Micro-condos make big splash

David
David Sali
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The arrival of Ottawa’s first “micro-condo” development is another sign housing has become out of reach for many local buyers, a leading industry advocate says.

Smart House mini condos

Toronto developer Urban Capital and local builder Tamarack Homes are teaming up to launch Smart House Ottawa, a nine-storey project at the corner of Bank and Flora streets featuring 151 condo units ranging from 315 to 586 square feet.

Prices start at $179,900, with the most expensive, two-bedroom corner units topping out at $354,900. Urban Capital recently opened Smart House’s downtown sales office with a special event for owners of the developer’s other properties in Ottawa, and it ended up selling all six of the smallest, 315-square-foot units in just a couple of hours.

The “micro-condo” craze has already caught on in many major metropolitan areas around the world where space is at a premium, including New York, Tokyo and Toronto, but this is the first time the concept has been tried in the nation’s capital.

John Herbert, the executive director of the Greater Ottawa Home Builders’ Association, says the fact that the cheapest units were snapped up that quickly proves the city’s housing market is in deeper trouble than many people think. “It’s interesting to hear how well they’re doing,” he says. “It’s all price-driven, I think. I think the fact that these units are selling as well as they are indicates just how serious the affordability situation is.”

Urban Capital partner David Wex says the building, which is slated to be ready for occupancy in the summer of 2017, is designed to appeal to people who want the benefits of downtown living at a reasonable price.

“The only way to press the reset button and get affordability back is to make units small,” he says. “If you’re going to make units small, you have to make them smart.”

The builders of micro-condos are doing that, he says, by using space as efficiently as possible. For example, the kitchen countertops are retractable, the dishwasher pulls out of a drawer, stoves have only two burners instead of the traditional four and the washer and dryer are combined in one unit.

“Every element is very, very efficient,” he says.

High ceilings and large windows also help make the space “feel bigger than it is,” he adds.

The building’s central “productivity area” will feature amenities such as a large-scale printer where residents can share desks and use a boardroom for meetings if they wish to work from home, he says. A large kitchen and dining room will be available for tenants who wish to entertain guests, and a central office will house bulky equipment such as ladders and steam cleaners for residents to use when needed.

Mr. Wex says Urban Capital is targeting a range of customers, including first-time buyers, investors and people who prefer a “pared-down lifestyle.” He says he knows the project won’t appeal to everybody, but he believes there is enough of a market in Ottawa to make it viable.

“This is narrow-casting,” he says. “The majority of people are not going to want this. But we’re not talking to the majority. We’re talking to that minority that loves this.”

He uses a car analogy to illustrate his point.

“Some people buy a Mini. You could say, ‘You could have a bigger car for the same price.’ (They say) ‘I don’t want a Malibu. A Mini and a Malibu might be the same price, but I don’t care if I get more space in a Malibu, I just don’t want it.’”

David Sugarman, a real estate broker with Coldwell Banker Rhodes and Company, says he doubts micro-condos will ever become a major part of the city’s housing scene. Downtown living doesn’t have quite the same broad appeal in Ottawa as it does in larger cities such as New York and Toronto, he says, and he’s not sure the rental market for such small units will be robust enough to make a lot of investors dive in.

“I think it would be hard to sustain a lot of this very micro-living sort of stuff (in Ottawa),” he says.

Still, he adds, “You have to be innovative and sometimes test the market. If nobody liked it, there’d be no sales.”

Organizations: Smart House, Greater Ottawa Home Builders, Malibu Coldwell Banker Rhodes and Company

Geographic location: Ottawa, Toronto, New York Tokyo

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  • Peter Quinlan
    October 23, 2014 - 23:32

    I believe this concept will take off, even in a smaller city such as Ottawa. Not everyone makes 100k a year, or is in a dual income arrangement. Young professionals ( probably with huge student loans to pay off) will flock to this concept. I hope this works out for the developer.

  • jayme
    October 21, 2014 - 11:02

    Racquel Ottawa is not really a small city the full time population is around 1.2 million which is a fair size then you add in all the part time citizens your looking at around 1.4 million. As for Toronto I know some who think there is a huge demand for condos fact is there is really not they soon will have the largest surplus of condos in the world same with office buildings there vacancy rate now is about 7% its expected to be around 18% in the next 5 years.

  • jayme
    October 21, 2014 - 11:02

    Racquel Ottawa is not really a small city the full time population is around 1.2 million which is a fair size then you add in all the part time citizens your looking at around 1.4 million. As for Toronto I know some who think there is a huge demand for condos fact is there is really not they soon will have the largest surplus of condos in the world same with office buildings there vacancy rate now is about 7% its expected to be around 18% in the next 5 years.

  • Raquel Ireta
    October 20, 2014 - 10:21

    I agree with David. Ottawa is not like other major cities. Micro-Condos will work well near universities but a lower price than it is. Very important for those new investors to understand what is a good investment in downtown. I do sales and rentals in the downtown and most people in the condo market complain about this small condos. It is quite common to see this units Vacant and hard to rent it, unless is a cheap, cheap price for students or a single person. Ottawa City, it is quite different from Toronto, Vancouver or major cities in the world where this type of micro condos make sense. This major cities house prices are 3-7 times more expensive than Ottawa and not choice than settle for small place. I have witnessed many first time investors who jumped into the market as first time investment and bought this small condos since 2012 are losing money. Too many condos too chose on inventory. Hard to compete with those ones that are 1-2 bedrooms that are also available (easy to rent). Ottawa is small city and most people are spoiled enjoying space, conform and distance. Why not, there are great buildings that offer all in one place. Often, I say to tenants and buyers.... want something new or bigger space?.. often bigger makes more sense. However, Ottawa with so many students ( 4 universities, 2 large colleges and other schools in the region Ottawa-Gatineau) this micro-condos will be perfect for students or a second place to stay when living in Ottawa due to work or school or short rental. But in slow or flat market, I will think is a BAD investment and I see this everyday when I show a rental and sale these condos ... I hear....too small, move on to the next one. .....In addition, most students to afford housing are started to move outside the city....to afford larger condos.

  • Anon
    October 17, 2014 - 11:31

    This is an advertisement, not journalism.

  • Cliff
    October 16, 2014 - 20:28

    Mini!