What Do We Mean By “Condos Nobody Wants?”

by David Fleming

TorontoRealtyBlog

“We did this to ourselves.”

Here’s a combination of honesty and accuracy that I believe will age well as this city moves forward.

Earlier this week, I was standing on the terrace of a beautiful condo at 80 Front Street East, aka “Market Square,” that is a relic as far as the Toronto condo market is concerned.

Built in 1983, this building is nine storeys and contains 187 units, with some of the best amenities you’ll find in an older condo.

This building dates back to a time when people expected to have both an indoor pool and an outdoor pool, as well as a squash court and one for playing raquetball.

Today, the building is home to a “community” in every sense of the word. This is not a building that’s full of Gen-Z renters and AirBnb’s. In fact, I would be surprised to hear that even one of those exists.

The demographic is older, wiser, and more connected than all but a few buildings in the downtown core. The residents know each other. The concierge knows every resident by name – and their friends and family as well. There are daily coffee groups, social activities, and art classes.

The units are large, and many have three true bedrooms – something that’s impossible to find in new condominiums downtown.

The condo I visited this week was 1,858 square feet, fully renovated with tasteful finishes, and priced at a modest $1,650,000.

And as I stood on the south-facing, 350 square foot terrace, gazing out at the waterfront, I couldn’t help but utter those words:

“We did this to ourselves.”

I have no idea which buildings I was looking at, by the way.

I’m in real estate. I sell condos. I work downtown. But I don’t mind being honest and saying that whichever two towers I was looking at to the south, I honestly couldn’t tell you what they were called, who built them, or what the address was.

I’m just not interested.

Those buildings are a symbol of everything that went wrong in our real estate market over the last decade.

Financed by international and domestic investors, sold by the proverbial pound (in this case, square footage), and offered as a pure commodity, these buildings will ultimately represent the least-popular style of residential living as our city moves forward.

Micro-condos.

Tuna cans.

Shoeboxes.

Dog-crates.

Tin cans in the sky.

Whatever you want to call them, they will be a timestamp in history, a time when our city had absolutely zero eyes to the future, and was so desperate for tax revenue that we allowed condo developers to sell pieces of the sky to whoever was willing.

Nobody wanted these units. Surely, not the investors who purchased them. But it was the only way to get condominiums built. Developers couldn’t sell 600 square foot, 1-bedroom units for $900,000 in pre-construction. Investors didn’t want that. End-users weren’t buying. And thus, we sat idly by as developers shrank the size of units so they could come up with an absolute price that was palatable to investors.

$450,000 sounds like a reasonable investment for a pre-construction condo, right?

Never mind that the condo itself is a mere 300 square feet. The investor never intended to occupy the condo, and simply wanted a safe place to park cash for the next 4-6 years.

As a result, we’ve been left with a slew of “condos nobody wants,” as is being reported in the media.

“Toronto Condos In Recession, Filled With Supply No One Wants: BMO”

It’s important to note that this doesn’t refer to all condo supply. We’ve listed and sold several downtown Toronto condos so far this year, but the type of offering is quite different from that which is being referred to as “supply no one wants.”

How about a 1-bed-plus-den, 2-bath, measuring 680 square feet, in a dynamite location?

Sure, that will sell, at the right price.

But how about a 0-bedroom, 1-bathroom, 300 square feet, on the umpteenth floor of a nondescript condo in an unpopular location?

Good luck!

With all this talk about “condos nobody wants,” I feel it’s time to actually show people what we’re talking about.

“Put a face to the name,” is it were.

Now, the regular readers know that I am not allowed to “disparage a competitor’s listing” under RECO rules, so the following examples will be provided without addresses, but I believe that the point will be made.

Here’s our first listing:

You know, my photographer once asked me, “Do you want me to do the sky replacement? Like, we can get a really cool pink and purple effect going.”

I told him to please hold off on that, since it’s a level of cheesiness that I find counterproductive, but it doesn’t mean that other folks aren’t still doing it!

This is a 310 square foot condo.

It’s listed for $349,000.

That’s $1,126 per square foot, which is a ridiculous price for today’s market, but the sad part is, this is very palatable compared to what these units were selling for at one point. We’ll come back to that.

Here’s the floor plan:

You can’t tell much from a floor plan, right?

It looks like there’s a bed, a television, a small dining table, and then a kitchen.

But how would this actually look in person?

Like this:

That’s a bed pushed up against the wall, with a prop-television on a stand (since there’s no wall to put it against), with a bistro set twenty inches from the bed.

Does this feel like home?

The problem is, once you turn the camera around and look at how close the table is to the kitchen, it becomes even less appealing:

Can a person actually fit between the table and the counter?

It feels like if you’re making scrambled eggs on that stove, your butt is going to be touching the dining table.

Oh, wait, you won’t be making scrambled eggs, since today’s 20-somethings just order three square meals per day, and then wonder why the city is unaffordable…

The same model is for sale on a higher floor:

I’d hate to use this metaphor, but what does the supermodel look like first thing in the morning without her makeup, hair extensions, and designer clothing?

Probably like this:

That is the condo in its entirety.

Without staging and high-quality photos (which need to be applauded by the agent who listed the first property), this is what the condo looks like.

That’s your bedroom, living room, dining room, and kitchen.

That’s it.

And it could be yours for the low price of $349,000, or less.

All jokes aside, that’s much more attractive than the price that was being asked in 2024:

That’s $1,738 per square foot.

And while the property was never actually “worth” that much, it was listed here because the buyer was trying to recoup costs.

This condo was sold for $505,157.01 according to public records, but as we know, this is “net of HST,” meaning the contracted purchase price was likely far more. Maybe $540,000, maybe $550,000, maybe more, but we’ll never know.

This would have likely been sold in pre-construction somewhere between 2017 and 2020, and it’s possible that the transaction price was somewhere around $1,740 per square foot.

It’s one thing to pay that much money if we’re talking super-luxury in Yorkville, but it’s another thing if we’re talking about 310 square foot shoe boxes, dog crates, and tuna cans.

Then again, it’s all relative.

Because a 310 square foot condo might seem palatial in comparison to a 293 square foot condo, like this one here:

For a mere $340,000, this could be yours!

While this is a different building from the two shown above, the floor plan looks familiar:

Same same, but different?

Here’s how this one was staged:

It’s almost an identical layout, just five percent smaller in every area.

Although, if we reason that the bathroom can’t be smaller, then perhaps the living/dining/kitchen/bedroom has to be 10% smaller to make up the difference.

In the photo above, we don’t even get to see what the unit looks like with a bed, but rather we’re given a sofa, and forced to assume that a bed could fit in this space.

293 square feet.

Can you imagine?

And while I know there are “other places in the world where people would kill for this sort of space,” those are, well, other places in the world. They’re not Canada. They’re not Toronto. Creating 293 square foot condos was not “progressive” in any way, so let’s not pretend like developers were somehow noble for doing so.

No, not noble.

Opportunistic.

When a 1-bedroom condo of 600 square feet was selling in pre-construction for $285,000, they were easy for developers to sell.

But as the cost to build a square foot in this city rose, and rose, and rose, it became unrealistic for developers to expect investors to grow with it.

If the cost to market, pre-sell, build, and profit ends up in the $1,500 per square foot range, then developers had no choice but to shrink the units in order to reduce the absolute prices of condos.

Somewhere, there’s a “sweet spot” for developers, and I assume it’s under $500,000. I think that as prices increase, investors have less of an appetite, so while you and I will understand the difference between a 900 square foot condo for $500,000 and a 300 square foot condo for $500,000, suffice it to say, many investors didn’t care.

This is why we have built a city of condos that nobody wants.

And the worst part is, we did this to ourselves.

We commoditized real estate.

And not just real estate, but real estate futures, which is what pre-construction condos essentially are.

Go back to that first example in today’s blog post with the 310 square foot condo.

That unit is located in a building that’s 46-storeys and has 595 total units.

Guess how big the largest unit in that tower is.

Go on.

784 square feet.

That’s a “two bedroom, plus den, plus study, two bathroom.”

Not quite as bad as a 293 square foot, zero-bedroom condo, but I would put this under the umbrella of “condos nobody wants” as well.

The good news is: there are still functional, liveable, desirable, affordable condos in this city that people do want.