Toronto condo projects on hold as sales plunge
Even Toronto condo king Brad Lamb, long a strong advocate of the high-rise sector, sees the writing on the wall. He doesn’t think any sort of catastrophe is in the making but concedes builders have woken up to a new reality in the city when it comes to constructing new towers.
“Here’s what’s happening: Projects under construction are well sold and going ahead, there’s no issue. But projects waiting to get their [sales] numbers to start construction are slightly delayed as they get the units they have to [sell] to get going. We are selling but at a slower pace,” said Mr. Lamb, a broker in the city who is also developer.
His observations come as new data from condominium research firm Urbanation Inc. show there were 3,317 condominium apartment sales in the third quarter, a 30% drop from just a quarter earlier. The research firm says developers started putting off new buildings after unsold inventory hit a record high in the second quarter.
Mr. Lamb said developers are facing a decision about whether to mothball a project by turning their development site into a parking lot or small office building. “What we did with one site is rent all the space out for 10 years,” Mr. Lamb said.
It’s not just Mr. Lamb. The trend seemed to catch fire in the third quarter to the point it affected sales.
“With slowing sales and a record level of unsold inventory in the market in the second quarter, condominium developers reacted quickly by delaying their project launches, especially in the ‘416’ area,” said Ben Myers, executive vice-president of Urbanation, adding that just five projects launched in Toronto in the third quarter.
The question is whether prices will go next. Already the average unsold unit in the Toronto census area was being offered at $573 a square foot at the end of the third quarter, up just 2% year over year.