The developer of what will be Canada’s second-tallest building says Toronto’s condo market is still extremely strong, despite the fact a number of projects in the city have recently been cancelled.
“I’m still very bullish on the market,” says Sam Mizrahi, president and founder of Mizrahi Developments. “The market still is extremely buoyant and it’s still very strong. I think that’s driven primarily due to the immigration.”
Mizrahi is currently developing The One, an 85-storey luxury condo, hotel and retail development at Yonge and Bloor streets that will stand at more than 1,000 feet, making it second in height only to the CN Tower.
Mizrahi says there have been more than 100,000 immigrants coming to the GTA every year since 2008, which has been fuelling Toronto’s real estate market. “It’s just been a very different market than other places in the world. We currently don’t have enough supply for the demand of 100,000 immigrants for the last decade or longer that have been immigrating to the city.”
An analysis published by The Globe and Mail found that there have been 6,350 planned condo units cancelled in the Greater Toronto Area since 2017. But Mizrahi says there has been a spate of condo cancellations for a very simple reason – there is a huge disparity in the pricing of the condo units when they presold versus where condo prices are today.
“The values are much higher today than they were in 2017 or when they did the presales,” he says, “and there were also cost escalations in terms of the cost of materials.” Hard costs have gone up about 35 per cent since the presales of the condos were conducted.
Pricing has increased more than anticipated and developers opted to cancel the projects “based on purely economics,” he says. “But it’s not to say there’s a problem in the market in terms of demand. It actually shows how much demand there was for the product.”
Mortgage stress tests and other rules that tightened access to mortgages resulted in an initial slowdown, he says, but interest rates are still at historically low levels. “Just getting a slight 250 basis points increase or 300 basis points increase is not going to really make any dent on the market. A market that is really in demand can afford the new mortgage rules.”
It was thought that taxes on foreign buyers would slow down the market and that real estate in Toronto would suffer, “but it really didn’t do anything.” There was only a short-term blip because the rules didn’t apply to the people that were buying, he says.
“They weren’t really foreigners. They’re people that are having their children go to school and university here; they’re people that are immigrating here, people that are moving their families here.”
Mizrahi says The One does not have foreign buyers. “It’s unbelievable. I keep asking ‘where are they?’ because they’re not in our building.”
Buyers at The One are families, empty nesters and divorced people. “We really have a mosaic of different age groups and diversity in the building that is hitting every age group and every type of family you can imagine,” he says. “It goes to the diversity of Toronto and Canada, which is great.”
Mizrahi adds there is a tremendous amount of depth in Toronto’s luxury condo market. He notes The One sold more than 75 per cent of its 416 units in 12 months, which is “significant” given that the development is one of the highest priced in Canada.
“There’s a significant need for high-end luxury products that before just didn’t exist in the marketplace,” Mizrahi says. “Everybody spoke luxury, but nobody really delivered it.”
Sophisticated immigrants who are moving to Canada are demanding “super high-end luxury” condos with high-end finishings and an eye to detail, he says. “They’ve lived in it and seen it for years prior to moving to Canada and they’re expecting to see the same type of product in Canada as well, which is creating the demand for it where we didn’t have it before.”
The One began construction in August 2017 and will be completed in 2023. It’s located at the southwest corner of Yonge and Bloor, the former home of the more than 100-year-old clothing store Stollerys.
The tower is being designed by internationally renowned architect Norman Foster of London-based Foster + Partners. Among the firm’s designs are the new German parliament in Berlin, the so-called “Gherkin” tower in London, the Great Court at the British Museum and Apple Corp.’s new headquarters in Cupertino, Calif.
The One features an exoskeletal design with column-free spaces throughout the building.
Aside from condos, The One will feature a 160-room Hyatt Andaz hotel on floors four through 16 of the tower, with more than 15 luxury suites, more than 12,000 square feet of event and conference space, restaurants, bars and a spa. There will also be a flagship ground-level retailer.
Mizrahi founded Mizrahi Developments in 2008 and previously ran Dove Cleaners. After initially building custom houses in Forest Hill, Mizrahi moved to luxury condo development.
His first condo project was 133 Hazelton Residences in Toronto’s Yorkville in 2011. His other projects include 181 Davenport and 128 Hazelton, also in Yorkville.