“Semi Dead”

I’ve long surmised that the days of developers and speculators building semi-detached houses are long over.

Barring a handful of reasons such as zoning and of course, the money in their pockets, there doesn’t seem to be any reason to construct these dwellings, joined at the hip.

Below is a great article by Terrence Belford from the Globe & Mail that examines the dying breed…

By Terrence Belford
Globe & Mail

Townhouses and semi-detached homes have been one of the mainstays of Toronto’s neighbourhoods almost since the city was founded. They were a dandy way for builders to get the biggest bang for their buck and provided an affordable option for families.

My first house was a semi on Balliol Street; I paid $24,500 and held it together with two mortgages.

Now, however, they are fast disappearing from the urban landscape: In the city of Toronto, semi-detached homes have reached almost endangered-species status. Granted they still represent a healthy chunk of the market in the 905 area, especially in Peel and York Regions.

But in Toronto, new semis are so few and far between that they almost qualify for museum exhibit status alongside the passenger pigeon and the horse-drawn milk wagon.

“We just aren’t seeing a lot of them built in the city of Toronto,” says Steven Hurst, vice-president of analytics at RealNet Canada Inc, which tracks the GTA’s new-homes market.

Figures for May show that there were only 34 new semis and 144 new townhouses for sale in the city. Compare that with 387 semis and 976 townhouses on the new-homes market in May, 2000.

The overall GTA figures show an equally discouraging picture. In 2000, there were 5,347 new semis; in the first five months of this year only 979 came on the market. Townhouses fell from 6,207 in 2000 to 2,281 in the first five months of this year.

So why are they not being built? Buyers like them. Just ask Sam Crignano, a partner in Cityzen Development Group. With other builders, he has recently done 40 of them at Aria at Leslie Street and Sheppard Avenue, 20 at The Shores at the mouth of Bronte Creek in west Oakville and 140 at Waterlilies at Dundas Street and Sixth Line in Oakville.

“People love them,” he says. “They might not be able to afford a detached home, or even a semi, but they don’t want the restrictions of condo living – life on just one floor. Townhouses are the perfect solution.”

Builders like building them as well. Townhouses can take only nine months to build compared with two years for high-rise condos. The risk of running head-on into a market downturn partway through a project is considerably less; the builders get their money out faster, and sticks-and-bricks low-rises are a lot cheaper and less complicated to build than concrete-and-steel high-rises.

“We would absolutely love to do more of them,” says G.P. Di Rocco, vice-president of Edilcan Development Corp. of Concord. He has 68 townhouses under way at his Valhalla project on the site of the old Valhalla Inn near Highway 427 and the East Mall. “The challenge is finding a site where the numbers work.”

That, in a nutshell, provides the answer to why semis and townhouses may still be plentiful in some areas of the 905 but rare as hen’s teeth in the city of Toronto: The numbers no longer work.

“The greatest challenge is always finding appropriate sites,” says Martin Blake, vice-president at Daniels Corp. “Land costs are just too high; vendors’ expectations make being able to get the density you need to be profitable just too high for low-rise. …

“In the city there are no more greenfield sites left; almost all sites are brownfields and they present challenges with remediation.”

So what builders need is a hook, a specific reason to build semis and townhouses that overcomes the need for high density or a new design form that packs more units onto each acre.

While that can be done with townhouses by stacking them or arranging them back to back, it just doesn’t work for semis. A semi is a semi is a semi. Put four side by side or back to back and they become townhouses.

Daniels is building 51 affordable stacked townhouses in the heart of Toronto at its One Park West project on Sackville Street just north of Dundas Street East. Its hook is that these homes are part of the city-sponsored Regent Park redevelopment. The city required that affordable townhouses be part of the overall plan, and left it to Daniels to come up with a form of housing that would achieve its goals.

What Daniels is building are stacked townhouses ranging in size from 650-square-foot one-bedrooms to 1,350-square-foot three-bedrooms on two levels. Prices start in the mid-$200,000 range.

“We know there is considerable demand for them,” Mr. Blake says, adding that one of the main factors in creating affordable townhouses at Regent Park is the city’s support.

Keeping planners happy is the main reason the Benvenuto Group added five three-storey townhouses to its 83 Redpath project on the street of the same name south of Eglinton Avenue West. As it stands today, 83 Redpath also includes a 21-storey tower with 207 units. Original plans called for a taller tower with more suites.

“We were going to put our amenities building at street level but the city said it wanted townhouses,” says Mitchell Abrahams, company president. “The planners felt people would feel safer at night walking by houses rather than open spaces.”

So Benvenuto reworked the numbers and found that if it built five luxury townhouses selling in the $900,000 range, the end result would be about the same as having more suites in a larger tower.

“It all comes down to economics,” Mr. Abrahams says.

But economics is not just what you can sell homes for. It also involves costs, time frames, interest on borrowed money and the speed with which the final project can be sold, Mr. Di Rocco points out. His Valhalla project is a case in point, he says.

The six-acre site could have accommodated four condo towers or three very tall ones. Edilcan looked at the local demand and opted for three shorter towers of 22, 30 and 35 storeys plus 68 townhouses with starting prices at about $400,000.

“When we started to work out the mix of what to build, we realized there was terrific pent-up demand for townhouses in the area. None of the other projects in the area had them; private homes in the area were too expensive for buyers with young families, and by going with townhouses we could stagger the cash coming from the project instead of waiting until each tower was finished.”

There is also the risk factor involved with high-rise condos.

“It will take us six or eight months to finish the townhouses, but two years to build a tower,” he says. “You can predict as far as six or eight months; doing that two years ahead is a lot more difficult.”

It all comes down to making the numbers work, Mr. Crignano says.

“With high-rise you can get 60 suites to an acre; with semis or traditional townhouses maybe 10. If, however, you can convince the city to accept more innovative designs like stacked or back to back or even stacked and back to back, you can get 50 to an acre and then the numbers start to make sense.

“Frankly we would love to do more townhouses in the city; we know the demand is there, but the cost of land is just too prohibitive for just about anything except high-end luxury townhouses. And even then they might not make sense unless they were part of a larger high-rise project,” he says.

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