The following is a guest column by Ben Myers, Senior VP Market Research and Analytics at Fortress Real Developments. Fortress Real Developments partners with builders and developers across Canada and Ben assists in evaluating the market and projects that Fortress engages in.
The size of condominium apartments has been a hot topic lately, a recent local newspaper article discussed the trend towards “micro-condos” in top metro areas, and on the other extreme, BuzzBuzzHome listed the largest new condominiums for sale in Canada this week (which I noticed was popular based on the Twitter ‘favourites’ it received). Everyone seems to have an opinion on what the smallest ‘livable’ condominium looks like, be it 500 square feet, 600 square feet or 1,000 square feet.
What prompted the title of this blog post was the Q & A period following my keynote address at the ULI Toronto Annual Emerging Trends Event. The event moderator asked the panel about the continued urbanization in Canada’s major cities, and I responded that many young first-time buyers and renters see the size of their suite as less important as the neighbourhood in which the building is located. Many recent college and university graduates would much rather have tiny suite in King West, than a giant suite in Agincourt.
With that anecdotal narrative in mind, I wanted to take a look at the actual (BIG) data. I took BuzzBuzzHome numbers from the 30 top municipalities in British Columbia, Alberta, Manitoba and Ontario combined as ranked by active condominium units from October 2014, and sorted them by their average suite size to see which municipalities have the smallest units. The goal was to determine if the municipalities with the smallest average suite sizes are really the most desirable places to live in Canada.
My expectation was to see Vancouver, Toronto, Calgary, Mississauga and Markham at the top of the list for smallest units, but that certainly wasn’t the case. My hypothesis was not correct, Toronto was the only city I got right. Toronto finishing with the smallest unit size at 661 square feet, followed surprisingly by Richmond Hill at 679 square feet, Burnaby at 695 square feet, and Surrey at 696 square feet. Rounding out the top five was the biggest surprise, Oakville at 704 square feet. Vancouver was 6th, and Calgary, Mississauga and Markham were 11th through 13th respectively.
Another common characteristic among the municipalities with the smallest unit sizes, is they had the highest prices on a per-square-foot basis. Seven municipalities had average per-square-foot pricing in excess of $500 psf, and all but one (Richmond, BC), had an average suite size below 760 square feet.
High prices and small unit sizes both seem like pretty good proxies for the desirability of a neighbourhood. So if someone tells you they live in a really small condo, chances are they live in a really desirable area!
Will the trend toward smaller suites continue? Of the 30 municipalities examined, only nine experienced a decline in the average size of their condominium units between September and October according to the BuzzBuzz data. One of those municipalities was Mississauga, a city in which Fortress is launching a project this month called Anchors East with Dunsire Developments which features some larger suites. Interestingly, Calgary and Edmonton were two of the municipalities with the largest increases in average condominium unit sizes month-over-month. We are launching The Orchard with Lamb Development Corporation in Calgary, and Jasper House with Lamb in Edmonton in November, which both feature very small suites. It will be interesting to see how well sales do at each of these sites, and if the conclusion holds that smaller average unit sizes equal more desirable places to live.
Keep checking back with BuzzBuzzHome and Big Data with Big Ben as we continue to review the trends and happenings in the new housing market in Canada.
Fortress Real Developments partners with builders and developers across Canada, and Ben assists in evaluating the market and projects that Fortress engages in (Twitter: @benmyers29). Follow his blog posts and commentary on the Canadian Housing Market at www.fortressrealdevelopments.com/news or for more info on real estate investing, go to www.fortressrealcapital.com.