Fashion Faux Pas?


4 minute read

December 4, 2009

There’s been some awesome feedback and comments on my blog in the last couple days about the future of real estate in our city.

So let me add some more fuel to the fire.

Fashion House condos are selling in pre-construction for an average of $550 per square foot, and as high as $632.

But if the market is going up forever, then who cares….right? 🙂


So over the last few months, I’ve made no bones about the fact that I’m looking to purchase another pre-construction condo.

Have cash, will travel.  But a lot of my readers think it is a mistake.  Many of you think that the current market isn’t sustainable, and that there is a correction, crash, or downturn on the horizon.

On Wednesday night, I received an email from the good folks at Freed Developments concerning their latest endeavour – The Fashion House.

For those of you don’t know, Freed Developments has been slowly taking over the King West area for the past half-decade, and have driven the prices to insane levels.

Don’t get me wrong – I love a nice $14 rye & ginger as much as the next person, but I don’t really see the purpose of living on King Street in between Spadina and Bathurst.  The nightlife is snobby, pretentious, and expensive for no reason.

Why has the area become this way?  That’s a question without a simple answer.  People go there because other people go there, and before you know it, everybody goes there.

And five years ago, everybody started to live there!

Freed bought up all the land in the area years ago, and continues to do so.  They purchased the old Travel Lodge Motel a few months back, and that will be yet another new condominium project down the road.

Prices for condominiums in the area have gone through the roof, and it all started with 66 Portland Street.

As I wrote on my blog in the Spring, a unit situated on the 2nd floor that stared into the back alley of the restaurants on King (during the garbage strike in the 33-degree heat, no less) was listed at $325,000 and sold for a ridiculous, unthinkable $385,000.

We all laughed at the fool that “overpaid” to such a degree, but over the next few months, everybody on the 2nd floor started to sell and chase the $600+ per square foot that seemed previously unattainable.

Since then, both 50 and 66 Portland Street have been seeing prices as high as $650 per square foot!

And along comes the latest release of suites from Fashion House Condos, where prices in pre-construction are as high as $632 per square.

I visited the sales centre on Thursday, looking to take advantage of two suites in the “Adelaide Building” that were priced at $454 and $473 per square foot respectively – with a monstrous 330 square foot terrace that seemed to come with the unit for free, but even after speaking directly with the developer’s second-in-command, they refused to let me put down 10%.

Prices for units remaining in the “King Building” are $560, $577, $534, $467, $494, $583, $474, and $632 per square foot respectively.

This begs the question, “What the #$%* is going on?”

Is it just me, or are these prices insane?

How much higher can our market go?

Is it a rational, well-thought-out decision to purchase a unit at Fashion House for $583 per square foot in December of 2009, and expect that prices have risen to over $700 per square foot by late-2011?

If the market continues at it’s current pace, then yes.

If the market goes flat, levels off, or decreases, then no.

Speaking with the sales people at Fashion House, they predicted that King West was going to be “A seven-hundred-dollar neighbourhood” down the road.  Is this reasonable?

If prices at 66 Portland Street are approaching $650 per square foot, then I could definitely see people paying $700 at Fashion House.  This project is going to be luxury personified, if you are a snobby 29-year-old who wants to sunbathe on the rooftop deck in between shopping at Diesel and Prada, and before going out to dinner at Conviction, followed by drinks at Blowfish.

The people at Freed Developments have planned this area out to a “T” and they are single-handidly transforming the face of King West.

And I commend them for their efforts.

They’re genius – pure genius!

They took this wasteland and transformed it into yuppie-central in what could only be described as “genius combined with a stroke of luck.”

What came first – the chicken or the egg?  The expensive condos or the yuppie restaurants and bars?

The new Bier Market came along about a year ago, but the clientele was already there.  Now there are even more people who want to live in the area, and soon the average cost of a meal will go from $150 to $200 as restaurants and bars see the aggressive demand.

So what do we make of the prices at Fashion House?

If they allowed me to put down only 10% on this condo in the “Adelaide Building” – 638 square feet with a 306 square foot terrace for $289,900 – then I would do it today.  It’s actually about $278,000 since I could throw in my ridiculous 4% real estate commission, so where is the risk?

In the King Building, you’re looking at $550/sqft on average.  It’s all under the “Fashion House” brand, even if the Adelaide Building isn’t as chic as the King Building, so THAT is where I stand to make my money.  I already think this unit is undervalued compared to what is available in pre-construction and in resale, so it makes sense to me.

But for the people paying $630 per square foot in pre-construction, I have to wonder what planet you’re on.

Even if there is no market correction, I still think it’s nuts.  Where is the upside?

Thoughts from the peanut gallery?

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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  1. IanC

    at 7:50 am


    I took a look at one floorplan…

    The “master” is 9 X 10 with a large pillar. A bed, and that’s it.

    Hall closet worse than some city place closets that will only accept hangers on an angle – looks barely half regular depth.

    Close to the trendy places, but living on top of them on weekends – a bit too close to the zoo… And I work at King and Spadina – not the safest place late at night in my opinion.

    I suppose if you must live in that area, you accept that those are going to be the prices… Even if they don’t make sense to most people – apparently it makes sense to people who pay $650 per square foot.

    My gut reaction is that someone buying there to live has not looked closely at resale in Toronto and does not have an open mind as to what are great places to live for them – great buildings in great locations. At better prices.

    If I left my deposit on a place like this, I would take advantage of the 10 days cooling off period and go nuts looking at resale – that’s one of the few rules in your favour.

  2. LC

    at 10:10 am

    When you factor the terrace into the purchase price, it’s actually more like $310/SF…hard to beat that anywhere in downtown TO. I actually snagged the other unit you refer to as I just couldn’t resist the value per square foot, even if the market “crashes”.

  3. Louisa Martin

    at 10:54 am

    I heard that a lot of the buying when we thought the world was coming to an end was overseas interest. David would know much better than me. But if this is the case, and even if it isn’t, maybe this is the wild card that could make paying 650 a sq ft for a condo seem like a good idea? Canada’s reputation has been enhanced by the financial crisis (prudent, safe banks etc etc), and it seems like a lot of wealthy foreigners want a flight-to-safety type bolt hole here (Ritz Carlton, Trump, Shangri-La, etc). If Toronto gets a whiff of becoming a more international center, then property prices here are cheap. Toronto may not become London overnight, but there’s a lot of wiggle room between $650 a sq ft and 1300 pounds or $2275 a sq ft, which is what you pay for good quality property in central London these days. Is this a good reason to step in and buy Toronto property at current levels? Probably not, as it’s a bit of a long shot, but it looks like interest rates should stay low for a long time, and this might continue to be a catalyst. It really doesn’t look like the US has the stomach to reverse or even withdraw stimulus spending-I could see US rates staying way too low for way too long and fanning the flames of localized bubbles, like the Toronto property situation, where there is too little supply vs demand. And prudent Canada…. what will they do? Raise rates before the US? I don’t think so. In fact, they will probably have to keep rates lower, for longer than even the US if they don’t want the loonie to appreciate further ( and they have been crystal clear that they want the loonie lower.) Personally, I think the risk/reward is that Toronto property could continue to spiral higher vs ?10% off? if it all goes to pot again. Disclaimer: I am talking my own book. I recently bought exactly for these reasons.

  4. David Fleming

    at 11:13 am


    Which unit did you take? #107 or #102?

    If they let me put down the final 5% upon occupancy, I may consider it…

  5. LC

    at 11:32 am


  6. dave

    at 1:21 pm

    Those who expect price increases typically point to soft details which can’t be quantified (wealthy foreign buyers, cheaper than London/NYE, immigration, reputation). Basically all the things that those who sell real estate put in their marketing campaigns.

    Those who expect price decreases typically point to hard details which can be quantified (mortgage rates, incomes, supply/demand relationships).

    Personally, I place more credibility on quantifiable facts than marketing opinions.

  7. WEB

    at 6:28 pm

    These prices at least make me feel that I wasn’t completely insane for buying a brand new detached house with high-end finishes on one of the nicest streets in the Beaches and a few houses from the lake for $450 psf. Plus, I get a 200 sq ft deck, two 100 sq ft balconies, a decent sized yard, a shed big enough for two kayaks and a driveway big enough for 3-4 cars.

    So, just call me insane, but perhaps not completely insane!

  8. buk

    at 12:33 am

    Sales started at Fashion house over 2 years ago. Same with 650 King. Neither project has even broken ground. Feel bad for those original buyers waiting 5 years for their units. Who knows what king west will be 3 years from now. it’s already played out. the party has moved west to WQW and Ossington. Cities transition. Trends die.

  9. LC

    at 4:04 pm

    I changed my mind on this unit. Neighbourhood trumped value this time. I’ve never been interested in anything west of Yonge and so if I have to live in an area I don’t like for the sake of having outdoor space, I’d be better off buying a small house in the suburbs.

  10. David Fleming

    at 9:06 pm

    @ LC

    So you changed your mind during the 10-day rescission period?

    I’m curious to know what your major deciding factors were.

    I’m still mulling over the project, maybe just because of lack of better options. I think both units #107 and #102 will be incredibly DARK since there are no windows anywhere other than the back of the unit that leads to the terrace, but with the two-metre wall I’m not sure how much light will make it’s way through to the unit.

    Upon selling, you’d have to keep the lights on at all times, and put a lamp in every corner.

    I’m already thinking about selling it and I haven’t even bought it yet…

  11. LC

    at 10:24 pm


    I guess I should give you some background on my situation so it all makes sense. In 2005 I bought my first property, a small one bedroom condo at Radio City, at $287/sf. I bought it because it was all I could afford at the time, and I was familiar and comfortable with the area – even thought my first choice was the St.Lawrence market neighbourhood. I’m currently sitting on a nice of pile of equity at the moment that I want to use as either down payment for an investment property or to rent out this unit and move-up the property ladder into something bigger.

    The unit at the Fashionhouse represented great value to me, and that was all I was interested in. But yesterday, I spent some time wandering around the neighbourhood and it didn’t take long for me to realize that I had to cancel this deal. It wasn’t just the lack of sunlight that bothered me, it was the lack of neighbourhood amenities/spirit that did it. Maybe I have an emotional attachment to the downtown east side of Yonge, but it’s always felt more like home to me than anything on the west side ever could. Even as an investment property, I wouldn’t feel comfortable investing in an area I wouldn’t live in myself.

    I rescinded the deal this afternoon and will bide my time over the holidays looking for other opportunities in January/February instead. And if nothing surfaces, I will just keep saving until something does.

    BTW – 107 has sold, going firm on Dec.15 I believe. But 102 is now available! 🙂

  12. Krupo

    at 12:09 am

    More support for LC’s thinking – based on passing through the area on a regular basis, I’m of the opinion that unless you plan on subsisting on what the pubs provide, want to drive over to Dufferin Mall or something, or plan to hike up to Chinatown, I can’t see the amenities in the immediate area being all that great for livability the way you can comfortable live with the shops and services in an old-school “real” neighbourhood.

    I love how quickly things move in the Toronto market though – the “real” neighbourhoods. I heard that the house adjoining my friend’s family’s home was on the market. We walked over the next day… sold with something like 8 offers in less than a week – high 500k ask apparently closed in the 700s.


  13. BB

    at 5:58 am

    I think #102 AD will be particularly dark since all four sizes are high rize buildings…its like living in a well…plus the terrace would be completely useless as there’s no privacy.

    Also, I am concerned about the entrance hall way in the Adelaide building, per plan it seems so long and narrow, how can we even move a sofa into the unit?

    Anyone knows if Freed also owns the next door 471 Adelaide? Will that be a high rise condo someday too?

Pick5 is a weekly series comparing and analyzing five residential properties based on price, style, location, and neighbourhood.

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