WHAT QUALIFIES A LUXURY CONDO AND WHERE ARE THEY IN TORONTO

WHAT QUALIFIES A LUXURY CONDO AND WHERE ARE THEY IN TORONTO
Charles Hanes,
March 28, 2007

Has anyone else noticed that every condo development being sold in the local ad rags and on web sites (except for simplycondos.com - we don‘t “sell“ condos - we “buy“ them) seem to be “Luxury Condos” (because that‘s what the print says). If you believe this, then . . . . . . “I know a guy who has got some land just off the coast in Florida . . .” - I’m sure you know what I mean.

So in this article I’m going to take you on a walk through the downtown core and tell you some of the differences to watch out for when buying a condo in Toronto. It is important to state up front that “one person’s luxury is not necessarily luxury to another”. A first time buyer’s luxury condo (a very rare bird) does not carry the same appointments that the usual empty-nester luxury condo will offer. The price point always reflects what you are getting regardless of what adjectives you may find in their advertising.

With over 250 different condo projects (including lofts and townhouses) being presently sold in the city it is very difficult for a consumer to jump into this very challenging specialty market (“residential condos”) within the overall body of real estate. With every form of media (except simplycondos.com) slanted totally in favour off (and working for) the Sellers, the realistic potential of the average person being able to find meaningful information about developers (they don’t put their name of condo developments thus “history” and/or “track record” are virtually non-existent) is pretty much senseless.

The scary thing is that even those developers who do boast successful track records by plastering their sales site walls with larger than life posters of their developments actually don’t tell you that all (or the majority of) these impressive looking monuments of architecture are actual “Artist Renderings” as they haven’t actually built any of them yet! Believe me a major part of the delivery cycles comes long after a hole is dug or footings laid or even a building built.

Of those who have built buildings before, some of them (unfortunately the majority) have scarier backgrounds than those who mislead by showing glistening towers that (one day) they will have built (providing everything goes well). I date back in this business to the late 1980’s when the market crashed and lots of the shiny towers that were being sold vanished in the dust!

So, how do you find good developers and/or good condos in Toronto. That’s quite simple, you work with a knowledgeable Buyer’s Agent with specific background in the condo business (that would be me). This expertise is NOT garnered under conventional real estate activity as in conventional real estate (commercial, residential -detached homes, etc) such as houses, for example, are all unique (every home is different by design) whereas condos are multiple residences within a vertical community of homes.

So unique (and specialized) are condos that there is actual legislature (“The Condominium Act”) to oversee this niche market industry. With almost three decades of hand‘s on experience in the Toronto condo scene, I must confess that I am uniquely qualified to join your Buyer Team (you should recruit a condo lawyer and a mortgage broker if not interior decorator and/or designer depending on circumstances).

Not only have I been involved in the sales and marketing of condos over my career, I’ve also been a resident of a condo during this time period. Someone can sell condos for their whole life and not understand the true intricacies of living in them. You would be shocked to learn how many developer’s sales people would have to confess to not having experience even living in condos.

Having resided in condos most of my life there is one simple formula that I can pass on right up front. Absolutely everything in this business revolves around the buyer’s situation in life. Reading a magazine and walking out into this highly competitive arena is a form of intellectual suicide as the sellers who greet you and the marketers who write the advertising and editorial looking ad pages that you find in magazines are working very hard to attract you and get you to buy their product right there on the spot once you walk in the door.

The sales reps working at presale sites are highly trained (in most circumstances although some developers use their family members and friends but usually highly trained sales professionals). Certainly the high end sites recruit the top sellers (“closers”) in the business. I written before that one cannot hold it against these sales pros that you use professional sales tactics and techniques to get you to buy. That’s their job and all Realtors undertake a legal obligation to protect the best interests of ONLY their client (in their circumstance the Seller). This is why it is so important that you retain the services of your own professional Agent to represent your interests, especially when buying presale but certainly any time that you are contemplating buying real estate. The absolute first thing that you want to do is Register with me and I’ll put the resources that you need to work for you.

The developer is always the absolute most significant element in the mix. Certainly Location is next (location, location, location, simply does not hold when it comes to condos as a bad developer with a great location is still a major head ache for buyers). Location must be assessed with respect to neighbourhood as well as the actual condo development (which is a community itself, within the community).

I actually have a list of the city’s worst developers that I used to publish but I wasted so much of my time defending myself against the vicious onslaughts of their litigators (these guys make millions and don’t want a guy like me muddying their water with facts) and I finally got it straight that it’s NOT my job to be the white knight and announce to the world the unethical and unacceptable conduct of certain developers who, quite skillfully exploit the condo act.

I realized that it’s simply NOT my place to inform the world but rather to fulfill my legal obligation to my client of “Full Disclosure” with respect to purchasing a condo, loft or townhouse and by doing so, making sure that consumers do NOT fall into the hands of these, other-than-scrupulous Toronto developers. These are many of the same guys whose web sites and ads run at the mouth about their “impeccable reputations”, “history of award winning projects”, etc., etc., at nauseum!

It really is up to the consumer to either go about buying a condo intelligently or not. As it’s usually the single largest investment of the buyer’s life, it seems abundantly clear to me that it is highly intelligent to retain specialized expertise when venturing into such uncharted waters. With almost three decades of hands-on experience selling Toronto condos for developers I am uniquely qualified to represent you as a buyer!

All I can say is that I can assure you that NONE of my clients buy from them. You can always check out my “latest purchases” on my web site and if you don’t find the name of a condo that you are considering listed there, then you might want to be apprehensive about proceeding. I only put my clients into quality buildings by quality developers in quality locations providing the developer is delivering quality appointments and fixtures. This is a very difficult and demanding challenge.

Great Gulf Homes did a fine job last year with The Hudson. Not the easiest company to communicate with and certainly not known for co-operation, they did supply a very good quality product. With over three dozen purchasers in the building and having not had any complaints following occupancy and registration (they uniquely registered BEFORE many occupancies - a big congratulations is due to them here). They were, however two years late delivering the building and many buyers were frustrated by not having been given the courtesy of any explanation.

So, where are the top end luxury condos in the city? Let’s start by setting out some kind of criteria as to truly be seen as a Luxury Condo the building must build in some safe guards for that elite purchaser who really is not intimidated with price.

The best that the city has to offer would start with The Hazelton Hotel and Residences in Yorkville. This intimate collection of 18 prestige homes reflects the first and primary criteria to factually identify a building as a “True Luxury Condo” which is, the number of residences.

When you buy into a condo you are buying into a community, moreso than when buying a detached house. You will meet your neighbours each day at the elevator and have to live with people not pushing their garbage down the chute for example. Many, many established Toronto condo developments have serious sound problems (you will never find these buildings identified as even the owners are terrified to make an issue about it as going public will diminish the value of their condo). This phenomena is not limited to the cheap stuff! Many of the more pricey in town still strive to cover up their building’s “dirty little secret”.

You must realize that your comfort and enjoyment of your most sacred asset (your home) is morphed into a kind of socialist community which is regulated by a Board of Directors who are elected (volunteers) from the owners willing to volunteer their time to manage the well being of the condo. All issues are set out in The Rules & Regulations and/or The Disclosure Documents and any changes must be (or are supposed to be - I have witnessed a number of boards abusing this) voted on achieving a predetermined (see Condo Act) number of voting percentage (major changes require higher percentages to change).

So, assume you buy into a building with 200 units in it. You are buying a million dollar condo in this building and as “view” is important to you (views are always made a priority but one must anticipate that in a major urban environment, high rise buildings usually adorn most vistas). In 200 unit buildings there are ALWAYS a large number of small suites. Investors always snap up these small suites and most target high end buildings to enjoy some kind of safety of investment.

With investors snapping up the small suites a couple negatives are introduced, one you are going to have lots of renters in the building and two, if a vote to spend money is required, they will vote against spending any money (they are investors after all). So your million dollar dream home comfort is regulated by small speculative investors!

The logical approach is to minimize the number of units in the development into which you buy. The city has only a handful of True Luxury Developments. Existing buildings such as 9 Jackes, 33 Jackes, Windsor Arms, 70 Rosehill, are prime examples of limited density luxury buildings in the city. Established luxury buildings also come with larger numbers like the Queen’s Quay Residences, King’s Landing, Renaissance Plaza, Renaissance Court, Hazelton Lanes, etc.

With respect to brand new luxury developments, what I see as the best “value” in town today as One12 St. Clair Avenue West, a 20 residence development on St. Clair just east of Avenue Road, still offering suites in the $650 - $700 per square foot range. One 12 offers all of the bells and whistles of it’s $900 - $1,000 per square foot competitors out there (like the Hazelton Hotel & Condos).

Another qualifier is Museum House, another intimate collections of 20 spectacular residences located on Bloor St. just west of Avenue Road. Museum House starts at $800 per square foot on the low floors facing north and $900 per square foot for low floor south facing units.

Another Luxury Condo alternative are Hotel & Residential Developments like The Four Seasons Hotel & Residences, Ritz Carlton Hotel & Residences, and Shangri La Hotel & Residences. Oh ya, Donald Trump has been trumpeting his Trump Hotel & Residences here for almost five years now but still no hole in the ground (there is a 2 year turn around to build a condo building). I’ve said for years (just like I did about 1 King West and Sapphire Tower) that these media dominating buildings have proven the worst investments in the city. 1 King West finally got built but it’s now claimed that there is serious construction deficiencies and big time fights going on between the entrepreneur who spearheaded the project and the real guy who stepped in and saved him.

The reason I like the above developments (both hotel condos and residential buildings) is that they have limited “little guy investors”. When you get to having 50 units in a building the suite mix is usually compromised with little units to make the development viable and these little units bring the investor crowd who rent out the units and change the entire dynamic of the building. Over 50 units and you are getting closer to the nature of the problem so it is sound logic to seek out limited number of unit developments.

Yes, be prepared to pay a little more with respect to condo fees (fewer owners to share the costs) but one peer group equates to piece of mind I tell my clients so if your budget allow, seek out limited density developments such as those above.

Before you move, and I cannot overemphasize this enough!!! Register with me and do NOT visit any presale sites or respond to any real estate advertisements without first talking with me (416-783-5000). That’s it for now. Talk soon.

I’m Charles Hanes