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