A sturdy condo market proves conventional wisdom wrong
Every year for the past five years, the same question has cropped up about the forecast for the Greater Toronto Area’s high-rise condominium market: Is this the year sales will finally decline?
It’s hard to believe, but there was a time when the experts thought the GTA couldn’t possibly sustain 250 to 300 new launches a year. Conventional wisdom was that the only thing pushing condominium sales ever higher in the early 2000s were historically low interest rates and a pent-up demand among first-time buyers.
If either of these two components changed, so the experts thought, developers who were late to the game would be in for a rude awakening.
If Toronto’s condominium market trends prove anything, it’s that conventional wisdom does not apply. In 2005, the city recorded 17,693 new-condo sales, crushing the 2004 mark of 13,750 sales, according to data collected by RealNet Canada.
A year ago, as the winds of January blew bitter and frosty, no one thought that 2006’s sales could possibly come close to the record-breaking condo sales of 2005 — not even the notoriously optimistic developers who were putting up the suites.
But demand continued strong, fuelled by affordable pricing, strong launches of attractive mixed-use projects in suburban “city centres” such as Markham and Mississauga, growing interest from empty-nesters, and skyrocketing low-rise prices that essentially pushed many young couples and families out of that market. The final numbers aren’t in yet, but sales from January to November of last year were 16,948, so the final total will easily top 17,000 for the year.
Condo watchers are understandably reticent to predict sales trends this year, but they are universally bullish on what areas will see a lot of activity from both developers and buyers, and most of them are not in downtown Toronto.
Sheppard Avenue East will see an eruption of high-rise units this year, according to veteran marketing consultant Barry Lyon. “The Sheppard corridor will boom this year, and we’ll finally be making sense out of the investment in that subway line,” he said, referring to the controversial subway spur off the Yonge Street line completed five years ago.
Mr. Lyon said major multiphase developments are in the works for nearly every subway station between Yonge Street and Victoria Park Avenue. But there will be a huge one at the corner of Leslie Street and Sheppard, on the current site of the Canadian Tire distribution centre.
Vancouver developer Concord Adex Investments purchased the nearly 40-acre site for about $150-million last fall and plans to build a 20-tower community with more than 4,000 suites. Residents will have easy access to the subway, TTC buses, GO Train and Highway 401.
Concord Adex is no stranger to condo development on a massive scale. It’s putting the finishing touches on CityPlace at the foot of Spadina Avenue on the former railway lands.
Following the successful launch of Markham City Centre’s condominium component — four buildings that sold out in very short order last year — there are plans to redevelop Vaughan’s city centre at Jane Street and Highway 7. Current proposals call for about 2,000 suites to be built in a mixed-use complex of four or five buildings. The development will be nicely situated at the end of a planned subway line extension to York University.
“I think developers are trying to include more mixed-use components in the 905 region as an added bonus to make it more of a community,” said Pat Baker, president of Baker Real Estate, which handles sales for Markham City Centre and several other new projects around Toronto.
Most market watchers agree that Vaughan has lagged behind in condo projects, and needs to do some catching up.
The long-awaited redevelopment of the West Donlands will move a step closer to reality this year.
Toronto Waterfront Revitalization Corp. is expected to issue a call for proposals, with the first development to be built near King East and River Streets. The funky and popular Distillery District nearby has already made it a much-anticipated project.
Another high-profile redevelopment, the once poverty- and violence-plagued Regent Park on Dundas Street East, also kicks into high gear this year.