There is a growing trend picking up steam in Canada that has its roots in places like Japan, and a few larger metropolises in Europe. It would appear that more and more people, looking to find a residence in a sprawling downtown core without having to pay downtown prices, are choosing to live in “micro-condos.” Such units already have a presence in Vancouver’s largest cities, like Surrey and Victoria. But an influx of these units are in there final stage of construction and development now, with potential buyers and renters expected to flock to these units by the summer. There are nearly 3,000 micro condo units under construction in Toronto that are slated to be completed this year, according to Shaun Hildebrand, vice president of condo research firm Urbanation.
According to Sandra Rinomato of Canada AM, the typical micro-condo unit is extremely small, ranging in size anywhere from 220-400 square feet. Alexandra Posadzki, refers to them as “shoebox condos,” comparing them to the size of two average living rooms, while Jason Proctor of CBC News describes them as the housing equivalents of Swiss army knives: “compact, brilliantly designed units that pack a seemingly unlimited cache of hidden space into 300 square feet.” Furniture is designed to maximize on the available space, such as fold up beds (which are standard issue in the units), with storage space often hidden away. Make no mistakes, these units are minimalist spaces, intended to cater to a very specific kind of lifestyle. The big trade off potential home buyers and new condo renters are willing to make involves trading personal space for communal space.
Opinions regarding these types of units vary, with some real estate analysts and observers pointing out some obvious flaws. For example, Rinomato argues that having only a few items out of place could force the entire unit to look cramped, making the space seem more confining. However, she also suggests that micro-condos make attractive sale units for real estate agents because they typically rent for more money per square foot than their larger counterparts. Hildebrand says condos under 500 square feet can bring in well over $3 per square foot, while the rest of the market averages around $2.50 or $2.60.
Securing the financing needed to purchase one of these micro-units can be exceedingly difficult, considering most banks and lenders have minimum square footage requirements. The concern being, that investors will sell off the properties in droves if the housing market starts to decline. This particular point seems ironic, considering that many investors are touting these units as being an excellent entry point into the market for young professionals. “There are minimum square-footage guidelines that vary market to market, but the most important factor is the condo’s marketability,” according to CIBC spokeswoman Caroline Van Hasselt. The true issue at heart has to do with demand uncertainty. Because these types of units are so new, no one can truly accurately predict how well they will sell in Canada’s major cities.