New condominium launches have decelerated as a consequence of the COVID-19 pandemic, but well-placed, well-priced developments in downtown Toronto proffer opportunities the city’s red-hot market hasn’t seen in years.
Interestingly, because Jac is built on a five-hectare park at Allan Gardens, its value will appreciate at least 1.5 times faster than similar projects placed elsewhere.
“Jac makes sense for a condo investor because the most important thing for appreciation over the years is transit, and this place is by everything, including College Station, the 506 streetcar, and two major highways,” said Kelly Liu, a sales agent with Baker Real Estate. “Being on the park gives residents the flexibility to do anything downtown Toronto offers, like visiting the Eaton Centre, which is a seven-minute walk away, hanging out in the Village, going to hockey and baseball games, and, of course, entertainment.”
Most importantly, Jac is located in an area with rich market fundamentals. According to Urbanation data, 37% of all jobs in the City of Toronto are in the downtown core. There were 276,610 new jobs created in Toronto between 2009 and 2019, a 21.4% increase over the decade, and 37% of all jobs in the city are downtown.
The downtown region has added over 100,000 jobs since 2014, representing a 4.2% annual increase, which is above the 2.5% City of Toronto average. In fact, the office category has driven job growth in downtown Toronto, even during the COVID-19 pandemic, and it comprises two-thirds of employment downtown. While pandemic-induced job losses have been in the food service industry, it represents a small overall decrease in downtown Toronto employment.
Toronto’s tech industry, for which 63% of all jobs are downtown, is booming, with job growth surging by 85% between 2014 and 2019, again demonstrating that the pandemic isn’t much affecting downtown office employment. On the contrary, downtown employment is projected to grow.
There is 8.7 million square feet of office space under construction in downtown Toronto, much of which is pre-leased, and prior to the pandemic the area had a 1% office vacancy rate—North America’s lowest. Moreover, there’s another 27.5 million square feet in the development pipeline, which will manifest in tens of thousands of new jobs in downtown Toronto in the next few years and 3.2 million square feet of positive absorption.
The condo rental market took a hit recently because the pandemic effectively shut Canada’s door to immigration, but that will soon be rectified, according to the federal government.
“To compensate for the shortfall and ensure Canada has the workers it needs to fill crucial labour market gaps and remain competitive on the world stage, the 2021 to 2023 levels plan aims to continue welcoming immigrants at a rate of about 1% of the population of Canada, including 401,000 permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023,” said a statement from the department of Immigration, Refugees and Citizenship Canada. “The previous plan set targets of 351,000 in 2021 and 361,000 in 2022.”
Downtown Toronto doesn’t have much unsold new condo inventory, with over 90% of units presold, noted Urbanation, meaning that prices will keep rising, especially with a dearth of development space. Although the pandemic scuttled new project launches, supply will become severely restricted within five years.
Rental prices in Toronto have increased by 8% annually over the last five years, and condo values have appreciated by 13% a year over the last half-decade, while those located near Jac Condos increased eight times faster than other central Toronto condos.
With Ryerson University—which has 36,000 students, many of whom choose to live near campus—literally a two-minute walk away, Jac’s developers, Graywood Developments and Phantom Developments, consulted with the school on its amenity package. Parents often opt for their young adult children to live in condos because of how secure entry into the buildings are, and because of how much higher the quality of finishes are compared to the city’s purpose-built rental stock.
In addition to students, Jac was designed with young professionals in mind, and there will be no shortage of those in the coming years, especially in 2024 when the building is slated for occupancy, says its developer.
“Toronto is subject to mega population growth; it’s growing exceptionally fast with over 400,000 people slated to immigrate to the city in the coming years on an annual basis, with 85% of our province’s growth coming through immigration, and with 35% of those people likely to land in Toronto, many of whom will live downtown,” said Stephen Price, president and CEO of Graywood Developments.
“The best job opportunities exist in downtown Toronto, whether in tech, the healthcare field, financial services, professional services and education, We have a long-term housing shortage in downtown Toronto, with quality sites diminishing. The value of product brought to market will continue growing over time.”
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Written by Canadian Real Estate Wealth.
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Canadian Real Estate Wealth