If Ben Myers’ big prediction for 2016 pans out, kids’ play spaces could become the hottest amenity in the condo market.
Myers, senior vice president of market research and analytics at Fortress Real Developments, expects to see a significant rise in the number of millennial parents rearing families in downtown towers this year. Although his forecast is mostly based on anecdotal evidence, 2011 census data showed signs of an emerging trend and 2016 census data could bear out what observation suggests.
“People have already spotted it,” says Myers. “They’re seeing the strollers on the streets much more commonly than they had before; they’re seeing more of the moms and dads taking their kids to the local coffee shops to get out of the house.”
The analyst isn’t alone in his assessment. He points to The Eglinton by Menkes and Garrison Point by Cityzen Development, Diamond Corp. and Fernbrook Homes as two Toronto projects that are actively targeting young families with kid-friendly amenities. For its part, Fortress Real Developments is contemplating similarly styled common elements as it plans the amenities in two of its own projects.
“We’re watching that to see if that’s something that really drives buyer demand or absorption from families,” says Myers. “We know the common issues we hear from young couples with kids about buying in a condo is: ‘Where’s the space for the toys? And where’s the storage for all the clothes?’”
Shared amenities are one way to answer the squeeze on square footage; so are additional guest suites to help families accommodate visitors. But there are other shortcomings to condo life for millennial parents, as the analyst readily acknowledges. In urban centres, daycare is expensive and green space sparse.
The trend toward bringing up babies in condo suites may be less of a choice than a rational response to what’s happening in the single-family homes market. As low-rise inventory has dropped off, low-rise prices have posted steady double-digit growth over the past few years.
“They’re [millennials] being forced to make the decision to either blow out their budget and go for the American dream or make do with smaller spaces,” says Myers.
In a lot of cases, they’re opting to go the latter route. He attributes this to a desire to live close to work as people log longer hours and inadequate transit infrastructure makes it harder to slog to the core from the relatively cheaper single-family homes in the suburbs.
If developers have been slow to respond to this reality by catering to millennial parents, it may be a function of who is buying units presale. As Myers explains, young families are more likely to buy a resale suite that they can walk through and put only five per cent down than a pre-construction suite from plans and put as much as 20 per cent down.
“There’s this dilemma that what’s being built currently is not representative of the actual demand in the market because there’s an intermediary in the market, and that is the investor,” he says.
The numbers don’t entirely make sense for three-bedroom units yet, adds the analyst. Go far enough east or west in the city and there are still single-family homes available in the same price range. But the market might cross that threshold as young families increasingly raise kids in condos.
“It’s only going to get much more common with what’s happening in low-rise house prices, which I don’t see going anywhere south in the City of Toronto,” says Myers. “There’s just so much demand and so little supply.”
Michelle Ervin is the editor of CondoBusiness.