Those that know me best will understand my advocacy of outdoor space in condominiums.
Perhaps it’s a personal bias, or perhaps it’s a professional reccommendation.
But it leaves a lingering question: how do you determine a value for outdoor space?
A few weeks ago, I went to Betty’s on King Street East for a beer with a few friends.
A friend-of-a-friend who I hadn’t seen in about two years told me that she had started reading my blog; she said she found it randomly on Google, and had read about ten articles before she ever knew that I was the author!
She told me she had reached two conclusions:
1) I don’t own a bike
2) I love terraces
She was correct on both accounts.
Ironically, she and her boyfriend were both in possession of their bike seats since they had just come from a wicked ride and so we avoided discussing bike lanes and traffic congestion in the City of Toronto…
We did, however, discuss terraces and she asked me, “Dave, what kind of value do you put on a terrace?”
I considered the question in its simplified form and answered, “Oh, huge! Terraces are sweeeeet!”
She rephrased her question and said, “No, no – I mean what kind of value – like how do you determine the value? What kind of metric do you use?”
That’s a completely different question!
The two most commonly used metrics to determine the value of the interior of a condominium would be the comparable sales method and the price per square foot method.
If the condo one floor above you sold for $X, it would be reasonable to assume that your identical unit is worth the same.
You can also look at the price per square foot of all the units to sell in a recent window, and perhaps determine a slightly broader range.
You have to account for a host of variances, from the layouts, to the features and finishes, and of course for the presence or lack of outdoor space!
So if there’s a 620 square foot unit that has a balcony and sells for $320,000, and there is the exact same 620 square foot unit next door that does not have a balcony, what is that unit worth?
Do you just ballpark it? Maybe throw out numbers until something hits?
“How ’bout like maybe….$312,000? Yeah, I think that balcony is worth like eight grand.”
That’s one approach.
Every buyer will value features differently.
Just because somebody paid $10,000 for a cool “art-wall” in their loft doesn’t mean you can just tack on $10,000 to the price of the condo when you go to sell it….and leave that art-wall behind!
But I think a terrace is slightly different than an art wall, as is the presence of any form out outdoor space.
In its simplest and smallest form, a “Juliette balcony” can provide fresh air where a closed window cannot. You can’t step out onto a Juliette, but at least you can let in the cool breeze and accommodate your friends who still don’t know that smoking is hazardous to your health…
The next step up would be one of those tiny “step-outs” that measures about two feet deep and four feet wide. I wish I had a photo of these (they have them in my building at 230 King Street) but unfortunately, I don’t think many Realtors take photos of these and put them on MLS as advertising ploys…
So then let’s consider an actual balcony that measures four feet deep by about ten feet wide. That’s forty square feet.
How do you value that?
Do you put a lump sum on it – call it $5,000?
Or are we looking at price per square foot?
If we considered any and all “outdoor space” to fetch $80 – $100 per square foot; a far cry from the $500/sqft average of the interior of most condominiums, then this balcony would be worth upwards of $4,000.
But here’s the rub: how do we distinguish between a balcony and a terrace?
If we’re going to put a value of $100 per square foot on something like this:
Then can we really put the same value on something like this:
I call that little balcony “the penalty box.”
That’s the balcony that sits atop my extra large terrace, and I have NEVER seen the person who lives in that condo actually sit outside on his balcony.
It’s shaped like a penalty box, and it must feel the same way. To sit in that 4 x 6 cube and overlook my terrace; watching me garden, half-naked, while singing “Time After Time” by 80’s pop sensation Tiffany must be rather unappealing to this condo-owner.
So is that outdoor space actually worth anything? It can’t be, since this guy or gal has never used it!
So then, are we back to the lump-sum, every-situation-is-different method of valuation?
When I sold a unit at King George Square with a beautiful 330 square foot terrace, I had a conversation with the owner of the identical unit one level above. She asked me what her condo was worth, relative to the unit below, and I said, “Your condo is the exact same thing with no terrace…..I’d have to take off about $35,000, maybe, $40,000”
In essence, that was a lump-sum approach – calling it $35,000.
But I also considered that while other terraces may command upwards of $100 per square foot, this terrace was “open air” since there were no other balconies or terraces above it, and it came upgraded with cedar-tiles, which are not cheap! The view over King Street and George Street was unobstructed, and the sunshine was fantastic. I had to
So does the price per square foot increase as the square footage does?
I would have to argue, yes.
I had a client purchase a penthouse at Quad Lofts with a massive 800 square foot terrace with all the bells & whistles. The unit below was the same layout, but I figured that this terrace had to be “worth” up to $125,000.
Eventually, however, you can receive diminishing returns as the square footage increases.
A terrace of 3,000 square feet can’t be valued at $400,000, can it?
Eventually, your marginal utility diminishes as the size of the terrace increases. I suppose there’s only so much you can do with 2,000 square feet outside.
So if I had to “ballpark it,” I would say that a terrace of 200 square feet or more is worth about $80 – $120 per square foot depending on the view, exposure, height, surface (concrete versus cedar tile), privacy (or lack thereof), whether there is a natural gas line for a BBQ (or whether propane tanks are allowed by the condominium), and of course the measurements of the outdoor space itself.
A 60-foot-long balcony that is 4-feet wide isn’t nearly as useful as a terrace that is 15.5 x 15.5 feet.
There are a host of factors to consider when valuing outdoor space.
I suppose in the end, it all boils down to the buyer and what he or she puts a value on.
We’ll just have to hope that the seller agrees…Back To Top Back To Comments