Condo Buyers Will Pay More for a Den, Even if Unit Size is the Same
Even without a global pandemic as part of the equation, condo suites with dens command a higher price-point… And that’s regardless of whether or not those units provide more square-footage than the next property.
This is according to Baker Real Estate Incorporated’s recently-launched Baker Insights Group (B.I.G.). The new research and analysis service provides developers with custom market insights, alongside data for sales optimization. Via data-based insights on not just where consumer demand is, but where it’s headed, Baker clients can refine their pre-construction development and sales processes.
Buyers, too, benefit from B.I.G.’s acumen, as their purchasing decisions become more informed and empowered.
Having sold more than 100,000 units, and having generated $80 billion in new home sales, Baker is a leader in Ontario’s realty market. As such, industry insiders will be wise to lean into B.I.G.’s den-centred insights, and apply them — where possible — to their own selling or purchasing endeavours.
B.I.G. says in 2020, sales of 1-bedroom-plus-den units rose noticeably.
“The biggest difference between the unit mix in 2020 versus 2018 and 2019 is the share of suites with one bedroom plus den, which rose from 10% in 2018 and 13% in 2019 to 23% last year,” reads the insight group’s April 2021 market report.
“Baker recognized that buyers were willing to pay more for a unit with a den, even if the square footage was the same.”
But, even as last year saw an influx in activity revolving around den-inclusive suites, such units have held higher value than those without dens for several years.
“Prior to the COVID-19 pandemic, we observed a big increase in demand for units with dens, and the trend has only accelerated since,” B.I.G. reports. “Buyers envision using the space for a second tenant or roommate, a place for friends and family to stay, as a nursery, and as we all know, a room to have a home office.”
Illustrating the concept in action, the median one-bed, one-bath unit — with a size ranging from 450- to 549-, so rounded to 500 square feet — has sold for approximately $515,000 from 2018 to 2020 at Baker projects. But a one-bed plus den, also rounded to 500 square feet, has sold for about $580,000, marking a difference of $65,000.
This variation in price points to plus-den units boasting an increased square-foot value of $115 over units that don’t have a den. When multiplied by the rounded size of 500 square feet, a den is shown to be worth $55,000 to $65,000 to the buyer.
And the value of a square foot only rises as the overall size of the unit does. Mostly.
B.I.G. reports in the last three years, a 600 square foot one-bed unit has sold for just over $510,000. The same size space, but with a den included, has gone for $570,000 — a difference of $60,000. In this case, the difference in price-per-square-foot between the two suite types is $125; multiplied by 600, we find a $75,000 advantage.
“A 600-sf unit with one bathroom is worth $60,000 to $75,000 more to a buyer with a den.”
While even for 500- and 600 square foot one-bed spaces, the value of a den is clearly evident, B.I.G. reports that it’s around the 700 sq. ft. mark when adding a den to a suite becomes particularly advantageous, as it brings in a price-premium element.
The report explains the premium gets larger as the suite does, but notes the caveat of transactions over 1,000 sq. ft. being sparse. Reason-being, as a suite grows considerably in size, buyers will pivot to preferring a proper “two-bed” title.
“The data clearly shows that buyers put a significant premium on smaller units with dens, even though they reduce the living room and/or kitchen size,” B.I.G. says. “Given the lack of three-bedroom units on the market, the value of a den increases as units expand from 650 sf to 920 sf (units above that range have less reliable data.) At those larger sizes, a suite has room, so it makes sense to add the additional flexibility and multiple uses that a den provides.”
However, below 650 square feet, a two-bed with a den is reported to have negative value; the space becomes too cramped.
Indeed, for pre-con industry insiders, the financial benefits of including a den — particularly in spaces that are arranged as one-bedrooms — should be kept top-of-mind. And for buyers, spaces complete with a den surely raise a given suite’s potential.
Whether that added space is transformed into a weight room, yoga studio, nursery or — on the very slim chance a global pandemic takes the world by storm — a remote office, a den means increased flexibility is (quite literally) built into your home.
This article was produced in partnership with STOREYS Custom Studio.