More Land Assembly In Toronto’s Vibrant “Yonge & Eglinton”

DevelopmentProposal

A couple of weeks ago, I posted a video about the new Freed Developments project underway at 150 and 155 Redpath Avenue in the Yonge & Eglinton area.

That was a classic example of a true “land assembly,” and if you look further, you’ll see even more land assemblies on surrounding streets, as Yonge & Eglinton is undergoing a rapid transformation.

Let’s look at another land assembly today, but along with the video, let’s look at the prices paid for the properties…

DevelopmentProposal

Here’s the video:

You’ve seen the video, and you’ve virtually walked that block, but let’s take a look at the map just to hammer home the location of this land assembly:

LandAssemblyRedpath

There you see the two houses on Redpath (#71, 73), the fourteen houses on Soudan (#174 through #200), and the box above those represents the apartment building at 18 Brownlow Avenue.

It’s incredible, when you think about it.

Somebody had the foresight, the strategy, the risk tolerance, and the money, to slowly buy up sixteen homes, and one large apartment building.

But how “slowly?”

And how much money?

You know that I can’t disclose sale prices due to TREB and RECO rules – the ones the public loves so very much…

But I can disclose the prices of the houses, on the whole, without disclosing which price was for which house.

Here are the sale dates (closing dates, not agreement dates), and corresponding prices of fifteen of those sixteen homes on Redpath Avenue and Soudan Avenue:

1/4/2014 – $1,300,000

1/8/2014 – $980,000

1/8/2014 – $1,275,000

1/10/2014 – $1,100,000

3/11/2014 – $1,125,000

4/4/2014 – $1,128,000

4/11/2014 – $1,600,000

6/10/2014 – $1,295,000

7/2/2014 – $1,188,000

7/30/2014 – $1,000,000

8/1/2014 – $1,125,000

8/27/2014 – $1,000,000

9/9/2014 – $1,150,000

10/7/2014 – $1,000,000

5/1/2015 – $1,800,000

Did you notice how I said “fifteen” houses, and not sixteen?

One of those sixteen homes still shows as being owned by an individual in both Land Registry and Public Records.

Is it possible there’s a “holdout” here?

It’s very possible that there were several holdouts.  How else do you explain the last sale – $1,800,000, for a house that’s probably “worth” $950,000 on its own?

$1.6 Million for a semi-detached house?  It looks like some pretty big premiums were paid here!

All told, the “assembler” in this case paid $18,066,000 for these fifteen houses.  Not bad for all that land!

As for the apartment building at 18 Brownlow, it hasn’t sold, according to Land Registry, but it’s assessed for taxes at $29,511,000 for 2016.

We can speculate like crazy as to what is going on here.

Maybe the project is a joint venture between the owner of the sixteen houses and the owner of the apartment building at 18 Brownlow.  Or maybe there’s a conditional agreement in place, who knows.

Judging from the sale dates of all those houses – given fourteen of the fifteen closed in 2014, I’m going to assume there were a lot of conditional sales.  In fact, land assemblies are often done on a conditional basis.  The assembler will throw out a massive number, say, 50% over fair market value, and convince the owner to sell conditional on the assembly of the other homes.

My guess, given all those 2014 closing dates, is that the assembly was pulled off in 2013, and the assembler allowed for very flexible closing dates.

If I were a betting man, I’d wager that later this year, we’ll see this project hit the market.

It’s open season in the Yonge & Eglinton area right now, and no building, or house, is safe.

Next week, I’ll show you just how much development is going on in the area.  It’s absolutely astounding, and the density at Yonge/Eg is going to change more than any other area in the city of Toronto over the next five years.

13 Comments

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  1. ANewInvestor says:

    knowing that someone is buying up in yonge and eglinton area, and a few condos (rather than apartment buildings) are to be built up in the near future, what is your /everyone’s idea on how to participate in (or benefit from) the Yonge & Eglington property boom in the coming 5+ years?
    As some collector once said, you sell an art piece, you earn a commission, you keep a good art piece, you make a fortune.
    Any property (e.g. condo , or nearby townhouse?) to buy on the area? because the new condos will revive the area (with the undesired high density in population)?

  2. Appraiser says:

    Man, are those poor souls praying at the altar of “real estate crash” ‘gonna have sore knees.

  3. condodweller says:

    There is also a large land assembly deal happening on the South side of Sheppard Between Wilson Heights and Faywood. It`s almost the entire block save for a couple of buildings at the Wilson Heights side. It will be interesting to see what goes up there. It`s been boarded up for years.

  4. Natrx says:

    It’s bonkers out there. And people buying are going to complain how crowded the subway is.Gee, don’t buy there then.

  5. Julia says:

    Madison has bought most of the buildings on Yonge between Castlefield and St Clements as well as the parking lot at Castlefield and Duplex. I live in the area – I’m fine with the development, but you can’t keep increasing density without changing anything else. Try getting on the subway at Yonge and Eg at 8:30am – good luck! I do hope the old bus barn at Yonge and Eg will be turned into a park, as suggested by some, rather than more condos!

  6. Kyle says:

    Very informative David.

    Now that Metrolinx has finally gotten their heads out of their ass on UPS pricing, I predict there is/will be lots of land assembly going on in the Mount Dennis neighbourhood. The proximity to the UPS, Eglinton cross-town, Y-U Subway into Vaughn or downtown, will turn that neighbourhood into a really desirable place to live over the next 10 years.

  7. condodweller says:

    Great article David! These are the stories I love to read about. I’m sure people in the market love your riveting articles on how you won the bidding war by $1,000 and why, but these stories are fascinating. Lot’s to speculate on. Here are some of the questions that pop into my mind:
    1. How did the negotiations on the house sales go down?
    2. Did the sellers know their buyer was a land assembler?
    3. I would try to pickup the first few as a regular sale in order to pay market value but how do you do that without tipping your hand? Question is who is the buyer listed on the offer.
    4. I’d be curious how many sales happen in the GTA where the owner is approached to sell that are not part of a land assembly deal.
    5. If you were the agent of the seller, how would you handle it?
    6. How long do you hold out?
    7. From the builder’s perspective, isn’t paying double value for the houses still cheap? Let me elaborate on this later.
    8. What’s involved at the city level in rezoning a block like this and how long does it take?
    9. Will house prices in these zones appreciate in anticipation of a land assembly deal? You know, people love to speculate and place their bets.

    These are just what pop in my head through brainstorming.

    Regarding #7, I can’t wait to see your numbers David but just using educated guessing I think these guys are going to make out like bandits. Frist, how much will it take to build these buildings? Here is my guess maybe I’m way off but let’s play ball anyway, I’m sure other readers will have better numbers.

    $40 million to build two buildings (including government fees, design etc.)
    $10 million to buy the rental building
    $ 5 million to tear down the rental building
    $ 20 million to buy the houses (couldn’t be bothered to do the math)
    $ 1.5 million realtor fees (assuming commercial rates are the same, could be more?)
    $ 1 million to run the building. Should be enough to start as it’s a brand new building. Since the developer is going to be the owner/operator is it fair to assume it’s going to be better quality than what they unload un us buyers?

    Let’s call it a round $90 million in costs in first 10 years.

    For revenue, let’s use say $1700 per month in rent on average which at 436 units is just under $9 million so let just call it $9 million. This during the first 10 years makes income at 90 million.

    So you’d break even in about 10 years and after that they are looking at about $8 million revenue per year. That’s about 10% cap rate.

    These are wild guesses but I think $20 million per building is probably high which should cover underestimated costs.

    This should be an interesting discussion…

    1. daniel says:

      Condodwell, i hate to break it to you but you’re in a completely different postal code from the real numbers on a project like this. The hard costs to do a 463 unit building (i.e. just what you pay for labour and materials and the management of the construction site) are more likely between $80-120M. The gov’t charges alone are likely to be $10M+, then you have to pay all the architects, engineers, lawyers, etc. Also note that the apt building had $29M assessed value, but i’m guessing they’re keeping that so exclude it from your value.

      Then, you’re rental revenue assumption has no deductions. How about some prop tax on there. Betcha it’s a couple mill a year on that alone. Then you have the utilities on common areas, staff, insurance, etc.You’re hopefully hitting a 70-75% profit margin on the rents.

      Overall, you’re probably more like a $140M project, and you probably need to do something like $2200 per month or you need to do tiny tiny units to make it work (actually you probably need to do both). Then you likely need to accept a pretty low return rate once the building is complete.

      My guess is that, like most development deals in Toronto, it’s fairly tight.

      1. condodweller says:

        @daniel No problem, I knew I was off. It’s surprising to see the building cost that high though.

  8. Francesca says:

    I grew up in this area in the late 70s to mid 80s and it’s unbelievable the transformation the area has gone through. I ask myself with real estate prices as high as they are now in the city, where are all these people who got bought out of these houses going? I’m assuming that most of them had families and are looking to stay in the same area and school zone. With the limited supply of houses on the market where are they going to find another house to move into assuming they don’t want to move into a condo. I lived in the North York area through the massive condo development phase along Yonge Street and witnessed what happened to the schools in that area. They got so crowded that kids that live across the street from a school are now being bused to schools less populated several kms away. In fact we moved out of our townhouse at Yonge and Finch when we learned that our daughter would not be eligible to walk to the school across the street from us because of the new school zones. I worry that the Yonge and Eglinton area is going to face this same problem with all the condos going up. Lots of families move into the area for the family feel and good schools but how will they feel when they find out they can’t go to the local schools anymore? As much as I understand that urban areas have to intensify by moving up what is happening to all the family areas surrounding these new urban areas when new schools or other services like community centres aren’t being built to accommodate the increase in demographics? As families get priced out of freehold homes, more will choose to stay in condos once they have kids and all these kids will be needing to go to the schools that won’t have room for them. We now live in Markham and here too we face similar problems with lots of new houses being built and then the schools become crowded and get portables to accommodate the overflow. However the positive side is that within 1-2 years of this happening the city builds new schools to accommodate the increase in population and brand new state of the art community centres to address recreational needs. So we get brand new schools within walking distance to our homes. I guess the city of Toronto doesn’t have enough funds to open more schools in heavily populated areas when it can force kids to go to schools that aren’t full and bus them there. It’s a shame as it takes away the walkability factor that makes Toronto such a great city to live in away. We actually contemplate moving back to the city because we miss many things about it but when we look at how bad the school situation is getting in certain areas with schools needing desperate repairs and so overcrowded we are glad to be living in the suburbs within a five minute walk to both a public and Catholic school and High school. It works for us as my husband works in York region and I’m a stay at home mom so I guess we are lucky and we are still close enough that on the weekends we come into the city to enjoy what it has to offer.

    1. Francesca says:

      I found this article which demonstrates that apparently it is already a concern they are looking into for the area. It references also the Yonge and Sheppard area like I had mentioned and specifically McKee PS which was the school we lived across the street from that couldn’t accommodate us already in 2007.

      http://www.postcity.com/Post-City-Magazines/November-2013/News-Focus-School-shortage-looms-as-midtown-development-rises/

  9. Graham says:

    My old neighbourhood. Lived at 95 Redpath for a few years and use to walk by these properties all the time. I imagine the owner of 18 Brownlow (18 Brownlow Holdings Ltd. also known as Crofton Moore from Montreal) is the one assembling the land.

    No doubt the City will fight them on the height and density.

  10. Joe Q. says:

    Lots of increased density around Davisville as well (new construction on Balliol, recent construction on Merton etc.) Apparently it’s putting a strain on the physical infrastructure — storm sewers, electrical, etc.

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