A conflation of surging construction costs as well as municipal levies, regulations and bureaucracy have resulted in relatively flat land prices in the Greater Toronto Area, according to a report from Bullpen Research & Consulting and Batory Management.

According to the GTA High Rise Land Insights Report for Q1-2021, there were 51 high-density land sales in the GTA during the first quarter of this year, the average cost of which was $112 per buildable sq. ft, increasing from $110 per buildable sq. ft during the fourth quarter of last year. The report also noted that Q1’s transactions were the largest quarterly total since Bullpen and Batory began tracking them in Q4-2017.

The report also noted that the median land price has declined for three years, however, it increased to $93 per buildable sq. ft last quarter from $85 per buildable sq. ft in Q4-2021, and from $74 per buildable sq. ft during Q1-2021.

The report concedes that it is using a small sample size from various locations around the GTA with, among other things, different risk profiles and could have heritage considerations, significant commercial or retail components, affordable housing, or they could be in various stages of entitlement -- all of which affected the sale prices.

The average land price per buildable sq. ft in the City of Toronto was $124 during the first quarter of this year, declining by 7.5% quarter-over-quarter from $134 per buildable sq. ft. In the 905, high-density lands sold for $69 per buildable sq. ft, decreasing by $1 from Q4-2021.

Last quarter in the 416, the average land purchaser paid at 9% of estimated revenue, dropping from 10% in Q4-2021, the report said, while, at 6%, it was sideways in the 905. These land-to-revenue ratios, the report said, are quite low because of escalating construction costs associated with interest rates, material and labour expenses increasing, development charge hikes from the municipal government, inclusionary zoning, and a larger share of transactions in what are known as ‘B’ and ‘C’ locations -- previously undesirable locales where, because downtown Toronto condo prices swelled from $1,400 per sq. ft to $1,650 in under a year, investors see value. Areas like Etobicoke, east Scarborough and North York have condos for sale in the $1,000-1,150 per sq. ft range.

Adhering to the Places to Grow Act, high-rise condos are typically found on transit lines, which makes them more expensive. In the former City of Toronto last year, the average land sale for towers of at least 16 storeys was $71M, while mid-rises were $12M. During the first quarter of 2022, high-rise land sales dropped to $57M and mid-rises rose to $15M.

In 2022 year-to-date, mid-rise condos in Toronto averaged per buildable sq. ft $211, followed by $124 in North York and $55 in Scarborough. Last year, per buildable sq. ft in Toronto, North York and Scarborough, land prices were $194, $13, and $64, respectively.