Ever heard of it?  Cubic footage?

We all know how square footage plays a major factor in the valuation of condominiums, but why not take that a step further and look up instead of just left to right?

One of the first blogs I wrote back in 2007 was about square footage.  It was called “Apples to Apples,” and I explained why I hate using price per square foot as a metric in real estate.

At the time, I found it was being used recklessly.

Whether it was buyers or agents – many people refused to adjust for differences between one unit and the next.  The PPSQFT was a misleading metric based on sloppy work!

Take the following criteria into account:

Parking – This might make a $25,000 difference on average, or as much as $50,000 in some buildings.

Locker – This might “only” be $3,000 to some people, but a large or double locker might be worth $12,000.

Condition – Oh really – the owners just sank $20,000 into this unit?  Huh…

Age of Building  – Older buildings are worth less than new buildings.  Isn’t this common knowledge?

Location – Does this really need explaining?  Location, Location, Location!

The post I wrote back in 2007 was based on my interactions with two young “investors” who I met when I had listed a unit in the St. Lawrence Market area.  They were only concerned with price per square foot, but they refused to listen when I told them that Mozo was a hot, new building, and it couldn’t be compared to the older building across the street at 330 Adelaide.

They didn’t care when one unit had a locker and the other didn’t, and they didn’t care that one unit had been fully renovated and the other was a heaping pile of crap.

They just said, “This price is too high.  $440 compared to $420 – it’s simple math.”

I let them walk.  It was a “simple” decision on my part.

Fast-forward four years, and the buyer pool is savvier, the Realtors (for the most part) are more knowledgeable, and the price per square foot metric is one of the most useful tools available.  However, you simply must account for the differences.

If two “identical” condos are both priced at $300,000 and they’re 600 square feet each, then that’s $500/sqft.  But if one has an over-sized locker worth $10,000 on the resale market, then subtract that number and calculate the PPSQFT at $290,000, and suddenly this unit is ‘cheaper’ at $483/sqft.

Simple enough, right?

Well, I still find that some people don’t know or don’t care.  Or both.

But I’m going to throw another idea out there, and that has to do with cubic footage.

Is this silly?

I mean, am I being completely ridiculous here?  Am I just taking things to next level (or dimension…) for the sake of argument?

Honestly, I’m not.

I don’t use this all the time, but it’s worth taking into consideration.

One of the major differences between my building at 230 King Street and the new “Vu” at 112 George Street is that my building has units with 8-foot ceilings, and Vu has units with 10-foot ceilings.

I don’t care who you are and what you’re looking for – you can’t tell me you don’t notice the difference.

Don’t get me wrong, I love my condo and I think the world of this building, but I’ll be the first to admit that there is a difference in ceiling height.  Even when my brother lived down the street at King George Square, I could feel that he had 9-foot ceilings as soon as I walked through the front door.

What higher ceilings do, in effect, is create the “Illusion Of Space.”

You know how when you go through the airport, the security guards take away your water bottles?  And you know how when you board the plane, they tell you that your seat can be used as a floatation device, even though if you crashed into the middle of the Atlantic Ocean you would all die?

That’s called the “Illusion Of Safety,” and it serves a purpose.  It’s to make people feel safe.

Well even though that has nothing to do with what I’m talking about now, I figured it was worth mentioning, but I digress…

The “Illusion Of Space” is something that is just as important with 600 square foot condos as it is with 1200 square foot condos.

The higher the ceilings, the larger the space feels.

My best friend lives in the Kensington Market Lofts and he has 14-foot-ceilings.  A friend of mine recently remarked, “His condo is way bigger than yours!”  But it’s not.  In fact, our condos are almost identical in size.  But because he has 14-foot-ceilings and I have only 8-foot ceilings, of course his condo “feels” bigger!

I think that a 600 square foot condo actually “feels” like 700+ square feet when it has that kind of height!

So how do we put a value on this?

You guessed it – cubic footage.

Take the example of two 600 square foot units, priced at $300,000, but one has 8-foot ceilings, and the other has 10-foot ceilings.

One unit is 4,800 cubic feet, and the other is 6,000 cubic feet.

That works out to $62.50 per cubic foot for the first unit, and only $50 per cubic foot for the second unit.

Remember – whether you’re looking at square footage or cubic footage, the units MUST be the same.  In the above example, I’m assuming that adjustments have been made for parking/locker, condition of the units, age of the building, etc.

Make adjustments for these before calculating price per square/cubic foot.

So then, how do you evaluate the price per cubic foot?

It all depends on the buyer.

Some people might not “feel” the extra space, and some might demand it.

If one of those units had 14-foot-ceilings, then you’d be looking at a mere $36 per cubic foot!  But that doesn’t necessarily mean that the unit is a bargain compared to the unit with 8-foot ceilings.

Look at it this way – would you rather have higher ceilings, or larger rooms?

I think the answers might be divided 50/50, and that’s why these metrics can’t be used in absolute terms.

Would you rather have a 600 square foot condo with 10-foot ceilings?  Or a 700 square foot condo with 8-foot ceilings?

One is 6,000 cubic feet, and the other is 5,600 cubic feet.

But I’d like to think that most buyers would prefer the second option – the 700 square foot condo over the 600 square foot condo.  Isn’t that a no-brainer?  Ceiling-height is important, but not that important!

Those 100 extra square feet could be a 10 x 10 foot den!  It could mean a larger bedroom with a massive walk-in closet!

How much extra “joy” do you get from your higher ceilings?

Well, every buyer is different and I don’t think you can ever boil it down to one single approach.

But the lesson to be learned from this discussion is that ceiling-height often goes unchecked, and it really shouldn’t.

I’ve seen a few developers sell condos in pre-construction with 10-foot ceilings and then knock those down to 8-foot ceilings in order to squeeze in a few more floors and a lot more condos to sell!  Hopefully, they’ll recognize that this constitutes a “material change” and that the buyer should be allowed to walk away from the deal, but some developers don’t see this, and many buyers end up sticking with the original purchase.

People talk about the “warmth” of a condo all the time, or whether it’s “homey” or not.

Well those ideas both have to do with the “feel” of the condo, and I always like to feel out the space.

If a vacant condo can feel larger than one with furniture, than a condo with higher ceilings can certainly feel MUCH larger than one with a simple 8-foot rise.

But how you value the overall cubic footage is all up to you…