Taking a Closer Look at Downsview ParkApril 9, 2019
What Your Realtor Didn’t Tell You About AssignmentsJuly 15, 2019
A few days ago I had the pleasure of attending an event called “Dive in with Developers” organized by Yair Rabinovich & PSR brokerage with proceeds going to Children’s Epilepsy support for Sick Kids Hospital. In addition to being a tremendously well-organized event, that raised over $42,000 for a fantastic cause, the event brought together some of the biggest developers and brightest minds in the housing industry today. The five panelists consisted of – James Tadeson CEO of Carttera, Stephen Price – President & CEO of Graywood Developments, Rafael Lazar – CEO of ELAD Canada, Robert Cooper – President & CEO of Alterra and Jane Renwick – VP of Marketing/Sales at Diamond and Kilmer.
The panelists were asked a variety of questions related to residential and commercial development within the city of Toronto, GTA and the province of Ontario. Below you will find my 4 main valuable takeaways from the discussion that took place.
- Large portion of the conversation circled around the issue of affordability and why prices are where they are. This is undoubtedly a hot topic in the Real Estate conversation. From what was said by the panelists I will highlight that the affordability doesn’t just rest on the shoulders of developers. Robert Cooper is quoted as saying “you need to plug your nose before you acquire land these days” due to how incredibly expensive land is in Toronto. Also not only have the raw construction costs increased by a massive margin that none of the developers forecasted, but the development charges coming from the City of Toronto have increased by the multiple of 6 in the past 10 years. In addition, the process of amending the zoning and getting a development approved is taking much too long.The developers all agreed that the city is understaffed and incapable of dealing with development applications in a timely manner. This is causing a backlog of development and delaying construction by years which is affecting supply. Prices as you know are a result of supply and demand. Final takeaway came from Stephen Price from Graywood, and as hard as it may be to believe, but the high-rise developer profit margin has steadily decreased over the last decade and is currently the lowest it’s been in a long time.
- A question was asked regarding land acquisition and what the developers main criteria is when considering a new acquisition. Almost unilaterally everyone agreed that the main consideration is the proximity to major transit artery. From the buyers perspective, this is important to note as well. Looking for projects that are in close proximity to a major transit node is of paramount importance. This is reinforced by the recent success of CentreCourt at their projects called TC4/TC5 in Vaughan. Two towers and just over 1000 units sold out in nearly a weekend. Mind you this is after selling three 55 Storey Towers with 1,700 units in 2 weeks a year prior. Absolutely incredible!
- Developers were also asked if there is still land to be developed in downtown Toronto and what areas offer opportunity/where they’re setting their sights on next. Everyone came to a consensus that developing in Downtown Toronto is becoming incredibly difficult. There are no more surface lots left to develop and builders are forced to get creative. Dealing with height restrictions, zoning restriction, heritage designations and more. Today developers are no longer acquiring land but are looking to acquire malls, old buildings suitable for a retrofit and getting creative with the city. The latter requiring them to retain the heritage facades, rental components, commercial and employment within their development proposals.
With regards to areas of opportunity everyone remained confident that development will continue in Toronto highlighting Downtown East and Scarborough as the future centres for development. The coming years will also see plenty of development in the 905 – Vaughans, Richmond Hills, Markahams and more. Montreal was mentioned as an exciting area of growth outside of the GTA.If you’re considering buying a property in these areas do your best to get in as soon as possible. New development will bring intensification and price growth quick!
- Lastly a question was asked what the panelists have to say to someone who has chosen to sit out and not buy real estate hoping for the prices to drop. Robert Cooper quickly responded and mentioned that he has developer friends that took that approach back in 2008 when the economy saw a crash. He says they have been out of work for 5 years. Jane Renwick mentioned that when someone is buying real estate they should have a long-term plan and that despite real estate being cyclical they will always be up in the long term. The response I liked most however came from Rafael Lazar who was quite outspoken and entertaining. He is quoted as saying that 50,000 units are required just to meet our housing shortage on an annual basis and we are only building 38,000 units. As long as this imbalance remains he has no concerns about our housing market whatsoever and has nothing but a positive outlook on the future.