Developers in Toronto are facing a challenging market as condo construction slows dramatically. With no new condo project launches in the first quarter of the year — the slowest period in at least three decades — many are grappling with high carrying costs for undeveloped land. As a result, they are exploring unconventional short-term uses for their properties, including pickleball courts and self-storage facilities.
Adapting to a Changing Market
Mitchell Cohen, chief operating officer of Westdale Properties, which has paused about 12 of its projects, emphasized the need for patience and discipline in the real estate market. "Putting them on hold is very costly," he said. "We have to pay our taxes, security, and we have to pay the bank. But real estate rewards patience — if it's paired with discipline." Cohen noted that his company is investigating all options for its sites, including converting projects to rental housing, but he remains cautious about following the trend toward purpose-built rentals.
Alternative Uses for Land
Some developers are getting creative. Brookfield Property Partners and Larco Investments recently proposed rezoning part of a property at Toronto's Yonge and Bloor intersection — formerly an HBC department store — into self-storage. Cohen applauded the move, saying it reflects the need for developers to adapt. "I was not shocked at all. That proves my point that real estate developers need to adapt to a changing market," he said. He added that short-term uses like pickleball or food trucks can help offset costs, even if they don't cover the full carrying expenses. "It doesn't pay the freight, but it's better than a vacant lot."
Rental Market Challenges
While many developers have shifted to purpose-built rentals, the rental market is also showing signs of strain. Urbanation Inc., a condo research firm, reported that the vacancy rate in stabilized buildings completed since 2000 in the Greater Toronto Hamilton area reached 5.4% in the first quarter of this year — more than double the rate two years ago. New projects are offering incentives, with two-thirds providing concessions to renters and nearly half including two months of free rent with a lease. Cohen warned against assuming that purpose-built rentals are a safe bet. "It's not always a silver bullet. People are moving into purpose-built rentals like it's a safe harbour, but it just happens to be the only boat leaving the dock right now," he said.
Waiting for Recovery
Despite the challenges, many developers are holding onto their land, hoping for a market recovery. The backlog of unsold condos must be cleared before demand for new construction picks up. In the meantime, creative land use strategies — from pickleball to self-storage — are helping developers manage costs while they wait for better days.
