Have you ever heard the term, “Client for life?”
That’s me, in many respects, across a slew of different products and services.
Part of that is simply my fear of change, my thriving on routine, and my obsessive-compulsive disorder shining through. But I also find that when I find something I like, I stick with it. I also believe in loyalty as a two-way benefit in many business relationships.
While my first car was a 1985 Buick Electra – the one with the fake wood-paneling on the outside that’s absolutely iconic, my first real car, ie. one that I owned and didn’t share with my mother or sibling, was a 1996 Toyota Corolla LE Plus. Don’t be forgetting the “plus,” okay?
When I got into real estate in 2003-2004, I was still driving this dark green legend. I eventually upgraded to a 2004 Toyota Corolla and I drove this for the first few years of my career. Although every agent in real estate drove a Mercedes, BMW, or Jaguar, I was not, and never have been, a “car guy.” I’m not interested in cars. I don’t attend car shows. I don’t care about horsepower, or engines, or tires, or how loud and annoying the muffler is. But after realizing that, unfortunately, you are judged in this business by what you drive, I realized I couldn’t drive a Toyota Corolla much longer.
I’ve written about this on TRB before, but after a lengthy search through multiple auto brands and dealerships, I realized that I could simply upgrade from Toyota to Lexus, which is basically a nicer version of what I had been driving since I was 17-years-old.
Fourteen years later, I’m on my fourth Lexus. It’s not a rich, snobby car, but it’s nice. Nice enough. What keeps me with the brand, however, is the customer service. I know the people at Lexus on the Park by name. I have their cell phone numbers. And they go above and beyond for me, every single time. That’s why I keep coming back.
I’ve got a slow leak in my front right tire, and I also have the ear of one of higher-ups at Lexus on the Park, so while we were texting about real estate (he’s in the market, but working with his sister who is an agent), I showed him the dashboard display of the tire pressure.
Within a minute, my phone rang.
“Bring me the car,” he said. “Drop it off, take a new ES, and I’ll get it fixed up and bring it back to you.”
Do they do this for everybody? What did I do to deserve such incredible service?
The new Bosley Real Estate office is at 103 Vanderhoof Avenue, which is literally a four-minute drive from LOTP. I drove over there, found my guy, and he handed me the keys to a new ES sedan – white, bit of an “old man car,” but damn was it clean inside! More than just clean, however. It had new car smell.
My guy said, “Don’t worry, I’ll bring your back when it’s done.” I didn’t think it could be that simple, but low and behold, they fixed the tire, did some long-overdue maintenance on the car, sent me an invoice through text message, and when I went out to the parking lot at 7pm on Tuesday night, the white old-man car was gone, and my car was in its place.
The service, I swear!
I got into my car and it felt different. It wasn’t leaning low to the right side, for one thing. But beyond simply fixing the tire, they cleaned the car inside and out. It was like new. More importantly, it had new car smell.
It’s not just the “idea” of clean, or the scent of cleaning products, but rather “new car smell” is something undeniable. Whereas some smells conjure up images of different times, different places, or different products, “new car smell” is synonymous with only new cars. You would never confuse new car smell with anything else.
When I put my daughter in the car-seat on Wednesday morning, she said, “Daddy, your car smells so clean!”
I smiled at her and said, “Maya, that’s not just the smell of clean; that’s the smell of new car smell!”
She paused, nuzzled her Teddy, and said, “Daddy, is this a new car?”
I said, “No, babe, it’s the same car, it just has new car smell.”
Seemingly disappointed, she said, “Oh. So it’s just the same car as before?”
She’ll learn all about new car smell and the inherent value when she’s older.
Is there such a thing as new condo smell?
I think we all enjoy that smell of fresh paint when we walk into a condo, and there’s something to be said for the presentation of a beautifully-marketed and staged listing on paper, being equally as appealing to the other senses once we walk inside. But is there a premium to be had for a truly new condo?
I’m shocked by the prices of new condos out there, and for the life of me, I don’t understand them.
I’ve been writing for over a decade about how I don’t understand pre-construction condos costing more than resale, but what about new condos that have been completed, are soon-to-register, and being sold by the developer?
You know the RECO rules prohibit me from “unauthorized advertising” and “disparaging a competitor’s listing,” so let me show you the following, and you can fill in the blanks…
First of all, how sneaky that the agent has put 645 square feet when this unit is 600 square feet. Now, the onus is on the naive buyer to understand that we don’t calculate the price per square foot on total square footage. Most of you know that, but what about the lay-people out there?
So this is a $783,900 listing, measuring 600 square feet, or $1,307 per square foot.
There is no parking and no locker.
This building is brand-new. The building has yet to be registered as a condominium corporation.
The unit has never been lived in.
So, if you will, please help me make sense of this price.
Those who “invest” in pre-construction condos will explain that newer condos sell for more. Why? Well, because newer condos are worth more.
Ah yes, I forgot – you can use the question in the explanation, and vice versa.
But biased justifications aside, what is the true value of “new?”
In this case, looking at a brand-new, never-lived-in condo, listed for an egrigious $1,307 per square foot, you must ask yourself what the units are trading for in the building next door.
The last sale for a comparable-sized unit was one month ago:
For those playing along at home, $592,500, for 654 square feet, is $906 per square foot.
But wait! We are not comparing apples to apples!
This unit has a parking space and a locker, which could be valued at $30,000 and $5,000 respectively. So take $35,000 away from the $592,500 sale price, and suddenly we’re looking at $852 per square foot.
The building next door is $1,307 per square foot.
That’s a 53% premium.
So how would you value new?
How would the next person?
Well, let me tell you how I would look at this, and in doing so, I’ll ask a series of questions to which your answers may differ from mine.
Here are the discussion points:
The old adage, “location, location, location,” may or may not ring true here.
How do you value location in your property search?
Because for these two condos above, they’re literally across the street from one-another. Any buyer looking at the more expensive condo is not valuing location, first and foremost, in their search.
In this case, I don’t like the location. I honestly believe that this is where people buy condos when they can’t afford to be where they want. You’re in between two highways. ‘Nuff said. So if the location is subpar, then how is a builder asking $1,307 per square foot? I have no idea. Seriously, don’t ask me. If a client called me and said he or she wanted to pay $1,307 per square foot to be here, I wouldn’t do it for them. I just wouldn’t, honestly.
In the context of our valuation – how you put a price on new, it all depends on whether or not you value location or whether or not you value something else more. Such as…
2) Property type
Neither of the condos above are the cool, funky, exposed-brick, hard lofts that many condo-buyers dream of. In fact, they are both boring, cookie-cutter apartment-style units.
Many buyers will put the property type atop the search, and going back to the hard-loft example, some buyers don’t care whether they are in Queen West or King East; they just want that unique loft!
For the purposes of our exercise, the cool, funky, exposed-brick lofts are rarely new. Builders just aren’t making any more of them, and if there were a brick factory somewhere in Toronto that would make a cool loft, a developer is just going to knock it down to build a 40-storey tower.
So what else could buyers be looking for that new condos bring along?
3) The building itself
Can a condominium have “curb appeal” like a house?
Do you find a glass tower like Murano to be more appealing than an old, grey, brick buidling like 250 Queen’s Quay?
Quite often, newer condos come with better-looking exertiors, or nicer and/or popular designs, which some people really value. There’s a reason that “artist’s renderings” get so much attention, or why we see scale-models in sales centres. Even though, to many buyers, only the inside of the condo matters, some buyers really care about what the building looks like. You might find a so-called “classic” look in a 1990’s or 2000’s condo, but chances are, the newer buildings look better to most buyers.
4) Property style, vibe, brand, and intangibles
Do you care what your building is called?
Maybe you don’t, but many buyers do. Otherwise, we wouldn’t have names for condos, like “Bisha.”
Do you care what the building atrium looks like? Do you care who designed the chairs in the lobby that nobody ever sits on? I don’t. But some buyers do. Probably the buyers who pay $1,400/sqft for condos in pre-construction, but I digress…
When 75 Portland Street first came out, every single listing advertised that the architect was Philippe Starck. Every single listing, without fail. And here we are, more than a decade later, and people still put this name on the listing.
Quick question: who the hell is Philippe Starck?
Pretend you know. It’s fine. I’m not judging.
I sure didn’t know this back in 2009!
Do you care who the interior designer or architect was for your condo? Would you pay more for a “big name?”
Ask the folks who bought pre-construction at 650 King Street back in the day. Renowned designer Munge Leung was supposed to do the design of the common elements in the building, and this was marketed to buyers in pre-sales. When it was revealed that Munge Leung did not work on the project, the condo owners sued. You can read the 2015 Toronto Star article about this HERE.
I didn’t know who Munge Leung was in the early-2010’s when this building was in pre-sales, and if I’m being honest, I still don’t. I don’t really care either, but that’s just me.
How many buyers out there, however, do care?
A lot, it seems.
And they’re probably lined up to pay $1,700 per square foot for “King Toronto” because Bjarke Ingels has his or her or their name attached.
Who is Bjarke Ingels?
My cynical side refuses to believe that more than 1/10th of one percent of the population have heard of Bjarke Ingels, or Munge Leung, or Philippe Starck, and yet buyers will pay more for “new” condos because they have brand-names attached.
What about a condo with Momofuku prominently-displayed in the base of the building?
What about a condo with Robert De Niro and Nobu Matsuhisa’s names attached, as well as a restaurant by the same name?
These are all elements of new condos in Toronto, and often, they drive the price.
5) Layouts and smart-design
Many new condos advertise this thing called “smart design.”
But isn’t that just a nice way of saying “small?”
The irony is, many of these micro-condos have pillars that kill the space, or rooms that aren’t square or rectangular, thus incredibly hard to furnish.
Today’s builders aren’t actually building “smart” for buyers, but rather smart for themselves. Cram as many condos onto each floor as possible, and who actually cares what the floor plans look like in person, when you’re selling to investors off floor plans in pre-construction?
“Smart design” and “efficient design” many also mean “hotel-sized kitchen appliances,” but that doesn’t stop a lot of young condo buyers from rushing to put down deposits at sales centres.
“New” and “smart” are synonymous in downtown Toronto condos, even though I find the “smart” features to be dumb.
No question about it, newer condos have better finishes than older condos.
Older condos have laminate counters, newer condos have some sort of stone, whether it’s granite, quartz, or a hybrid.
Older condos may have carpet or laminate flooring, and newer condos have at least engineered hardwood.
All the “standard” finishes are better in newer condos, hands down. This is barely even a discussion point, and as cynical as I may be, I wont’ deny the value in a newer condo simply because the finishes are better, and that’s probably a 5-8% value right off the bat.
But let’s not forget about wear-and-tear either…
Certain cultures will apply a higher value to a condo that’s never been lived-in.
Do you feel the same way?
In this case, there’s some notion of prestige associated with a new condo. Mabye they draw parallells to virginity, purity, or the circle of life (and death…).
For us more rational folks, we might simply recognize that a condo which has never been occupied has absolutely zero wear-and-tear. No scuffs on the flooring, regardless of the cost compared to another building. There’s not that one kitchen cupboard door which is falling off the hinge. The sliding closet door hasn’t been kicked by a tenant after watching the Leafs get scored on in overtime. There’s zero wear in a “new” condo, and that does have value.
So what do you think?
Try to take my cynicism out of the above analysis, if you can even call it that. But is there a premium to be had for “new” in the condo market?
I would argue, yes, when it comes to the finishes and the lack of wear-and-tear.
But I would argue a resounding no when it comes to the intangibles like the name of the condo, the architect/design team, brand name, building demographic, and maybe even the exterior of the building, but I would probably lose that battle with many of you.
I don’t belive there’s a value to “smart design” because unless we’re talking about a car-charging port in your underground parking space, I believe that “smart” is a word used to take advantage of stupid people, when it comes to pre-construction condo sales.
Bottom line: I just have no idea who’s paying $1,300/sqft, devoid of parking or locker, for that ridiculous condo I posted above.
All the fresh paint in the world couldn’t provide the jolt to my senses, necessary to pull the trigger on that.
Now, if the condo had new car smell, that’s another story…Back To Top Back To Comments