Ban Condo Development In Toronto!

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Several months back I was having lunch with a friend in the industry and we were talking about the small number of rentals constructed in Toronto every year despite huge demand for new, condo-equivalent rentals in the city. We agreed that we didn’t really expect anything to change, since developers prefer to build and sell condos, while the few developers who want to build rentals (you could count them on one hand) have to compete with everyone else for available land and money. At one point I jokingly said, “Toronto should ban condo development for ten years and let rentals catch up.” After we stopped laughing, my friend said, “Actually, that’s exactly what they should do.”

It will never happen, of course, because neither Toronto’s municipal government nor the province would ever support it. But a ban would force developers to build something other than condos, which wouldn’t be too much of a challenge for them since modern-day rental buildings are almost indistinguishable from modern-day condo buildings. And, despite their howls of protest, developers would still make lots of money thanks to high demand for rentals and an acceptance of high rents in the city, plus they’d be building assets they could sell to REITs or keep as income-generators for their own portfolios.

And Toronto would finally get more rentals, lots more.