Return of the large apartment

Whatever is happening recently,  we have a habit of extrapolating indefinitely into the future. But circumstances change, and what was true before is not necessarily true in the future. Consider the trope: “tiny condo”. If I had a dollar every time i hear that said … or “boxy condo”; as if houses aren’t also “boxy”.

Yes, there was a “oversupply” of condos a few years ago. New building plans were scaled back or postponed. Some planned condos were converted to rentals or student housing (for eg, Nuovo condo on Rochester became rentals; two condo towers on Champagne became student housing).

But did society stop having kids in 1995? No? Well, they are adults now, and may want to move out the basement or attic to their own place, so there is ongoing demand for apartments, either condo or rental.

And the recent “condo boom” wasn’t much of a peak either. In this chart from Urbsite, compare the 2014 apartment boom with the 70’s:

 

And many potential downsizers ( I speak from personal experience, and from observing other decrepit elderly folks like me) couldn’t find much on the market a few years ago unless you wanted to downsize to a small unit designed for millenials buying their first apartment..

I think a lot of complaints about condos being small or oversupplied is a search for a socially acceptable reason to be NIMBY. In my neighbourhood,  the co-ops disposed of their 5 bedroom units, as is Ottawa Community Housing now, while simultaneously complaining that market housing isn’t “family friendly”. Walking the talk isn’t required.

Today, the market is being provided with large three bedroom units. Again. And in all types of neighbourhoods.

Here is a three bedroom layout in Kanata:

Separating the bedrooms to opposite ends of the apartment is good marketing, since it allows large units to be shared, or keeps older parents away from visiting and more active adult children.

Here’s an attractive new-build layout, in Vanier:

 

And here are two layouts on the Vanier Parkway near the Adawe ped/bike bridge crossing the Rideau River, making it very accessible to the downtown and Ottawa U:

In centretown west, Domicile is building a new 20 storey rental apartment building on Rochester, near Dows Lake, with 60 three bedroom units.

On Main Street there is a buzz of new condo mid-rise buildings. I notice one building offered a number of nice three bedroom units (marketed as two bedroom plus den, but the “den”, with its own window,  is easily screened off to house visiting kids or other guests).

Out in Barrhaven, a low rise apartment building has these three bedroom units:

And also in Vanier, I notice one builder is even offering a five bedroom apartment. Claridge’s ICON building at Dow’s Lake has a few very large units too.

Most condo builders will combine smaller units into larger unit. So you can have as many bedrooms or space as you want and are willing to pay for. Some rental agencies will do the same. There are numerous very large units in Island Park Towers and some rental buildings along Carling. To justify the cost of renos, rentals will require a longer lease commitment. In a co-op near me, tenants are sinking their own big dollars into renos because the units themselves are so cheap to rent (2 bedroom townhouses, with garage, $900/month incl utilities).

Like all housing, new build units with the latest layouts and amenities cost more than older accommodation. It doesn’t take much searching to find lots of 60’s and 70’s buildings with large units. Here are some rentals from that era:

(note how similar the above 70’s rental, with a row of bedrooms, is to the new condo in Barrhaven, two pictures above …).

A number of yesterday’s luxury apartments, once derided for displacing “affordable housing” in centretown, are now themselves the affordable housing of today. Luxury plus time equals ordinary and affordable.

Condos from the 70’s are way cheaper than new. I noticed a recent listing for 1025 Richmond Road, near the coming New Orchard LRT Station, for a 2100 sq ft condo, riverfront, 3 bathrooms, 2 balconies, 2 garage spaces, in a building loaded with amenities, asking $575,000, or considerably less than $300 per sq foot ($274 for the calculator deprived).

And in centretown west, a 1150 sq ft two bedroom two bathroom apartment, lovely river views, remodelled to the hilt, asking $300,000, or $260/sq ft. Sold as of Saturday after months on the market.

Some buildings even have too many three bedroom units, one popular condo building on Bay Street has many three bedroom units that are converted to dens, offices, or combined into larger living rooms.

I’d love to compare the sq foot cost of new infill homes to new condos, but it is like pulling hen’s teeth to find the square footage of many new infills. The buildings are selling wow! layouts, and big windows, and design, rather than square footage, which is more the suburban trope.

But if a newish infill, one of those vertical shoe-box-on-end type designs that are popular on the west side,  goes for $700,000 then the cost per square foot is about $460 assuming there is about 1500 sq ft distributed amongst all those floors. But if the price is nearer $900,000 then the infill cost is similar per sq foot to that of a high rise. **

And that, of course, was always the premise behind smart growth – make development land scarcer > more expensive > forcing higher density units. Thus far it has been working.

And the existing carve outs, whereby City Council discouraged infills/densification  in many single family neighbourhoods, the recent Ontario policy directive mandates intensification of housing near transit stations. So those single family blocks adjacent Tunney’s, Westboro, or Cleary Station will soon be in play. And soon, so will the rest of the single family neighbourhoods, as the call for “complete communities” takes hold. There’s only so much longer boomers can stay overhoused. Downsizing is now Rightsizing.

But back to our theme: builders are building large condo and new rental units, “family sized”, three bedroom units. And there is a large stock available from the 70’s, at a cheaper price. Just like “regular, ground level housing”.

Supply, meet demand.

 

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** (When the cost differential for concrete construction in buildings was too much higher than stick built towns, buyers tended to choose more space in the suburban towns over the amenity of living in walkable neighbourhoods, ergo the spate of ground floor townhouse units promised in condo towers that failed to sell, and were rejigged to become smaller apartments with walkoff balconies, but that market niche seems to be undergoing a revival now as new versions of “townhouse units” are selling again as they are now comparable or cheaper than infills or suburban row houses).

 

 

 

6 thoughts on “Return of the large apartment

  1. One has to be careful when comparing the cost of new and old apartment buildings. Older apartments condos buildings often face significant maintenance upgrades; new windows, elevators , A/C units which add significantly to the monthly maintenance costs. We lived in the Queen Elizabeth Towers Condo for a few years. The units were larger and it was possible to combine units ( 2 bedroom and 1 bedroom Units). However the Condo fees were huge ( $700 Plus per month) to cover the estimated $6 million plus cost of window replacement. We found it cheaper to take out a low interest Mortgage to finance a semidetached downtown and make the needed renovations.

    The trend towards apartments continues in the West End with a planned 24 Story apartment near the future New Orchard St LRT station , in which 2 and 1 bedroom apartments could be combined. It remains to be seen how affordable these rental units will be.
    There is some local resistance to the 24 story height of the building. In theory the taller building with more density will reduce the rental cost

  2. Two of the factors that affect the price of a condominium are the monthly condo fees, and the amount of the reserve fund. Is the lower price for a condo unit in an older building due to higher monthly condo fees, often the result of having to maintain significant amenities, and inadequate reserve funds, especially in the context of an older structure, due to short sighted Boards that want to minimize their already high condo fees? Buyer beware.

  3. I think there is a lot of “fear mongering” about condo fees. Yes, some older boards didn’t set aside enough reserve funds to keep things in repair. Similarly, I see lots of houses for sale that are in poor condition, ie windows rotted, or even single pane slider “mason” windows, bad driveway asphalt, etc. So the buyer of any type of housing has to consider repair and maintenance costs.

    Resale prices in an older building may be lower than for a new apt, and condo fees may be higher. Just like for all houses. Only the CBC thinks that somehow high rises need never replace their windows. What matters to the buyer is the total cost of ownership, ie PIT + condo fees. Lots of new buildings have low condo fees because the operating costs are sloughed off onto the unit owner, with individual electric meters, etc. Some older buildings condo fees include heat, A/C, electricity, etc. It gets complicated.

    It’s no wonder that a high percentage of millennial buyers of any type of real estate regret stretching to buy their home.

    1. Eric, I agree with you that the total cost of ownership is what matters, and the price of the home reflects those costs.

      The majority of the monthly condo fee goes to expenditures that would also be made by the owner of a non-condominium home. As the owner of a single family dwelling, I spend money on minor (and major) repairs and maintenance, landscaping, cutting the lawn, removing snow etc. I may be supplying the labour, or I may be contracting it out. Either way, it is not “free”.

      Having said that, there are a lot of examples of special assessments to top up a woefully funded reserve report. That is the key area that I think buyers need to ask a lot more questions, especially about how current the reserve study is.

  4. …and the great thing here is that we are getting more people considering and buying into multiple unit housing; it will improve the overall livability of the city and various neighborhoods. When amenities such as small stores and restaurants arrive, the places become very desirable. Add to this the potential of better transit (note I said ‘potential’), and you have a real city. I was just in Montreal and along Notre Dame East (formerly a lower value residential walk-up neighborhood), which has been densified with low rise apartments and condos and thus gentrified with many amenities, and even a surviving hardware store.
    By the way unit prices per square foot are over $800 in Vancouver (yes). Hope this does not come East.

  5. I don’t understand those bathroom (ensuite) within a bedroom.
    A waste of money, of space, of square footage.

Thank you for reading. So what do you think?