just what are we getting into? the impacts of the gta condo boom

Just What are We Getting Into? The Impacts of the GTA Condo Boom

Presentation to Lambda Alpha Simcoe ChapterFebruary 25th, 2008

Presented by: N. Barry LyonPresident and Senior Partner

N. Barry Lyon Consultants Ltd.

2007 A Landmark Year for New High Density Sales

Source: RealNet Canada Inc.

High Density Sales Outpace Low Density

Source: RealNet Canada Inc.

Former City of Toronto Dominates Market

Source: RealNet Canada Inc.

North Yonge Corridor

Scarborough City Centre

Yonge & Bay Corridors/Waterfront

King West/Liberty Village/CityPlace

Mississauga City Centre

Etobicoke Waterfront

Investor Activity Linked to Transit Accessibility

Affordability DecliningAffordability Calculation - Required Income for a Condominium Apartment Unit

Greater Toronto Area - 2003 to 2007

Year 2003 2004 2005 2006 2007

Avg. Unit Size (sq.ft.) 850 850 850 850 850

Avg. $PSF $292 $305 $333 $353 $387

Maintenance Fee @ $0.35 psf $298 $298 $298 $298 $298

Monthly Taxes @ 1.25% p.a. $259 $270 $295 $313 $343

Purchase Price $248,200 $259,250 $283,050 $300,050 $328,950

Downpayment % 20% 20% 20% 20% 20%

Downpayment Amount $49,640 $51,850 $56,610 $60,010 $65,790

CMHC Premium % 2.50% 2.50% 2.50% 2.50% 2.50%

CMHC Premium Amount $4,964 $5,185 $5,661 $6,001 $6,579

Total Mortgage Required* $203,524 $212,585 $232,101 $246,041 $269,739

5 yr rate** discounted 0.50% 5.95% 5.55% 5.80% 5.95% 7.04%

Mortgage Payment*** $1,244 $1,259 $1,433 $1,550 $1,882

Total Occupancy Cost $1,900 $1,927 $2,125 $2,260 $2,622

Required Income (32% GDS) $65,677 $66,674 $74,115 $79,175 $92,758* includes any applicable CMHC premiums ** Bank of Canada 5-year rates 6.45%, 6.05%, 6.30%, 6.45% and 7.54%

***Amortized over 30 years

Source: N. Barry Lyon Consultants Limited

Source: RealNet Canada Inc.

Pioneering the Empty-Nester Market

Market Square Condominiums, St. Lawrence Neighbourhood

Emergence of Super Luxury Market

Four Seasons East & West Towers

5-Star Hotel/Condos$1,238 & $1,579 PSF

77 Charles$1,162 PSF

Residences at the Ritz-Carlton5-Star Hotel/Condos

$989 PSF

Emergence of Super Luxury Market

Shangri-La5-Star Hotel/Condos 65-Storeys

$1,100 PSF

MuseumHouse$1,541 PSF

The St. Thomas$1,000+ PSF

Conversions

Clockwise from Left: One Benvenuto; Wrigley and Garment Factory Lofts; Printing Factory Lofts

New Office Development

First Waterfront PlaceQueens’ Quay at Jarvis Slip8-StoreysTEDCO and City of Toronto Co-DevelopersLead Tenant: Corus Entertainment500,000 Sq. Ft. Office & Broadcast CentreLEED Gold

New Office Development

Telus TowerYork Street at Bremner Boulevard30-StoreysMenkes Development, Hospital of Ontario Pension Plan (HOOPP), Halcyon Partners FundLead Tenant: Telus780,000 Sq. Ft. OfficeLEED Silver

New Office DevelopmentRBC CentreWellington West at Simcoe Street42-StoreysCadillac Fairview and Graywood DevelopmentsLead Tenant: RBC1.5 Million Sq. Ft. OfficeLEED Silver

Maple Leaf SquareSoutheast Corner York Street at Bremner Boulevard44 and 40-StoreysLanterra Development, Maple Leaf Sports & Entertainment and Cadillac Fairview230,000 Sq. Ft. Office in Podium ComponentLEED Silver

New Office Development

Bay-Adelaide CentreNortheast Corner of Bay Street and Adelaide Street EastBrookfield PropertiesLead Tenant (Phase 1) – KPMG, Goodmans LLP1.1 Million Sq. Ft. Office – Phase 1 West TowerLEED Gold

New Transit Lines

Source: Toronto Transit Commission

Proposed Waterfront Transit Lines

City of Toronto Waterfront Proposed Transit Lines

Source: Waterfront Toronto, Toronto Transit Commission

New Grocery Retail

Future Development

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Future Development

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Suburban Intensification

Proposed Master-planned Community, Duke of York Boulevard, Mississauga City Centre

Suburban Intensification

Holiday Drive, The West Mall and Rathburn Road, Etobicoke

Parking Lots A Dying Breed

Parking Lot, Church and Colborne Streets

Mixed Use Developments

Mixed Retail-ResidentialVancouverHome Depot with Condos Above

Approved Mixed Retail-ResidentialQueen Street at PortlandHome Depot with Condos Above

Family Housing in the City

Rendering of Blocks 32 & 36, Railway Lands, Toronto Community and Housing Corporation

Family Housing in the City

Overview of Future Regent Park

The West Donlands – A Largely Condominium Community

Aerial View of West Don Lands

• Toronto arrives as an international destination, place to live, work, visit

• Immigration, economic stability & aging Boomers/ Zoomers drive condo demand

• International investors continue to see Toronto as a safe haven

• Housing affordability continues to decline in Central City

• Continued largest condo market share to City of Toronto

• Downtown & waterfront increase market share

Looking Ahead

• New condo neighbourhoods mature, enhance infrastructure

• Balanced growth Downtown—offices, hotels, retail, institutional, residential

• Shift from small condo units to upsizing & families

• Height resistance mellows outside of traditional neighbourhoods • Neighbourhoods continue to confront change

• Closer live/work relationships across GTA – commuting loses favour with $1.50 to $2.00/litre gas

Looking Ahead

• Growth of 905 sub-centres/downtowns

• Suburban transit network becomes increasingly functional

• City, TTC continue to fail to designate higher densities around transit stations

• Toronto’s employment retention policies continue to ignore functional obsolescence

• Toronto’s main street redevelopment policies fail to deliver development

Looking Ahead

• Urban Toronto loses gap-toothed streetscapes as parking goes underground

• Entertainment District shrinks

• Toronto’s residential taxes climb to 905 levels

Looking Ahead