Sunday, April 09, 2006

Condo Boom Continues, Developers are Starting to Consider a New Target Market

Debbie Thompson wanted to move downtown. She really did.

Having just spent a year in London, England, the 34-year-old research manager returned to her former condo in Scarborough and found herself bitten by the urban bug.

"I was totally converted," she says. "I wanted to replicate that kind of lifestyle, where I lived close to where I studied and worked."

The trouble was, Ms. Thompson was looking for something that was affordable and would also give her room to grow -- along with the family she was hoping to start soon. When her parents, her brothers and their children piled into her condo on a recent visit, she realized she'd need more space in which to raise kids of her own. And despite the condo boom, affordable room to grow is one thing Toronto's rising towers aren't providing.

Condominiums represent the overwhelming bulk of new housing being built in the city, but virtually every project is dominated by tiny units that only singles and couples can squeeze into. In fact, of the more than 17,000 condos sold in 2005 across the GTA, only 342 had three or more bedrooms -- enough space for a two-child family.

So, when the generation of young couples who've bought downtown condos find themselves with more children than they have rooms, will they have to leave the core? And is a downtown tower any place to raise a family in the first place?

Harry Stinson thinks it is, and has plans to make his next project family-friendly. The outspoken developer, whose posh One King West condo is currently playing a starring role on MuchMusic's DJ Search, is now promoting a revised proposal for his Sapphire Tower development downtown that will include about 300 family-sized units ranging from two to four bedrooms.

"If you look at major cities around the world, that have become serious urban centres, as Toronto -- despite itself -- is becoming, there's ample proof that urban living is large apartments," Mr. Stinson says. "It's astounding how unoriginal the concept is."

Mr. Stinson, who plans to price his larger units between $500,000 and $1.5-million, says it's reluctant developers, not reluctant buyers, who are holding back the market for large-suite condos. The marketplace just needs someone to prove that families will move in.

"The real-estate market in Toronto is like everything in Toronto," he says.

"They're just a bunch of lemmings."

But while there's growing interest in the subject of housing families in condos, the lemmings appear to be waiting for more than Mr. Stinson's cue.

Perhaps the single biggest impediment to family condos across the city is that, as expensive as houses in Toronto may be, big condos are more expensive still. With downtown condo prices passing $350 per square foot this year, units large enough to house a family are also expensive enough to deter buyers who could buy a house, white picket fence and all, elsewhere in town. And according to developers, the expensive units are often the hardest to sell.

Condo broker Brad Lamb says he's not seeing any demand for family-sized units at the moment, but he expects that to change within a few years. He predicts that real-estate prices in Toronto will continue to rise, to the point where buying a house will no longer be an option for young families, leaving still-expensive condos as the only choice.

"For condominiums to be a serious consideration for families, houses need to be out of reach," says Mr. Lamb. "They're not yet out of reach -- they're close."

Whether or not Mr. Lamb's bleak predictions come to pass, at the moment condominium developments are the only game in town. As Gary Wright, the City of Toronto planner responsible for the downtown core, puts it, "the condo market is the housing market.

"If families are going to live in the city in the future, if they live in newly constructed buildings, by and large they're going to be condo buildings." Developers, for their part, are guardedly optimistic about the future of family living in the downtown core -- but few are bringing large-suite condos to market.

Jim Ritchie, senior vice-president of Tridel, one of the city's largest developers, says that his company has seen increased customer interest in larger condos, though it's weakest in the downtown core, where first-time buyers currently dominate. Tridel has included three-bedroom units in projects elsewhere in Toronto, including 80 in a smaller project in Willowdale, which he says sold well.

Meanwhile, sales are proceeding for the massive Maple Leaf Square condo complex across from the Air Canada Centre, which will go so far as to include a day-care facility. Barry Fenton, President and CEO of Lanterra Developments, the project's developer, agrees that he sees more families in condo towers, some of whom, he says, are buying adjacent units and having them built as a single large unit when the building goes up. But the trend, he says, is toward families making do with less space.

"They'll take a 1,000-square-foot unit and try to figure out a way to have sleeping quarters for two kids, plus themselves," Mr. Fenton says. "In the living room and dining room they'd have a pull-out couch. They'll put a Chinese screen in front. They're creative."

Mr. Lamb, the broker, phrases it differently: "It's a complete nightmare to live with a kid in a condo."

Parents often buy their condo before their child arrives, he says, and then "stuff the kid into an awful little den, or into the living room. As soon as they've got the money and built the equity, they sell the condo and move to a house, probably in the suburbs."

Others point out that many new condo projects are built in areas that lack the residential-neighbourhood qualities families traditionally seek, and that such areas don't become attractive to them until commercial development -- and gentrification -- takes place.

"The most pioneering crowds typically aren't families," says Craig Taylor, director of marketing at Context Development.

"Historically, the most pioneering people are the gay community and the arts community, and then, after that, the gentrification starts with yuppies. Families come third."

Still, a study conducted by students in the University of Toronto's masters of urban planning program attempted to find solutions that would make downtown living more feasible -- and concluded that towers aren't incompatible with family life.

The report underlined a number of factors that make for "family-friendly housing": chief among them that families prefer living closer to the ground so parents can watch their kids at play.

"Family-friendly buildings can be incredibly tall -- families just aren't going to live on the 35th floor," says Annely Zonena, one of the authors.

The report also stressed that floor space alone doesn't make a condo child-friendly: factors such as storage space and sound-absorbing building materials are also of critical importance. But the study also suggests that high land prices downtown will keep condos from being affordable unless government sponsorship ensures at least some units are made available below market rates.

"There needs to be concerted effort from the public sector if we want to see families downtown," says Ms. Zonena.

Indeed, for all of the core's bright lights and beautiful people, it was the cost that eventually drove Ms. Thompson away from the city. Faced with the choice of a tiny place downtown that she could afford, and a larger place she couldn't, she stopped by a model home in an Ajax development -- 1,800 square feet, and within her price range.

"I walked in," she says, "and thought, 'Oh my God, this is my house.' "


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