# The market for three-bedroom apartments isn't what you think

By [Brandon Donnelly](https://brandondonnelly.com) · 2025-11-02

toronto, condo, apartment, housing, real-estate, development

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Erica Alini of _The Globe and Mail_ just published [this article](https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-livable-apartments-condos-rentals-rulebook-housing/) called, "The era of the shoebox condo is over." You should read it, and not just because I'm quoted in it. One thing that I appreciate about the article is that it gets into some of the development economics underlying new projects.

The high-level math provided by [Bryn Davidson of Lanefab](https://x.com/Lanefab) (Vancouver) once again shows that land is the residual claimant in a pro forma and that the price developers can feasibly pay needs to be greater than the status-quo value. It's exactly what I was getting at in [this recent post](https://brandondonnelly.com/exactly-how-impossible-is-a-dense-urban-toronto) about the _Impossible Toronto_ publication.

The other thing I'd like to highlight is the following chart showing the share of three-bedroom apartments in newly built condominiums and purpose-built rentals in the city:

![](https://storage.googleapis.com/papyrus_images/b13f435ecbbaa10ac6b19c40ff741c22c44b29ae824a13eb30f6fa66b32d0aab.png)

What's interesting about this six-year period of completions is that there isn't a meaningful difference between condominiums and rentals. Average unit sizes as a whole tend to be slightly larger in rental projects, but in terms of the share of three-bedroom suites and the average size of those three-bedrooms, the differences aren't meaningful.

This suggests that it's less about investors "distorting" the market (see pundits talking about the condo market), and more about the fact that the demand isn't there. And the reason the demand isn't there is because these types of homes are expensive. If you can afford $5,000 per month in rent, you generally have some options.

_Table from the_ [_Globe and Mail_](https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-livable-apartments-condos-rentals-rulebook-housing/)_; cover photo by_ [_Lotus Design N Print_](https://unsplash.com/@lotusdnp?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText) _on_ [_Unsplash_](https://unsplash.com/photos/a-living-room-filled-with-furniture-and-a-flat-screen-tv-4-7s995Kv1U?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText)

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*Originally published on [Brandon Donnelly](https://brandondonnelly.com/the-market-for-three-bedroom-apartments-isnt-what-you-think)*