You're currently building mid-rise rental apartment buildings in Toronto. Why have you picked this sort of project to focus on?
There are a few things that attract us to the midrise scale. First, we have experience building smaller 3-4 storey apartment buildings, so midrise feels like a natural progression. We also like some recent planning permission changes that have made it relatively easier and faster to get mid-rise proposals through the City’s approvals process. Finally, we specialize in a form of construction, with precast concrete floors and shafts along with panelized CFS (cold-formed steel) walls and structure, that is best suited to this scale. It also helps that I think good midrise streetwalls make for more beautiful cities.
We like rental because we believe that Toronto will be an even more attractive place to live over the next fifty years than it has been for the past fifty, and we'd like to build and own a small part of it.
What are the biggest barriers to more housing getting built in Canada's big cities?
The biggest barriers are municipal land-use rules and taxes. We have regulated real estate development so aggressively that large parts of our cities are effectively off-limits to meaningful intensification. Even where development is permitted, developers can expect to spend more time securing approvals than actually building. These rules are embedded in municipal Official Plans and zoning bylaws and increasingly feel like a last vestige of Soviet-style top down economic planning.
As a developer, how do your costs break down these days?
On a midrise building we’re working on in Etobicoke, we’ll spend approximately 10% of our total project costs on land, 10% on charges, fees, and taxes, 7% on planning and design, 7% on debt service on our land and construction loans, and about 65% on construction. It is worth noting, however, that land prices are inflated by regulated scarcity, design costs are inflated by excessive municipal requirements, and construction costs are inflated by some costly and unnecessary building code provisions. In other words, the true impact of policy on our total costs is much higher than that initial 10%.
Why do so many new condo and apartment buildings look so ugly? You would think with all the technology we have, we'd be able to build nicer buildings than we did 100 years ago but it doesn't usually seem to be that way.
I think simple boxes with nice windows and good quality masonry are a really good start to building a beautiful building. In Toronto, land use rules and urban design guidelines have pushed developers and architects to introduce more articulation in their massing and more variation in their materials. I think that is part of the answer.
Another part might be that, as I mentioned above, since developers spend more time on approvals than on construction, the industry has reoriented from builders and designers to planners and lawyers, and planners and lawyers might not have the best taste or care much about taste either way.
It is also worth noting that the most important things we could do, as a society, for more beautiful cities do not require major changes in architecture. We need narrow streets, narrow lots, mixed use permissions, and a good amount of greenery. In that context, even a street full of mid buildings could look great. Think Tokyo. By contrast, even a really nice set of buildings on a very wide six lane street, with large front and side yard setbacks, overhead electric wires, and minimal trees, will look bad.
Why were so many condos built like shoeboxes over the past 20 years? How do we get more housing built that's suitable for families again?
This opinion is not shared by all commentators, but my view is that small units were built over the past 20 years because that is what the market wanted. Toronto has more single and childless people than married people with families to begin with. In a market where supply is as constrained as it is here, housing becomes quite expensive, and small units cost less than large ones. If we want developers to build larger units, there are some things that could be improved in the building code, such as allowing single egress in more cases, but ultimately we need an agenda of abundance that gives end users so many good options that they pass on the shoeboxes.
Are there any new technologies or innovations in building that you're excited about?
Peter Thiel has this fun framework about horizontal progress versus vertical progress. Horizontal progress is going from 1 to n: taking something that already works and spreading it everywhere, think globalization and copying best practices. Vertical progress is going from 0 to 1: inventing genuinely new technology that did not exist before. The stuff I am most interested in right now fits into the horizontal progress bucket, especially the variety and availability of really high quality materials and equipment coming out of China at great prices, which lets us build better buildings for less. If I look a bit further into the future, though, I'd love to have ChatGPT act as my planning and design team, and maybe some humanoid robot masons.
Canada's housing market: up, down, or sideways?
I'm most familiar with Toronto, where almost everything is down. I have a friend who builds ultra-luxury condos—think $3,000 per square foot for 3,000 square foot units, that sort of thing. He's doing ok. Everyone else is struggling. I do however think that many people are ignoring the fact that these struggles, which are leading to fewer housing starts, will inevitably deliver fewer housing completins, and that housing will be more scarce and more expensive in 3+ years than it has ever been.
Chris Spoke is a partner in Toronto Standard, a real estate development firm building rental housing for long term ownership in Toronto.