Sunday, June 15, 2014
Toronto's building on up
The south-facing view from the penthouse condo at University and Dundas St. W. shows panoramic vistas of the skyline stretching to the lake.
And speckled around these landmarks are a few dozen construction cranes — the indication the city is growing and continues to build.
“It is Toronto’s new normal,” said Bryan Tuckey, CEO of the Building Industry and Land Development Association (BILD). “When you see what’s happening in the City of Toronto, it’s not a condominium bubble — it’s a very significant, public policy-driven shift to higher density.”
There are 154 building cranes in the air right now in Toronto. That translates to 46,362 units being developed, mainly in highrises, and 89% of those units are sold, according to BILD.
Toronto may be destined to be a land of glass towers, but that doesn’t mean people aren’t willing to throw stones at them.
Condo development has become a contentious issue in recent years between those who say they are creating adequate housing for the future and those who believe too many projects at once is oversaturation.
BILD claims the number of developments is slated to grow steadily in the next 10 years, and future construction follows the requirements for Ontario’s Places to Grow Act, the provincial plan for growth and densification in existing communities.
In the last five years, about 60% of new homes sold have been highrises. New home construction in 2013 created more than 207,400 jobs in the GTA and the City of Toronto generated $11.1 billion in new home construction.
For builders, it’s the challenge of providing housing for 100,000 people coming to the region each year from immigration, migration from other parts of Canada, and people starting families.
According to the builders association, the development industry must build between 35,000 to 40,000 new homes each year to keep up with demand.
“When you look at what Toronto is going to be in 20 or 30 years, Toronto will be the third-largest metropolitan area in North America, with only Los Angeles and New York being larger,” Tuckey said.
But analyst Don Campbell, of the Real Estate Investment Network, warned condo developers and the province to closely monitor the city’s long-term demand for the next decade.
“The trend that we see is the size of the units get smaller, therefore trying to keep the market in an ‘affordable level.’ Our studies are really focused on who’s next rather than who’s now,” Campbell said.
“Developers are developing what is required right now — in essence, a condo factory. The demand right here right now is size for sheer affordability. Take that out 10 years from now, you’re going to see a lot of one-bedroom ghettos. That may be a harsh term, but it’s painting a picture,” he said.
“All these one-bedroom units that we have now are going to become quite useless to Generation Y (families) 10 years from now (who need more space).”
While buying a condo unit is still approximately $230,000 cheaper than purchasing a single-family house, prices are rising.
Condo prices have increased by 6.4% from last year in the GTA and even higher in Toronto at 7.6%, according to the Toronto Real Estate Board (TREB).
Compare that with detached homes price increases of 8.3% in the GTA and 9.2% in Toronto.
“The condo market has been quite resilient,” said Jason Mercer, TREB senior manager of market analysis.
“We saw record occupancies last year of new condominium apartments, and over the last few years, we saw a lot of construction and a lot of completion that has led to a lot of supply in the marketplace for condos. Yet, we’ve seen enough demand relative to that supply to continue to see upward pressure on pricing,” Mercer said.
But as more condo towers pop up, so do concerns of residents who are impacted by what they call overdevelopment.
The Toronto Entertainment District Residents Association (TEDRA) notes a large number of condos are slated for their community. The group’s concern is that when they attend meetings and ask for a vision from condo developers, they don’t receive a satisfactory answer.
“As you see already, we have an enormous amount of traffic congestion and when we go to these development meetings, we always ask about infrastructure and we never get an answer. But they keep approving them,” TEDRA executive director Mike Yen said. “If we don’t have an answer, why do they keep approving them?”
“It’s an area where condo developers advertise to come here because it’s eclectic, fun, vibrant — but if they’re tearing all that down, what do we have left? One of our main fights is saving restaurant row (on King St. W.). We’re losing heritage buildings and businesses that are vibrant and successful,” Yen said.
“No one wants to live in a forest of condos with no green space and nothing to do.”
BILD contends the public and the industry need to clearly identify where they want shovels in the ground “so it fits in the community in a sensitive way.”
Builders recognize that areas close to transit are attractive, such as North York Centre, along the waterfront, Liberty Village, downtown and Etobicoke. BILD also examines other cities, such as Calgary and Copenhagen, Denmark, as examples of how they can build more effectively.
Tuckey said he believes there should be a mix of housing options and that the condo market is self-regulating. If units are not sold, they’re not built.
“I think we still should be able to have housing choice for the different phases of people’s lifestyles,” he said. “At this juncture, there just isn’t enough supply of ground-related to meet that market, so people are forced up longer they’d like, out — and we see people moving farther from the city to find places to live, or they move back in with their parents.”
Ute Lehrer, a York University environmental studies associate professor who has studied condo development in the GTA for 15 years, said there needs to be an overall vision for the city when it comes to condo planning.
“It’s not the question of numbers, it’s the question of quality,” she said. “We talk too much about overbuilding in Toronto, but we don’t talk about the form of the building. It’s lacking interest from the builders’ side to build for the long-run. They are thought through for 20 or 30 years, but 10 years in they already start to leak. They need to think about quality over a cheap deal.”
BILD maintains building up is simply an inevitable — and a sustainable and beneficial part of Toronto’s future.
“The residents of Ontario and the GTA spoke very clearly 10 years ago that they wanted to stop the outward expansion — what they perceived as sprawl — of the region,” Tuckey said.
“Change is difficult for all involved. This is a significant change that public policy has decided to implement in Ontario. (Builders) are on the front lines implementing this change.”
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