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The Challenge of Building Mid-Rise Toronto Condos

The Challenge of Building Mid-Rise Toronto Condos

Oct 16, 2015
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The higher up you are, the more swank the pad. Or so traditional condo thinking goes. But as Toronto continues its transition to a city of tall towers and low-rise homes skyrocket in price out of reach of many, there's a large segment of the market that's moving away from shoe boxes in the sky and desperately seeking mid-rise condo living.

And there are voices in Ontario's building associations, developers and in City Hall that are pushing for a mid-rise movement, challenging the mindset that density necessitates high-rise living.

Mid-rise Toronto condos are technically considered by the City to be between four and eleven storeys. While mid-rises typically can't offer the sweeping city and lake views that high-rises can, what they can provide is a better blending with the character of a neighbourhood, a sense of intimacy and, often, a feeling of closer ties to the community both inside and outside of the building.

Mid-rises are often much more conscientious in their design than high-rises, integrating into their surrounding streetscapes. Mid-rise developments often respect the area's existing architecture and their neighbours in terms of maintaining sight lines and not blocking natural light.

Duke-Condos-Toronto

Duke-Condos-Toronto

That desire for a small community feel within the big city is a major driver for a lot of buyers today. It's becoming more and more common for our client wish lists to include intimate or boutique-style Toronto condos for sale , particularly as young couples and families aren't able to get a foot on the freehold housing ladder but want to move on from high-rise living to a place that feels more private as well as more a part of the surrounding neighbourhood.

But just like hard loft conversion projects are dwindling, there are challenges with mid-rise developments, capping their growth.

Developers Struggle With Mid-Rise Toronto Condo Proposals

The Economics

It's no surprise that developers make more money on high-rises making mid-rise projects less desirable. The reason is not simply that there are more units in high-rises to sell and therefore more money to be made, it's an issue of profit margin because there so many fixed costs with multiplex residential builds that aren't impacted by scale.

Les Mallins, President of Streetcar Developments renowned for their mid-rise builds was quoted in last year's Globe and Mail article about the issue of mid-rise economics. Mallins said:

“We call it the Oreo cookie problem... there are so many fixed costs in any given building, from the mechanical systems on the roof and all the design and infrastructure costs at the bottom. But we have to make our money from the residential floors in the middle, whether you have 10 floors or 50.”

canary_district_condominiums_1_870_450_both_

canary_district_condominiums_1_870_450_both_

If the real money is in the middle, the more units / floors the better from a dollars and cents perspective. That said, more intimate buildings can demand a premium depending on the project and tend to sell quickly. And so thankfully, developers aren't abandoning the category altogether. But it's not easy getting approval from City Hall.

The Red Tape

Beyond the obvious deterrent for going mid-rise - i.e. that developers tend to make more money on high-rise projects - developers face some real barriers with the City in getting mid-rise projects approved. Yet mid-rises, particularly along under-utilized avenues, is a key objective of the City's 2010 mid-rise study .

The study proposes an increase in mid-rise condos along main arteries like College, Bathurst and Dundas as an excellent solution to dealing with density issues in the core and providing reasonably priced housing options.

The City has stepped up on several projects stemming from the study including re-zoning the West Don Lands before the Pan Am Games, making the creation of the Canary District an easier ride for developers Dundee Kilmer. And their Eglinton Connects project has pre-zoned Eglinton Avenue for greater density, making it easier to get approval on mid-rise developments.

A subsequent, independent study called "Make Way For Mid-Rise " by a think-tank consortium including the Pembina Institute also highlights the need for mid-rise condos, particularly around under-utilized pockets north and south of Bloor and Danforth, to support higher density living in walkable and transit-friendly communities. The report was discussed recently in the Toronto Star Across the various studies and consultations, the consensus is that mid-rises are one of the most easily implemented solutions to density issues because they're typically faster to build than high-rises and can fit into smaller, under-utilized pockets of land, they tend to be a gentler approach in terms of blending in with the existing neighbourhood and they're much less likely to cause community push-back than a high-rise.

Yet with all the supposed support for mid-rises, it seems to be more difficult and not less for builders to get approvals. After the City approved the new mid-rise guidelines in 2010, there were dozens of mid-rise projects to start construction but according to the information uncovered by the Star, the majority of those had their plans approved prior to the new regulations, before 2008.

While no one can deny the need for City regulations to ensure mid-rises integrate with communities, have appropriate set-backs, etc., if the reality is that the new regulations are deterrents rather than aids in moving towards more mid-rises, than something just ain't working.

In the aforementioned Globe and Mail article, Mallins of Streetcar goes on to say: "It’s easier to get approval to build another high-rise in Liberty Village than it is to do one of ours.”

Corktown-District-Condos

Corktown-District-Condos

Proposed Solutions

The Pembina Institute suggests five key changes in their report to help mid-rises become more attractive to developers - particularly, more economically viable - without abandoning the core principles and regulations of the City's mid-rise policies.

These include requiring minimum densities along new, major transit routes like the Eglinton-Crosstown LRT (i.e. if we're investing in new transit, let's make sure that those plans are servicing as many people as possible), eliminating the minimum parking requirements (it's a huge expense for builders to meet the current minimums and many condo buyers along transit lines don't want parking anyway) and softening the parkland dedication rules.

The parkland rules are a big impediment to mid-rises. Currently, developers have to set aside a certain amount of land for parkland when developing a condo and if the land doesn't exist, they have to pay steep levies to contribute towards parkland projects elsewhere in the city.

In theory, park levies sound like a good thing but a lot of these mid-rise projects are proposed for tight spaces near major intersections or former parking lots where there's never been much in the way of green space. And the reality is, these costs just get passed on to the buyer anyway. In their report, Pembina cites a project in Richmond Hill where buyers paid $37k extra each as part of their purchase price to cover the green space levies.

Time will tell if the City makes these or any amendments. There has been one major win for developers though in the last few years - approval on the use of wood-frame construction for projects up to six storeys which costs considerably less than concrete construction - but it's a baby step.

Howard-Park-II

Howard-Park-II

We need to find a better balance between City regulations and builders' objectives in a way that benefits communities if we're going to see a healthy mix of condo types in Toronto. Because as great as sky-high living can be, it's not for everyone. And despite the huge surge in condo stock over the last decade, this city still needs more diversity in our property choices at reasonable price points.

Lead image: Rendering of B Street Condos (now built) © Lindvest Properties Ltd. Rendering of Alto condos © Edenshaw Developments Ltd. Rendering of Duke Condos © TAS. Rendering of Canary District Condos © Dundee Kilmer. Photo of Corktown District II © Condos.ca. Rendering of Howard Park 2 © Triumph Developments.