New Condo Investors in Toronto Face Growing Risk that Rent Won’t Cover Expenses

This is an interesting article on the carrying costs of residential condominiums.  The underlying message is that carrying costs including realty taxes, maintenance fees and debt service are now higher for investors as property value and interest rate increases are rising faster than rental rates.

There are many other investment vehicles available for Real Estate investors including mixed use and multi-residential properties that offer better returns.  Although these types of investment require a little more management, I expect they won’t be subject to the same risk as the resiendital condo market.
Read the CBC article here, or here for Globe and Mail Subscribers.

City of Toronto – Avenues and Mid-Rise Building Study

May 3, 2014

Toronto City Council has extend the monitoring period to the end of 2014 to allow staff to complete consultations on the effectiveness of the Mid-Rise Building Performance Standards.  The Study recommends that many of the major arteries in the city including, in the Lower West End of Toronto, most of Dundas St. W and parts of College St. , Queen St. W. , Bloor St. W,  Bathurst St. and Roncesvalles Ave.  are permitted Mid-Rise, mixed commercial-residential development as of right.

What is a mid-rise building?

Mid-rise buildings are the ‘in between’ scale of building, they are bigger than houses but smaller than towers. Mid-rise buildings have a good scale and relationship to the street. They define or make walls to the street that are tall enough to feel like a city and provide lots of usable space, but low enough to let the sun in and open the view to the sky from the street. They support a comfortable pedestrian environment, and animate the street by lining the sidewalk with doors and windows with active uses including stores, restaurants, services, grade related apartments, and community uses. Mid-rise buildings may contain a single use like an office or residential apartment but they usually contain a mix of uses which may include retail, office, community service, and residential all in the same building. The height of a mid-rise building varies from street to street, as we define mid-rises as buildings that are no taller than the width of their adjacent street right-of-way (the width of the publicly owned portion of the street). In Toronto, on the narrower 20 metre wide streets in the downtown, a mid-rise is 5 or 6 stories high. On the wider arterial streets outside of the Downtown, a mid-rise may be taller up to a maximum of 11 storeys on the widest Avenues. Mid-rises typically are designed with step-backs or terraces at upper levels to make them appear lower in height from the street, and to allow sunlight and sky views on the sidewalk.

midrise_key_perform

The adoption of the ‘Avenues and Mid-Rise Building Study’ recommendation by the City of Toronto will have a major impact on property values for major arteries effected by the study.  Please drop me a line of give me a call to discuss.  A full version of the study including maps of the areas effected can be found at: http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=7238036318061410VgnVCM10000071d60f89RCRD 

Urban Office Locations Enable Employees to Walk to Work

March 20, 2014

A new article at ccim.com discusses the trend of employees preferring to work in communities that are walkable and offer a mix of residential and entertainment options:

Research and market observations have revealed that the new generation of employees is clear on what they want out of the ideal office space — with many of the preferences manifesting outside of the company’s walls. Employees want to be in areas where there is access to other talent and work in communities that are walkable, close to transit, and offer a compelling mix of residential, entertainment, and business options. These employees don’t want to balance work and life; they want it integrated. Those cities that offer this integration will be best positioned to attract top businesses and talent.

Demand Factors

Not only have office space needs and wants evolved, but so has overall space usage — presenting companies with new opportunities. The average square foot per person in a typical office has decreased by more than 300 square feet since the 1970s. A typical company can move from a 100,000-sf class B space to 70,000-sf class A space, upgrading the environment for the same number of employees without affecting its bottom line.

Tenants’ desire to be in higher-quality buildings and better locations, combined with the recession and a general lack of new supply over the last five years, presents pockets of opportunity for new office development. Many of these development opportunities are in primary markets where fundamentals support replacing functionally obsolete buildings. However, there will also be opportunities in business-friendly, secondary markets driven by low business costs, quality labor supply, friendly regulatory environments, strong economic growth climates, and a better overall employee quality of life.

Read more at: http://www.ccim.com/cire-magazine/articles/323384/2014/01/walk-work