Who is building the most in North America?

[Razor]

Toronto's construction boom has just been insane this past decade..I was just reading another thread re: Dallas..I never realized how large Dallas was..Texas as a whole seems to be growing at a good clip as well.

[MolsonExport]

There is nothing more predictable in life than death, taxes and DC_denizen anti-Toronto/Canada posts.

[dc_denizen]

Originally Posted by memph

Yeah, well in Chinese real estate I think rental cash flows aren't even close to positive, so I guess it makes sense that Toronto can build expensive condos with relatively low rents (compared to cost to buy). You might get $2000 in rent but $600 in condo fees leaves you with only $1400/month to pay off a $600,000 condo.

yeah...I mean how many US built rental apartments are expected to be cash flow negative for their owners upon completion...meanwhile..

Almost all recently purchased homes in the GTA are cash flow negative

https://www.thehabistat.com/post/alm...-flow-negative

It appears that buyers have become comfortable with having a negative cash flow property. One reason for this is because they expect future price appreciation to exceed their net cash outflows. We started this article by pointing out how home prices increased by over $200,000 in under two years, which would more than make up for the net cash costs. Also, buyers could still be building equity as long as rent prices cover mortgage interest and other costs apart from the principal portion of payments. Based on those two arguments, buyers can justify why they are willing to buy a property that will be cashflow negative. So should we be concerned with the findings of this analysis? Absolutely.

[Crawford]

Weird. Why would anyone buy cash-flow negative RE when they could just put cash in a basically no-cost, nothing-to-manage index fund that generates averaged 10% returns forever?

RE returns are irrelevant unless you're constantly flipping, which sounds like an extremely dangerous game. And getting killed in the interim.

[Maldive]

Not to interrupt the perception of a sea of investor-driven condos u/c in Toronto (many of which are actually mixed-use), but a brief commercial for the office construction contribution to the downtown boom. Other than NYC, not sure how other NA cities are faring in the commercial sector, but a number of major office developments are u/c or nearing completion downtown.

Finishing touches are underway on the Wilkinson Eyre-designed CIBC Square Phase 1 (1.3 million square feet) and below grade construction for the slightly taller Phase 2 (1.4 million square feet) is progressing quickly.

The Well office tower (1 million square feet) is topped out, the AS+GG-designed TD Bank on Front Street (1.2 million square feet) is well into construction, and the 820,000 square foot Bay Adelaide phase 3 (ScotiaBank) is nearing completion.

Google’s 400,000 square foot local HQ at 65 King East and Menkes’ 690,000 square foot 100 Queens Quay Sugar Wharf office building are getting closer to completion. First Gulf’s 460,000 square foot EQ Bank Tower is climbing to grade. More office space will be coming online via mixed-use projects u/c such as WestBank’s 19 Duncan (includes 150,000 sq feet of office).

The 54 storey 11 Bay office tower near the waterfront has supposedly landed a major anchor tenant (yet to be officially revealed but likely Amazon) so we might see a start next year. More are in the development pipeline including a couple of supertalls (Oxford’s Union Park and 191 Bay Street). Westbank’s BIG-designed Union Centre proposal was recently bumped up to 298m but no news yet on an anchor tenant. No doubt the impact/longevity of WFH will likely stretch the timelines of new proposals moving to construction.

[C.]

Originally Posted by Crawford

Weird. Why would anyone buy cash-flow negative RE when they could just put cash in a basically no-cost, nothing-to-manage index fund that generates averaged 10% returns forever?

RE returns are irrelevant unless you're constantly flipping, which sounds like an extremely dangerous game. And getting killed in the interim.

Because it's likely not true. I'm assuming investors are purchasing Toronto condos and renting it out because there is very high rental demand. The rental vacancy rate is well below what is considered a healthy market. Plus how many purpose build rental buildings are going up in Toronto? My guess is not as many as needed. So these condo investors are stepping in to meet that demand.

Secondly, unless these investors have very deep pockets, they able to charge enough on rents to cover carrying costs. Property taxes in Toronto are very low, so it's just debt service and condo fees. With interest rates below inflation, the government is practically begging people to borrow money and invest.

I'm making a couple of assumptions, so if anyone has any unbiased data on these topics, they would make an interesting read. Please post away.

Originally Posted by Maldive

Not to interrupt the perception of a sea of investor-driven condos u/c in Toronto (many of which are actually mixed-use), but a brief commercial for the office construction contribution to the downtown boom. Other than NYC, not sure how other NA cities are faring in the commercial sector, but a number of major office developments are u/c or nearing completion downtown.

Finishing touches are underway on the Wilkinson Eyre-designed CIBC Square Phase 1 (1.3 million square feet) and below grade construction for the slightly taller Phase 2 (1.4 million square feet) is progressing quickly.

The Well office tower (1 million square feet) is topped out, the AS+GG-designed TD Bank on Front Street (1.2 million square feet) is well into construction, and the 820,000 square foot Bay Adelaide phase 3 (ScotiaBank) is nearing completion.

Google’s 400,000 square foot local HQ at 65 King East and Menkes’ 690,000 square foot 100 Queens Quay Sugar Wharf office building are getting closer to completion. First Gulf’s 460,000 square foot EQ Bank Tower is climbing to grade. More office space will be coming online via mixed-use projects u/c such as WestBank’s 19 Duncan (includes 150,000 sq feet of office).

The 54 storey 11 Bay office tower near the waterfront has supposedly landed a major anchor tenant (yet to be officially revealed but likely Amazon) so we might see a start next year. More are in the development pipeline including a couple of supertalls (Oxford’s Union Park and 191 Bay Street). Westbank’s BIG-designed Union Centre proposal was recently bumped up to 298m but no news yet on an anchor tenant. No doubt the impact/longevity of WFH will likely stretch the timelines of new proposals moving to construction.

Is Toronto not seeing as much WFH as is happening in the United States? I ask because office vacancy rates, especially in secondary markets, are soaring. The next major financial crisis will probably be CMBS defaults as the office owners aren't able to pay the loans they took to purchase/develop the office buildings. Looks like Toronto's office market is weathering the pandemic very, very well. At least in the Class A space where offices are still going up.

[dc_denizen]

regarding office construction, in the US:

LA expects 7M sf of new office space delivered in 2021
Boston — 6.6 million square feet and San Francisco — 5.7 million square feet — were the second- and third-most active markets for new office space.

https://therealdeal.com/la/2021/04/0...ats-a-problem/

[C.]

Originally Posted by dc_denizen

regarding office construction, in the US:

LA expects 7M sf of new office space delivered in 2021
Boston — 6.6 million square feet and San Francisco — 5.7 million square feet — were the second- and third-most active markets for new office space.

https://therealdeal.com/la/2021/04/0...ats-a-problem/

But vacancy rates are soaring in these cities and Toronto is stable.

https://www.forbes.com/sites/danpont...h=1a2a85711344

In the US, epicentres of high-tech are feeling the real estate pinch. The Greater Boston region has witnessed sublease space nearly double since the onset of the pandemic. More than 3.5 million square feet of prime office space has been put back on the market. Like Manila and Ho Chi Minh, the regional vacancy rate has also risen, from 12.3 percent to 15 percent across Boston. San Francisco—the hub of high-tech—is no better. That city's office vacancy rate reached 16.7 percent by the end of 2020, with no signs of it letting up in 2021.

[mhays]

Originally Posted by Crawford

Weird. Why would anyone buy cash-flow negative RE when they could just put cash in a basically no-cost, nothing-to-manage index fund that generates averaged 10% returns forever?

RE returns are irrelevant unless you're constantly flipping, which sounds like an extremely dangerous game. And getting killed in the interim.

Because value can increase, and RE can be relatively stable.

And (this is big) because you can buy with heavy leverage. You're making money on the whole value, not just the amount you've paid so far.

And because even negative cash flow might be temporary.

[dc_denizen]

Originally Posted by C.

But vacancy rates are soaring in these cities and Toronto is stable.

https://www.forbes.com/sites/danpont...h=1a2a85711344

I think that's a pretty old report (jan 2021)

eg Boston's vacancy rate is currently 14.6% (oct 2021)

https://www.nmrk.com/insights/market...market-reports

pre-pandemic it was 12%. so hardly what I would call soaring.

[dc_denizen]

Originally Posted by mhays

Because value can increase, and RE can be relatively stable.

And (this is big) because you can buy with heavy leverage. You're making money on the whole value, not just the amount you've paid so far.

And because even negative cash flow might be temporary.

nonetheless, I challenge you to find markets in the US where RE investments are made with the expectation of being cash flow negative on rental income.

[C.]

Originally Posted by dc_denizen

I think that's a pretty old report (jan 2021)

eg Boston's vacancy rate is currently 14.6% (oct 2021)

https://www.nmrk.com/insights/market...market-reports

pre-pandemic it was 12%. so hardly what I would call soaring.

That's a 21.7% increase...

[Wigs]

Originally Posted by dc_denizen

regarding office construction, in the US:

LA expects 7M sf of new office space delivered in 2021
Boston — 6.6 million square feet and San Francisco — 5.7 million square feet — were the second- and third-most active markets for new office space.

https://therealdeal.com/la/2021/04/0...ats-a-problem/

Toronto has 8.8 million sq. ft (SF) of office space under construction.
Vacancy rate:
Downtown: 6.3%
Midtown: 5.3%
GTA total 8%

From what I posted in the GDP thread:
Greater Toronto Area
- 252,000,000 SF total office space
- ~94 Million SF of which is Downtown
- 8.8 Million SF u/c

826,000,000 SF total industrial space
total vacant: 3.1M SF or 0.4%

Both office and industrial markets have ~100,000,000 SF more than Greater Philadelphia, for example.

source: Colliers (Q2 2021)

[Northern Light]

Just talking proposed units here, not starts........but Urban Toronto's August summary is a bit of an eye popper.



8,140 units proposed.

That's only for the City proper, and only for August!

[C.]

Originally Posted by Northern Light

8,140 units proposed.

That's only for the City proper, and only for August!

I track similar data for another city - absolutely incredible that could happen in a single month. Most cities would be celebrating with rapid growth with that many requests in a year!

Normally I would say that proposals do not equate to building starts, but all the construction photos in the Toronto complication thread proves otherwise.

[dc_denizen]

Originally Posted by Wigs

Toronto has 8.8 million sq. ft (SF) of office space under construction.
Vacancy rate:
Downtown: 6.3%
Midtown: 5.3%
GTA total 8%

From what I posted in the GDP thread:
Greater Toronto Area
- 252,000,000 SF total office space
- ~94 Million SF of which is Downtown
- 8.8 Million SF u/c

826,000,000 SF total industrial space
total vacant: 3.1M SF or 0.4%

Both office and industrial markets have ~100,000,000 SF more than Greater Philadelphia, for example.

source: Colliers (Q2 2021)

a bit apples to oranges: the values I posted were completions, whereas this looks like sq feet under construction.

anyhow seattle has 9.8 MM sq feet of office space under construction per that report , Chicago 3.5 MM sq feet

[mhays]

Originally Posted by Wigs

Toronto has 8.8 million sq. ft (SF) of office space under construction.
Vacancy rate:
Downtown: 6.3%
Midtown: 5.3%
GTA total 8%

From what I posted in the GDP thread:
Greater Toronto Area
- 252,000,000 SF total office space
- ~94 Million SF of which is Downtown
- 8.8 Million SF u/c

826,000,000 SF total industrial space
total vacant: 3.1M SF or 0.4%

Both office and industrial markets have ~100,000,000 SF more than Greater Philadelphia, for example.

source: Colliers (Q2 2021)

I'll add my standard caveat that these numbers might not be apples-to-apples.

Colliers says my city has 80,000,000 sf of office, while CoStar says it has 215,000,000 sf -- amost a 1:3 ratio.

They have different standards and levels of effort in different cities, even within one firm.

[Wigs]

my whole point was there's a ton of Office (and industrial) space in the GTA and that there's 8-9 Million square feet of Office under construction.

Americans don't seem to realize how big Toronto is and how damn quickly it is growing.

[mhays]

Agreed on those points.

I'd trust the brokerages to be reasonably accurate on construction stats...though I noticed some incorrect details when I looked at my local Colliers report just now.

[dc_denizen]

interesting video about buying condos in Vaughn, Ontario:

https://www.youtube.com/watch?v=Xhu1LtxWswc

some comments:

. I own 6 properties in Toronto area at this time and 4 were purchased through pre construction. Yes you could get burned but that's why you deal with reputable companies and lawyers.. those do cost a premium, but you get what you pay for. If I can be of any help or refer you let me know.

Most people in US don't realize that real estate market in Canada is hotter than in Beverly Hills, I can't explain why anyone would pay a million for something that is worth $150 in another city, but it's an investors dream

any idea when transit city 6 and 7 will be released and if they will be worth investing, the per square footage in Toronto is at $1250 / foot and $1400 average it seems. I feel anything north of 401 and even close to 407 will soon be around $1200 as well

haha..this market is crying out for derivatives trading. I'd like some $1000/sq foot puts in the Vaughn submarket please.