I Want To Build an IKEA Small Space Condo Complex

I love IKEA. I think it’s not only a store, but an idea towards simplified living that is encapsulated within a powerful brand (I am not brainwashed by a corporation!).

There is one innovation to marketing that I really like when I visit IKEA. It’s their Small Spaces demo rooms and units. Walking through their show suites you will stumble upon one or two “whole living spaces” in only a couple hundred square feet. And if we chain a bunch together we could test run a couple of “you life your condo by IKEA”

Hear me out. There is a need for two types of ultra-high density living situations: recently homeless and low cost/entry housing.

Recently homeless are individuals that are transitioning from homelessness to some sort of permanent residence.  Social programs have been helping people do this for decades, but this has recently become a hot topic with a movement in “rapid re-housing” which attempts to find housing and then treat the symptoms that caused the homelessness.

In this case, we would create individual “dorm floors” with a score or so individual Small Spaces, combined with shared common room, activity room, training room, and a larger onsite “dorm-mom” housing on each floor. The key is, instead of a dormitory feel, to use the Small Space approach to build fully legitimate apartments that are independent of each other – enforcing that that living there is about being independent. None the less we do wrap some common areas to help deliver the social programs and support on an individual level.

I guess why I look to IKEA is recently homeless people could also benefit from being in a well-designed, modern, beautiful and well equipped home. In Calgary we have a gorgeous drop in centre. Nice enough that when it was planned and built people complained it was “too nice looking” and “too much was spent on looks.” Now, it’s been a decade, and the building acts as an icon for the community, and the hundred thousand people+ who see the building daily have a positive impression. Good architecture, looks and functionality are as important. IKEA’s Small Spaces can do the on a unit by unit basis.

For low cost (and entry) housing, there shouldn’t be a disjunction between low-cost and IKEA. Low cost housing often creates an impression of ugly, low quality, slipshod, and temporary. To me it doesn’t have to be like that. We could build a specially designed complex where low-cost means value and quality, and that value and quality is driven by IKEA.

Anyways, there’s room for a company like IKEA to move from filling a house, to being a housing developer, and doing it in a way that is phenomenal.

Toronto Condo Sales Are Freaking Insane – Still Think it is Speculation Driven

Toronto is Hot Hot Hot baby! The National Post is reporting – for only January through August 2011 – 18,055 new (NEW) condo units were purchased for $8.1 billion. That’s about $449,000/unit. Like I said – HOT!

We know that more than 50% of those are investor (non-resident) purchases which run highly leveraged (usually 25% down) . The Financial Post runs a good article where one of the showcased examples is an investor with seven properties – holding 2 million in value with 700k equity.

Based on some averages, the investor is spending about 100k/year on mortgages, condo fees, insurance and tax. The investor – if 100% rented all the time is likely pocketing about 34k/year. The game here is the investor is hoping the 7.5% yearly appreciate in condominium value for the last 15 years continues. With that, he’s pocketing and extra $150k/year. Not bad for the risk – $185k/year in income and equity.

So here are the concerns.

For the full year, Toronto may add upwards of 27,000 new condo units on top of current inventory. That’s 45% more than any other year on record. There is also that much inventory slated to be added each year for the next 3 years.

Second, real estate is hot because US, Europe, and many other jurisdictions are facing or have experienced a housing crash with no certainty of recovery. While New York announces the most expensive pre-sale units in history, large multi-story developments have been shelved right left and centre. If Europe tanks, housing prices are going to go low, low, low. With that, international investors have been buying Canada because of our stable economy and the start power of Mark Carney.

When local markets pick up in the US and Europe the money parked in Canadian real estate will flee back to their home countries.

Finally, even in the Canadian banking town Toronto (and I’ve said that banking cities will always perform well for real estate compared to the rest of the country), incomes are flat and the middle class is being squeezed (Bank of Canada indicated last month that income disparity grew significantly last year). That means there is a question if rent levels (which equal investor cash flow) can be supported – or if they will stagnate.

If we are lucky, because Toronto is our financial capital, we could see Toronto continue to appreciate every year until we have prices similar to New York. It’s not out of the question. But investor money is fickle. Both foreign and local money is sensitive to price change, and a slow down in Toronto cost per sqare foot will create a feedback cycle that would be vicious.

Little Sympathy for Residence Fighting Development for Mentally Challenged Homeless

As a start, I have a condo that is 2 block from a stroll for prostitutes, 4 blocks (the other way) to a homeless shelter, and there’s a long term facility for homeless going up as well within that distance. And I’m ok with that.

Hang with me then, when I indicate little patience for residence who fight the inclusion of a shelter for mentally challenged homeless in their community – and let’s be clear – Astoria, New York, is a large community. Even in Council Member Peter Vallone Jr. challenge to the development he indicates that there are at least 8350 residence within one block. The shelter will house 50. That’s a .006% population increase. It’s nothing.

Having .006% of your population requiring special needs because of being mentally challenged should be considered part of your civic and community based care and support network. It should be something the community says “we live in our community, and every day our community supports and assists people a little less fortunate”. Civic pride, not civic shame.

Municipalities Should Never Be Residential Condominium Developers

They were teased by the success of small scale urban development projects that successfully helped their community. But when the Borough of Collingswood NJ decided on being the developer of their own downtown condominium project, they took on a multi-year headache now culminating in over 8 million in debt for the municipality.

The 120 residential units, the commercial units, and the parking facilities of The Lumberyard Condos were the cornerstone plan in revitalizing their municipality. An 18 million loan to the municipality started the project in 2006. Now, 5 years later and with only 2 of the 3 phases completed, Collingswood will issue a six million ordinance to help cover the remaining 8.3 million on the loan and now focus on renting the remaining 14 (of 24 units in phase 2) to help pay down the remainder.

In March, the Mayor James Maley indicated the project was picking up, and 8 of the 24 units had been sold. It appears that things weren’t looking up that much, and only 2 more units sold in the last 6 months.

Development risks should really be left to developers – and not to municipalities where the cost to citizens, as in this case, is expensive against both tax revenue and in the energy expended by the municipality in working with this long losing project.

I agree that municipalities should take a very active role in wooing developers if they feel a population “mini-boom” is required to keep their city alive. I also believe in the municipality, in hand with the wooing, set out strict development requirements that would have generated a project that meets their vision and goals.

But they should always refrain from being the actual developer.

Seniors Could Migrate To Small Towns and Bring Them To Life

I am excited about bringing the community aspects of seniors condominium living to small towns. Create a net migration of seniors fleeing the large urban communities to nest in smaller municipalities, and with that, lower the cost of their housing and make a comfortable retirement accessible.

With housing and health care costs rising significantly for seniors as the demand swells – literally as the baby boom bump hits this care phase and more people compete for limited living assisted care or seniors only living – we need new solutions.

One would be to build such housing in rural towns. As stated below, we can realize a lower cost of residency for the seniors in smaller communities.

But better, if done right, the communities will be the ultimate benefactors – the focus being health care.

It’s a chicken/egg problem. Seniors don’t inhabit small towns due to a lack of easily accessible medical treatment. Small towns have problems growing because they lack a variety of services including, importantly, medical care.

We can break this chicken/egg problem by building assisted care communities. These communities hire trained and certified nursing and medical staffing. Done right, and working with the regional health care boards, these professionals could have split time jobs – part-time for the assisted care facility, and part-time for the health care region. Indeed, balanced correctly, this could be a way to subsidize the cost of nursing and trained medical receptionists for the always overworked, underappreciated, and often difficult to find rural general practitioner. We could work on using a seniors complex to incentivise doctors to practice in rural communities by sharing costs with the housing facility.

Perhaps the hosing facility has a medical clinic as part of the building, with an outside/separate entrance for the public use.

And if a small community can attract some accessible medical treatment, which is one of the most significant hurdles to overcome in growing the town, everybody wins.