nrb, can you say how it has affected the shift please? I'm not knowledgeable enough about that.
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Toronto Mirvish Village (Honest Ed's Redevelopment) | 85.04m | 26s | Westbank | Henriquez Partners
- Thread starter TorontoArchitect
- Start date
nrb
Active Member
From 2013-2016 development charges for new condos are being raised by 71% and are getting indexed to inflation.
So for example, charges in november 2013 were $ 15,695 for 2+ bedroom units, and $ 8,356 for 1 bedroom and bachelor. Now they're $ 25,483 and $ 17,331. It increases the costs per unit substantially.
Development charges for rental units have gone up to, but they're still much less. $ 18,896 for 2+ bedrooms, $ 13,059 for 1 bed and bachelor.
I assume developers have started crunching the numbers on the effect of these changes, and are deciding that for some projects, the increase in costs are raising selling prices beyond what the market can bear for a profitable condo development.
Interesting. Didn't know the charges were so much less for rentals, and I will assume that's probably specifically to get more rentals built.
I doubt it's mostly development charges that are causing the surge in new rental housing though. The charges are still a relatively small percentage of the price of a new condo, and it's more the challenge of saving enough for a substantial down payment that's causing more people to think rental. There are other factors too of course.
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I doubt it's mostly development charges that are causing the surge in new rental housing though. The charges are still a relatively small percentage of the price of a new condo, and it's more the challenge of saving enough for a substantial down payment that's causing more people to think rental. There are other factors too of course.
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AHK
Senior Member
One other factor would be the marketing costs of condominium developments construction of the model suite / sales centre, and payment of the marketing staff / organization. My understanding would be typically in the 3% of project costs range. On a $300,000 condominium, that would add a further $9,000 on top of the development charges - a cost that rental project developers would not incur.
And maybe they'd rather not cash out now. A long term income stream is obviously enticing to some developers.
nrb
Active Member
Of course, there are lots of changes at play, the housing market is a complex system. Like anything else, certain developers are taking a risk based on changing conditions and betting it will pay off.
maestro
Senior Member
Think condo developers are being overly hesistant in making the switch to rental properties. See no reason rentals won't outnumber condo apartment construction in the coming years providing investment funds are still being directed towards real estate .
neuhaus
Senior Member
Not just increase in development charges:
- An increase in interest rates will make it much more expensive/difficult to purchase and may affect the market negatively.
- There is less liability as you don't have condo corporations suing the developer for faulty work, which is on a rise these days.
- Developers have made a lot of money these past years so they are more able to develop a property outright and sit on it and earn equity while it is managed as a rental. A developer could convert the rental building to condos later on if they wish to.
- Toronto still has a vacancy rate of just over 1% even with so many new condos being rented out by investors (however the exact number has not been documented), so we will continue to have a strong demand for rental apartments.
- Real estate prices has increased so much that even condos are becoming unattainable to first-time or young buyers, also these buyers may not want to make such a big commitment and would rather have the option to move around before settling down on one place or city.
I'm sure there are more reasons, but these are the ones I have been hearing about lately.
- An increase in interest rates will make it much more expensive/difficult to purchase and may affect the market negatively.
- There is less liability as you don't have condo corporations suing the developer for faulty work, which is on a rise these days.
- Developers have made a lot of money these past years so they are more able to develop a property outright and sit on it and earn equity while it is managed as a rental. A developer could convert the rental building to condos later on if they wish to.
- Toronto still has a vacancy rate of just over 1% even with so many new condos being rented out by investors (however the exact number has not been documented), so we will continue to have a strong demand for rental apartments.
- Real estate prices has increased so much that even condos are becoming unattainable to first-time or young buyers, also these buyers may not want to make such a big commitment and would rather have the option to move around before settling down on one place or city.
I'm sure there are more reasons, but these are the ones I have been hearing about lately.
Automation Gallery
Superstar
Toronto, Vancouver experiencing rental renaissance as appetite for condos wanes
For the past two decades, developers in Canada’s hottest real estate markets have busily erected shiny new condominium towers while construction of rental buildings has stagnated.
But with the appetite for condos beginning to wane and sky-high home prices leaving home ownership out of reach for many, developers and institutional investors in Toronto and Vancouver are increasingly setting their sights on rental units.
“It’s a significant shift,†says Shaun Hildebrand, vice-president of condo research firm Urbanation.
The firm says there are eight rental buildings currently under construction and 37 more proposed in the Toronto area, containing a total of more than 11,000 units. That’s a nearly 75 per cent increase over what has been developed over the past decade, says Hildebrand.
Some Toronto projects that were originally planned as condo towers will be built as rental buildings instead, including Urbancorp’s Kingsclub condo complex on King Street West and a proposed 49-storey tower at Bloor and Sherbourne called The Selby.
The new development proposed at the site of Toronto’s iconic Honest Ed’s store will contain no condos – only rental units.
More.........http://www.theglobeandmail.com/repo...as-appetite-for-condos-wanes/article24795581/
This development was just before the Design Review Panel for the first time. Presenting for Westbank were Gregory Henriquez and Janet Rosenberg with Michael McClelland from ERA on hand to take questions on heritage elements.
The DRP panel members have been quite effusive about the documentation provided to them by the proponents, that the DRP have never seen such a comprehensive proposal, covering every angle that the DRP is interested in reviewing. (That would put it just slightly ahead of The Well, which they also loved.) That said, they are concerned with two general things: 1) it's a little too high, and that shadows will drag across some of the neighbourhood streets to the north, while transition to the neighbourhoods to the south need to be a little more sensitive, and they're looking for more solar access on surrounding streets, plus 2) there should be more actual green space amongst the generous public realm plans.
So, the vote is 7-0 to Refine with attention to reallocating density to allow for more sunlight and green space.
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The DRP panel members have been quite effusive about the documentation provided to them by the proponents, that the DRP have never seen such a comprehensive proposal, covering every angle that the DRP is interested in reviewing. (That would put it just slightly ahead of The Well, which they also loved.) That said, they are concerned with two general things: 1) it's a little too high, and that shadows will drag across some of the neighbourhood streets to the north, while transition to the neighbourhoods to the south need to be a little more sensitive, and they're looking for more solar access on surrounding streets, plus 2) there should be more actual green space amongst the generous public realm plans.
So, the vote is 7-0 to Refine with attention to reallocating density to allow for more sunlight and green space.
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A Torontonian Now
Senior Member
This reminds me of another example of where Westbank seems to be trying to do everything right in this process.
They had set up a booth during the recent Annex festival, with renderings and site plans (nothing new that hasn't been seen here), and staff on hand to answer questions. The festival itself did not have a huge turnout due to the rain, but this display was very busy.
They're not even selling condos, so the only possible purpose of this outreach is to try to get the community onside. Classy move, in my opinion.
AlvinofDiaspar
Moderator
Certainly help to bring the community onside when what you're asking for will require residents (read: political) support.
AoD
freshcutgrass
Senior Member
I do believe property taxes are higher on purpose-built rental buildings than they are on condo buildings. I thought developers interested in getting into the rental game were building projects as condos and just retaining the ownership to all the units themselves.
This allows you to pay lower property taxes and have the added bonus of easily unloading some or all of the units at any time in the future. Or am I missing something?
W. K. Lis
Superstar
Wonder if the Mirvish family bought any Wal-Mart shares yet?
ssiguy2
Senior Member
What are they going to do with the great Honest Ed's signs?