So, you’re in the market for a new condominium and you’ve looked through the latest copy of NextHome + Condo Guide to check out a bunch of projects. You might not have an exact intersection in mind, but you probably have a general idea of what area of the GTA you’d like to buy in. It is amazing that within a five-minute transit ride you can go from a 60-storey new condo to a six-storey new condo.
If you’re only buying for future price appreciation, then a highrise tower will probably provide the best opportunity to experience price gains because they’re typically located on the most coveted real estate, either right downtown in the core, or along the subway lines. In this case, you’re not really comparing apples-to-apples.
What about a mid-rise project in a prime location, you ask? Well, those are likely to be very expensive. In certain areas of the GTA, planning is very restrictive, only allowing smaller buildings. For developers to generate an acceptable profit with fewer units, they must charge a lot more for the few units they do have. These luxury boutique projects have always experienced very good price growth, but luxury units are harder to sell when the market softens, the views are not typically as good, and the buildings often have no common amenities.
As an investment, the supply of mid-rise projects isn’t going to increase rapidly either due to the economics of the projects. In an email sent to me recently, a developer said “The challenges to assemble a mid-rise site at the right price to make a project viable, the effort and time to do that assembly, the limited amenities you can fit into a mid-rise project, the lack of premiums for views from most suites, the similar cost to a highrise project for shoring, dewatering, building a bath-tubbed parking garage, all make mid-rise a difficult built-form to develop.”
On the other hand, when you drive down the Gardiner Expressway, you might not think the supply of high-rise buildings is constrained in any way, but they will be in the future, as the number of sites available to build on continues to dwindle, construction costs increase, municipal fees skyrocket, and interest rates rise. We may never see another year in the GTA with 35,000 new condo sales again, like we did in 2017.
Highrise towers have the advantage of having tremendous views, they typically have more common amenities, there’s often greater opportunity for social interaction, and the locations are great for tenants should you choose to lease out your suite.
There is certainly a lot to consider when looking at the pluses and minuses of mid-rise versus highrise. My advice to all future buyers is to hire a realtor with pre-construction condo experience and get their two cents, and most importantly, do your own research. Good luck!