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The Toronto real estate market continues to experience low levels of activity, as interest rate hikes, price drops, and policy uncertainty continued in August of 2022.
New proposals for development came in at 9 applications, compared to 24 applications in August of last year. This represents a decrease of 62% year-over-year. The number of applications this year was also a disappointment compared to longer historical trends, as the median number of applications submitted in August from 2017 to 2021 was 11.
As the total number of proposed projects decreased, the total proposed gross floor area decreased as well. Developers are asking to build 5.48 million ft² of GFA across 1.07 million square feet of site area. This is 32% less than the 7.25 million ft² of GFA proposed last year, over 1.17 million ft² of site area.
A similar trend can be seen in the number of proposed new dwelling units. 7,139 new units were proposed this month, compared to 8,140 units last year – a decrease of 14%. This relative resiliency is driven by much smaller space for residential purposes: this month’s average residential GFA per unit was 709 ft², while last year’s average was 820 ft².
There has been a corresponding decrease in the amount of parking proposed per new dwelling unit. This month 0.36 parking spots were proposed per new dwelling unit on average, compared to 0.65 parking spots per unit last year – a decrease of 80%. It should be noted that this decrease is largely due to one particularly large proposal for 5,000 parking spots. Excluding this proposal, the average number of parking spots per unit would be 0.42, only slightly lower than last year’s figure. Between last year and this year, the City of Toronto dropped minimum parking requirements for new developments.
All in all, these numbers suggest that developers are responding to current market conditions by proposing smaller, lower-density projects. The increased uncertainty about costs and prices is leading to fewer units. The question, however, is why developers are also proposing smaller units as well. One possibility is that developers are anticipating that buyers will be increasingly looking for affordability, and smaller units represent a way to offer more affordable options. Another is that developers are concerned about the difficulty of selling larger units in the current market.
Whatever the reasons may be, it is clear that the current market conditions are having an impact on the types of development being proposed. And with interest rates expected to continue rising and prices remaining unstable, it is likely that this trend will continue in the months to come.
Looking forward, it will be interesting to see if these trends continue or if developers begin to propose larger, more dense projects as the market begins to recover. While this may be negative news for those hoping for a quick rebound in the real estate market, it is encouraging to see that developers are being responsive to changing conditions.
Despite the small number of applications, we have data on 144 companies working to bring these projects to life. Of these, below we list the 22 developers and architects.
Proposals are an indicator of developer confidence for future demand in the city. As the economic environment continues to cast uncertainty about the future of prices, costs, and policies, expect less ambitious developments going forward.
If you want to track all of this information live as it comes in, with your ability to customize reports and maps, set up a call about getting a tour of UTPro.
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UT Pro is UT's premium database service that collects and reports information on development applications across the Greater Toronto Area.
This UTPro New Development Report analyzes new development proposals for large projects submitted to the City of Toronto. (UrbanToronto defines a "large project" as anything larger than a typical detached home.) These numbers are for proposals only, and are subject to change at any time up until (and sometimes even after) completion. Due to the early stage of the development process, some documentation may be missing; the numbers for some components of the data might not add up in some cases.
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