Forget the “missing middle,” we need more of the missing mid-rise
The two most common buzzwords in relation to housing affordability in recent years in Canada are “missing” and “middle.” According to the website missingmiddlehousing.com, “Missing Middle is a range of multi-unit or clustered housing types compatible in scale with single-family homes that help meet the growing demand for walkable urban living.” They’re referring to duplexes, fourplexes, live-work units, townhouses, and apartments with two or three storeys. Others built forms include laneway housing and stacked townhouses.
However, many of these housing types are not allowed in established single-family neighbourhoods in major Canadian cities, and most local residents would like to keep it that way. Advocates for missing middle housing believe that you can easily add density to these older communities, with minimal disruption to the existing built character. Many developers across the country would love to see the planning constraints in single-family neighbourhoods loosened but are skeptical that they could make the numbers work on these projects. Another two words used in relation to small scale developments: brain damage. In other words, too much work for very few units.
Instead of trying to produce 100 missing middle buildings with 15 units each, you’d produce twice as much supply if you could build 20 mid-rise apartments with 150 units each. Unfortunately, municipal planning offices are not making it easy for developers to do that either, resulting in huge clusters of high-rise condos in a few geographic pockets.
Many Canadians are not fond of high-rises, and prefer “human-scaled” developments like five- to 12-storey mid-rise buildings, but developers have found the economics to be challenging for a number of reasons. “Many of the challenges of mid-rise development are well catalogued: extensive and expensive approvals timelines, poor economies of scale for construction and soft costs, land assembly risk, and a longer sales process with end users,” says Daniel Byrne, vice president of development at Main + Main in Toronto.
“What is less discussed is the impact of the mid-rise guidelines on the viability of the interior building program,” adds Byrne, as Toronto’s 45-degree angular plane restrictions and penthouse setback requirements included in many urban design studies significantly reduces the viability of these projects. “A high-rise will typically have well over 80 per cent of the floor area of the building as units, with the remainder being corridors, stairwells, etc.,” explains Byrne. “A mid-rise building that conforms to the guidelines on a typical Avenues site is probably somewhere in the 70s. When only ~75 per cent of your building generates revenue, it makes the economics very hard to work. Every unit needs to carry a much bigger allocation for these common areas, further eroding affordability. It not only makes the buildings unwieldy from an economic perspective, it’s also extremely wasteful. Do we really want to be mandating buildings where 25 per cent or more of the cement, steel, GHG are ‘wasted’ on building corridors and stairwells?”
Alterra Developments’ CEO Stuart Wilson reiterates many of the same concerns as Byrne. “Low- and mid-rise apartments have less efficient gross to saleable layouts, cost more to build than high rise due to lack of economies of scale and typically have higher operating costs once complete, as there are less owners to share fixed costs. However, these building have to compete with high-rise projects for purchasers but are ultimately saddled with the same onerous municipal costs that high-rise units are.”
Wilson suggests that municipalities like Toronto should make serious concessions to encourage this type of development. “If the City wishes to encourage mid-rise, it should consider a break for developers, and ultimately the end users, for development charges, parkland dedication fees, community contributions fees, permit fees and a whole host of levies and charges that can often make small scale projects uneconomic.”
There is clearly a desire for more missing middle and mid-rise developments in Canada’s major markets, but even where those built forms are allowed in Toronto, developers have trouble making the numbers work due to overly prescriptive design guidelines. Municipal planning departments need to better understand development economics, plan for buildings that can actually generate an acceptable financial return, or they’re planning for nothing at all.