Toronto Loft Conversions

Toronto Loft Conversions

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Modern Toronto Lofts

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Unique Toronto Homes

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Condos in Toronto

Condos in Toronto

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Toronto Real Estate

Toronto Real Estate

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Condo developers start 2014 with record number of launches

Downtown sees biggest demand remains for units.

Susan Pigg – Toronto Star

Developers are so optimistic that confidence has returned to the condo market, they’ve launched sales of a record number of new units — more than 2,700 — in January and February alone.

And more are planned, with new project launches scheduled unusually late, into May, as builders see a surge of pent-up demand after the downturn of the last two years, especially for condos close to the Toronto core.

Comment: And this follows a Q1 with new condo sales up 68% over Q1 2013. Last year was slow, developers took a breather and there were some slowdowns due to land issues, materials and generally too much else going on. Now it is full steam ahead for new condos in 2014, critics be damned.

2014 Toronto Condo Developments
Those 2,721 new units are in eight projects, according to figures from research firm RealNet Canada, which will release March launch numbers later this month. That exceeds the 2,394 units in nine projects launched in January and February of 2011, the record year for condo sales.

The total is also up significantly from the 1,261 unit sales launched in the first two months of 2012, and the 1,873 units that went to market in the same period of 2013. That’s when fears of a condo crash led to a dramatic slump in sales and flagging investor interest.

Comment: No, it was not fears of a crash. It was developers busy with current projects not launching new ones. It was not low investor interest, as they turned to resale condos and pushed sales of that segment up 10-20% in some months. It was materials and permits and all the boring grunt work that lowered new condo launches last year. If developers were that afraid, why did they launch so many in the first 2 months of this year?

“People have been waiting two years on the sidelines, anticipating that something is going to go wrong, but the market isn’t slowing,” says Riz Dhanji, vice president of sales and marketing at Canderel Residential.

Comment: So the experts were wrong again.

It recently launched sales of its new, 600-unit YC Condos project at Yonge and College Sts. to “incredible” interest, especially for bigger units starting at 1,000 square feet as alternatives to pricey houses, says Dhanji.

“It’s really just an indicator of what a great place we live in and the factors that are driving the condominium industry in this city,” says Andrew Hoffman, president of CentreCourt Developments.

Comment: Amen brother.

CentreCourt launched sales for its newest project, the 220-unit Core at Shuter and Church Sts., in January and sold out within a month.

Comment: In the middle of a horrid winter and regardless of the negative press.

“The most successful launches have been in close proximity to the subway and the downtown,” says Hoffman. “This year is going to be, to some degree, a makeup for what wasn’t launched in 2013.”

Developers have learned their lessons from the downturn, says George Carras, president of market research firm RealNet Canada: Layout and design have become more important than ever, especially as suite sizes continue to shrink.

Comment: What downturn?

They now average about 784 square feet in new launches. That’s some 120 square feet — the equivalent of a bedroom — less than units that sold just five years ago, according to RealNet.

Pricing remains highly competitive and many new launches so far in 2014 have been priced below neighbouring new condo projects still actively marketing unsold units, said Carras.

The index price per square foot of a new condo was $559 in February, up just slightly from $539 a year ago. (The index price factors out high-end condos that can skew average prices.)

Comment: Yeah, flagging sales all right… Prices up 3.7% and sales up 68%. Boy, the sky sure is falling for new condos in Toronto.

“The development community, as a whole, recognizes that the condo market is normalizing and we’re seeing new projects coming down in size from the mega projects” that have overtaken the market the last few years, says development consultant Barry Lyon.

“The new sweet spot in the GTA seems to be projects under 300 units. They tend to sell quicker and attract more end users” than investors who plan to rent the units out.

Comment: Yes, it seems to be the era of the mid-rise, which is a good thing. Some smaller, more neighbourhood-y buildings would be nice.

There is no doubt that the condo market remains investor driver, and that’s likely to continue as long as rental vacancy rates, now at about 1.7%, remain below 3%, making it easy to find tenants, says Lyon.

Comment: I don’t know about that. Not when owners account for at least 75-95% of the market, maybe more.

“The big story this year is that we are certainly in a buyers’ market. It will be the year of the incentives” as developers with projects already in the works try to clear a record inventory of 23,327 unsold units.

Some 13,212 of those unsold units have yet to be started, another 8,824 are under construction and just 1,291 are actually built, according to RealNet.

Comment: Thank heavens, finally some context! That is out of 80-90,000 resales every year, 28,000+ new sales every year, plus some 60,000 condos currently under construction. Plus all those in pre-contruction.

Already some “interesting shifts” are playing out in the condo market, says Lyon. More midrise buildings and stacked townhouses are in the works, in an effort to cater to condo dwellers looking to start families but stay in the city. There are also more two bedroom units.

The numbers alone tell the story of Toronto’s dramatic shift skyward, largely just over the last decade, in the wake of Ontario’s intensification policies, he added. As of October, there were 305,241 condos across the GTA. A further 250,000 are in the planning stages. Some 60,000 are under construction.

“It’s a healthy sign that the market hasn’t gone south, but basically what you’re seeing now is developers trying to catch the last of the big wave,” says Lyon.

Comment: I don’t know about that. I think we are seeing a condo market that is maturing. The past 15 years have been crazy, but things are settling somewhat, with new ides coming along. Huge towers downtown are not the end-all be-all, we are seeing more smaller buildings in other locations. Getting condos in The Junction, The Beaches, Yonge & Eglinton, High Park and along the Danforth is changing the fabric of the city. Not everyone wants a condo in CityPlace, many want a neighbourhood to live in.

Launches are likely to ease as the year progresses, he notes. He’s anticipating about 70 to 80 new projects for 2014, down from 101 in 2013.

Comment: And new project launches, sales and starts will all ebb and flow each year as various factors change.

Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.