevalent those externalities might be and to what extent our greenbelt is actually impacting housing affordability in Toronto. In her article she cites a recent report by the Pembina Institute that very clearly argues the following:

  “There is no shortage of land throughout the GTA [Greater Toronto Area] to build single-family homes for decades to come, but this land is predominantly located far from the City of Toronto and other established centres of employment in the GTA.”

  More specifically, the report found that of all the land available for development in the region (within our growth boundary), 81% of it is projected to still be unused by 2031. This got me thinking: it’s not that there isn’t land still available in the region; it’s that there isn’t land in the areas where demand is the greatest.

  Put differently, young families aren’t clamoring for single family homes in High Park and Leslieville because the greenbelt has restricted their ability to find new housing. They’re doing so because they want to live in neighborhoods like High Park and Leslieville.

  If you dive into the data, the report shows that in 2004 the average price of a detached home in Toronto was about $117,000 more than the rest of the Greater Toronto Area. As of 2013, that spread had grown to about $200,000. And indeed the data shows that it’s the core of the city where home prices seem to be appreciating the fastest.

  

  So when it comes to housing affordability and supply, the greenbelt may actually be a red herring. Releasing it would not increase the supply of housing in areas where demand is already high, which is probably why this same report also found that – with or without an urban growth boundary – most Canadian cities are seeing similar increases in home prices.

  So what should we be doing?

  I think we should do two things: (1) focus on accommodating more growth in the areas that people already want to live in, and (2) figure out ways to transform the less desirable areas into more desirable ones. This second one will be the hardest, because it’s likely going to mean changing car dependent areas into transit-oriented ones, which is no easy task.

  The good news though is that we are already doing these things. There’s more that I would like to see happen, but we’re headed in the right direction.

  If your city has a greenbelt or you have experience with greenfield development in the Toronto region, I’d love to hear your thoughts in the comments. This is an area of development that I’ve never really been involved with.

  Image: Flickr

  2015.01.13

• Is the world urbanizing or suburbanizing?

  

  The Economist recently published an essay called, A Planet of Suburbs – The world is becoming ever more suburban, and the better for it. The argument is basically that the “great urbanization” that everyone loves to talk about these days is actually a misnomer. From Chicago to Chennai, it’s not the urban core that’s growing. It’s the suburbs. And so what we’re seeing should actually be called the great suburbanization.

  The basis for this argument is that wealth fuels sprawl. As people become richer, they naturally consume more of everything – including space. It’s a natural market outcome.

  Take for example, the path of many of Toronto’s ethnic groups. In the first half of the 20th century, College Street was the Little Italy. Then it shifted north and St. Clair Avenue West became the more authentic Little Italy. Today, many Italians now live north of the city in Woodbridge. In fact, last weekend I was on St. Clair West and was disappointed to learn that one of my favorite butchers had closed up shop and “moved to Woodbridge.”

  However, there are also many supporters of the exact opposite outcome. From Edward Glaeser to Alan Ehrenhalt, many have argued that we’re in the midst of a “great inversion.” The suburbs are no longer a threat to urban centers. It’s the urban centers who are threatening the suburbs. The suburbs are dead. Long live the city.

  So which is it?

  Well, The Economist does cite two examples where true urbanization is actually taking place. It’s happening in Tokyo and London. In both cases, it’s the city center that is growing the fastest – not the suburbs. The explanation for Tokyo is its aging population. And the explanation for London is its restrictive greenbelt, which effectively stops the possibility of any further sprawl.

  Here in Toronto – where there is also a greenbelt in place – we know that the population of the downtown core is growing at an incredible pace. A recent report by the city – called Comprehensive to the Core – revealed that the downtown core is growing at 4 times the rate of the rest of the city.

  But what about the suburbs?

  If we look at the province of Ontario’s growth projections, it is indeed the suburbs which are expected to grow the fastest up until 2036. Here is a diagram showing percentage growth rates:

  

  In absolute numbers, the city of Toronto alone is expected to add about 0.66 million people between 2012 and 2036, and the suburbs are expected to add almost 1.9 million.

  There are a number of potential explanations for this differential, but I think it’s largely because land is cheaper in the suburbs, it’s easier to add new housing supply, population densities are lower, and we’re talking about very different land areas.

  The city of Toronto is 630 square kilometers. If you tack on the suburbs, the Greater Toronto Area is 7,124 square kilometers. That means Toronto makes up less than 9% of the total land area. And yet it is expected to contribute 25% of the region’s population growth. 

  Still, the suburbs are where the bulk of the population growth is expected to happen over the coming decades.

  However, the “great inversion” that authors like Alan Ehrenhalt have been talking about should not really be interpreted as the death of the suburbs. What he’s instead talking about is a socioeconomic or demographic reversal: center cities used to be poor and now they’re becoming rich.

  Here’s how he put it:

  What we are seeing is a reversal in which the words “inner city,” which a generation ago connoted poverty and slums, [are going to mean] the home of wealthier people and people who have a choice about where they live, and the suburbs are going to be the home of immigrants and poorer people. And Census figures show that that’s taking place.

  In this context, we are still living through the great urbanization. We’re seeing a shift in consumer preference and a shift in where wealth is choosing to locate. That’s a profound change.

  And while we’re obviously still suburbanizing, I don’t agree that we’re better for it. In fact, left unchecked, this demographic inversion could actually prove to be quite damaging to our suburbs.

  Image: Flickr

  2014.12.09

• The war on the car

  

  In today’s post I’d like to focus on the second tweet I embedded in yesterday’s piece about downtown Toronto. Specifically, the fact that almost 75% of downtown residents walk, cycle, or take transit to work, leaving drivers firmly in the minority.

  For me, this then makes me question whether or not we’re optimizing well enough for the majority. However, it’s often not that simple. And that’s because the downtown core is clearly regional in its draw, and the further you move out from the downtown core, the more the modal split flips. In the suburbs, driving is obviously the majority.

  And herein lies the tension and the reason for all this “war on the car” rhetoric: We have a downtown core with completely different mobility preferences than the rest of the region.

  But as Toronto continues to intensify and grow (the population of the Greater Toronto Area is projected to reach almost 9 million by 2036), I truthfully don’t know how we could reasonably expect to (efficiently) move that number of people in private cars. I’ve just never seen it done before.

  Some people think that if we simply got rid of all those damn streetcars on our city streets, that we’d be doing a lot to eliminate traffic congestion. But it’s not that simple. The Highway 401 here in the city is already 18-lanes and one of the widest in the world. And yet it’s perpetually clogged. No streetcars there.

  So I look at this tension as a growing pain. Sooner or later I think we’re going to realize that this war should really be a war on inefficiency. How do we move lots of people around big cities while minimizing waste, maximizing economic output, and enhancing quality of life?

  Now that’s a war worth fighting.

  Image: Helibacon

  2014.09.04

• 34th Annual BILD Awards

  I just got home from the 34th annual BILD awards. It’s late and I’m tired, but I had a good time. TAS won a few awards, including green builder of the year, and I saw a lot of old friends and familiar faces.

  For those of you not in the industry, BILD is the Building Industry and Land Development Association. And every year a gala is held where a bunch of awards are given out for things ranging from the best marketing brochure to the best suite design under 750 square feet. If you’d like to get a feel for the event, check out #BILDAWARDS.

  It was held out in Woodbridge, which is a suburb of Toronto. So today, I did something that I don’t do all that often or even every week: I drove my car. That’s fine, but it reminded me that one of the perks of living in a dense and transit oriented area (like downtown Toronto), is that you never have to worry about drinking and driving.

  I’m really disciplined about not doing that, but it’s nice not to have to worry about it. It can make driving feel like a liability. So there’s another reason to love cities. You can drink whenever you want.

  2014.04.26

• On medium density development

  Over the past decade, Toronto has seen a proliferation of condos across the city. And while I do think this intensification is a great thing, we’ve been much better at building towers than anything else. We’ve neglected medium density development and it has bifurcated our housing market: you’re either in the market for a condo or for a house.

  And since we’re not really building anymore of the latter, Toronto has become accustomed to bidding wars and multiple offers. Every young couple I know is in the market for an “hip fixer-upper in the city.” Problem is, that’ll cost you $700,000 or more and you may still need to gut it.

  At this point, it’s not realistic to expect that we’ll be building anymore single family homes in the city—at least not at any sort of significant scale. We’re tapped out. But what we can reasonably expect is more medium density development. I’m talking about midrise developments along our avenues, laneway houses in people’s backyards and other creative infill solutions that sit somewhere between a house and a highrise.

  If we’re concerned about creating equitable housing opportunities, then we’re going to need relieve some of the pressures on low rise housing. We’re going to need more diversity in our product offerings.

  2014.02.16

• Priced out of the city

  Earlier this month, the Royal Bank of Canada and the Pembina Institute co-published a report on Toronto’s housing market called “Priced Out”. The overarching argument is that homebuyers in the Greater Toronto Area (GTA) are being “priced out” of the areas in which they really want to live, which happen to be walkable and transit-oriented neighborhoods.

  In fact, according to their research, 80% of residents in the GTA would be willing to sacrifice space (size of house and yard) if it meant they could live in a more walkable and urban neighborhood. But at the same time, more than 70% of GTA residents say that they live where they do because of affordability reasons, not because of actual preference. This, of course, isn’t new. It’s the whole “drive to affordability” notion—just keep driving until you can afford the housing. 

  Overall though, the report does reinforce a macro tend that I’ve discussed many times here at Architect This City. People are returning to cities in droves (or would at least like to, if they can afford it).

  If you’re interested, the report also has some good data on Toronto and Canada’s housing markets. 

  Here’s how average home prices in Canada trended between 1980 and 2012. Vancouver became a total outlier starting in the early 90s (thanks Hong Kong).

  

  And here’s a look at housing completions (so new construction) by product type in the Greater Toronto Area. Note how apartments/condos surpassed single-detached houses in and around 2008. 

  

  2013.12.20