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: toronto condos

  • Infill balcony housing — an adaptive reuse proposal

    Balconies are a never ending debate here in Toronto (and in many other places). In some cities, like New York, they don’t seem to matter for new housing. Residents seem to be generally content without them. But here in Toronto, we have typically included them in new high-rise housing and there has been a lot of debate and criticism around both their utility (high up in buildings) and their impact to overall energy performance.

    I have noticed that we are starting to see fewer balconies on new buildings, and I suspect this might increase with the way that costs are right now. And for some people and some (sub)markets, this will be just fine. But I happen to be a huge fan of outside. As my tanned dad likes to say when asked about the value of outdoor spaces in multi-family housing, “you don’t get this dark by staying inside.” He is pretty tanned.

    I also believe that great outdoor spaces are an important ingredient in shaking off the deep-rooted cultural biases that this city has toward low-rise housing. Since pretty much the beginning, low-rises houses with backyards have been seen as noble, whereas apartment buildings have been viewed as disease-breeding tenements liable to morally corrupt even the best of intentions.

    This is one of the reasons why we created the two-storey House Collection of suites at Junction House and why One Delisle is almost entirely formed by its outdoor spaces (both balconies and terraces). We wanted to celebrate multi-family living.

    At the same time, I really like this adaptive reuse proposal by Peter Song over at BDP Quadrangle. The idea is to allow people to infill their balconies with more interior space so that our existing stock of housing can become more flexible for growing families and for when people’s lives just generally change.

    The balcony offers extra space for children to play, and parents to work. ©Peter Song

    It would be a great way to capture additional space within our existing stock of buildings, and I think it would be pretty interesting to see what people ultimately choose when given a binary option: more interior space or more outdoor space. Maybe it would help provide some clarity to the great balcony debate.

    Technically, it is my understanding that this is entirely doable.

    In the middle of writing this post I shot an email over to one of the best structural engineers in the city (James Cranford, Principal at Stephenson Engineering), and he confirmed that strength is no problem. Typically balconies are designed to accommodate more load than the suites. The thing we’d have to look at is slab deflection, since this is not usually limited on balconies.

    The greater challenge is likely to be the overall coordination.

    In some cities this sort of thing happens all the time on an ad hoc basis. People just do it and the end result is likely more functional, but the building elevations end up looking pretty schizophrenic. Here you’d need each condominium corporation to bless the change (since the envelope is a common element). And people would also need to agree on what design(s) should be used across the building.

    It would require some work, but I think Peter’s idea is a really good one. What do you think?

  • Looking south toward High Park

    What a beautiful day in Toronto. I love the heat.

    I took the above photo this morning from the 7th floor of Junction House. It is a view south toward High Park. More specifically though, it is the view from the second and upper floor of what will ultimately become suite 607 (a suite that happens to be still available for sale).

    Now that the building is almost topped out, I’m planning to run through a bunch of the suites with my camera and photograph all of the different views. I don’t think I’ve seen something like this done before and I think it could be a pretty cool little photography project.

  • ONE DELISLE: Official launch video

    Last week was the official broker launch for One Delisle. In normal times, we would have packed the house and done a fun in-person event involving food, and probably some negronis. Instead, Lucas, Riz, and I did a livestream from the sales gallery at Yonge & St. Clair.

    That video is now available online (embedded above and here). You’ll have to get past our hair (Lucas and I are both in desperate need of a cut), but otherwise it’s pretty cool. Shoutout to Veronica for pulling everything together and making it awesome.

    If you’d like to schedule an appointment at the sales gallery, send a note to sales@onedelisle.com. Please also feel free to contact me directly (or copy me on the email to the sales team). If you’re interested, I would encourage you to act quickly as demand has been incredibly strong.

  • Penthouse at 388 Richmond Street West sells for $2.4 million

    My friend Christopher Bibby — who is a real estate agent here in Toronto — is in the Globe and Mail today talking about how Toronto-area buyers have returned to downtown. The article is by Carolyn Ireland and in it Bibby cites two of his recent deals: A large 2 bedroom suite at 168 King Street East that just sold for $1.2 million and an even larger penthouse at 388 Richmond Street West that just sold for $2.4 million.

    (Sidebar: 388 Richmond Street West is one of my all-time favorite buildings in the city and was developed by Howard Cohen nearly two decades ago. For more on Howard, check out this post I wrote back in 2016.)

    These are two examples of buyers who want to live in the city. Of course, there are countless others who are making moves right now. As Bibby points out in the article, the mood has certainly shifted from what we were seeing last year in the condo space. Condo buyers today are even starting to comb through expired listings in the hopes of finding off-market deals.

    I view this kind of real estate activity as a leading indicator for what’s to come in the the city. Rental activity is naturally going to lag until people starting returning to offices en masse and downtown life fully resumes. It’s more of a short-term “buying” decision. But as a condo purchaser, it’s easy (and probably better) to look through the short term.

    I think that’s what people are doing right now and they’re saying to themselves, “yeah, I want to be in the city.” I know that’s how I feel.

  • Long live the city

    The sentiment around downtown/urban condos has completely changed over the last month or so. This is happening in Toronto and, from what I hear, it’s happening in many other cities as well. Carolyn Ireland published an article in the Globe and Mail today called, “For downtown Toronto condos, the worm has turned.”

    But I can also speak to what we (and our colleagues in the industry) are seeing on the ground. A sense of urgency has returned. Prices are starting to push upward. And people are buying. The last few weeks have also seen some very successful condo launches in the city including 8 Wellesley by CentreCourt Developments. I can’t remember if they sold out in 7 minutes or 7.5 minutes.

    None of this is necessarily surprising. Interest rates are low. The US is doing a good job at vaccinating its people. Single-family home prices have exploded over the last year (pushing buyers toward condos). And there seems to be an emerging view that the second half of this year is going to be pretty good. (This was my view at the beginning of the year and stand behind that position.)

    Today was a beautiful spring-like day in Toronto. I was out for a site visit this morning and the sidewalks were filled with people milling about and enjoying the sunshine. City life isn’t going anywhere my friends. Long live the city.

  • I want an expensive condo

    The Globe and Mail published this headline today: “Developers building more small condos, despite people clamoring for more space.” It’s behind a paywall and so some of you may not have read it. But the data looks something like this. Of all the new condo project launches that happened this year in Toronto, studios and one-bedroom suites accounted for 61% of all new inventory, according to Urbanation. This is a higher percentage than what the market saw in 2019 and 2018, and this is despite the fact that many/most people are still working from home and would probably appreciate a bit more space.

    The short answer as to why this is happening is affordability. For years I have been clamoring for a dual aspect oceanfront penthouse on Miami Beach, but that time hasn’t come for me yet. Things cost money. And the downward pressure on unit sizes is a direct result of developers trying to ensure that their inventory is within the reach reach of buyers (there’s a sweet spot somewhere in the range of $500-700k right now). Developers are heavily incentivized to build what sells and rents, both quickly and at the highest price. That tends to be smaller units, especially early on.

    Where this goes in the future is anybody’s guess. But with the dramatic price increases that we have seen on the low-rise side of the market, I suspect that we’ll see a subsequent surge in demand for condos — maybe even larger condos.

  • Site Magazine: Why have Toronto condos become so %@$#$! expensive?

    Every year my friends at Urban Capital publish an annual magazine called Site. And every year it contains some great articles about the real estate development industry across Canada. (Some of you may also remember that I’ve written a few articles for it in previous years.)

    Well this year’s issue is out and there are a few featured articles that I’d like to draw your attention to:

    • What happens when 175 (mostly) women get together to design a condominium? Link
    • How (not) to build a public park Link
    • Why have Toronto condos become so %@$#$! expensive? Link

    This last one is a topic that we have talked about many times before on the blog. But here, UC has provided a quantitative comparison between a project they did in 2005 and a project that they’re doing today in 2020. Here’s what they found:

    Average condo prices in the City of Toronto are up about 150%. But…

    Land costs are up 160%.

    Soft costs are up 118%.

    Construction and related costs are up 91%.

    Financing costs are up 93%.

    Government fees, charges, and taxes are up 413%.

    And development charges (a subset of the above) are up 3,244%!

    At the same time, the profit margin over costs is down about 45%.

    (As a point of comparison, CPI only increased by about 26.5% during this same time period.)

    The point here is that condos are so %@$#$! expensive largely because of cost-plus pricing. Government fee increases are also outpacing every other cost bucket.

    If you’re developing new housing in Toronto, you have no choice but to accept these rising costs. You have to pay development charges and you have to pay them when you’re told, even if that means swallowing some new massive increase.

    So by necessity, end prices get continually pushed as a way to try and absorb these costs. You figure out what your costs are going to be and then you price accordingly. But of course, you also have to ask yourself: Can people actually afford this kind of pricing and can this neighborhood support it?

    Sometimes the answer is yes, which is why development continues. But sometimes the answer is no. In this case, the next step is simple: you don’t build.

  • Shrinking lot sizes and unit sizes

    Shane Dingman’s recent piece in the Globe and Mail about shrinking lot sizes raises two interesting points.

    One, new low-rise lot sizes seem to be shrinking and that’s probably a normal market outcome. Similar to the way in which average unit sizes have been generally coming down for mid-rise and high-rise product, it is a way to maintain some semblance of affordability in the face of ever-rising costs.

    The average price of a new condo in the City of Toronto last quarter was nearly $1,300 psf. That means that if you had an average unit size of 1,000 square feet, you’d have an average selling price of $1.3 million (to state the obvious). Not everyone can afford this ticket price, and so there’s downward pressure on unit sizes in order to get the face prices down.

    Two, developer margins aren’t increasing just because home prices have been going up. At best, they’ve remained constant (Shane provides a quantitative example in his article). But there are also many cases where margins are getting squeezed as a result of rising costs.

    All of this to say that I think we can continue to expect downward pressure on lot sizes and unit sizes as the Toronto region continues to grow.

  • Drive and listen

    Who needs to travel when you have, this? This, is a site called Drive & Listen, which allows you to drive around cities — well, watch vides of people driving around cities — while listening to local radio stations. It’s oddly fascinating in an I-spend-hours-on-Google-street-view kind of way. (It’s okay if you do that too.) A colleague sent out the link this morning and I thought it was a pretty clever idea, particularly right now, when many/most of us are yearning to travel, but can’t. The first cities I visited were Buenos Aires, Tokyo, Sao Paulo, Lisbon, Berlin, and, of course, Toronto.

    Photo by Sasha • Stories on Unsplash

  • Integral House sells for $18 million

    One of the most famous and important houses in Toronto, and in North America, just sold. It was reported last week in the Globe and Mail in an article called, “Integral House finds buyer amid wave of high-end Toronto deals.”

    Designed by Shim-Sutcliffe Architects, the 18,000 square foot Integral House was commissioned by mathematician and musician James Stewart. It was completed in 2009 at a cost that seems to vary widely depending on where I look online. But it did just sell for $18 million.

    For photos and drawings of the house, click here. The section is really interesting because of the way in which the house is built into the side of a ravine. The house is 5 storeys, but only 2 of these levels would be visible from the street.

    The article goes on to mention a bunch of other high-end transactions that were consummated during this pandemic, ranging from a $13 million home in Forest Hill to a $9 million condo in Yorkville. These are all positive signs for this pandemic market.