Rendering of The One in Toronto
A cliches in real-estate is that it’s usually trouble at the biggest projects that signal a bubble bursting.
A 91-storey condo tower at an iconic Toronto intersection is the latest in that long line. The concrete for the building is poured up to the 40th floor but it’s gone far over budget and hasn’t sold out, despite a launch six years ago. It was placed into limited receivership yesterday after an application from a South Korean bank.
Apple has also sued to get out of its lease as the anchor tenant at street level and it’s not clear what will happen next, for what would be the tallest tower in Canada.
The news is reminiscent of the property bust in the US financial crisis and the building shells that sat empty in places like Miami for years, however, the bankruptcy application notes that further funds have been extended by lenders to complete the projection, hoping to recoup at least some of their investment.
I fear this is just the beginning for Canadian real estate. Condos in Toronto sold at lofty valuations and with interest rates high, values are already under pressure. News like this could prompt a wave of investors to try and cash out and will hurt sales at unfinished buildings — there is still a flood of condos in Toronto that were sold during the pandemic that are now under construction.