I have vivid memories of being in a broker meeting many years ago talking about development land in Vancouver. Our team's comment was that it felt expensive. I mean, Toronto was expensive, and Vancouver was even more. Why? It has one-third the GDP of Toronto. The response we got was something like this: "Yeah, Vancouver may seem pricy, but you just need to get into the market. Then in 5 years you'll be happy you did."

Well it's been more than 5 years and now this is the market:

The market for development sites is being tested by a roughly 50-per-cent drop in value since 2022, according to Mark Goodman. The principal of Goodman Commercial Inc. said Broadway Plan sites, for example, were selling for about $200 per square foot buildable three years ago. Sellers can now expect closer to $100 per square foot buildable, he told BIV. Goodman currently has three Broadway Plan listings.

Of course, Toronto is in a similar situation today. If there's no market for new condominiums and apartment rents aren't growing, then high-density land values are going to feel the impact. But I do think it's interesting that, in some ways, our response was being anchored by our experience in Toronto. What we know, and have accepted, often becomes a baseline for assessing if something else feels expensive or cheap.

I sometimes see the same thing with long-time developers. They remember what they used to sell and/or rent apartments for, and have a harder time accepting today. But this is a positive thing if it compels greater deal scrutiny. Advice like "you just need to get into the market" is never sound. But if you were to take this approach, I would bet that today is a better time than 5 years ago.

Cover photo by Angie on Unsplash