Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

Tag: low-rise

  • A study on expanding housing options in Toronto

    The City of Toronto is currently studying ways to increase housing options/supply and planning permissions in areas of the city that are designated as Neighbourhoods in the Official Plan.

    These are areas that are sometimes referred to as the “Yellowbelt”, because they are seeing very little intensification and, in a number of cases, actually losing population. (They’re also colored yellow in Toronto’s land use map.)

    Ultimately, the goal is to encourage more “missing middle” type housing forms; housing that is denser than single-family homes but smaller in scale than say mid-rise housing like Junction House.

    Here are a couple of interesting charts from the City. Based on Toronto’s Official Plan, “Neighbourhoods” make up 35.4% of the city’s land area.

    In Toronto’s Zoning By-law, the “Residential” category makes up 47.1% of the city’s land area.

    Digging deeper, 31.3% of Toronto’s total area is zoned for only detached houses — which would mean no missing middle type housing. But 15.8% of the city’s total area is already zoned to permit other types of low-rise residential buildings, such as duplexes and triplexes.

    So why isn’t more of that happening?

    As we’ve talked about before on the blog, the problem is that it is exceedingly difficult to make the math work on projects of this scale, which is why most developers don’t want to do them. The web of bureaucracy that you need to navigate in order to build anything in the city is also imposing for non-developers (and developers really).

    But to be a developer, I think you need to be an optimist. So I am going to remain hopeful that this study — and the pilot they want to do in Ward 19 — will result in a streamlined solution for housing of this scale.

    Images: City of Toronto

  • Could high low-rise infill buildings work?

    Dylan Reid recently wrote an interesting article about, what he calls, high low-rise infill buildings along Toronto’s main streets. 

    He describes the typology in this way: “These are generally 4-storey mixed-use buildings built quickly on one or two lots, replacing smaller previous buildings. They are often inserted beside existing, attached buildings.“

    Now, Reid acknowledges that this a challenging scale to develop at. He links to one of my articles in Urban Capital’s Site Magazine where I talk about exactly that: the diseconomies of scale associated with building small. (Though, I was talking about mid-rise, not high low-rise.)

    Reid addresses these challenges with a number of potential cost savings, including no parking minimums and no rezoning process. He also suggests that these projects may be better suited to existing landowners (who may own the land free and clear of a mortgage).

    Getting rid of parking minimums and streamlining approvals would certainly help, though I remain doubtful about overall feasibility. But what I wanted to comment on today was the last point about these projects being better suited to existing landowners.

    One problem with this line of thinking is that if we’re talking about land on a street where greater densities such as mid-rise are also permissible, the land is going to get valued based on mid-rise and not high low-rise.

    So when a prudent landowner thinks about developing their land, they may also consider the opportunity cost of simply selling their land based on its highest and best use.

    That thought process might go something like this. I own a piece of land. If I were to sell this land today and take on no development risk, I could make $X. If I were to instead develop this land, I could make $Y.

    If $Y is less than $X, then I’m obviously not going to develop. But if the spread between $Y and $X isn’t enough to compensate me for the risk of developing (and there’s lots of risk in developing), then I’m also not going to do it. (Developers run a similar test by marking the land cost in their pro forma to market.)

    And if $X is based on greater densities than $Y ($X is based on mid-rise densities and $Y is based on high low-rise densities) and if $Y is also being challenged by further diseconomies of scale, then I’m sure you can start to see how the math may not pencil.

    I say all of this not to shit on Reid’s article. It’s a good article. You should go read it. And we should all continue to think about ways to increase the supply of housing in this city and in others.

  • Neighborhood depopulation

    Recently we’ve been talking about California’s Proposition 13 and how it may be creating a disincentive for longtime homeowners to move. They’re enjoying below market property taxes, and so they stay put, even if they may have too much house.

    But this concept of “overhousing” isn’t unique to California. The Globe and Mail just ran a piece talking about how Toronto’s designated “Neighborhoods” are losing people as the nests empty out, seniors remain put, and the broader city booms.

    The rate of depopulation that created the spare bedrooms in Toronto’s low-rise neighbourhoods is stark: “Since 2001, about 52 per cent of the land mass of Toronto has reduced in density of population by about 201,000 people,” Mr. Smetanin says. “Other parts of Toronto have grown by 492,000.”

    The irony of this phenomenon is that the city’s Official Plan considers these Neighborhoods to be “physically stable”, as well as “one of the keys to Toronto’s success.” However, things are clearly changing behind that physical stability.

    Photo by Verne Ho on Unsplash

  • The Toronto and Vancouver housing markets

    CIBC World Markets recently published this report by Benjamin Tal talking about the Toronto and Vancouver housing markets. Here is an excerpt:

    “But when the fog
    clears it will become evident that the
    long-term trajectory of the market will
    show even tighter conditions. The supply
    issues facing centres such as Toronto and
    Vancouver will worsen and demand is
    routinely understated. Short of a significant
    change in housing policies and preferences,
    there is nothing in the pipeline to alleviate
    the pressure.”

    It’s a good read. Worth your time.

    One stat that stood out and directly relates to some of the topics that we frequently talk about on this blog is the shift in Toronto from low-rise to high-rise housing.

    In the report there’s a chart showing the “change in [housing unit] completions” in 2016 as compared to 2000. The switch from low-rise to high-rise is almost 1:1 in Toronto. In other words, we substituted high-rise housing for low-rise housing. 

    I think this speaks volumes about the fundamentals underpinning the Toronto condo/apartment market. We are continuing to build up because it is the future of housing in this city.

  • The year of the condo

    Over the past 5 years or so, real estate headlines in the Greater Toronto Area have often focused on the rapid appreciation of low-rise housing. High-rise housing simply wasn’t appreciating at the same rate – at least in aggregate terms.

    But 2017 has brought a different story. 

    If you look at BILD’s “New Homes Monthly Market Report” (data provided by Altus Group as of July 2017), you can see that high-rise pricing is now on a similar trajectory to low-rise pricing.

    Here is that graph:

    image

    This sharp uptick in pricing is also apparent when you look at the average price per square foot of new high-rise inventory. As of July, it was $764 psf across the GTA. See below.

    At the same time, average unit sizes have also jumped up to 871 square feet. So not only are new high-rise homes becoming more expensive on a normalized basis, they are also getting bigger, which further increases prices.

    image

    I recognize that we’re only seeing data up to the end of July, but, from the looks of it, 2017 is shaping up to be an extraordinary year for the condo.

    Of course, part of the reason this is happening is because remaining inventory for both low-rise and high-rise product is hitting 10-year lows. We’re back to the topic of supply.

    If you’re curious how some of these numbers have changed from the month prior (June 2017), check out this post.

  • Powerhouse: A case study in neighborhood infill

    Dezeen recently featured the above project in Philadelphia by Interface Studio Architects. It’s called Powerhouse and the goal was to provide a variety of different housing typologies and tenures within a dense infill project that, at the same time, remains in keeping with its context.

    The full block complex contains 31 residential units, which are a mixture of apartments, duplexes (stacked towns), live/work units, and single-family townhouses. There’s also a corner retail space. 10 of the units are rental and the balance are for sale. The development also incorporates 3 existing rowhouses on the block. (Were these the holdouts?)

    Here is a diagram from ISA to give you a sense of how these different housing types come together:

    The project feels germane to Philly’s urban fabric and it is certainly interesting in its own right. But for those of us from Toronto, it’s perhaps even more interesting because it’s a scale of infill development that we don’t see very often in this city: low-rise intensification. (Also commonly referred to as “The Missing Middle”.)

    Recently I’ve been speaking with a number of people about whether or not Toronto should be thinking differently about its low-rise neighborhoods. Because as it stands today, even this sort of gentle density can cause quite a stir

    Two thoughts immediately come to mind – one of which will not surprise anyone who reads this blog. Firstly, I see laneway housing as an elegant way to intensify low-rise neighborhoods without changing their character. That’s why I’m proposing this house.

    Secondly, I have long felt that we should rethink how we treat arterial roads that are not designated as “Avenues.” That is, we should encourage greater densities. An “Avenue” designation signals mid-rise. But absent this, our policies are frankly retrograde, given the way some of these arterial streets have evolved over the years.

    What are your thoughts about this scale of infill?

    Images: ISA

  • A prototype for low-rise intensification

    Laneway housing is back in the news here in Toronto. Last week the University of Toronto reported that they would like to build 50 laneway houses within the Huron-Sussex neighborhood and that they are aiming to start a 2 house pilot project some time in 2018.

    Here is a drawing from their Planning Study:

    image

    What you see is mid-rise infill (orange) along the main streets and low-rise infill (purple) along the secondary streets and laneways. There’s also a “living lane” that runs north-south through the neighborhood. 

    I know we’ve talked a lot about laneway housing and neighborhood intensification on this blog, but I hadn’t seen the above plan before. And I wonder if we aren’t going to look back at this neighborhood plan as a prototype for low-rise intensification.

  • Low-rise vs. high-rise

    Yesterday I sent out this tweet, which included this graph:

    The chart is from Altus Group and it is a monthly price index of new low-rise vs. high-rise housing in the Greater Toronto Area (GTA). I have posted similar charts in the past, but every time this chart gets updated the spread widens and the market looks even crazier.

    Some people responded on Twitter by saying that this is clearly an indication of a bubble. I don’t know if that is the case. 

    But, as I have said many times before, I do believe that it tells a vivid story around supply. Low-rise housing is severely supply constrained in the GTA and high-rise housing is less so. That has helped to stabilize pricing in the latter case.

    Now, you could look at this chart and say that the pace of low-rise price increases is simply unsustainable. The market must correct. 

    But you could also look at it and say that the market is going through a fundamental shift whereby more and more families will start living up, as opposed to out – which should then translate into high-rise pricing trending upwards as unit sizes increase. This is where I think we are headed. 

    What do you reckon is happening?

  • Enhancement Zones: The mid-rise performance standard that didn’t make the cut

    I’ve written a lot about mid-rise development on this blog and elsewhere. 

    I recently wrote this post responding to a tweet by the Chief Planner of Toronto. And towards the end of last year, I wrote a longer piece for developer Urban Capital’s annual magazine. If you missed it, you should definitely download a copy. Not so much for my article, but because, overall, the UC magazines are excellent. (Credit to David Wex.)

    Today, I’d like to focus on one specific “performance standard” from Toronto’s mid-rise guidelines that I’ve been thinking about lately. But more specifically, I’d like to focus on a performance standard that was initially contemplated but never actually got adopted. 

    (I apologize in advance if this post gets a bit too geeky for some of you. It refers to a specific land use policy in Toronto, but it has much broader relevance.)

    If you take a look at the final Avenue & Mid-Rise Buildings Study and turn to page 56, you’ll see that Performance Standard #5B (Rear Transition to Neighbourhoods: Shallow Properties) was stricken from the report. It was never adopted as a standard.

    So what is this all about?

    This performance standard had to do with something called “Enhancement Zones”, which was proposed as a way to deal with shallow parcels of land on Toronto’s main avenues. You see, because of the other performance standards – namely the angular plane (see images below) – the depth of an avenue site is hugely important for determining what can ultimately be built on it.

    From the city’s perspective, this is a double edged sword. In the case of exceptionally deep lots, you can actually meet all of the performance standards while at the same time exceeding the recommended densities. But in the case of shallow lots, the performance standards sometimes/often make it so that you can’t even achieve the recommended densities. In fact, a lot of sites simply become un-developable.

    To give you a visual for what I’m talking about, here’s a section drawing from a zoning by-law that was adopted by City Council for St. Clair Avenue West in midtown:

    image

    Here you can quickly see that if you were dealing with a shallow lot of, say, 25m in depth, you wouldn’t have much left over after taking into account the rear property line setback (7.5m above), the front property line setback, and the 45 degree angular plane. Now you’re beginning to see why I said that it is easier said than done to play creatively within the guidelines envelope (thick black line above). When you look at the feasibility of these projects, you quickly end up getting pushed right up against the glass.

    But this is where Enhancement Zones comes in. 

    The idea here is that an adjacent low-rise residential property (or pair of properties in the case of attached houses) could be included in mid-rise development proposals to create a deeper site that then meets the requisite separation distances between the mid-rise scale and the low-rise scale. To be clear, nothing would be built in the Enhancement Zones. They would just help to relieve some of the setback pressures from the original shallow lot and maybe even create a rear laneway system where one did not exist before.

    Below is a drawing from the Mid-Rise Buildings Study showing that new condition. The same 7.5m setback applies at the rear, but now it sits within an Enhancement Zone – formerly an adjacent and separate property. All the text is crossed out because, again, this standard was not adopted.

    image

    From a mid-rise development and feasibility standpoint, this makes a lot of sense. Sites that may have been un-developable before, now become developable. This makes it easier for us to achieve the European-scaled mid-rise vision that Toronto has for its avenues.

    But for reasons that I am sure you can guess, there are concerns with this performance standard. Probably the most obvious is that, to a certain extent, it destabilizes “neighbourhoods.” And they are intended to be completely stable entities that see little to no intensification. As soon as you allow this to happen, properties sitting in Enhancement Zones would become the prey of developers.

    However, there are counter arguments you could make. The owners of these properties would likely receive offers above market value. So maybe they end up better off. At the same time, you could also argue that the more development we unlock outside of “neighbourhoods”, the more stable they can actually remain.

    In any event, I’ve been thinking about this lately and I thought it would be interesting to debate the pros and cons of these magical-sounding Enhancement Zones. For those of you inclined to engage in geeky planning discussions, I’d love to hear from you in the comments.

  • The future of housing in Toronto

    On Monday evening I gave a 45 minute talk at the Rotman School to a delegation of about 70 people from Portland. The talk was about Toronto housing, but more specifically about the history and possible future of high-rise housing in this city. 

    Thanks to everyone who commented on my lead-up post over the weekend. It was really helpful to hear what other people in this city (as well as people not from this city) are thinking. Many of the comments also echoed my own beliefs.

    The narrative I told in my presentation was about two significant, yet very different, periods of time when Toronto built more high-rise than low-rise housing. The first was our post-war suburban slab tower boom. And the second, which we are currently living through, is really the outcome of the Places to Grow Act (2005).

    But as I mentioned over the weekend, the really interesting question is: what’s next?

    In my view, what we are seeing today is fundamentally different than what we saw in the post-war years. Despite the fact that we were building towers then and we are also building towers now (albeit much taller ones), the ideology behind them has changed. It has gone from suburban to urban.

    Toronto’s post-war towers were built upon a particular dream. The dream of getting in your car, escaping the decay of the city, whisking up the Don Valley Parkway (nobody whisks on the DVP), and being rejuvenated by all the light, air, and green space afforded to you in your Ville Radieuse.

    But it turns out that people of means didn’t want that back then. They wanted a suburban house. That was the dream.

    Today, however, cities are back in vogue

    Companies are moving into city centers to compete for the best talent. Retailers are moving downtown to capture disposable income. And the most pressing problems are no longer about decay and urban blight, they are about housing affordability, gentrification, and too many rich people pushing out the poor.

    The narrative has changed.

    So in the context of Toronto, I feel as if we are at an inflection point when it comes to housing. The multi-family dream may not have stuck decades ago, but I believe it will stick for many, though not all, today. And this will happen for a variety of reasons ranging from sheer preference to sheer necessity. The alternative is no longer an affordable bungalow on a 50′ x 150′ lot that happens to be 10 minutes from the subway.

    But as a result of this shift, I also think a number of other things will happen. 

    Eventually, Toronto will look to loosen some of the land use restrictions on its single family neighborhoods. This could mean “gentle” low-rise intensification (new planning buzzword, take note), as well as the acceptance of laneway or accessory dwelling housing. This won’t be popular, as one person said in the comments over the weekend, but eventually the pressures will become too great.

    At the same time, I think we’ll be brought full circle with respect to our suburban towers. The suburban ideals in place at the time means that many of these tower communities have relatively low densities. That represents a tremendous opportunity for this city and it’s only a matter of time before we truly figure out how to unlock them.

    But for all the change and disruption that’s happening in Toronto, I think it’s also worth saying that those of us who live here should consider ourselves a lucky bunch.

    One of the things I actually asked the delegation from Portland was, what struck you the most when you arrived in Toronto? The response I got was: its vibrancy. 

    Everywhere you walk downtown, they said, people are on the streets – walking, cycling, and hanging out. In fact, some said it’s almost hard to remember which street is which because every street seems to be so full of activity. Most North American cities do not have this kind of sustained vibrancy in the core, I was told. And so that makes us a pretty special place. We must be doing something right.

    It’s easy to take those sorts of things for granted when you live somewhere. So today I’m trying to do the exact opposite of that. I’m trying to stop and appreciate the place I call home.