Rapid Condominium Growth and the Emergence of the Ultra-Luxury
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Rapid Condominium Growth and the Emergence of the Ultra-Luxury Condominium Market in Toronto, Canada By Andrea L. Mager A thesis submitted to the Department of Geography in conformity with the requirements for the degree of Master of Arts Queen’s University Kingston, Ontario, Canada April, 2013 Copyright © Andrea L. Mager, 2013 Abstract In this thesis, I undertake a study of rapid condominium growth occurring in the City of Toronto, Canada, and the emergence of an ultra-luxury condominium market during a time of global financial instability. This thesis examines the influence of rapid growth on Toronto as a world city during this time by asking the following research questions: Why has Toronto become a place of safe investment for condominium buyers during a time of global economic uncertainty? Why has the ultra-luxury market emerged in Toronto? What are the driving forces behind it, how does it contribute to Toronto’s standing as a world city, and what does the future hold for this niche market? What is the current state of the condominium market in Toronto and what can we expect to see happen in the near future? To answer these questions, this thesis draws insights from urban, political, economic and social geographic literature, statistical and policy data, as well as twenty-five (25) semi- structured interviews with a variety of key industry stakeholders in the City of Toronto. The results of this study point to a changing demographic landscape in a city where fundamental elements have not only secured Toronto’s reputation as a place of safe investment, but also created an environment of pent up demand leading to the emergence of the ultra-luxury condominium market. The City of Toronto has garnered international attention for its rapid rate of high-rise growth, and continues to craft its reputation as a world city through the addition of four, 5-star hotel condominiums. Additionally, this thesis recognizes the pressing social, environmental and political issues that accompany this recent, rapid growth, and provides general recommendations for addressing these complex topics through the suggestion of future research on the topic. ii Acknowledgements This study was made possible by the remarkable efforts of many individuals, and I am so grateful to each one of them for their contributions. First, I would like to give a special thank you to my supervisor, Dr. Betsy Donald, who went above and beyond her supervising duties during this process. From our first meeting until the final editing of my thesis, she was a constant support, providing the perfect balance between giving guidance and creating the opportunity for independent discovery. Dr. Donald’s ability to provide constructive feedback demonstrates the trust and care she places in each one of her students, and I feel very fortunate to have had her as a guide during this academic endeavour. Thank you, Betsy! Secondly, I would like to thank the entire faculty in the Department of Geography at Queen’s University for providing an enriching learning environment. In particular, I would like to acknowledge the following individuals for their mentorship, guidance, and support over the course of my graduate studies: Dr. Anne Godlewska, Dr. George Lovell, Dr. John Andrew, Dr. Laura Cameron, Dr. Mark Rosenberg, and Dr. Paul Treitz. I would also like to thank all of the staff in the Department of Geography for their hard work in providing such a high quality academic experience, and allowing me the opportunity to pursue my Master’s degree at Queen’s University. I would like to thank my fellow graduate students for both their encouragement and humour, essential components in making all of our challenges become attainable goals. I would like to show my gratitude to my family and close friends who were there every step of the way. I could not imagine completing this degree without their love and support, for which I will be forever grateful. Finally, I would like to thank all of the individuals who agreed to be a part of my study. Their contributions provided the valuable material required to create original and insightful research findings. I am extremely grateful to each and every one of these individuals for their efforts. iii Table of Contents Abstract ……………………………………………………………………………..………...ii Acknowledgements …………………………………………………………………….….....iii Table of Contents ………………….…………………………………………………………iv List of Figures ………………………………………………………………………………..ix List of Tables …………………………………………………………………………………x Glossary of Terms …………………………………………………………………………....xi Chapter 1: Introduction……………………………………………………………………..1 1.1 Introduction………………………………………………………………………………..2 1.2 Purpose of Study and Research Questions…………………………………..…………....3 1.3 Focus of Study…………………………………………………………………………….6 1.4 Methodologies……………………………………………………………….………….....7 1.4.1 Literature Review…………………………………………………………………….….7 1.4.2 Quantitative Analysis of Secondary Housing Market Data and Statistics……………………………………………………………………...8 1.4.3 Qualitative Analysis of Primary Semi-Structured Interviews with Various Stakeholders………………………………………………………………….9 1.5 Quantitative and Qualitative Analysis…………………………………………………...12 1.5.1 Positionality……………………………………….……………..….................13 1.6 Conclusion……………………………………………………………….……………....14 Chapter 2: Literature Review…………………………………………………..………....16 2.1 Overview…………………………………………………………………………...........16 2.2 Post-War Toronto…………………………………………………………………….….17 2.2.1 The Influence of Fordism………………………………………………….….18 2.2.2 Canadian Housing Acts and the Canada Mortgage Housing Corporation………………………………………………..…………….….21 2.3 Policies of Metropolitan Toronto: 1954-1998……………………………..…………....24 2.3.1 Rapid Suburban Growth: 1950s and 1960s…………………………..…….....25 2.3.2 Rethinking Planning and Stimulating the Housing Market: 1970s……..........26 2.3.2.1 Federal Policy: Assisted Home Ownership Program (AHOP)…………………………………………………..…….….27 iv 2.3.2.2 Municipal Planning: Toronto’s Central Area Plan (1976)…….…..28 2.3.2.3 Citizen Activism: The Influence of Jane Jacobs………………......31 2.3.3 Economic Boom and the Affordability Crisis……………………………….34 2.3.3.1 Provincial Reponses to a Demand for Social Housing……………34 2.3.3.2 Municipal NIMBY Reactions……………………………………..35 2.3.4 Promotion of Urban Intensification: 1990s………………………………….35 2.3.4.1 Government Reactions to Globalization…………………………..36 2.4 Amalgamation and Creating the New City of Toronto: 1998……………………….…37 2.4.1 Restructuring of Provincial Government………………………………….…37 2.4.2 Municipal Evaluation: The Greater Toronto Area Task Force………............39 2.5 Policies of the 2000s: Toronto’s Growing Knowledge-Based Economy, Curbing Sprawl and Concerns Over Gentrification…………………………...41 2.5.1 A New Wave of Gentrification……………………………………………...42 2.5.1.1 Toronto’s Economic Development Strategy……………………...45 2.5.2 The Greenbelt Act…………………………………………………………...47 2.5.3 The Influence of Richard Florida’s Creative Class………………….............51 2.5.3.1 Business Improvement Areas (BIAs)……………………………..52 2.5.4 Condofication…………………………………………………………....…..54 2.6 Housing Developments Today and the Rise of Condominiums……………………….54 2.6.1 Selecting Building Sites: Urban versus Suburban…………………………..55 2.7 Conclusion……………………………………………………………………………..56 2.7.1 The Future of Toronto………………………………..….…………………..57 2.7.2 Seeking Local Understanding within a Broad Field of Literature: Project Rationale ………………………..……………………58 Chapter 3: A Current Overview of the Condominium Market in Toronto………….60 3.1 Introduction……………………………………………………………………………60 3.2 The 2007-2008 Financial Crisis……………………………………………………….60 3.2.1 Overview of the Subprime Mortgage Crisis………………………………...61 3.2.2 Crisis’ Impacts on the Canadian Housing Market…………………………..65 3.2.2.1 The Role of Canadian Banks……………………………………..66 3.3 The Current Status of Mortgage Lending in Canada……………………………….…69 3.3.1 The Bank of Canada………………………………………………..............70 v 3.4 The Condominium Market Today………………………………………………...72 3.4.1 The New Home Market…………………………………………...........72 3.4.2 The Golden Years: 2008-2011……………………………………....…74 3.4.3 The Reality of 2012………………………………………………...…..76 3.4.3.1 First Quarter: Stable Growth Predictions……………………76 3.4.3.2 Second Quarter: Canadian Housing Market Expected to Moderate……………………………………………………...78 3.4.3.3 Third Quarter: Nearing Moderation in the Market…………...78 3.4.3.4 Fourth Quarter: Less Demand, Time to Settle……………..…79 3.5 Changing Demographic Profile of Canadians…………………………….............80 3.6 Focus on Toronto Condominiums…………………………………….……..…….84 3.6.1 Condominium Starts, 2012……………………………………………...85 3.7 Classifying Ultra-Luxury Condominiums………………………………………...87 3.7.1 The Residences at the Ritz Carlton…………………………….............88 3.7.2 Trump International Hotel and Tower Toronto………………………..90 3.7.3 Living Shangri-La Toronto………………………………………….…91 3.7.4 The Four Seasons Hotel and Private Residences Toronto………..…....93 3.8 A New Standard of Luxury……………………………………………………….95 3.8.1 Services and Amenities………………………………………………....95 3.8.2 Cost, Developers, Units and Extras……………………………............95 3.8.3 Location, Location, Location…………………………………….....….98 3.8.4 Marketing and Image……………………………………………...….103 3.9 Changing Social Geographic Landscape…………………………………....…104 3.10 Conclusion…………………………………………………………….….…...105 Chapter 4: Methods and Findings……………………………………………….106 4.1 Introduction………………………………………………………………….…106 4.2 Descriptions and Identification of Interview Participants………………….….106 4.2.1 Ultra-Luxury Sales Managers…………………………………….…108 4.2.2 Development Executives………………………………………….…108