When The One was put into receivership last month, all of the remaining 70 unsold units of the 85-storey under-construction luxury condo tower were located above the 50th floor, but experts suggest it doesn’t mean nobody wants the sky-high suites.
In fact, it’s the industry norm for upper-level units to sell after those below, whether they’re in an iconic — and also beleaguered — Yorkville supertall project co-owned by Sam Mizrahi and Jenny Coco or elsewhere around the city.
“That is not an unusual situation, and we’ve dealt with that in many, many different developments over the years,” Barbara Lawlor, president and CEO of Baker Real Estate Incorporated, which handles sales and marketing for developers but did not work on The One, told Post City. “There most likely would’ve been a willing audience had they been able to continue,” she said.
The main reason it’s standard for higher suites to take a longer to sell boils down to the cost, she says. “The price goes up as you go up a tower,” explained Lawlor, noting that higher prices simply limit the pool of potential buyers who can afford the expense. “The units tend to get bigger up top, so it’s rarer air up there,” she said.
When the condo market is booming, some developers have even been known to intentionally hold off on selling units up top, suggested Pauline Lierman, vice president of market research for Zonda Urban, a real estate data firm: “While we were seeing such high price increases the last couple years before the last year, that was more of a ubiquitous trend.” Developers may be able to achieve a higher price selling close to completion than if they had sold years before during the pre-construction phase.
“There’s always a number of premier product that’s larger, higher price point that will sell closer to the end, and sometimes it’s more of just finding the right buyer to fit that — and that’s not uncommon for a lot of stuff in the Bloor-Yorkville strip,” Lierman said.
However, not selling at least some of these more luxurious units earlier on can present challenges for a developer, depending on their financing terms with the lender, Lierman said. A developer may not only require 70 per cent of the overall unit sales to successfully finance the construction; they might need 70 per cent of the project’s overall achievable revenue, which is where the higher-priced residences can have a bigger impact.
As for how much of a premium buyer can expect to pay for soaring views, it varies from project to project. “A typical premium can run anywhere from $1,000 to $2,000 per floor; it really depends on the product,” Lierman said, who has seen floor premiums as high as $10,000 although that’s rare. Meanwhile, height is just one factor to consider. The direction a unit faces could also determine the price. For example, a unit with a sunny southern exposure may be more desirable. Or, if a certain floor has views that look over a neighbouring building rather than being blocked by it, it could cost more, too.
To Husain F. Neemuchwala — who about a decade ago purchased a 700-square-foot penthouse suite on the 47th floor of a building in the Spadina–Fort York area — the premium was well worth it. He likes the view and the privacy, but investment potential also drove his decision to purchase a penthouse. “There’s only one top floor in any building,” he said, saying he expects he’ll also be able to one day resell the unit for a premium for that very reason. “It’s a better investment. If you’re going to spend that kind of coin anyway, then you might as well spend $20,000 more, $30,000 more and be the top floor.”
When he bought the unit during the pre-construction phase, he went so far as to have his lawyer add a specific clause to the purchase contract that dictated the unit would be on the top level, whatever that may be. This was done to guard against the chance that the developer might add a few more floors to the original plans before completion. If there’s a downside to the penthouse at all, he says, it’s the elevator wait times, which can add up to 15 minutes to a trip. “It’s the cost of doing business,” he said. “It’s not a big deal.”
Of course, high-rise living isn’t for everyone. “Somebody who doesn’t like heights is not your audience,” said Lawlor. But some of the hassles of multi-family buildings, such as lengthy elevator wait times, aren’t a factor for ultra-luxury condo units. “When it comes to that level of luxury, there are express elevators or private elevators servicing those kinds of floors,” Lawlor said.