Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 222

Statistics Canada recently published some data (from 2022) looking at investors in the condominium apartment market. Here is what they believe to be the share of condominium apartments used as investment properties in Ontario's 10 largest census metropolitan areas:

It's worth noting that this is after excluding condominium buildings where every single suite is owned by a single investor. This is/was most prevalent in London, and it's the result of there being property tax benefits to registering a condominium (individual unit assessments), even though for all intents and purposes it's a rental building (building in its entirety assessed).

The article goes on to rightly suggest that the prevalence of investors, and the way that condominiums are financed, could be leading to the construction of more buildings with smaller suites. Here's the proportion of new condominium apartments under 600 square feet by period of construction:

The unsurprising takeaway is that condominium suites have gotten smaller. In the 1990s, the average condominium apartment built in the Toronto CMA was 947 square feet. This is compared to 640 square feet after 2016. And the same thing happened in Vancouver, which went from an average of 912 square feet to 790 square feet.

Investor preferences certainly have something to do with this. But what the article doesn't specifically mention is that this phenomenon is also a direct response to rising build costs: making suites smaller was how the market tried to maintain some level of affordability. Put differently, imagine how expensive new condominiums would be if the average size was still 947 square feet.

But there are obviously limits to this. I was with one of our architects the other week and he made an interesting comment to me. He said, "Brandon, before when build costs used to go up and things got less affordable for consumers, we could just make the suites smaller to offset the impacts. But I don't see how we can go any smaller now. We've reached the limit."

This is one of the reasons why I think this downturn is going to ultimately be a good thing for Canada's housing markets. It's a reset. It's forcing everyone out of complacency and, hopefully, it means that when the next cycle begins we'll be starting from a better foundation.

Here is an interesting chart ( source ) showing housing starts in Canada, by type, between 2000 and 2023:

As recent as 2000, single-family houses accounted for 61% of total starts and multi-family housing accounted for 39%. This flipped somewhere around the financial crisis and, last year in 2023, the percentages were 23% and 77%, respectively. This is a meaningful inversion which has helped our cities become more vibrant and more conducive to non-car modes of transport.

But in this recent article about Canadian housing, Donald Wright more or less argues: so what? We've been densifying our cities for all these years, but it hasn't helped our affordability problem. Supply must not be the answer to our housing crisis.

I'm not exactly sure what he believes to be the solution, but I don't think this problem is as simple as "we've built some housing, we made our cities denser, and yet housing is still expensive -- more supply must not be the answer. Let's move on."

Among many other things, it's important to understand what kind of density we've been building. Because up until very recently, we've basically taken the position that single-family neighborhoods should never be touched, and that density should only go in very specific areas -- and only after a lengthy and expensive rezoning process has been completed.

We've designed new housing to be expensive.

But attitudes are changing all across North America. We are now starting to do two very important things: (1) we are opening up more of our cities to intensification and (2) we are now allowing more multi-family housing on an as-of-right basis . Meaning, no lengthy rezoning exercises and no risk of community opposition.

These are two fundamental changes that should alter the kind of density that gets built. And in my view, it's going to be a positive thing for Canadian cities.

It is maybe comforting to know that even Europe wrestles with the decision of whether a grand urban space should be used for pedestrians, or turned into a parking lot. Take, for example, the Grand-Place in Brussels (pictured above).

Today, it is a UNESCO World Heritage Site and one of the most important tourist destinations in the city. Perhaps its most famous. But during the 1960s, in what Wikipedia calls a "low period of appreciation," it was a parking lot.

This lasted until 1972, when a bunch of people from the community got together and lobbied for it to, you know, not be a parking lot. Not surprisingly, local shop owners were worried, at the time , that this would hurt their businesses. This is often the concern.

Here in Toronto, where we continue to debate the pedestrianization of Kensington Market, we have surveys showing that 94% of visitors to the area support pedestrian-only zones, but that this number drops to 55% when you narrow to people who live/work/own stuff in the area.

But if your goal is to sell more things to people, then there's something to be said about listening to what your visitors want. In the case of Grand-Place, pedestrianizing the square made it far more popular as a tourist destination. And I think the same would be true of Kensington Market.

For some photos of iconic public spaces in Europe being used as parking lots, check out this Politico article .

Image: Wikipedia Creative Commons