Defanging the housing price monster
Mid-rise developers say proximity to transit mitigates investment risk
In the debate over solutions to Toronto's skyrocketing housing prices, some developers are favouring a middle ground: multi-family development along existing and planned transit routes.
When executives for Medallion Corp., a developer with 7,000 apartment units in its portfolio, scan the Greater Toronto market for opportunities, they see plenty of consumer interest in rental accommodation, but an uncertain market outside the core. There, land prices are so high that traditional multi-unit residential projects are difficult to execute.
"We're in Ajax," said George Espinola, Medallion's director property management operations. But because there are so few new apartment buildings in the area, "we have to be bang on with rents." If the company starts leasing such projects with the wrong price, they may never recoup their investment.
What takes the guesswork and risk out of such ventures, he says, is the presence of an existing or proposed rapid transit stop. He mentioned a new project near a GO station in Brampton and a nine-building project at Weston Road and Finch. Casa Emery Village is planned to include 1,400 residential units and 48,000 square-feet of retail space. "The [planned Finch] LRT is a great asset to us."
Medallion is hardly alone among developers that are mitigating investment risk by betting on future rapid transit corridors, even ones with longer time horizons. While trains won't start running along Finch West until about 2021, Mr. Espinola said such locations are "important to us."
Given the high-stakes debate about how to take the speculative price pressure out of both the housing and rental markets, it would seem that Queen's Park and GTA municipalities should pay more attention to the opportunities created by the billions being spent on new rapid transit and GO corridors across the region.
Such "transit oriented development," (TOD) according to experts, could take some of the edge off prices in hot markets, produce transit accessible housing and rental supply that doesn't encourage sprawl and encourage office and commercial development. This approach could also decant some of the population growth, which has pooled in high-growth zones, such as King West or Yonge and Eglinton.
While various assessments have concluded that there's no need to open up new tracts of land for traditional subdivisions, a September, 2016, study from Ryerson's City Building Institute, pointed to the need for more mid-level transit-friendly projects to fill the gap between single-family homes and high-rise condos. "That missing middle should be part of the solution," said David Amborski, the director of Ryerson University's Centre for Urban Research and Land Development.
Yet most subway and rapid transit stations around the GTA are situated in communities with not nearly enough density to make them genuinely viable from a cost-benefit point of view. Most of the subway stations along the Bloor-Danforth line and the Spadina extension fit this description, as do the vast majority of GO stations. "We don't have a record of doing this well," observed Matti Siemiatycki, a University of Toronto urban geographer who specializes in infrastructure planning.
He cited corridors such as Hurontario and Highway 7, as well as Finch. "There's a real opportunity to encourage intensification along the main arterials."
York Region has sought to spur investment on the Viva BRT corridors. But other municipalities, including the city of Toronto, have lagged in updating their official plans and zoning rules along such corridors or around transit stops to encourage residential and commercial intensification, said Michael Sutherland, director of urban solutions at Hatch, an engineering and planning consultancy.
The provincial government, he added, is not only spending billions on the transit, but has also put in place the high-level planning policies that should encourage transit-oriented development. The problem lies in the execution of such plans. "They've done a lot," Mr. Sutherland said, "and they probably need to do more."
Indeed, there are examples where municipal councils have taken steps that will hinder the full development potential of multi-billion-dollar investments, such as Brampton's decision to halt the Hurontario LRT at Steeles rather than extending it to a potential connection with a GO station on the Kitchener line.
Similarly, Metrolinx has been building multi-level parking garages around suburban GO stations to meet the anticipated growth in demand as the commuter rail service moves to all-day/two-way service, even though the provincial regional growth plan calls for intensification around such "mobility hubs."
"They shouldn't be building parking structures," Mr. Sutherland said, "and yet they do."
Prof. Amborski warned that TOD isn't a panecea: local and regional planners can put in place the intensification policies around transit nodes, but that doesn't necessarily guarantee a market that developers will be able tap.
Yet the pressures in a regional housing market that sees an influx of 100,000 new residents each year suggest that the planning risks aren't huge.
"I think we have to look at both the supply and demand side," Prof. Siemiatcyki said. "Intensification in the rights places with the right model has the potential to improve affordability."