The availability of land and construction costs can be a challenge for developers in Ontario, especially in high-density cities. In Toronto, recent reporting suggests that condominium builders may have an advantage compared to other types of developers. According to real estate consulting group Altus Group Ltd, those building residential units have an advantage because of how much people will pay for space.
Residential buyers in Toronto were reportedly willing to pay $800 per square foot at the end of 2017. This is a significant increase from the average of $600 per square foot a year prior. Condo units can be sold for more based on these figures, increasing their return on investment for developers and allowing the developers to bid more for their projects.
As a result of this economic advantage, condominium builders have been winning contracts over commercial and rental apartment builders. This has led to a shortage of office and residential buildings for rent. Developers are reportedly now looking outside the downtown core or considering more unique land parcels for their projects. However, they are struggling to find space that isn’t in demand by condominium developers.
Real estate and development can be affected by many factors. Currently, the real estate market, particularly the high amount people are paying for condominiums in Toronto, is having a serious impact on the availability of other types of buildings. In Ontario, laws and business tactics often emerge to address these issues, so it is a good idea for any buyer, seller or developer to speak with a lawyer about the current laws and processes that may affect them.
Source: The Globe and Mail, “In Toronto’s land war, condo builders are better armed“, Cole Burston, Feb. 8, 2018