Industry Profile: Andy Brethour of PMA Brethour - PART 2

This week, in Part 2 of our conversation with Andy Brethour of PMA Brethour, we take a look at Andy’s views on planning and how we, as a city, compare to other cities around the world.

NewInHomes (NIH): What has changed as far as residential development in Toronto?

Andy Brethour (AB): Energy conservation and environmental sensitivity have vastly improved over my time in the industry. These didn’t exist in our industry 10 to 15 years ago. Back then, we didn’t worry about sustainability, we didn’t even talk about it. These are fundamental changes.

NIH: What are some of the challenges that we face moving forward?

AB: The biggest change in Ontario has been Dalton McGuinty’s growth plan in ‘03 and ‘04 with the Oak Ridges Moraine. What it did, whether you support it or not, is artificially constrained supply in the 905 area, all with the goal to create higher density form in the 416. Now, if you look at the land value from that time period to today, they’ve gone up three to four times what they were. That made high-rise much more attractive and financially viable for the first-time buyer. We have all but eliminated the first-time buyer from traditional subdivision development; the costs are just too high, which is sad.

When I came through customs last week, the American customs agent commented on how hard it was for him to find a home. He had been looking for six months, and his home in Atlanta cost $150,000. There is nothing to be found for anything that close. He commented that when he flies into Toronto, there is nothing but land for as far as the eye can see. When you’re flying, you can see a very distinct line; that line limits our development, which has caused values to climb dramatically. Toronto was always looking to build high density anyway, but since 2003, it’s been a steep climb. Back then, we were building at a ratio of 70:30, low-rise to high-rise. Now, we have flipped that in only eight years. Volume is somewhat similar, but the product has changed significantly.

NIH: What is holding us back from further developing into these open spaces?

AB: We live by a four-foot rule. Everything that I can see within four feet matters to me, not what that customs guy can see from a plane. We have all this land, why aren’t you developing it? We look at what’s going on close to us. Close to us, we see chaos, but the opportunity is there to move the development to other areas while limiting the effects on Toronto from an infrastructure standpoint. Toronto has moved in price too high, too fast. A lack of infrastructure and the higher prices for housing are limiting our growth potential. Any corporation that is looking to move here is challenged. Where will my people live? How will they get here? I moved my business to north of the 401 simply to avoid congestion and allow people to live in an environment outside of the chaos.

Tax regimes, employment, and housing are the three cornerstones for industry to move to any neighbourhood. We now compete on a global stage, and we need to be cognizant of the value of our housing on this level. We are quickly pushing ourselves to an unaffordable level, all because it’s artificially constrained. The only way to fix this is through a more balanced approach to development. We need more land in the system for more traditional low-rise development. That could stabilize the market and offer more affordable options moving forward.

NIH: What are some of the benefits of the condo boom in Toronto?

AB: High-rise has been, and will always be, a lifestyle choice. It allows people to live in an urban area like King West; it provides an affordable alternative for those who want to live next to Rosedale. It also acts as an artificial rental option. The high-rise phenomenon has provided rental apartments for the 100,000 new immigrants who come into Toronto every year. As our market becomes a little tougher with the issues about oversupply, this will offer amazing opportunities for the rental market – it’s fantastic.

NIH: So, where are we headed?

AB: Well, there is no reason to expect any changes; unless policy changes, which will only come with a change of government. Frankly, we need more balance. We shouldn’t have allowed ourselves to flip this from 70 percent low-rise to 70 percent high-rise in such a short time period. From an affordability standpoint, it needs to be much closer to 50/50. To be honest, we were probably too extreme when we started low-rise development or ‘sprawl,’ although one could make the argument that we were developing at very high density in our suburban markets anyway. The growth was occurring at such an extent that we just needed to provide housing.

Thanks to Andy Brethour for taking the time to sit down and chat with us about his experience in the industry and the future of Toronto. Hopefully, everything balances out!