There’s a famous Mark Twain quote about real estate: “Buy land, they’re not making it anymore.”
It’s good advice most of the time, but, these days, Canadian developers already have more than they want.
With new condo project launches grinding to a standstill in the Toronto — there were zero in the first quarter, the slowest in at least three decades — many are being forced to swallow high carrying costs, leaving them to contemplate alternative uses for their land.
Mitchell Cohen, chief operating officer of Westdale Properties, which has pressed the hold button on about 12 of its projects, doesn’t sound too worried.
“We are just waiting and seeing,” said Cohen, who is now into his fifth decade in the industry. “Putting them on hold is very costly. We have to pay our taxes, security, and we have to pay the bank. But real estate rewards patience — if it’s paired with discipline.”
Like Cohen, most residential developers seem in no hurry to sell, with depressed prices leading to very little liquidity.
Cohen said his company is now “investigating all avenues” regarding its sites, and he’s open to new ideas. Many condo developers have switched gears and are now converting their entire projects to rental housing , but the executive said he’s cautious about jumping on the bandwagon that has seen more purpose-built rental construction in decades.
“It’s not always a silver bullet. People are moving into purpose-built rentals like it’s a safe harbour, but it just happens to be the only boat leaving the dock right now,” said Cohen. “We have to be analytical before we lock in on the wrong assumption.”
Cracks are already appearing in the apartment rental market , which has been heavily affected by a drop in demand due to reduced immigration and foreign student enrolment.
Condo research firm Urbanation Inc. said the vacancy rate in stabilized buildings completed since 2000 in the Greater Toronto Hamilton area was 5.4 per cent in the first quarter of this year, more than double the rate two years ago.
New projects are increasingly under pressure, with two-thirds offering incentives to renters and almost half of new projects including two months free rent with a lease.
Looking for alternatives in today’s market , Brookfield Property Partners and Larco Investments raised eyebrows this past week when it was revealed they want to rezone at least some space at a property that was long the home of an HBC department store at Toronto’s Yonge and Bloor intersection into self-storage.
It’s a move Cohen was quick to applaud.
“I was not shocked at all. That proves my point that real estate developers need to adapt to a changing market,” he said, adding that can mean alternative uses in the short-term, such as allowing pickleball or food trucks on a piece of land. ”It doesn’t pay the freight, but it’s better than a vacant lot.”
Shaun Hildebrand, president of Urbanation, said land trades have been rare, but what is moving is down 50 per cent from the market peak, based on price per buildable square foot.
“People were way overpaying, but it’s hard to draw much from (prices today) because the samples (of sales) are small,” said Hildebrand.
Urbanation’s latest data from the fourth quarter of 2025 shows that the total transaction value of all Greater Toronto Area land sales was 56 per cent below the five-year average of $1.74 billion, at about $762 million.
“Some projects that were going to be condos have been pivoted to rental,” said Hildebrand, noting 11,500 condos that were being marketed in the Greater Toronto Hamilton Area have been cancelled since the start of 2024, with about 4,000 converted to rental.
He said the market today is favouring bigger players with deeper balance sheets who can hold on to land longer, and leading some to take on smaller projects, which have lower capital costs and risks.
“There just isn’t going to be big towers; there will be more mid-rise that are easier to manage financially,” he said. “Anyone selling land is kind of in a distressed position. Others are just waiting for market conditions to improve.”
Adam Jacobs, head of research in Canada for Colliers, said the condo situation has sucked some energy out of the real estate sector. He said the whole condo model, which is based on pre-sales of about 70 per cent to fund a project, could evolve in the future.
“Are you signing up to buy a pre-construction condo that won’t be delivered until 2032?” said Jacobs.
The backlog of unsold condos will have to be cleared before there is more demand for land to build even more of them. That’s even with changes to remove the harmonized sales tax from new homes in Ontario and a reduction in development charges, said Jacobs.
The Greater Toronto Area has seen more distressed land transactions as sales have slowed. Jacobs said there were 78 of those land deals in 2024 and 2025, compared to 49 in the previous three years.
“Residential land is where the distress is happening,” said Jacobs, noting land loans can be eight per cent to 10 per cent. “People thought there would be all these distressed sales offices or malls, but that day never comes because the lenders don’t want to or the cycle changes. But for land, you are just sitting there with no income. We need a way to make construction viable now, not five years from now. There are some policy levers being pulled.”
Mark Goodman, a principal broker at Vancouver-based Goodman Commercial Inc., said lenders he is talking with said the wave of distressed land hitting the market over the next 24 months is just getting started.
While he says there is a clear uptick in sales from even “big developers,” the real estate veteran said land prices may also be reaching an acceptable level for developers, allowing them to make deals work.
“We’re finally seeing enough data points to trigger a reset in market pricing,” said Goodman.
In the interim, for developers like Cohen, the name of the game is wait. “Markets come back, they always do,” he said.
• Email: gmarr@postmedia.com