The surprising rise of the rental
Toronto’s biggest apartment project in decades points to a comeback amid condo craze
It’s a sight that hasn’t been seen in North Toronto for decades, perhaps since Greenwin Inc.’s towering white brick apartment buildings sprouted up near Yonge and Davisville, earning the area the moniker “Young and Eligible.”
Toronto housing developer Shiplake Management Co. is proposing a 500unit, two-tower apartment complex on Davisville Ave. and Balliol St. That’s the biggest rental project constructed in the city in decades.
The 12- and 29-storey towers will be bookended by two 29-storey former Greenwin buildings and, in a nod to that history, likely be covered in the same white-glazed brick.
Given that condos have become the de facto downtown home for a new generation of young renters, there are lots of people wondering: Does this make any sense?
The project may be the best evidence yet in a city where condos are king that apartment buildings are poised to make a comeback.
“We are excited about revamping — pioneering to some degree — these new purpose-built rentals,” says Marco Ventola, vice-president of business development for Shiplake, former partners in Greenwin.
“The rental housing stock in Toronto is somewhat dated. These ’60s buildings don’t even have (central) air conditioning,” says Ventola. “These would be a new hybrid of apartments. We’ve done a lot of studies and we think we can compete with condos.”
The units, at $1,500 a month and up, would have concierges and the feel of condos, right down to granite countertops. Plus, tenants won’t have to worry the place will be put up for sale or that the landlord is away if the stove breaks.
Shiplake is aiming at those can’t afford a down payment for a house or are leery of open-ended condo maintenance fees.
It’s also banking on some boomers looking to cash out on their homes and opt for the freedom of apartments, part of a trend some call “wish to rent, rather than need to rent.”
Ventola can speak to that firsthand. Tired of commuting, he and his family moved from Oakville five years ago to a rental townhouse on the Balliol site — one of 21 rental homes that will be razed if the project gets city approval.
“Thirty per cent of Canadians live in apartments, yet it’s almost an invisible sector,” says apartment broker Derek Lobo of Burlingtonbased ROCK Apartment Advisors. “They are a stable asset in an unstable world.”
Apartment construction virtually shut down in Ontario after the province introduced rent controls in1975. By the time they were eased in 1998 to exempt new apartments, most developers had shifted to condos.
But there’s been a significant uptick in apartment construction and the purchase of existing buildings since the 2008 recession because apartments have outperformed all other real estate classes, says Lobo.
Rental is seen as a sure thing because of land values, ongoing income from rents and low vacancy rates — less than 2 per cent across the GTA. But the competition from condos is significant: More than 129,000 have been built across the GTA since the first quarter of 2000, according to market research firm Urbanation, and thousands are rented out.
Lobo is such a believer in apartments that he recently took 20 Canadian developers to Dallas where construction is booming.
That’s largely because the U.S. housing crash has created a generation of renters: Those who lost homes and can’t afford new ones; those who are renting until the market is in solid recovery.
“Some of us were joking, ‘Where are the margaritas?’ ” says Steve Martin, vice-president of development for Minto Properties, who was on the April tour. “They looked like resorts.”
Minto, which manages 17,500 apartment units, 6,600 of them in Toronto, has been buying up exist-
“It’s a stable sector. Apartments haven’t been overbuilt. And people always need to have a place to live.”
STEVE MARTIN VICE-PRESIDENT OF DEVELOPMENT FOR MINTO PROPERTIES
ing apartment buildings and considering stepping up rental construction. Just like Shiplake, which is keeping costs down by building on land it already owns, Minto has been looking at its existing properties. Eight or 10 seem to have potential for added apartment buildings, says Martin, but more study is needed to be sure new towers wouldn’t cast shadows or force a shutdown of pools or other amenities used by existing tenants. And then there is the condo question. “As long as the condo market remains so strong, you’re competing against investors who are renting units out. But if the condo market cools off, if interest rates jump up a little bit, it has to happen (a restart of apartment construction),” says Martin. “It’s a stable sector. Apartments haven’t been overbuilt. And people always need to have a place to live.”