I t’s hard to believe that 15 months ago, the world was forced to pause, recalibrate and think about how to contain a deadly virus sweeping the globe. And yet, here we are at the end of July 2021, finally seeing a new and more promising chapter coming into focus.
For the Greater Toronto real estate industry, this past year and a quarter has been one of the most interesting periods in recent memory. First, the roller-coaster ride began with pundits predicting doom and gloom ahead, making it difficult to see the path forward. The industry soon plateaued as we shifted our mindsets and realized that business could, in fact, continue. A sense of panic ensued, as outlandish stories of inflated prices and rushed deals across the board led to a call to re-examine real estate regulations and procedures.
However, on the investment side of the market – and more specifically, pre-construction investments – things have progressed smoothly compared to the general market.
Pre-pandemic, many projects launching in the suburbs ranged in price from $950 to $1,150 per square foot. In the downtown core, costs varied more due to TTC proximity and finishes, with pricing coming in between $1,300 and $1,500 per square foot. Throughout the pandemic, even with the demand for low-rise suburban properties causing ballooning prices, the downtown area did not see much of a price reduction on the pre-construction side. In fact, pre-construction developments that launched during COVID-19 through to Q2 are seeing great traction. Demand has not slowed at all.
Right now, the average price range in Toronto has increased even among vastly differing locations, including the downtown core. We can confidently predict that the current pricing model investors need to work with falls within the $1,400-$1,900 per square foot range. Conservatively speaking, that means getting into the market with delivery dates at five-plus years from today.
At TCS, we pride ourselves in advising our clients with the best intentions and long-term growth in mind. We did not deviate from this course of thought at all during the pandemic. Fortunately, our firm’s vast experience, along with our founders’ extensive knowledge means we’ve seen these economic situations before. In 2008, TCS was steadfast with regards to the resilience of the real estate sector in Toronto. We kept pushing for more and better deals and ended up with a significant purchase volume both during and immediately after that economic crisis.
Today, we know, as you do, that the City of Toronto will continue to see incredible gains for many years to come. We will look back at this pandemic era in a few years and see it as another situation that we managed to overcome while continuing to push forward for the betterment of our community.