Rise in Property Values May Evict Toronto Hospital

Many people were shocked to hear that a Toronto area hospital may be subject to eviction as the property manager attempts to raise rents to a level that would cripple the facility. The Centre for Addiction and Mental Health (CAMH) is fighting to keep its College Street location which features Toronto’s only 24 hour emergency services for mental health.

CBC explains, “The hospital is nearing the end of a 20-year lease, with the option for two additional 20-year terms. The next term is based on the present market value.” The article goes on to explain that “CAMH has valued the property at $26 million, but said the property should continue to be a hospital site instead of a housing development.” Toronto City Councillor Joe “Cressy points out Brookfield’s valuation is based on a condo proposal that currently wouldn’t be permitted at the site.”

The issue of rising rents and how they coincide with rising property values is one the city must start to tackle head on as residents and Toronto based services stand to be priced out of the market. This trend should come as no surprise as numerous reports indicating that property values will double in the next 25 years.

The Economist has been tracking housing prices in 26 markets using OECD reports to create the graph below. The numbers speak for themselves when it comes to the Canadian housing market as a whole. See the impressive upswing illustrated below.

While this rise in property values may be good for landowners, the affordability of monthly mortgages poses another question. In the 1980’s, when interest rates were high, the risk involved with carrying a home was also high. Interest rates are low but the overall cost of homes could impact that burden moving forward.

As property values rise the potential for financial burden on renters and new homeowners turned landlords increases. The Federation of Metro Tenants’ Association explains that they have had “numerous calls from condo tenants, surprised to discover that apartment or condominium buildings  occupied after November 1, 1991 are exempt from rent controls” in this article from The Toronto Star. While commercial leases are not bound by the same rules as residential leases both situations illustrate what happens when property values sharply increase in a matter of years.

Image Sources: CBC, The Economist, TREB