I was asked last week to discuss a new micro condo development project coming soon to Toronto with 281 units in the Queen and University area with units starting from 289 square feet. My initial thought was that small units aren’t something new in Toronto. Past projects with small foot prints have been DNA 3 by Canderel, INDX by Lifetime Developments and One Park West suites in Daniel’s revitalization of Regent Park where units started from 300 sq ft that had created quite the buzz on the internet but what’s different about this project is that there is smart design that runs throughout the project. With fold up tables and chairs, moveable countertops and smart furniture, the developer is marketing these units to the buyer that is looking to live in downtown and keep their purchase prices low and willing to sacrifice space but not on storage.
I was asked if such a development is sustainable. My answer is yes, but it depends on where the development is. Located in downtown Toronto, close to universities and colleges, close to shops, and close to transit are the essential that will help make small footprint projects a success. I was recently reading a report and was surprised to see some of the stats posted about the population demographics in Toronto. Here are some highlight:
- Population of downtown Toronto has doubled between 2006 – 2011
- 47% of the population in Toronto is between 20 – 39 years old
- The median age has dropped to mid 30’s
- We’re making less babies – the percentage of children have declined despite the population increase
- 15% of our rising population is made up of seniors and it’s expected to be closer to 25% by 2036
- 8% or 1 in 12 people have been in Toronto for less than 5 years.
In terms of life choices, we know that Torontonians are staying single longer, getting married later, having less children and want to enjoy life and concentrate on their careers. This roughly translates into a lifestyle of working during the day, meeting friends around town in the evening and coming home at night. Price is another consideration that would drive behavior of buyers in today’s market. Most of these smaller units are hitting the market starting at mid 200’s which makes for an excellent first home.
So, are they sustainable…?!?
I still think, yes! If the above boxes (transit, close to everything, downtown core) are ticked, these properties will retain their value and increase in value along with other real estate.
There’s always a but! This assumes that the population will keep rising. When and if there is an exodus from the downtown core, we will start seeing softer demand and ultimately softer prices. We are currently seeing a surge of young people living in Toronto that would sacrifice space to own their own place or an investor looking to make money off the renters but what happens when we see this being reversed. How the market will use these in the future is to be seen. Part of me thinks we might see more seniors, who will be a driving force in the market within 20 years, move into these smaller units and enjoy all that downtown has to offer.