TorontoRealtyBlog

If it’s fair to draw just one conclusion from Monday’s blog post, it would be this: maintenance fees have increased substantially throughout the downtown core over the last decade.

And if we wanted to take that a step further, we might conclude that there’s a “new normal” when it comes to fees.

As I showed you on Monday, I wrote blogs about this way back when.

In 2012, I suggested that $0.60 to $0.70 per Square Foot represented “average fees” and that anything over $1.00 per square foot was insane.

Back then, there were literally only a couple of buildings that had fees of over $1.00 per square foot and they were the black sheep of the Condo world.

Today, things look very, very different.

What does the “average range” look like?  If it was $0.60 – $0.70 back in 2012, can we increase it to $0.70 – $0.80 and call it a day?

I honestly don’t think so.

Most agents would tell you that $0.75/sqft is “very good” or they might argue it’s “below average.”

So what is average?

Before I answer that question, let me get to a question from Monday’s blog.

Blog reader Daniel wrote:

Very good point!

So let’s look at a building with higher fees for a moment.

Here’s one of my favourite east-side buildings, which, unfortunately, is suffering from high fees:

Fees of $948.11 for a condo measuring 854 square feet.

For those playing along at home, that’s $1.10 per square foot.

Back in 2012, I would have called this “insane” and while I still think it’s high, fees like this are very common in 2023.

But there’s more.

As the reader noted on Monday, many condos also come with rental items.

This particular building fits into that category and the listing reads as follows:

That’s an additional $84.57 per month in “fees,” albeit not actual maintenance fees, but if you’re buying a unit in 98 out of 100 other condos that don’t have these rental items, then you’re going to consider it all the same.

Add this in, fair or not, and suddenly the “fees” are $1.21 per square foot.

Owners in this building or others like it would argue that this comparison is unfair, and don’t get me wrong: I absolutely love this building!  But it’s not unfair to point out that when you’re being charged for rental items that aren’t present in an overwhelming majority of other condos, buyers are going to factor this into their monthly carrying costs when they evaluate the property’s prospects.

As another reader noted on Monday, some condos are all-inclusive, some include water and gas, some include just water, and some include none.

If we evaluated all the maintenance fees in the city, plus rental items, plus utilities, and came up with a new cost-per-square-foot, well, I think we’d be somewhere in the Pulitzer world, but that’s just me…

Nevertheless, note that the condo above only includes water, so heat and hydro are separate.

Back in the mid-2000’s, most condos were all-inclusive.

Today, most condos include absolutely nothing.

I would estimate that very few, if any, condos built in the last decade include heat, hydro, and water.  Probably 40-50% include heat and water, and maybe 60-70% include water on its own.  Agents – chime in here with your estimates, as I’m just going from my gut.

A few readers also noted in Monday’s blog that there’s another facet of a condo that can drive maintenance fees more than anything else: amenities.

Just consider these condo amenities, among others…

Indoor pool
Hot tub
Sauna
Gym
Yoga room
Running track
Climbing wall
Rooftop terrace with BBQ’s
Movie theatre
Bowling alley
Games room
Virtual golf simulator
Basketball court
Tennis court
Racquetball court
Poker room
Dog wash
Salon and spa
Zen garden
Library

And so on, and so on.

There’s no question that the more amenities your building has, the higher the fees will be.  And that’s common sense, right?  Even if you’re in a building with 1,000 units and there are enough people to pool their money to account for the reserve fund and the day-to-day maintenance, looking after a swimming pool is going to cost more money than not doing so.  Again, common sense.

To the buyers out there who are evaluating condos based on the fees, surely you have to consider the amenities in the building and whether you’d use them, in relation to the fees.

Of course, other readers pointed out that the age of the building, the condition of the building, and the health of the reserve fund will also affect fees.

It’s not automatic that an older building will have higher fees, but the odds are that they will.

And it’s not automatic that an older building will be in worse condition, and therefore require higher fees.  Some buildings age better than others, some were built with ahead-of-their-time or neutral-enough aesthetics that the hallways and lobby don’t need to be refurbished after seven years, and some have been proactive enough with fees that if a renovation is needed, they can pay for it out of the reserve fund.

Then, there’s always how the building is managed and to a lesser extent, how the board of directors makes decisions.

Case in point: everybody is always afraid of a special assessment, but it’s often your friend, not your enemy.

Let’s say that a 500-unit building needs $1,000,000 for repairs and the reserve fund sits at $1,300,000.  The building’s management and/or board doesn’t want to take the entire amount out of the reserve fund so they issue a special assessment for $2,000 to each unit owner.

This, to me, is a great decision.

But most condominium owners would fight this.  Trust me – I’ve been on condo boards before!

Instead, most condo owners would want the money taken out of the reserve fund, which of course would cause any future condo buyer to balk at the $300,000 reserve fund, thereby making units more difficult to sell, and thus lowering the price.

So instead, if you told the owners, “We could simply raise fees so you’re not hit with the $2,000 all at once,” those owners would rejoice.

Trust me – I’ve been there.

So instead of condo owners paying $2,000, you raise fees by 35% one year, and again, future condo owners balk, and units are harder to sell, and prices fall lower.

Again, trust me – I’ve witnessed this first-hand!

Another reader on Monday asked about the size of a condominium

Consider your classic 10-unit hard loft conversion.

They probably don’t cost a lot to maintain, since there are no amenities, no on site property manager, and minimal upkeep.  But these buildings don’t keep a high reserve fund and I think when there’s a large expenditure, it’s more likely than not that they issue a special assessment rather than increase fees.

Why?

For starters, because increasing fees $100 per month will only net the condo corporation another $12,000.

But also because I feel that people who live in small, 10-unit buildings are intimately aware of everything that goes on in that building, and pride of ownership is far greater than somebody who lives in a 500-unit building.

So having said all this, which buildings have the highest and lowest maintenance fees in the central core?

And what are the average fees in a condo in 2023?

For this information, I turned to Urbanation, which keeps data on just about any quantifiable condo stat, including condo fees.

The sample size here was 578 condos in total, which clearly isn’t all the condos in the central core, but enough to allow us to highlight some with high fees and some with low fees.

Atop the list:

1) 36 Hazelton Avenue
$2.39 per square foot

This 2016-built condo is only 7-storeys and 20 units, clearly the definition of “luxury” in Toronto.

You’re paying for white-glove service as you would expect.

Here’s a listing from last year:

Some of you might suggest, “If they can afford $6,660,000, they can afford $7,492.39 per month!”

That’s the simple answer, and it’s the same answer you get when you lament that the land transfer tax on this condo is $305,950.

Either way, it’s not cheap.

At least when you pay maintenance fees, you’re getting something for it…

–

2) Rosedale Terraces at 1174 Yonge Street
$1.72 per square foot

This is a 2001-built, 4-storey, 18-unit building, very cute from the outside and in a dynamite location.

In this case, the high fees don’t seem to be because of the age of the building or any sort of white glove service.

But I also think the fees play a role in the prices, since this location should be selling for way more, if not for the fees:

–

3) 4 Lowther Avenue
$1.62 per square foot

Another luxury building, although this one dates back to 1987.

7-storeys, 40-units, and yet another Yorkville address.

Here’s a listing from last year:

–

Now, in terms of the lowest maintenance fees in the city, one of my favourite buildings in the downtown core, which has always been known for low fees, is still near the top (er, bottom?) of the list.

Let me see if I can dig up the article from a decade ago…

…ah, here:

Geez, it seems like just yesterday this article was written.  I remember speaking with the columnist on background for the buildings in Toronto with the lowest fees, and Toy Factory at 43 Hanna Avenue was such an interesting story, it became the feature of this article

From the article:

Four years ago, Craig Gagliano did something virtually unheard of in Toronto’s condo industry.

The resident of the west-end Toy Factory Lofts and president of its condo board cut monthly maintenance fees for each of the building’s 213 units — by a stunning 30 per cent.

While the price of living the carefree condo life continues to climb in buildings across the GTA — often at rates well above inflation — the well-kept Toy Factory Lofts still boast some of the lowest monthly maintenance fees in the city.

They now run just 31 cents per square foot for units without parking or a locker, almost half the city-wide average of 59 cents per square foot for similar units, according to new building-by-building analysis of Toronto condos done by the innovative site Condos.ca.

That was in 2015.

In 2023, the fees at 43 Hanna Avenue, according to Urbanation, sit at $0.51 per square foot.

And according to Urbanation, the lowest-fee buildings in the city, from the 577 they have listed, are the following:

1) 347 Sorauren Avenue: $0.35/sqft
2) 670 Richmond Street West: $0.36/sqft
3) 214 Main Street: $0.50/sqft
4) 43 Hanna Avenue: $0.51sqft
5) 576 Front Street West: $0.52/sqft
6) 993 Queen Street West: $0.53/sqft
7) 280 Howland Avenue: $0.55/sqft
8) 78 Tecumseth Street: $0.55/sqft
9) 10 Morrison Street: $0.55/sqft
10) 60 Bathurst Street: $0.56/sqft

It’s worth noting that 347 Sorauren Avenue is a 44-unit building, 670 Richmond Street West is a 12-unit building, and 214 Main Street is a 16-unit building.

So for those that believe all smaller buildings must inherently have higher fees, it would seem otherwise!

Alright, so for those that have only read this far because they want to know the average maintenance fee per square foot happens to be in the city, here we go…

Again, from the 577 units listed by Urbanation, the average is $0.86 per square foot.

On the one hand, that seems really high.

On the other hand, I’m going back to ten years ago when fees were around $0.75 per square foot on average, and if fees are expected to keep up with inflation, we’re actually lucky they’re not higher.

One reader commented on Monday that all fees are going to be in the $1.00 per square foot range in the near future, and that could be correct.

But when I think back to the 2004 version of myself – who felt that maintenance fees were like “paying rent on a condo you own,” that might not have been true of $300 for a 1-bedroom condo.  But what about $700 for that same condo?  At what point do the fees cost so much that there’s no longer an advantage to the carefree lifestyle of condominium living, but rather, you’re paying through the nose for it?

The larger the condo, the higher the fees.

If a 1,200 square foot condo is going to come with $1,300/month fees, on average, in the very near future, then we’re going to see affordability decline even further.

Thankfully, our property taxes are never going up, right?

The post What’s Happening With Condo Maintenance Fees? (Pt2) appeared first on Toronto Realty Blog.