Six Canadian cities are among the top 10 in North America for the number of high rises and skyscrapers being built – this from the Globe and Mail. This is a real testament to the economic and immigration miracle that Canada is experiencing. Toronto is first with 197 highrises, New York is second with 72. Vancouver is third with 21 followed by Montreal and Chicago with 20 and 17, respectively. Calgary and Miami have 13 under construction. Toronto’s situation is nothing short of miraculous. The entire city is being re-shaped similarly to New York and Chicago in the late 1800’s. This is an unprecedented and exciting time for any city to experience. It will likely never happen again on this scale.
It is not just condos that are contributing to the building bonanza in Toronto. High rise office buildings are also adding to the numbers. Toronto’s office vacancy rate is just 5.1%. Nine new office towers are being completed, adding 8% more leasable area to the 70 million square feet of existing office stock. This represents the largest office expansion in Toronto in decades.
Housing starts in Canada trended at 224,419 in September on an annual basis. This is a huge number and totally unsustainable. We don’t need this kind of construction production for a healthy Canadian housing industry. We need to acclimatize ourselves for the inevitable, which is a 15-25% drop in new housing sales followed next year by a similar drop in new construction starts. This would still represent huge production in Toronto, Montreal, Calgary, Vancouver, and Ottawa in the high rise condo market. Toronto will still likely be one of the busiest cities for high rise construction for the foreseeable future.
You can see from the graph depicting new condo sales in Toronto versus overall new home sales that two things stand out; the first being the fact that high-rise condo sales have become the largest contributor to overall new home sales. The second thing being that overall, through slow downs, internet bubbles, terrorist attacks, and the great recessions, Toronto still creates and needs 35,000-40,000 new homes every year.
It should also be noted that going forward to the end of time, the vast majority of those new homes will be condominiums.