Welcome to this month’s Dear Urbaneer, where clients get to dip into the Urbaneer knowledge bank for answers to their real estate questions. This month, I offer my guidance to an urban house hunter who covets outdoor space.
Whenever I have the chance, I love to be outdoors - whether it's exercising, dining or simply taking in fresh air. I also value the convenience of strolling from my home to village amenities. In both ways, I feel like both of these options offer me freedom. As I embark on my property hunt, I'm wondering how I might balance these two preferences as an urbanite?
Here's my reply:
Dear Inside Out,
This is a very topical point and, as you begin to navigate your wants, wishes and needs in your future Home, it's important to identify your shelter priorities before you begin the search. The short answer is, Yes - if you love downtown living and prioritize the value of being outdoors - purchasing a condo with a terrace might be the optimal solution. However, be aware the value-added benefit of private outdoor space comes with a premium price tag.
You're not alone in your desire to combine urban living with the ability to have personal outdoor space. As land grows scarce in the City of Toronto and freehold property values skyrocket as The Demand For Low-Rise Housing Fuels Toronto Real Estate Prices, condominium living is becoming a more prevalent - and affordable - form of home ownership. As condo dwelling becomes more popular, so does the need to connect this type of homeownership with outdoor opportunity, hence the rise of and focus on terraces and balconies.
Not too long ago The Globe and Mail published the piece The Rise of the Balcony which discusses how developers are responding to a growing demand for balconies and outdoor space on high rise buildings. It explores how balconies and terraces, while offering the chance to take in impressive views, are not for everyone at great heights because of wind speed. It also talks about how architects and developers are working to incorporate balconies as part of the exterior aesthetic to create cohesive design.
As a realtor who works in both the freehold and condominium markets in the original City of Toronto, I think most Buyers value having some outdoor space, if only to step out and confirm what the temperature is like before they choose their wardrobe. For many - in particular busy urbanites making the most of downtown amenities - the outdoor space off their suite may not be used with great frequency, in particular if they reside in a building with a larger communal terrace with barbecues or even a swimming pool akin to a 'boutique hotel'. However, there are many who feel that having sufficient outdoor space to rest and relax off their personal living space is a high priority, and potentially worth the acquisition price premium to secure.
But just how much does outdoor space in a condominium cost? And how can we determine relative value?
Outdoor Space For Buyers And Sellers
Let’s address for a minute how outdoor space is a lure for a buyer and ergo an opportunity to garner top dollar for a seller. There is both dollar and mental value to this feature. I’ll break down the dollar value with some examples below, but let’s talk first about the intangible value.
I’ve written in the past about the psychological need that real estate fulfills, in Maslow’s Hierarchy Of Needs And Toronto Real Estate For Sellers and Maslow’s Hierarchy Of Needs And Toronto Real Estate For Buyers. From both points of view, you can certainly understand how the presence of outdoor space plays a role. For the Buyer, whether it is access to the light and the air (many people are impacted mentally and emotionally with lack of sunlight) or the more pragmatic wish of being able to unwind and entertain outdoors or if it is increased perception of space for the money, outdoor space is a factor in the purchase decision. Additionally, for a Buyer looking ahead to resale of their current purchase, a sublime outdoor space may not only help them garner top dollar, but stand out from the competition. For Sellers, they need to understand the psychological draw of the outdoor space in the buying process in order to tap into that Buyer desire. For Sellers, this works out to presenting their outdoor space to fulfil the Buyer’s psychological needs, which I'll illustrate with examples below.
Elements That Determine The Dollar Value Of Outdoor Space
Just as the price per square foot of interior space can vary widely in a condominium - based on the complex's reputation, location and features, as well as the particular suite's finishes, upgrades and size - the value of outdoor space too, can range, depending on its size, views, and whether it has gas or water lines. The greater the capacity to create an 'outdoor room' the higher its potential value. After all, it's one thing to step out on a sliver of an outdoor perch where you're greeted with high winds and vertigo, and quite another if you can lay down on a chaise with a glass of wine while a partner grills fresh vegetables grown in your outdoor containers.
Remember, much of the intangible value of outdoor space rests on the opportunity that it affords. On a more practical note, it is how the features, size and finishes of outdoor space accumulate to add dimension to that opportunity that drive the dollar amount.
Terrace Or Balcony?
Certainly, the opportunities and constraints of the interior space of any condominium tends to outrank the size of a balcony or terrace, though I do have some Buyers who list an 'outdoor terrace where I can barbecue' to be an absolute necessity and its lack thereof a deal-breaker.
To illustrate how the values may vary between the two, here's two recent sales in the same building - just a floor apart- but with very different outdoor spaces.
The outdoor spaces in question are situated in the reputable VU Condominiums, located in the heart of Old Town Toronto just steps to the St. Lawrence Market. The buildings - bordered by Adelaide East, Jarvis, Richmond East and George Streets were designed by Hariri Pontarini Architects and developed by Aspen Ridge Homes. Completed in 2010, they comprise three distinct sections in two condominium corporations. A lime stone and brick 8-story podium structure connects the two Vu towers - one being 15 storeys and the other 12 storeys - providing many residents with spectacular vistas.
Both the suites in this example are located in the 112 George Street tower - having south exposures with views of the city toward Lake Ontario, with the financial district to the west. Each suites offers 860 square feet of living space, configured in a 2bed 1bath layout, and included one car deeded parking.
This is the suite with the 250 square foot terrace:
112 George St #6th floor
List: $780,000, Sold: $785,000 August 2017
Rare & Private 250 Square Foot Terrace
You can see how inviting this terrace is and understand how having space without walls seriously amplifies your perception of space. Although the interior square footage was identical, there is a greater sense of space when you can walk onto an 'outdoor room', especially when it's connected to a panoramic view. Literally filled with light and air, it creates an entirely different experience. Notice how this Seller has a gas heater to extend its use through the seasons, and also strategically placed greenery, which not only adds colour and improves the aesthetic, but provides subtle reminder of the grounding connection of the outdoors.
This is the second suite:
112 George St - Seventh Floor
List: 689,000, Sold: 689,000 September 2017
Walk-out To A 36 Square Foot Balcony
Whereas the terrace proclaims "sublime living space" this narrow balcony, while still providing some outdoor respite, is decidedly more utilitarian. You can see how you are able to generate a premium for the terrace, simply because of the "opportunity" that it presents as a selling feature, which has been established as a major motivator for buyers. However, if one had to decide between a suite with this balcony, versus one without, wouldn't you choose to have this slice of outdoor space?
Doing The Math
More or less, the interior of these suites were near identical, in that they both showed well with stylish finishes and features. In fact, they both sold in four days. With the seventh floor suite including a locker, which the sixth floor suite did not, I deducted a value of $5000 for this additional storage space. One might also attach a value to the premium of being one floor higher, which in this instance I accorded the sum of $5000. Effectively, the suite with the terrace sold for $785,000 and the one with the balcony sold for $684,000 (after deducting the 5k estimate of value for the locker) but by adding a 5k premium for being a floor higher it lands at $689,000. This translates into a $96,000 premium for the terrace over the balcony. Would you pay that?
With the terrace being 250 square feet, and the balcony about 36 square feet, this translates into a sum of nearly $450 per square foot for the additional outdoor space. The suites otherwise garnered just under $800 a square foot. While it's impossible to say that all terraces in the city are valued at $450 per square foot, it does signal that one might loosely value the outdoor space to be around half of value of the indoor space. To me this makes sense. After all, in Toronto, we can spend about half the year outdoors getting the benefit of sun, breeze and gauging what one might wear as the seasons change.
A Word To Sellers With Outdoor Space
The price tag put on owning personal outdoor space will be unique to each Buyer. It's as much psychological and tangible, depending on how you land on the outdoor spectrum. By having the choice to walk out onto your own personal balcony or terrace, the simple option to access outdoors - even if you never use it - has its own premium. For some it's worth everything, and to others it's minimal at best. You only have to look at a high-rise to see that many urbanites don't value their outdoor space, given they lack limited personal investment in creating additional usable seasonal living space.
A lot of Torontonians crave light and fresh air, especially when our harsh winters limit our exposure to the natural elements for as long as six months a year. So if you have outdoor space - whether that be a balcony or a terrace - presenting it in its highest and best use is a strategic way to garner top dollar. And be assured you don't have to have a large space to make an impact, and a refuge. The savvy Seller understands that investing in presenting their outdoor space in its highest and best lifestyle use assures a solid return on investment!
If you, or someone you love craves a condominium with outdoor space, please know we're here to help!
Did you enjoy this piece? You may find these posts on Toronto real estate of merit too:
~ Steven and the Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage - (416) 322-8000
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