Condos and rentals in Toronto are much smaller than they were two decades ago
Toronto’s condos and rental units have earned a reputation as concrete shoeboxes in the sky, ever-smaller units that challenge the use and functionality of homes as they increasingly depend on amenity spaces and their surrounding neighborhood to meet the needs of residents.
But it wasn’t always like that, and there was a time when the average Toronto condo or apartment was actually quite spacious, almost double the size of average rental units in the 2020s.
One need only look back to the late 1990s to see an average rented unit size of nearly 1,000 square feet, which is a palace by today’s standards for multi-residential buildings, with the average rented unit measuring a just under 600 square feet by 2022.
The median size of rental condos and apartments for rent in the GTA by building completion year (last 40 months of @torentals registration data).
— Big Ben Myers 🐂✒️ (@benmyers29) June 1, 2022
Ben Myers, president of Bullpen Consulting, told blogTO that “affordability is deteriorating and the only way to keep end sale prices reasonable is to reduce average unit size and instead increase revenue per square foot”.
“Developer costs are skyrocketing due to cost of materials and supply chain issues, record sales and buildings under construction driving up labor costs, and the City of Toronto is increasing development costs.”
Myers notes that while people often complain about the size of apartments being built, large units put on the market before construction “often sit unsold for years, often not selling until the building is complete.”
“Developers must sell at least 70% of project revenue to secure construction funding, so they must offer suites that will sell early in the pre-construction process.”
Data shows a gradual decline in all median unit sizes from 2018 to April 2022, indicating that it’s not just about packing more studios and one-bedroom units into developments to achieve this 70% sales bar, but a decrease in all types units.
This could be seen as another case of shrinkage, a term for products that shrink while retaining their normal price, and something the actor BJ Novak has been warning us since the mid-2000s.
I have already written about this! https://t.co/RpNAFOOaAB
— Big Ben Myers 🐂✒️ (@benmyers29) June 2, 2022
So when the next new development launches with incredibly small units, just remember that the market can only keep up with demand, and if buyers (read investors) want small units, that’s what the developers will build.