Food for Thought: Has the Time Come for a New Development Model?
A Globe and Mail article came out last week titled, "Toronto Condo Projects Teeter on Collapse amid rising costs". The article comments on the increasing difficulty for developers to complete projects. The concern comes after Liberty developments cancelled more than 1,100 contracts with buyers, for its Cosmos three-tower project in Vaughan, due the inability to secure financing.
The complexity involved in developing projects have become increasingly challenging amidst our changing market conditions. Lengthy and sometimes unpredictable planning approval processes, and significant material price increases have many developers unable to make ends-meet in the process. Prices for concrete and glass have been specifically troublesome, progressively rising since 2015, and up 6-8% in 2017 alone.
Some developers have managed the increasing prices by pre-ordering expensive materials for multiple towers at once to receive discounted rates. However, the low Canadian dollar has increased demand for our exports, driving up local prices and reducing local supply. Now only developers with deep pockets are able to compete for supply.
We may not sympathize with developers' complaint of lower, 5-8% profit margins. But upon reading this article, the question arises, that if developers are struggling, then perhaps we should be considering another model to develop.
There are a variety of challenges facing the private and public realms: The city is trying to manage housing affordability and infrastructure needs; developers are facing rising costs and securing financing is becoming a bigger challenge; and local residents are struggling with more expensive housing costs and smaller spaces that aren't necessarily desirable to live in long term.
I recently attended at talk by world-renowned, UK based architect Alison Brooks and was inspired by her work and the starkly different approach to development, again raising the question that perhaps a different model could work here.
The country's affinity for historic preservation and restoration has led them to develop not only city-wide planning guidelines, but also small scale, local master plans for specific sites. The planning process is community-focused, understanding that the urban criteria for varying areas to thrive are unique and different from each other. To better manage the development of these communities, projects to redevelop sites are not awarded to the highest bidding developer, but rather through a competition process based on project quality for the specific site.
The result are projects that not only add density, but also add value to the community whether it be in the form of additional or more usable public space, or creation of economic stimulating elements.
Perhaps this difference in approach, whereby the parties to the project work in partnership, can create benefit for everyone: a revitalized urban space, a streamlined planning approval process, and a financially efficient model for developers.
As our city densifies and our urban fabric becomes more complex, encouraging an open discourse between communities and politicians and planners might help us to rethink our existing model and perhaps create something new.