Small Apartment Buildings are Disappearing

July 13, 2018

Drive to the Sky a Big Trend in Most Metros

A quiet trend is hitting housing markets such as Vancouver, San Francisco, New York, Boston, Toronto, Miami, and other major metros.

It’s the growing development of monster sized condominium towers such as M City in Mississauga, The Avery in San Francisco, and Metropolis in Los Angeles that exemplifies the rental housing market in most cities in 209 and beyond.

Whether it’s in Southern US tourist locations or dense urban areas of California, low rise buildings are giving way to towering complexes. Even in cities such as San Diego, new construction for condominiums and apartments is predominant. Renter lifestyles are changing, and apartment management businesses will change too.

Estimates are as high as 80% of new multifamily units constructed are high rise developments.

Graphic courtesy of Altus Analytics

The end result for buyers and investors is higher prices for low rise. The sales characteristics of a 4 story low rise today is very similar to single detached homes. In some markets such as Toronto, house and low rise are often grouped together in descriptions of market sales.

When people can’t buy houses, low rise condominiums and appartments are their next choice. And small families in particular have a strong preference for low rise. Even as high rise developments offer day care and other family friendly amenities, low rise is the preferred choice.

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As Toronto Realtor Ashley Smith describes in her video below in buying low rise vs high rise, low rise developments often have more thought put into design and amenities.

What’s Creating the Drive to the Sky?

From financial to political, the trend is inexorable. The need for housing right now, urban intensification plans, land shortages, cost efficiencies, current labor shortages, and toughened financing rules are making giant condo towers the wave of the future.

With land and construction costs rising so quickly, the small apartment building is becoming a relic of the past.

In Canadian cities such as Vancouver and Toronto the trend is most pronounced. Housing prices and condo rental prices in Toronto and Vancouver have skyrocketed, irregardless of economic conditions.

Even after both Canadian cities had foreign buyers taxes applied, it failed to answer the affordability or available issues prevalent in those cities. The condo towers are the current solution and they are selling.

Is population growth the main factor driving large scale condo development? Or is it simply cost efficiencies? Last year in Toronto, a record low 5,711 low-rise homes were available. Prices in those developments rose by 12% over last year.

Large condo developments are seeing prices drop in 2018.

“According to BILD CEO Bryan Tuckey, the situation “is a perfect example of demand outpacing supply. New ground-related homes are sold as soon as they are introduced into the market, resulting in high sales figures for the month, but low inventory overall.” The result for consumers, says Tuckey, is higher prices and less choice. — https://condo.ca/demand-outpaces-supply-for-new-low-rise-homes-bild/

Photo Courtesy of 111 West 57th – JDS Development Group

San Diego, Los Angeles, and San Francisco all have a surge of new, monster sized apartment buildings. The trend to bigger buildings isn’t likely to go away. It’s a perfect storm of conditions to create a race to the sky in many cities within the multifamily housing market.

Super Slender Mega Towers in New York City

At right is 111 West 57th Street, a 1,428 ft (435 m) tall “slender tower” being completed in on Manhattan in New York, NY. New York is the location for a number of staggeringly high towers with hard to believe height to width ratios.

Central Park Tower, when completed will be even taller than 111 West 57th Street. It will be a mixed use commercial tower stretching up to 1,550-foot (470 m) high. Tenants with a fear of heights and a lack of belief in “counterbalancing” wind resisting technology need not apply!

Low Rise Buildings are very attractive, livable, and convenient, however construction trends are toward high rise. Low rise construction labor, materials and land shortages mean low rise prices are sure to keep climbing.

Whether hi-rise or low-rise, property managers must manage more units today and do it efficiently to maintain rental yields. They’re turning to technology and proptech offers some amazing solutions. The key solution is online property management software, which eases property managers number one problem: time management with tenants.

Solutions such as ManageCasa create efficiencies in rental payment, tenant communications and maintenance tickets, tenant screening, and accounting. Tenants as well as contractors increasingly expect digital business solutions and ManageCasa is a manageable, affordable, and professional solution they like.

Find out more about ManageCasa today.