Jordan Heath-Rawlings: When you think about a condo, whether it’s when you’ve owned or rented or even just stayed in on an Airbnb, what do you consider must-have amenities? Did you have a gym? Or maybe a pool or perhaps a fleet of BMWs? Or a rock climbing wall? Because those are real things in real condos in Canada. Here’s my next question. How much of a difference did those amenities make when you were making your decision on where to rent or buy or stay? And how much did you end up actually using them? The last two decades have seen a condo amenity arms race as new developments go off and developers scramble to outdo one another with luxuries that they hope will seal the deal for prospective buyers. And they definitely do seal the deal for some people. And then some of them get used and others don’t. But what about beyond that condo? What happens to the community pool, for instance, if everyone already has one in their condo that they use instead? The same question for the library? Or the dog park? Or the running track? These are things that we built so that the entire community has access to them, only for private condo developers to build their own. So is the war for condo amenities changing the shape of the neighbourhoods that they’re built in? And what happens to the people in those neighbourhoods who don’t own luxury condoms? I’m Jordan Heath-Rawlings. This is The Big Story. Aaron Hutchins is one of our most favorite guests on this podcast. And it’s been a while since we spoke to him. Hey Aaron.
Aaron Hutchins: Hey there.
Jordan Heath-Rawlings: It’s nice to have you back. It’s been awhile.
Aaron Hutchins: It has. You guys have ghosted me.
Jordan Heath-Rawlings: Oh, we had a pandemic. But here we are. And, as somebody who spent a lot of time in condos and has read a lot about the market, I’m excited to talk about this. So why don’t you just start, this is a really quirky story. And it seems like it’s about condo amenities only, but there’s more to it. What attracted you to this story? And what’s at the heart of it?
Aaron Hutchins: Well, it’s interesting because when you start looking at condo amenities, you could just basically list off a thousand of them. There are so many different ones that you could just go through: spas, massage rooms, different gear rooms where people can fix their bicycles. And you can go through each of them, and each of them, you can wonder, would I use that? Would I not use that? And it kind of– there are only things to think about, and it makes you think about your own house, your own living quarters saying, Oh, would I want my own meditation salt rock well? But when you get further into it, it really affects how the city looks around you. And if everyone has a pool and their own condo, do we need public pools? If everyone has their own library in the building, do we need public libraries? And what impact does having a dog park in your own condo unit have on dog parks outside in public squares? So as much as we’d like to talk about all these little trinkets of how fun and needed we have these things for ourselves, it’s also a reflection of what we prioritize, but also what we prioritize for ourselves, as opposed to what we prioritize for sharing with the entire community.
Jordan Heath-Rawlings: And we’re going to talk about those trinkets in just a second. But first, you started with a really interesting example, which is a place called Vancouver House. Tell me about it and what makes it unique?
Aaron Hutchins: Vancouver House is a very nice condo out on the West coast. It overlooks False Creek. And when you look at the old marketing materials for Vancouver House, a few years ago, it had many reasons why you should buy it there. One of them was residents would get access to a fleet of BMWs. So that’s a nice perk. There was a 25 meter heated rooftop pool that was configured in a way that the wind wouldn’t really affect you, but the sunshine would still get in. And there was a 24 concierge who was trained to the same standard as the Fairmont Pacific Rim Hotel, which is one of the brand hotels in the city. But what really struck me was this other perk that didn’t help the buyers or residents per se, but was an amenity nonetheless. For every condo unit purchased, they would be funding a home for a poverty stricken family in Cambodia that lives near a garbage dump. So in effect, you buy a condo unit here, you make a home for someone else abroad.
Jordan Heath-Rawlings: How different is that from, I mean, not only just helping someone abroad, but a fleet of, BMW’s and et cetera, et cetera. How different is that from what we would traditionally think of as amenities offered with condos? You know, what are the first things that come to your mind?
Aaron Hutchins: When I lived in a condo, there really was three things before– it was, there was a pool, there was a gym, and there might’ve been some sort of, you know, business centre or a place where you could work. So to have the BMWs at your disposal or to have, you know, these concierge that aren’t just people manning the front door, but they are, you know, the highest end, it really speaks to how these buildings really have to kind of stand out. Some of that’s marketing. Some of that is just what people want, especially at different price points. But no, it’s a lot different than just, here’s a gym with a bicycle and some weights. And it’s gotten, in the last few decades especially, they have really gotten quite robust in terms of their amenity offerings.
Jordan Heath-Rawlings: Give me some examples of the stuff that you found. You know, not the building homes overseas, but the, wait that comes with the condo, now. Why?
Aaron Hutchins: There so many things that come with it. I’ve seen spas, massage rooms, swimming pools, or running tracks that kind of jet out from the side of buildings so they’re like you’re almost like floating above the city. I’ve seen condos with salt rock meditation walls, music studios, race car simulators. Part of that is that there’s this increase in offerings because, one as condo units themselves get smaller people have less room in their own home and they want to be able to have more things to do outside the confines of their own four walls. So the developers are trying to give them a bit more incentive to stay there. And on top of that, as these condo projects just turn into mega mega projects, they have more people who are living in them. So you can share that cost across way more people. And that affords these developers, the luxury of just packing in more little treats for people to use.
Jordan Heath-Rawlings: How necessary is this? Because we’ve reported on condo prices in Canada in general before, especially in major cities, and you know, they’re consistently rising, consistently in demand, low vacancy rates. So why do they need these amenities to compete?
Aaron Hutchins: Well if you talk to anyone who works in industry, the most important thing is location and price. Location, location, location, and a price that someone can afford. But when you have 10 condo buildings, all within a few blocks of each other, then location really doesn’t matter much anymore. Everyone’s relatively in the same space. And these companies are all pretty good at doing construction units. Like, the materials are all the same, the engineering is mostly the same, so you’re really using the amenities as a differentiator. Part of that is marketing, so it stands out and you can kind of say, Oh, look at this condo, they have this or that. So it’s just to get someone in the door. And that’s kind of what happened with Vancouver House, is the funding homes in Cambodia while it was absolutely, you know, altruistic, it also gets people’s attention and gets people talking about it. And if people are talking about it, you get prospective buyers in the door.
Jordan Heath-Rawlings: You mentioned that a big part of this is marketing. Do people actually use these amenities once they’re installed? And I’m not talking here about like gyms and pools and business space, which fine. But you know, the more quirky ones. Do they actually get used by condo owners? Or is this just a way to get them in the door?
Aaron Hutchins: Some of them, yes. Some of them, no. And I spoke with a lot of people who help fix up condos, maybe 10, 15, sometimes even five years down the road after they’ve been developed. And they have to completely change the setup in some cases, just because some things aren’t used. The virtual golf simulator. Sounds great, looks cool and marketing materials, but really how many people actually would do virtual golf simulators? And from people I’ve talked to, it’s, you know, maybe one in 300 might use a golf simulator. And on top of that, just the damage from the golf ball if someone, you know, shanks the drive, it’s going off and knocking up walls. So yeah, that’s one thing that people aren’t using. Another one, and I remember this one when my spouse and I were looking to buy a place probably about seven or eight years ago, and we saw a condo with indoor rock climbing walls. We thought, Oh, that’s interesting. It looks kind of cool on the materials. But it wasn’t something that we were going to use, per se. And what I found is a lot of those rock climbing walls were quickly taken down by the condo boards once everyone moved in, because the insurance costs were so high just to keep it at around, that they said, listen, the condo fees are just so exorbitant because of insurance, we’re just going to, you know, put caution tape around this thing and say, don’t use it. And then eventually we’ll make new use of the space. So those things look great, but in practicality people don’t use them. And even if they wanted to insurance costs sometimes are just too high.
Jordan Heath-Rawlings: How is this fixation on amenities different from the way people purchased condos in the past?
Aaron Hutchins: You know, I went looking at old newspaper archives and I saw this one from the early 1970s for this place called Toronto’s Bransfield House, and you should have seen the ad for it. It was speaking so glowingly about how each suite has soundproof walls, the high quality venting system, and my personal favourite, how each unit has its own utility room for wiring or plumbing. And those were the top selling advertising points. And then lower down, it said, by the way, we have an indoor pool, a gym, and a billiards his table. But you can see how those things were– the amenities are treated as afterthoughts, and how the actual living space is what was the selling feature. And I think when you get really excited about amenities and how neat and fun they are, it definitely maybe distracts you a little bit from what it’s like to actually live in your unit. What’s the lighting like? What’s the ventilation like? How is the setup? And even when you get in there, it takes away from what it’s actually like to live day to day in your own unit, especially now during a time where, because of the pandemic, you can’t even use your amenities. And these folks that live in condos are actually discovering, what is it like to actually live in a condo unit without most of the amenities? And what are the pros and cons of that?
Jordan Heath-Rawlings: What are the practical amenities that people actually do use that return value? And does that value translate into an increase in the value of condos in the building? Or is this just window dressing and marketing?
Aaron Hutchins: I think it really kind of changes over time. So I think gyms are definitely something that is used and always will be used. I think, nowadays especially, those old crappy basement gyms that just have a treadmill, a bike and weights, no one wants those anymore. Now they really have to even add more window dressing to those gyms. They have Pelotons in them, or the smart mirror where people work out in front of, the yoga room. So they really have to kind of really dress up these gyms. And people do use the gyms quite a bit. And other things that people are using, like, does it increase the value on the condo unit itself? I mean, I guess it’s so tough to tell how much of that is the amenity and how much of that is dictated by the marketplace itself. One new trend that’s coming is just trying to make the condo more of a community, because some condos or apartment buildings, they can’t keep up with all these pools and race car simulators, and rock climbing walls, or hot tubs, that they’re trying to find a different way to stand out. And in fact, there were two buildings– I think they’re about two kilometres from each other in Calgary, in fact they’re on the same street– and both of them have what is effectively the same thing, where it’s a lifestyle concierge, where the person’s job is to, in effect, help people within the building make friends. Because with condos or with rental units, there’s a lot of turnover. Like people might stay for a year, they might stay for two years. And whether it’s for a condo owner who’s trying to keep a renter around longer, or if it’s an apartment building trying to keep tenants around longer, they found that having friends in the building is absolutely vital to having people stay around longer. So they actually have a concierge whose job is to run events, help people meet each other in the lobby, essentially make friends in the building. And it’s always nice to have, you know, some sort of community within your building, but there’s also the added bonus of if people make friends– I think that one developer told me if you have one friend in the building, you’re 30% less likely to, or rather you’re 30% more likely to renew. If you have two friends in the building, it goes higher. And if you have three friends in the building, you’re almost likely going to stay. You’re almost definitely going to stay.
Jordan Heath-Rawlings: Where is the eventual end game for this stuff? Where does it go from here? Will new buildings that are being developed now continue to add more and more of these until everything you could possibly need is inside your condo? Especially since nobody goes outside right now anyway.
Aaron Hutchins: In some areas it’s definitely turned into that. There’s– in Burnaby, BC, there’s Metrotown, which is a forthcoming multi-tower project, which is going to have a 66,000 square foot– they call it sky park that has poolside barrel saunas, a conservatory, outdoor work pods, yoga lawn, a tea house, a running track that lights up at night. So I think when you get to these mega projects, really the sky is the limit in terms of what these folks are thinking to stand out. On top of that, it’s a new demographic of people living in condos as well now. You have more families or people with babies or young children. So you’re trying to find ways to accommodate a different type of clientele, so to speak. Things that accommodate baby strollers and how to take care of kids, or even when they’re toddlers. There’s one condo coming up in Toronto that has a gym that has kind of a glass door next to a playroom so that parents can actually get a workout and still see their kid in the play room next door. So trying to accommodate that. So I think in a few years, they’ll probably be trying to find ways to accommodate maybe teenagers who live in condos, because we really don’t know what will be the age demographic of those living inside. But when you talk about what the knock on effect, is it changes a city. It really does.
Jordan Heath-Rawlings: Well, this is the part that I’m most fascinated by, kind of beyond the really interesting things that are going into condos and the marketing of them and stuff, is the way that impacts the neighbourhood around them. And, you know, city services like pools and libraries rely on the number of people using them to set their funding for the next year. And, you know, I remember living in a condo right downtown with both the library and a community centre and a dog park, all right next door. And it was an old building, so it didn’t have any of those things in the building. So everybody in that 1500 unit apartment was out and about, and, you know, going through the turnstiles of those city services, for want of a better word. And, you know, then when tax time comes, you realize that you actually got something for your money, and like that’s what I wonder about the end game, is, you know, does it make it impossible for people who aren’t of means enough to afford one of these condos, to live in a downtown that feels like a neighbourhood?
Aaron Hutchins: Yeah. As much as we talk about condos being more affordable than a house, which they absolutely are, the target market still is people in their thirties, forties, affluent, able-bodied people. Based on the advertising, you see that appears to be the target market. When you get into the luxury market, a lot of these companies are targeting people who they call HENRY, which is an acronym for a high earner, not rich yet, what’s essentially people born in the 1980s or 1990s who make more than a hundred thousand. And when they survey these people, what they wanted, I mean, they wanted a nice finishes, they want a good location, but a majority of them said that luxury is defined by amenities. So as long as that’s the case, then these companies are going to try and stand out with the best amenities, because that is what their target market wants.
Jordan Heath-Rawlings: What’s worth more to marketers and developers? You know, flashy amenities in the condo? Or a real feeling of a functioning, flashy neighbourhood, like say a downtown Toronto or Vancouver?
Aaron Hutchins: I think it’s really trying to find a way to balance both, because if you have a dud of a neighbourhood, then you’re not going to really attract as many people. But you still want the building to be as nice as possible. And as a– as silly as it sounds, like some of the times, it’s not the flashiest amenities that even are the most sought after nowadays. Because especially with the pandemic, and even before the pandemic, there was just such a need to online delivery, and now online grocery delivery, that these condos have to just make room for delivery spaces, or even refrigerated delivery spaces. Like those are just empty rooms. They have to try to accommodate that. So this isn’t flashy or nice, but that is something that is practical and doesn’t really take away– does it take away from the life of the city? Yeah, if you’re having an on-dine delivery, you know, it takes away from people walking out and getting their own groceries or shopping on their own. But at the same time, especially the impacts of COVID, and who really knows what’s going to happen, but they’re really responding to what people want. I mean, they’re leading the way and they’re also responding, and it’s tough to say exac tly what’s going to happen to downtown cores as a result of condos, or as a result of what’s gonna happen once once this pandemic ends.
Jordan Heath-Rawlings: It’ll be fascinating to see. Thank you, Aaron, for talking us through it a little bit.
Aaron Hutchins: No problem.
Jordan Heath-Rawlings: Aaron Hutchins of Maclean’s. That was The Big Story, for more from us you can head to thebigstorypodcast.ca. Find us on Twitter at @thebigstoryFPN. You know the drill by now. You can email us, we read every last one, email@example.com. And of course we would appreciate your rating and your review and your follow or subscription or whatever it is your app does, that lets you see our episodes every day. Thanks for listening. I’m Jordan Heath-Rawlings. We’ll talk tomorrow.
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