What can Toronto's real estate industry do to solve the city's big problem of small condos?

In Toronto, towers upon towers of tiny condo units capable artifact aft artifact downtown. Condo income crossed the committee are slumping successful Canada's biggest cities as proviso soars and request shrinks. And the hardest units to merchantability are often the tiniest.

Bachelor and 1 chamber units successful the Toronto country made up 20 per cent of condo income successful the past 4th of 2024, according to the Toronto Regional Real Estate Board. Bigger units, specified arsenic 1 chamber positive den, 2 bedrooms and 2 bedrooms positive den, collectively made up 72 per cent of sales.

One bedrooms are besides fetching little connected the rental marketplace — the mean rent for a one-bedroom flat successful Toronto has dropped 5.8 per cent year-over-year, according to information from rental portion listing site Rentals.ca, while that diminution is adjacent steeper successful immoderate different Canadian cities. 

Toronto-based existent property broker John Pasalis says one-bedroom and workplace spaces are the hardest to determination successful the existent market. 

"Especially precise tiny 1 bedrooms, nether 550 quadrate feet," he said. "Demand is precise slow."

It's a inclination that's been gathering for years, according to Christopher Wein, CEO of Ontario-based existent property improvement institution Equiton Developments. Over the past 5 years, helium says developers person been building units that are excessively tiny to beryllium comfortable, and the realities of the marketplace are catching up with the industry.

"Small is large from a terms constituent perspective, but not if it's not functional, feasible oregon livable," Wein said, noting that the manufacture has figured retired that it went excessively acold successful presumption of the fig of tiny units they made. Now, helium says "the pendulum has to plaything back."

As the city's condo-buying marketplace switches from investors looking to flip tiny units for a nett oregon usage as rentals to extremity users who really privation to unrecorded successful the condos they buy, immoderate builders, realtors and different manufacture insiders are re-evaluating what erstwhile worked and trying to fig retired however the existent proviso of smaller floorplans can beryllium reimagined to conscionable request for bigger units. It's something experts accidental is doable, but complicated, expensive and precise overmuch babelike upon what signifier of improvement buildings are in.

Structural hurdles

Wein says changing a condo's footprint is imaginable sometimes — he's redesigned respective buildings successful the past astatine assorted stages of the operation process, some with Equiton and different companies.

But erstwhile a gathering is finished, helium says, swaps tin beryllium truly difficult to make, whether its being done by a builder oregon a azygous condo proprietor hoping to merge 2 units.

"Now you are tearing things apart, you're doing a renovation," Wein said. "You person to look astatine however that affects not conscionable the structural engineering, but besides mechanical and electrical." 

WATCH | Why the condo marketplace is plummeting during a lodging crisis: 

Expansions necessitate knocking down walls betwixt units, which presents challenges. Wein says midrise buildings mightiness person walls made of wood oregon steel, but astir buildings implicit 12 storeys necessitate factual walls for support.

He says merging units successful high-rise towers is often "so complicated, truthful expensive, and it's going to necessitate truthful overmuch engineering solution, that we conscionable shouldn't bother."

In cases wherever Wein has removed walls, lone portion of the partition is made of factual — then, it's a substance of uncovering the gaps and making the level program functional betwixt the 2 spaces. But this inactive requires tons of enactment and results successful discarded — for example, ripping retired 1 fully-functional room which means all those fixtures and materials would extremity up arsenic scrap.

Pasalis, the realtor, says merging units does hap occasionally, but mostly successful the luxury condo market.

The mean idiosyncratic looking to bargain 2 units and merge them — particularly 2 antecedently occupied condos alternatively than units successful a brand-new gathering — would apt person a tricky clip uncovering a spot wherever that's possible, helium says.

"The probability of 2 units going connected the marketplace astatine the nonstop aforesaid clip for merchantability that are good suited to beryllium merged … that volition beryllium virtually zero."

Financial issues and reddish tape

On apical of hard structural challenges, experts accidental the mathematics besides doesn't adhd up successful astir cases.

According to Pasalis, smaller condos merchantability for much per quadrate foot than bigger ones. Buying 2 tiny condos mightiness outgo astir $1.2 million, helium estimates, positive much to renovate and merge them. For adjacent to that amount, helium points out, you could bargain a semi-detached location successful Toronto's downtown, and of course, it would outgo far less to simply bargain a condo pre-built with aggregate bedrooms.

The lone mode the enactment mightiness go viable is if the terms of tiny condos falls importantly and bigger 2 oregon 3 chamber units support their value, Pasalis says, as folks buying and renovating condos would really summation thing from their investment.

Helen Stopps, an adjunct architectural subject prof astatine Toronto Metropolitan University, says adjacent if buyers could stomach the terms and the extended renovations required to merge smaller condos into larger ones, reddish portion mightiness halt operation anyway.

WATCH | Just however tiny is simply a micro condo?: 

Condos are built connected a shared ownership model, wherever radical ain their idiosyncratic units but put and marque decisions astir the wide gathering arsenic a group. Most operation successful condos needs to beryllium approved by the condo committee that oversees gathering management, which Stopps says tin marque getting this benignant of renovation done "incredibly hard."

The cases wherever it makes the astir consciousness sense is connected a wide standard erstwhile radical aren't surviving successful the building, she says. So that means either successful the pre-construction signifier portion the developer is inactive successful control, oregon successful vacant buildings wherever a azygous institution oregon corporate has bought the full condo.

What happens to these units, then?

Even if tiny condo units beryllium connected the marketplace for a while, Stopps says they'll yet beryllium sold oregon rented — though she notes prices mightiness person to autumn substantially earlier that happens.

On immoderate level, that means moving with a tiny abstraction to marque it much livable. Things similar movable walls oregon dividers, reconfigurable furnishings and off-site retention units could each marque smaller spaces much functional, Stopps suggests. Adding much shared amenities oregon nationalist spaces to condos, she says, could besides assistance radical get immoderate of the other abstraction they crave.

Stopps besides says it's up to provincial oregon municipal governments to incentivize developers to physique much livable housing.

Allowing developers to "do immoderate they privation successful bid to maximize their profits" is portion of wherefore we ended up with truthful galore tiny condos successful the archetypal place, Stopp says, noting that due to the fact that smaller units tin beryllium sold for much wealth per quadrate foot, that's what developers take to build.

A "density bonus" from the government, or lowering improvement charges for condos that are planned with bigger units could assistance propulsion developers away from micro-units, she says.

Developers responding to purchaser demand

On the improvement side, Wein says helium and immoderate different developers person started changing aboriginal projects wherever indispensable to make units bigger successful effect to buyer demand.

He notes that Equiton's task astatine 875 The Queensway successful Toronto is simply a bully example. Designs, zoning and support were each done erstwhile Wein says helium went backmost to the drafting board after realizing the units were excessively cramped and weren't matching what buyers wanted. 

That project, expected to beryllium move-in acceptable successful 2027, volition present person 152 units alternatively of 179, with each portion becoming about 10 per cent bigger. 

Wein says it's the astute move, fixed the demand for bigger spaces doesn't look to beryllium going away.

"You're acold amended disconnected [adjusting now] than you are, you know, conscionable forging up and hoping marketplace conditions change."