In This Issue
The last few months have been busy with new clients and new projects.
First, the development side. Imprint has been doing more fund advisory work, supporting investors on existing positions in multifamily projects across Canada. We are seeing that rental projects which were capitalized during the 2018–2023 period sometimes need support. Rental housing was a re-emerging asset class at the time, and many developers were building this product type for the first time. Add to this cost inflation, the Covid pandemic, and weaker rental demand in some markets, and it’s easy to understand why projects of this vintage may need extra attention.
We’ve also been engaged by a few not-for-profit/community housing organizations to help them with financial underwriting and drafting business plans for their land holdings. This is an interesting development in the housing market — NFPs hiring private-sector developers! This is happening because government is creating new funding streams for housing construction, but the best incentives are reserved for community housing organizations which, for the most part, do not yet have the internal capacity to execute these projects on their own. Since I moved to Canada, I’ve been struck by how few nonprofit developers there are, so I have spent a lot of time volunteering and working with these organizations to help build internal capacity. The next ten years will be a huge opportunity for the most ambitious NFP organizations to become serious market participants.
On the investing side, we’re seeing some opportunities in approved, low-rise sites in secondary and tertiary Ontario markets. We’re currently working with a few owners to advance the capital required to begin construction. Sometimes we can assist in getting better land financing to fund incremental soft costs, and other times we need to fund a preferred equity tranche if attractive debt isn’t available. What I like about these projects is that they can be built very quickly, the margins are more forgiving than apartments, and the approvals tend to be less contentious. The challenge is often bridging the gap between an approved project and a project that is actually ready to start construction. A developer may have zoning approval but still need six months of additional work before breaking ground, or the design may not yet be advanced enough to obtain reliable construction pricing. These are situations where we can sometimes help provide the capital and execution support required to move the project forward.
The next issue of Urban Progress will be released in the coming weeks. I wrote an article for that issue, which I am sharing below. It making the case for why policymakers should focus less on large, attention-grabbing projects, and more on making small projects faster and easier to build. This is something I truly believe. And I’m not just talking my book here. Most of my career has been spent delivering large multifamily projects. I understand why governments and developers gravitate toward scale. But I believe that if the goal is broad affordability, then small projects are by far the easiest way to get there.
One thing I will qualify upfront, is that building at this scale in many cities would make a ton of sense but for government risk. The margin on an infill apartment building is usually thin, and is often dependent on a short construction schedule and high leverage. A single problem with the local utility or building department can potentially turn a profitable project into an unprofitable one. This is the core issue that government needs to resolve, if they want to unleash a wave of low-cost, low-price housing options.
Canada is facing a massive housing shortfall. To restore affordability by 2035, the Canada Mortgage and Housing Corporation estimates that we must more than double production of new homes, to about 450,000 housing units per year.
The predominant view across both government and industry is that the most effective way to accomplish this is with large-scale developments: residential towers and expansive, master-planned communities. While these projects will be a central form of new housing supply, they also have their limitations. They often entail prolonged timelines, complex approval processes, and massive financial and labor investments.
Middle-scaled housing — low- to mid-rise buildings with four to 50 units or so — is more agile and adaptable. These structures can be built more quickly and at lower cost, they use more common construction methods, and they tap into an existing but underused workforce. With the right policy shifts to make these projects both legal and economically viable, this type of housing can help close the supply gap faster and more efficiently than large projects.
One of the strongest arguments for small- and midscale housing is also one of the least understood: it’s often faster and cheaper to build than large-scale development.
According to real estate consultancy Altus Group, it costs $350 to $480 per square
foot to build a 40- to-80-storey high-rise in Toronto. A wood-framed three-storey stacked townhouse, by contrast, runs from $205 to $325 per square foot, with a four- to-six-storey midrise apartment sitting somewhere in the middle. Parking is another cost driver: depending on local rules, large towers often require multi-level underground garages, adding $215 to $325 per square foot.
Some of these cost differences are due to inherent differences in the structural systems the different forms use: concrete for high-rise towers versus wood for three-storey walk-ups, for example. But they are also embedded in the Building Code. In Ontario, buildings under three storeys and 600 square metres fall under Part 9, which allows for prescriptive, faster-to-design structures. (Prescriptive, in this context, means that a designer can follow standard rules for, say, the spacing of structural elements, rather than having an engineer produce a detailed design.)
Larger buildings, however, fall under Part 3 of the code, triggering additional fire protection, accessibility, and engineering requirements. Speed is another advantage. A small project might not deliver as many units per month of construction as a large condo tower or sprawling subdivision, but it will also require fewer total months to build, which means it will come online faster. A high-rise will typically take two or three years to construct; a small apartment building can take less than one year. Ten small apartment buildings with ten units each can be built more quickly than a single 100-unit tower.
Smaller projects also benefit from lower soft costs (on an absolute basis, though not necessarily on a per unit basis). They typically require fewer consultants, less complex drawings, and fewer technical studies. They also face lower development charges and municipal fees in an increasing number of jurisdictions, which drastically improves project economics. All of this contributes to faster, more affordable delivery.
Small- and mid-scale housing projects also benefit from simpler and faster approvals: they often require fewer layers of review and can move through the planning system more quickly.
That is not to say that small projects are immune from obstruction; NIMBYism is still a common obstacle. In Toronto, a small apartment building may occasionally qualify for a building permit as-of-right, but more often than not, a developer will need to get zoning variances.
The body that approves such variances is the Committee of Adjustment and obtaining one is usually a four- to six-month process that adds tens of thousands of dollars in cost. A developer can spend six months and tens of thousands of dollars simply to find out whether they are allowed to build what the zoning should have permitted in the first place.
Larger developments will usually require even more to get going: official plan amendments, rezoning, and site plan approval, stretching budgets by millions and timelines by years — sometimes by a decade.
This isn’t unique to Toronto. The Canadian Home Builders’ Association’s 2024 Municipal Benchmarking Study found that approval timelines increase with project size. This has a huge impact on how much housing actually gets built.
Generally speaking, cities with faster planning timelines and lower fees tend to see higher housing production on a per capita basis.
A few years ago, at the height of the Canadian housing boom, labor constraints were widely considered one of the biggest limits to increasing housing production. In a narrow sense, that was true. If the market had continued growing beyond 2022 levels, there may not have been enough concrete crews, tower-crane operators, or experienced high-rise managers available to deliver significantly more large projects.
Since then, housing starts have declined sharply, construction costs have fallen, and trades are much more available. The lesson is important: labor markets respond to demand. We should not avoid building more housing because the industry doesn’t currently have enough capacity for tomorrow’s production targets. If demand returns, wages will adjust and more workers and firms will enter the market.
More importantly, limited high-rise capacity does not mean Canada lacks construction capacity overall. Small- and mid-scale housing relies on a broader pool of builders: framers, masons, general contractors, and smaller subcontractors. Thousands of these companies already build single-family homes and renovations. With better zoning and stronger economics, many could shift toward producing fourplexes, walk-ups, and other forms of missing-middle housing.
In Toronto, about 4,000 single-family homes undergo major renovations every year. That’s in addition to the 15,000 new housing units produced in the city annually. Small contractors are already working on thousands of units, but very little of their labor adds net new units to the housing stock. With more permissive zoning and better project economics, that same labor force could be producing small multifamily housing instead.
The goal is not to replace large-scale development, which is necessary, but to also activate a part of the construction industry that already exists and can scale much faster.
A common objection to small-scale housing is that it is simply insufficient given how large our housing shortfall is. It’s true that adding 10 or 20 units at a time may seem insignificant against national housing targets. But this view misunderstands how housing gets delivered and how delivery scales when small projects are allowed to proceed in large numbers across a city.
Let’s return to our 100-unit tower example. It might take a developer four years to get such a tower approved and two more to get it built. Now compare that to ten ten-unit buildings. If those projects take six months to approve and 1.5 years to build, then most of them could be finished in two years or less.
This difference matters. By the end of year seven, the large project has delivered 100 housing years (100 units x 1 year of use). The smaller projects, which came online five years earlier, have already provided 500 housing years (100 units x 5 years). Same number of homes. Five times the social benefit, delivered earlier.
And in practice, the small projects are more likely to happen, because they can be done by many different builders working in parallel. Housing years offer a clearer way to think about delivery: not just how many homes we build but how soon they start helping people.
In many cities, the biggest obstacle to missing-middle housing is not construction capacity. It is whether projects can be approved and built with enough certainty to attract developers and lenders.
Enabling this type of housing doesn’t require new programs. It requires clear, as-of-right zoning, faster approvals for projects that meet established criteria, and a planning system that treats each project as essential infrastructure rather than an exception requiring justification.
Other jurisdictions can provide useful examples.
California’s accessory dwelling unit (ADU) policy is one of the clearest examples of successful small- and mid-sized-housing policy. For decades, ADUs were technically legal but practically impossible to build throughout much of the state, thanks to local rules around minimum lot sizes, discretionary reviews, and parking. In 2016, the state began passing a series of bills to override local restrictions and make approvals as-of-right. The results were immediate. In 2016, fewer than 5,000 ADUs were permitted statewide. By 2023, according to housing advocacy group California YIMBY, that number had climbed to more than 30,000 annually — a sixfold increase in just seven years. That’s nearly as many homes as the entire Greater Toronto Area builds in a year, across all housing types.
Another example. In 2016, Auckland implemented the Auckland Unitary Plan, up-zoning roughly 75% of its residential land. In the six years that followed, the City permitted over 112,000 new homes — equivalent to 21% of its total 2016 housing stock. This had a massive impact on building permits, which increased from five permits per 1,000 people to more than 12 per 1,000 in 2022. These reforms also led to measurable improvements in affordability, with rents falling 28% compared to projected increases without the reform.
Portland, Oregon, has seen similar momentum. Between 2021, when it adopted its Residential Infill Project, and 2024, Portland permitted more than 1,400 missing-middle-scale housing units in former single-dwelling zones. Middle housing now accounts for a growing share of the city’s new housing stock.
These examples show what’s possible when missing-middle housing is legalized citywide and permitted as-of-right and demonstrate that smaller, incremental housing forms can be produced at scale when the rules allow them to.
Delivering housing at the scale Canada needs will require a more varied toolkit than we currently have. Large projects will continue to play an important role, but small-and mid-scale buildings could offer a faster, more cost- effective, and more adaptable solution. These projects are less costly, are less dependent on scarce labor, and can be brought to market faster.
Municipalities and provinces already have the tools to make this happen. What’s needed now is alignment: between plans, permitting, and the actual delivery systems that get housing built. Canada did not build its best neighborhoods megaproject by megaproject. We built them incrementally — one walk-up, one fourplex, one small apartment building at a time. If we want a country where young families can stay, where newcomers can put down roots, and where opportunity is not rationed by postal code, then we need to make it possible to build that way again.
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Thank you for reading, and have a great month.
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