British Columbia developer Tien Sher is planning to offer the country's smallest condominium units, at just 290 square feet. The Surrey development will be in a four-storey building with 56 "micro" suites, the developer says.
"We wanted to build suites that renters could afford to purchase today," says Charan Sethi, president of Tien Sher. "With suites starting at $109,900, if you can afford the $6,000 down payment and you make a salary of $17 per hour, we have a home for you."
The developer says 60 per cent of the suites will be 305 square feet or smaller. They will include five stainless steel appliances, hardwood floors and a balcony. The largest suite in the complex is a one-bedroom at 653 square feet.
"With mortgage-amortization periods capped at 25 years, coupled with the high cost of developable land in the Lower Mainland, micro suites are a sensible and cost-effective option for single people looking to purchase their first home," says Peter Simpson, president and CEO of the Greater Vancouver Home Builders' Association. "This is an idea I expect to see emulated throughout the region in the years ahead."
In Toronto, back in 2009 the average size of a new condo was about 920 square feet, says George Carras, president RealNet Canada. This summer, the average condo sold in the pre-construction stage was down to about 795 square feet – the equivalent of removing a 10-by-12-foot room from that 2009 condo, says Carras.
While smaller condos have been the trend in Toronto for the past few years, the impact of these units has yet to be felt, he says, because most condo buildings take three to five years to build and make ready for buyers to move in.
According to Toronto research firm Urbanation, more than 65 per cent of new condo launches in the GTA in 2012 have been one bedroom or less. That's the highest percentage of smaller units ever. In 2006, one-bedroom or less units accounted for less than half of new condo launches.
Canada's condo boom in its major cities has been driven by affordability, and developers can charge less if the units are smaller. Another trend is eliminating parking spaces. The Surrey development by Tien Sher is not offering parking with any of the units, although they will be available to be purchased separately. Since the development will be built beside major public transit facilities, it's expected many residents won't need a car. The same trend is being seen in Toronto, where downtown condos close to amenities and public transit are not being offered with a parking space.
Who is living in these small condos? Statistics Canada reports that 51 per cent of households in the Greater Toronto Area now have two people or less, and one-person households grew by 14 per cent from 2006 to 2011.
After a decade-long boom, real estate markets in Vancouver and Toronto have slowed in recent months and some analysts believe that may result in a trend toward larger units.
Shaun Hildebrand, a senior analyst with Canada Mortgage and Housing Corp. (CMHC) says the drop in sales is causing some developers to put planned projects on hold, and he thinks that may be a good thing. He says there are currently a record number of condos under construction in Toronto – about 50,000. About 95 per cent of them will be sold by the time they are completed, but new projects may not move forward if interest from investors has waned. "This is going to slow down supply pressures and it's healthy for the long-term stability of the market," he says.
Although there is concern that the Toronto market may be oversupplied, Hildebrand says that rather selling their units, many Toronto condo investors are catering to a booming rental market. The city's vacancy rate is low because very few new rental units have been built during the last several years, and the number of renters looking for a condo is expected to increase.
Hildebrand says that savvy investors realize that larger condo units will be in demand as the smaller units come on the market, and will begin to look for two-bedroom or one-bedroom-plus-den units. Toronto has become the North American leader in high-rise construction, says Emporis, a buildings database in Germany. It says Toronto currently has 147 construction sites, more than twice as many as New York City. Most of the new buildings are condo towers although the total includes some commercial buildings.
After New York, Vancouver ranks third in high-rise construction with 21 buildings under construction. Montreal is fourth with 20 buildings going up.
However, with just over 2,501 high-rises, Toronto still has a long way to go to catch world leader Hong Kong, which has more than 7,800 high-rises, or New York, which has more than 6,000.
Written by Jim Adair
Realty Times, Dec 2012
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