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Is Toronto’s condo market at a crossroads?
Mega-projects and towers flood city despite growing concerns
Russ Blinch – Reuters
Barry Fenton walked to the bank of floor-to-ceiling windows in his 30th-floor uptown Toronto penthouse suite and declared, “This is the best view of the city.”
To the south, a mass of steel-and-glass skyscrapers glinted in the bright autumn sun. Several cranes were in motion on unfinished buildings, a common sight in a city in the midst of a residential building boom.
“If you look around the core, every building you look at has a different look to it, a different ambience,” said the energetic co-founder of Lanterra Developments, one of the city’s most active builders. “That’s important.”
Mr. Fenton, 56, says he is confident the city’s condominium market will remain strong – despite warnings that it is all moving too far, too fast – and has an ambitious lineup for future development. And he is not alone in his optimism.
Toronto’s seams are bursting with new condo and hotel towers designed by star architects like Frank Gehry and built by famed developers like Donald Trump.
But Mr. Fenton and others face formidable obstacles: an infrastructure buckling under soaring density rates, the laws of supply and demand and preservationists who says too many new towers are destroying the city’s character.
Canada’s central bank drew a bead on the city of 2.6 million this month in its weighty “Financial System Review,” warning of “potential future supply imbalances” in the condo market.
The Bank of Canada noted that the number of unsold condominiums in pre-construction has doubled, to 14,000, over the past year.
Greater Toronto home sales have slowed after years of steady increases. Sales fell 16% in November from the same month a year ago, according to the Toronto Real East Board. So far, however, prices are flattening, not falling, as some analysts have predicted.
In defiance of warnings by the central bank and economists, two mega-projects were unveiled within days of each other in October – a three-tower condo complex to be designed by Gehry and a multi-tower office project that includes a massive casino.
RACE TO THE TOP
More skyscrapers – 147 of them – are being built in Toronto than anywhere in North America, according to Emporis, the German data provider. That is twice as many as in New York, a city with about three times the population.
Toronto is getting taller fast. Fifteen buildings that will be more than 150 meters high are under construction, more than anywhere in the western hemisphere.
The recently completed Trump International Hotel topped out at 277 meters, just shy of Toronto’s tallest skyscraper, the 72-story First Canadian Place, which is 298 meters. That height could be exceeded by a couple of major projects on the drawing boards, including the Mirvish project.
(The city’s tallest freestanding structure, however, is the CN Tower, which soars over Toronto at 553 meters.)
“Toronto is creating a very sustainable future by building condos downtown,” said Daniel Libeskind, the American architect, who was in Toronto in October for a ceremony for one of his latest projects, the 57-story L Tower, with its sweeping, curvaceous, design that rises above the city’s modernist Sony Center for Performing Arts.
“It fights urban sprawl and brings people into the heart of the city.”
While building in big American cities and in Western Europe cratered following the financial crisis four years ago, Toronto never stopped booming. Demand for residential space has been strong, and while the office market has also been healthy, most of the new developments have been for condo projects.
Lanterra’s Mr. Fenton said his company has built some 9,000 condominium units in Toronto over the past 10 years and now has “in the hopper” up to 6 million square feet of property in downtown Toronto that is being rezoned for new projects.
Lanterra gained prominence over the past five years for the development of Maple Leaf Square, which included two condo towers, a hotel and office space, near the city’s hockey shrine, Air Canada Center, on land that had sat vacant for years.
Now it is “one of the hottest places to be,” said Mr. Fenton.
“ONE TOWER LEADS TO ANOTHER”
Some worry that Toronto can’t handle much more development.
Despite decades of debate about transportation policy, Toronto has just two subway lines, a fleet of charming but lumbering streetcar lines and crumbling roadways.
Commuters in Toronto spend at least 80 minutes in traffic a day, on average – worse than what commuters face in London or Los Angeles – according to the Toronto Board of Trade.
Toronto’s City Planning Department did not respond to numerous requests for comment.
There is also concern about soaring neighborhood density rates. The city’s waterfront area has seen the most growth. Its population has soared 134% in a decade and is up 66% in the past five years, to 43,295, according to city data.
Toronto’s aging energy grid is strained. In July, downtown Toronto endured an eight-hour blackout after a transformer blew due to high demand. There was a similar outage last January.
THE MEGA-PROJECTS
Now two of the most ambitious projects the city has ever seen are being floated.
First out of the gate was theater impresario David Mirvish, who with his father, the late Ed Mirvish, helped create Toronto’s vibrant arts and theater scene.
In early October, Mirvish unveiled a plan for three condominium towers, with up to 85 floors each, that would be the city’s tallest buildings.
A podium at the buildings’ base would house two museums, including one for the Mirvish family’s contemporary art collection.
The Mirvish buildings would be designed by Gehry, the celebrated Canadian-born architect whose 76-story 8 Spruce Street residential tower was just completed in New York.
“These towers can become a symbol of what Toronto can be,” the 83-year-old Mr. Gehry said at project’s unveiling. “I am not building condominiums, I am building three sculptures for people to live in.”
Two weeks later, Oxford Properties Group, a Canadian developer with a $20-billion global real estate portfolio, announced a $3 billion makeover of the downtown convention center, just south of the Mirvish and Gehry project. It envisions a casino, two hotel towers and two office towers that would be among the tallest in the city.
Adam Vaughan, a city councilor whose district would encompass both projects, said a lot more planning is needed. He had kinder words for the Mirvish proposal – “it’s a transformative and astonishing proposal” – than for Oxford’s project, which he called “all out of proportion.”
“It’s time to have a really smart conversation about how we are building this neighborhood because there is a hell of lot of density arriving not just with this project but with all the projects that have been approved,” he said in an interview.
AT THE KIT KAT
Al Carbone, owner for the past three decades of the Kit Kat restaurant, doesn’t think people like Mr. Vaughan are listening to him, as the councilor and other politicians are not heeding the growing concerns about the rapid pace of development.
He said buildings are springing up too close to lot lines, creating jammed sidewalks and alleyways. And the sun does not shine on the streets like it once did.
He supports the Mirvish project, which would preserve his street, known as Restaurant Row. But he is battling a separate 47-story building that would go up steps away from his restaurant.
The plan, which still must be approved, would retain the historic facades of buildings on the street, which Mr. Carbone believes will destroy the character of the row.
“It’s a tough battle,” said Mr. Carbone, who launched the website SaveRestaurantrow.com to drum up support in opposition to the project. “You can’t have a condo on every corner.”
WHERE IS TORONTO HEADED?
Some believe Toronto is at a crossroads as developers, politicians and citizens debate the rapid changes the city’s urban landscape.
David Lieberman, an architect who also teaches at the University of Toronto’s architectural school, agrees the new developments have been good for the city, but he is not sure the city’s citizens are ready for it.
“We have such an excellent opportunity to get things right, but there is the Canadian conservatism,” Mr. Lieberman said, sipping coffee in his studio in an old downtown Toronto house. “Canadians in their city building are not risk takers.”
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Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
—————————————————————————————————–
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Experts warn of Toronto’s cooling condo market
Canada’s largest city is only getting larger. But it’ s not necessarily growing outwards – it’ s actually growing upwards.
Global News, with files from Kieron O’Dea
Canada’s largest city is only getting larger. But it’s not necessarily growing outwards – it’s actually growing upwards.
Toronto is in the midst of a building boom, with 147 highrises and skyscrapers under construction. There are more than double the condos under construction as New York City, and more than all major U.S. cities combined.
TD Bank chief economist Craig Alexander explains, “If you have a rising population, and you have this invisible barrier to growth: if you can’t grow out, you grow up.”
Comment: One of the major drivers behind all of this condo construction. That and people want to live downtown.
And more residents mean more companies will be setting up shop too. “When more people decide to live downtown, then you have more businesses providing services to those people downtown. So in other words, it becomes a virtuous circle which makes it more attractive to live in condo towers.”
The boom has transformed Toronto, shifting tens of thousands of people to the downtown core, where the city’s once sleepy streets now thrive. With a lack of land to develop, the shift has been necessary in a metropolis with soaring home prices.
But there are strong signs this boom will soon bust. Will there be enough people to fill all the condos available?
Comment: No, just people saying it. Things may be slowing, but they are slowing from a record pace to a near record pace. The condos are being filled because construction does not start until 80% of the units are sold. When you hear about 28,000 units completed in a year, 22,400 of them were sold before the shovels hit the ground. And most of them are sold by the time the project is complete.
Alexander says, “I think the rate of construction is not sustainable, and ultimately, construction is going to have to slow or decline, and when that happens, it will work to temper growth in the GTA.”
Comment: Well obviously it will decline at some point. It is more a matter of when, at what rate, and where it ends up.
“Any time you see a forest of cranes, it creates some nervousness about the sustainability about what’s happening and it creates worries about the possibility of a correction.”
The anxiety has cast a chill over the once-hot market. September’s sales dropped by almost 30% over 2011.
Comment: No, the changes to the mortgage rules slowed the rate if buying. Look at when the slowdown started, right after the mortgage changes. Same as with resale condos. Don’t believe me, just look at the numbers. The only people worried are the press and some economists.
“Buyers are spooked and they’re nervous, and they’re active. They are looking, but they’re nervous to pull the trigger,” says Toronto realtor Andrew la Fleur.
Raphael Sammut is eager to buy, but he has his doubts. “I do have some concerns. There is talk of the market slowing down. If I’m going to make a solid investment now – I mean, it is my first purchase – so I want to be absolutely certain that I’m making the right decision.”
Comment: If anything happens, it will be solely the fault of the press. All these articles about a correction that is not coming is scaring good people. Then they hold off buying and when they finally realize that prices are NOT dropping, the house they like has jumped 20% and is now $500,000 and not $400,000. Thank you media, this is what you are doing to people.
Jim Grimes, in comparison, is more of a real estate buying veteran. He sees a correction coming and beyond that, an opportunity. “I think we’ve hit a point where saturation has come… I’m kind of setting myself up right now to be ready.”
Comment: How can we be saturated when 100,000 move to the GTA every year? They all need somewhere to live. Since new house building has dropped to near zero, it is condos taking up the slack. New apartment buildings are not going up, so condos are taking up the slack. Vacancy rates are close to 1% and there are bidding wars on rental condos. Every time you see a crane go up, 80% of those units are sold. Of those 147 condos being built right now (never mind low-rise) 80% are sold before construction starts. And more sell after that. There is still a huge appetite that is not close to satiation quite yet.
“I’m getting calls back from agents saying they’ve dropped the price by $50K and (they’re asking if) am I interested in getting it at that price.”
Comment: Some resales, yes. But that is because they were $50k over priced to begin with. Sellers got greedy, but condos do not have the demand that houses still have. It is there, but not strong enough to sustain ever-higher prices.
With Toronto’s real estate atmosphere already clouded in doubt, realtor Heather Holmes points out that not all buildings are created equally. “There are definitely projects I would steer away from or developments that I would say ‘You know, there’s just a better way to use your money.’”
Comment: As has always been the case. With new buildings and with resale. There are good areas and bad areas, how is that new? Talk about stating the obvious.
She also warns, “Some of these buildings are approaching and have approached 10 years of age, and some buildings – quite frankly – are showing signs of deterioration.”
Comment: And that is what condo fees and reserve funds are for. Though certainly there are some that are just special assessments waiting to happen.
Some of the downtown Toronto projects are designed to be bigger and bolder, with the help of iconic architects like Frank Gehry. If he gets his way, he will have helped design three towers destined to be the world’s tallest residences.
But Holmes advises that people need to ask important questions that run deeper than esthetics. “When buyers are looking to buy a condominium, they need to ask questions beyond ‘Does it have granite? Is there stainless steel? Can I barbecue?’”
Comment: But buildings like Mirvish’s, Aura at College Park, One Bloor – these are landmark buildings that will always have drawing power. If you are looking in another one, make sure your realtor helps guide you through the pros and cons and how each property matches your needs and wants and lifestyle.
In the meantime, Toronto’s condo construction continues, but a cooling market could alter builders’ blueprints. “In truth, an awful lot of the projects that have been announced in recent years may not be completed. And if the market weakens, the builders will respond to it by simply saying ‘We were planning on three towers – but now we’ll do two or even one.’”
Comment: Same as at the end of 2008. Things slowed, builders held their breath, then they got back to work.
Toronto’s population is expected to grow by 100,000 people every year.
Comment: And they all need somewhere to live…
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Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
—————————————————————————————————–
Incoming search terms
Minto Group specializes in skyscrapers, sunshine and sustainable homes
Ryan Starr – Toronto Star
This month marks 10 years since the Ontario Municipal Board gave Minto the green light to build Midtown, a twin-tower condo project just south of Yonge and Eglinton that had been the source of much heated controversy.
Despite pushback from the community and city council over the 37– and 54-storey towers, Midtown – which council eventually approved by a vote of 23–17 – was completed in 2008 and helped paved the path for subsequent high-rise condo development in Toronto.
“Today 50-, 60– or 70-storey buildings are bandied about in numerous locations around the city, without a whole big issue about height and density,” notes Chris Sherriff-Scott, senior vice-president of Minto Communities.
“But before Midtown went through the mill, height and density were huge issues for the city, which was still fussing about (how tall the buildings were) and not about what was going on at the street level.
“So we take particular pride in that development.”
Minto Midtown also helped clear the way for the recent surge of condo projects at Yonge and Eglinton, a once-prominent intersection that had been in decline since the 1970s. “That area was actually undergoing a net loss in population the year we started (Midtown),” Sherriff-Scott says. “Since then, it’s changed dramatically.”
Although Midtown represented a milestone for Minto and the city, it’s just one example of the innovative approach to development that the Ottawa-based company has demonstrated since it started doing business back in the 1950s.
In its six decades since, the family-owned Minto Group has developed more than 70,000 homes, 17,000 residential apartments and more than 2 million square feet of office, retail and industrial space across Canada and the U.S.
Minto was also an early industry leader in sustainable home construction and, in 2011, was named Green Builder of the Year by the Ontario Home Builders’ Association, the third time in four years the company received the award.
With operations in Toronto, Ottawa and Florida, Minto builds an average of 2,000 homes per year. (Its current Toronto condo projects include 30 Roe at Yonge and Roehampton, Winter Garden in Thornhill, 88 at Yonge and Sheppard, and 775 King West.)
The company traces its roots to Ottawa, where it launched in 1955 as Mercury Homes, a suburban home builder founded by the Greenberg brothers: Louis, Gilbert, Irving and Lorry.
The Greenbergs developed an “assembly-line” approach to homebuilding that was novel for the times.
“Builders in those days didn’t build with a construction schedule,” notes Sherriff-Scott. “Most builders didn’t have a production-line mentality in terms of providing certainty about how many days it would take to deliver a house and when things were expected to arrive on site.”
Rather than rely on outside suppliers for building materials, the Greenbergs purchased a mill and began manufacturing their own kitchens, roof trusses and trim.
“By introducing an industrial process, it brought a lot more certainty,” Sherriff-Scott says.
The company changed its name to Minto in 1957. By the mid-1960s, the developer had built more than 5,000 homes in Ottawa and expanded into the construction of rental apartments.
Near the end of the decade, Minto created what it claims was Ontario’s first condo project.
“It was a new form of housing and we took advantage of it immediately,” says Sherriff-Scott. “It was a good business opportunity because it enabled people to enter the home-ownership market at an earlier phase than they ordinarily would have.”
The company expanded to Florida in the late 1970s and went on to build thousands of single-family homes, condominiums and rental apartments in the Sunshine State. (It still maintains its Florida business.)
“We saw it as an interesting opportunity at the time, and it allowed for diversity in terms of the economics of land development and housing to have two operations that ran on different cycles,” Sherriff-Scott notes. “It has turned out to be a very successful operation.”
Minto entered the Toronto market in the mid-1980s with a pair of condo projects in Scarborough: Optima on the Park and Minto Plaza. “If we were going to expand in Canada, there didn’t seem to be any other logical place to go,” says Sherriff-Scott.
The company expanded its Toronto presence over the years, primarily through condo projects but also with single-family homes across the GTA.
It was as an early adopter of green-building practices. In the early 1990s, Minto’s Innova House, a prototype eco-home built in Kanata, served as a showcase for sustainable technologies such as solar power.
Minto became one of the province’s leading green developers, retro-fitting its entire rental apartment portfolio with energy-conserving features, such as low-flush toilets. “At one time, we were the largest purchaser of low-flush toilets in North America,” Sherriff-Scott says.
When Minto Midtown received LEED Gold certification in 2009 – making it the largest multi-residential building in the country to earn the designation – it represented the culmination of the company’s forward-thinking green strategy.
With a dedicated green division focused on carrying out its sustainable building strategy, Minto has vowed that all of its future condo buildings will meet the LEED standard, including eco-friendly features such as dual-flush toilets, all-off switches, heat recovery ventilators, rainwater harvesting and multi-chute recycling.
The company prides itself on being able to educate buyers on the virtues of green living.
“When customers ask, ‘Why should I pay more to have a sustainable building?’ our salespeople say, ‘Why would you want to move into a building that would be obsolete the day you took occupancy?’ ” Sherriff-Scott says.
“It’s going to cost less money to live in the suite – less on utilities and on maintenance fees,” he adds. “If you can make folks understand that it’s not only good for the environment, but it’s good for them personally, in terms of what they’re going to pay to live there, that resonates with them.”
“And if people can understand those benefits, then, as a company, you have a competitive advantage.”
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Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
—————————————————————————————————–
Incoming search terms
