VAUGHAN CONDO SELLOUT SHOWS DEMAND FOR HOUSING CHOICE IN CITY
The successful redevelopment of low-density lands around the Highway 7/Highway 400 intersection in Vaughan indicates a demand for housing and that it’s time for the city above Toronto to grow up.
The developer Smart Centres has been working with the City of Vaughan to increase density in the lands around the intersection of the two highways, as Vaughan hopes to develop its new Metropolitan Centre. The neighbourhood, already bolstered by a subway extension connecting it with York University and downtown Toronto, promises to become a vibrant urban centre with a population of over 28,000 residents and employment for more than 11,000 people by 2031.
The increased densities within Vaughan Metropolitan Centre and other areas within Vaughan is critical if the city is to sustainably attain its projected population of 416,600 by 2031.
Housing Choice to Tackle Urban Sprawl
Until the past decade, Vaughan has primarily been known for suburban-style development, with a preponderance of single-family homes and a limited amount of purpose-built rental housing. In 2011, Vaughan, which then had a population of 288,300, had only 1,132 rental units.
This lack of diversity in housing choice hampers Vaughan’s ability to develop its local economy with a diversity of jobs. By keeping purpose-built rental units out of the city, it becomes harder for certain families to get to some of the jobs that are available. People go unemployed, while employers struggle to find qualified people to fill positions.
Unfortunately, despite sustained growth and a plan to increase densities within the city, Vaughan remains the most underserved market for housing options within the Greater Toronto Area. Since 2000, only 105 new rental units were added to the marketplace, compared to 23,000 new single-family homes and 12,000 condominium units, which came to the market since 2010.
The extension of the Toronto subway to the Vaughan Metropolitan Centre, and the increased densities planned for that area are a game changer for Vaughan. These changes must continue, but purpose-built rental apartments must be part of the mix.
People Want More Choice in Housing
There can be no doubt that the developers, as well as buyers, will benefit from increasing housing choice. The Transit City condominium development recently accepted pre-orders for its phase 4 buildings. These condominiums sold out within days, and phase 5 units are now on the market.
Meanwhile, Canada Mortgage and Housing Corporation statistics show that only 1,820 purpose-built rental units can be found within Vaughan as of October 2018. The vacancy rates for these units is at 1.4%, comparable to the very tight market found in downtown Toronto. Average rents in Vaughan stand at $1,289, compared to average rents of $1,648 in downtown Toronto.
The condominium units of Transit City are being snapped up by investors eager to cash in on renters looking to live close to the transit stops and employment opportunities springing up in Vaughan Metropolitan Centre. Developers who build purpose-built multi-family rental developments can take advantage of this opportunity, trading the short-term rush of a quick sale with the long-term stability and cash flow associated with a rental building’s net operating income.
Changes Long Time in Coming
The changes that are taking place in Vaughan today have been a long time in coming. Developers are reaping the benefits of increased densities, increased transportation infrastructure, and a new diversity of housing styles. There is still time to take advantage of an increased diversity of housing choice. Rental accommodations meet a need that Vaughan has not fully addressed, and which could help the city achieve its ambitious goals of growing its residential population and employment opportunities.
SVN Rock Advisors has been following the growth and changes of the rental market in the Greater Toronto Area for the past two decades. They have found that new high-quality purpose-built rental housing can easily achieve monthly rents that are at least 25% higher than what investors receive renting out condominium units piecemeal. Tenants are looking for security of tenure, and an understanding that their housing will remain rental housing for as long as they choose to live there. Tenants will pay a premium to know that their property managers will take care of the day-to-day needs of their units.
SVN Rock Advisors has worked with land developers across Ontario to find new sites for development. They can help investors find land and develop it to best address the demands of the market. Vaughan’s growth market provides an opportunity for developers to get in on the ground floor to address the strong demands for high-rise living in Vaughan Metropolitan Centre.