I just got home from a banner night of showing 2-bedroom condos to my aspiring lessee-clients.

The building is so new that the top floors aren’t even finished yet!

So how do the prices at 18 Harbour Street compare to that of an established (completed!) building?

Here’s something you may have heard before…

When a condominium is “ready for occupancy,” it’s probably less than half finished.  They build from the ground up, so if you’re the lucky owner of suite #205, chances are you’re taking possession before the units a few floors above you are completed.

The lobby is finished (hopefully…), as are the parking garage and the elevators, but in many cases, that’s about it.

Quite often, the hallways have no carpets, wallpaper/paint, light fixtures, or signs.

None of the amenities are finished; what would be the point in that?  Why finish the gym when you can finish the 17th floor and start collecting maintenance fees from ten other owners?

And that’s what it’s all about – collecting maintenance fees from whoever you can!  The developer can give occupancy at any time, so he’ll tell the 2nd, 3rd, and 4th floor people to move in while the 5th floor and up is still being completed.

Of course, I’m generalizing, but when I arrived today at 18 Harbour Street and looked up to see that the top four floors didn’t even have exterior glass, I started to chuckle.

18 Harbour Street is a whopping fifty stories with 600 total units, brought to you by the good folks at Pinnacle International who also built 12 & 16 Yonge Street and who will probably build as many other buildings on the surrounding lands as they can.

Possession of the units began at the start of May, and all of a sudden we’re seeing the market flooded with units both for sale and for lease.

My clients, Kate & Christie, are currently living at 12 Yonge Street in a unit that has far outgrown them.

Christie has the larger bedroom, since Kate uses the parking space.

But Kate’s bedroom is so small that it is really just a bed-room in that you can barely squeeze in between the wall and the bed frame.  I believe it’s about seven feet by seven feet.

Kate finally decided that she’d had enough of living in an over-sized closet, and thus the two ladies agreed to start looking for a larger space.

They set a budget of $2100/month but most of the “larger” units we saw at 12, 16, and 18 Yonge Street were all $2300 and up.

I tried to get them out of their “bubble” and see some units on King, Lombard, and Church, but they want to continue living in the “concrete jungle” as they put it, so I had no choice but to monitor the listings for units just south of Lake Shore.

After one month, one failed offer, and no suitable listings, we turned our attention to the new building right next door at 18 Harbour Street.

And after scouring for units at 12, 16, and 18 Yonge Street, we were now like kids in a candy store with all the listings at 18 Harbour Street that have flooded the market.

There are currently eleven 2-bedroom units priced at $2,100/month or below, not to mention the other eight 2-bedroom units that are just out of their price range at $2,200 – $2,6,00.

Tonight, we spent two hours travelling up and down the elevator, juggling handfuls of keys, and having the run of the mill.

The building felt completely empty, since there was practically nobody coming in and out of the lobby, nor did we run into a single person in the elevators or in the hallways.

But the lobby was finished, and surprisingly, so too were all the common elements such as the hallways; although the gym, media room, and the other extras won’t be completed for some time.

As far as price goes, this is where things get interesting.

We saw three units all ending in “09” and as you might expect, they were all the same layout.

But the prices were all different!  One was listed at $2000, one at $2100, and one at $1950.

So you might expect that the “best” of the three same units would be listed at the highest price, but no!

In fact, one unit was 20 floors higher than the other with a much better view, yet it was $150/month cheaper than the other.

And had any of these units been listed at 12, 16, or 18 Yonge Street, I think they’d all be $2200 and up.

There is a discount for units at 18 Harbour Street for several reasons:

1) Supply and Demand
There are so many units available that clearly owner/landlords are fighting over tenants.  The rental market in Toronto is hot right now (as evidenced by the five offers on that Carlton Street condo I mentioned yesterday), but in a building where there are 20+ two-bedroom condos available at once, buyers have their choice.  This puts downward pressure on the price, and even though the building is newer and prettier than 12, 16, and 18 Yonge Street, the prices are lower.

2) Unfinished Business
There is “new” and then there is “too new,” which is what many of these condos are.  They’re so new, in fact, that some of the building isn’t even completed and thus you have construction workers coming in and out everyday for months.  Your unit may sparkle inside, but there are probably 10-15 floors at this building that haven’t been finished yet.  Try coming down in the dust-filled elevator every morning and you’ll be polishing your shoes on the way to work.

3) Lack of Amenities
Most lessees expect a discount since the gym, pool, billiard room, rooftop terrace, and BBQ pits aren’t ready, and the lessees usually win out.  Part of this goes back to point #1 about supply and demand, but I think landlords realize that you’re not really getting what you paid for if the amenities aren’t completed.  After all, these are a “selling point” when you buy in pre-construction as well as on the resale market, so why should it be any different when it comes to renting?

Kate & Christie found a unit that they like, which is not only larger and with more upgrades than their current unit, but priced equally as well.  It has a better view, a larger balcony, and a better layout than where they currently live.

Since there are 4-5 of the exact same model unit on the market, we’re going to try and negotiate the price down even further.

How is the listing agent supposed to know I’m calling his bluff when I say, “If you don’t take it, we’ll move on to one of the other twenty units currently for lease”?

Since none of these units have the same listing price, it’s pretty clear that nobody really knows how to price these units and no precedent has been set.  On my MLS system, only one unit has leased so far and that was a 1-bedroom.

Could it be possible that Kate & Christie set the precedent?

They’re the guinea pigs that get the ball rolling at 18 Harbour Square?

At least they won’t need to rent a moving truck; they could literally carry their furniture through the courtyard from 12 Yonge Street to 18 Harbour Square on July 1st…