Dream Unlimited is building purpose-built rental apartments in the prairie provinces and Ottawa-Gatineau, but it’s not economically feasible in Toronto according to the company's leader. Proposed incentives from the City of Toronto could quickly change that.

“Some cities don't have development charges so they deal with it differently, and some cities have more income and housing costs are lower,” Dream president and chief responsible officer Michael Cooper told RENX in a wide-ranging interview.

He stressed that his company has land in Toronto which is already approved for development of rental housing. 

“In Alberta and Saskatchewan, it works well. With the waiver of the HST (harmonized sales tax) and ACLP (Apartment Construction Loan Program) financing from CMHC (Canada Mortgage and Housing Corporation), we can build apartments in Ottawa-Gatineau.

"But it’s not enough for Toronto.”

The City of Toronto proposals are aimed to initially support the development of up to 16,000 purpose-built rental homes and a minimum of 4,000 affordable rental homes.

City of Toronto’s proposed incentives

If the city staff proposals were implemented, eligible projects would receive city incentives of:

• an indefinite deferral of development charges, estimated at $37,636 per unit, as long as the development remains rental tenure;
• a 15 per cent property tax reduction for 35 years, estimated at $20,396 per unit;
• and full financial incentives, including foregone taxes and fees for affordable rental units, estimated at $97,264 per unit.

To qualify for these incentives, projects would need to include at least 20 per cent of its units being affordable (according to the city’s income-based definition of affordable housing) for at least 40 years and up to 99 years. Projects would have to start construction by the end of 2026.

The provision of 20 per cent affordable units is the same amount required to receive CMHC financing through the ACLP, Cooper pointed out.

“I think the waiver of development charges is going to make a big difference to get things started,” Cooper said.

The staff report also includes other recommendations to incentivize purpose-built rental development.

Dream could start building between 2,000 and 3,000 purpose-built rental units in Toronto before the end of 2026 if the incentives are introduced and the company qualifies, according to Cooper, and the city itself would commit to building 7,000 of the first 20,000 new rental homes through its own resources.

Toronto city council will consider the proposals later this month.

“We started 1,200 apartment units in 2024 we're going to do at least 1,000 in 2025, not including Toronto,” Cooper said. “A lot of the apartment business that we're doing in Canada is on land we already own.”

Cooper said Dream owns 8,000 acres of land in Western Canada, where it has room to build approximately 80,000 more units. 

“In Saskatoon we're doing about 250 units a year and we're hoping to start doing about the same in Calgary in 2025,” Cooper noted.

New plans for 250 Dundas St. W. in Toronto

Dream received approval in 2020 for the 49-storey redevelopment of a 43-year-old, eight-storey, 121,590-square-foot office building with retail at grade at 250 Dundas St. W. in downtown Toronto. It was to include a mix of residential, office and retail uses. 

With the challenges faced by the office sector, however, Dream now seeks to build a 57-storey Arcadis-designed building with 719 residential rental units (with 20 per cent classified as affordable), approximately 2,700 square feet of retail space at grade and about 8,000 square feet of public parkland. Cooper is hoping to receive approvals to begin construction in 2026.

Toronto has a bylaw that says any office space removed in certain parts of the city must be completely replaced, which severely restricts the potential conversion of under-utilized office space to needed housing. 

Cooper cites Calgary as a role model for incentivizing the conversion of such office space to residential and he’d like to see something similar done in Toronto.

The City of Toronto now seems prepared to consider reducing or eliminating the office replacement requirement on a case-by-case basis.

“They don't want to make a hasty judgment and then find out it was a mistake, so they're just doing one-offs now,” said Cooper. “But hopefully, in the next year or two, they're going to come out with a new policy for how you can convert office buildings into residential.”

Quayside is moving forward

Quayside — a joint initiative involving Waterfront Toronto, Dream and Great Gulf on a 12-acre site in East Bayfront — received zoning approval over the summer for the first phase of mixed-use development.

That permits the construction of three towers of 70, 64 and 55 storeys as well as a 12-storey building. They would include approximately 2,800 residential units, with the number of affordable units likely to increase to 20 per cent to qualify for CMHC financing and the city’s anticipated incentives.

“There's no new information yet, but we're working on it,” Cooper said of Quayside’s planning progress.

Selling land at Zibi

Dream expects to build 2,500 rental units along with commercial/retail space at Zibi, a 34-acre master-planned community in Gatineau, Que. and Ottawa. About 600 are completed and leased or are completing lease-up. Construction will start on another 440 units within the next year and the remainder should launch over the next six years.

Marketing of Dream’s Capital View Lands, comprised of 3.27 acres in Gatineau that are part of Zibi, began in late September. The land offers approximately one million square feet of potential development density.

“We have a lot of land in Gatineau but we don't have the ideas to absorb it,” said Cooper of why Dream is selling. “Maybe somebody wants to put a hotel or seniors housing there, or maybe they have some other ideas, but it would help us absorb the land and get the development finished quicker.” 

Residential acquisition in the Netherlands

Dream has what Cooper calls a small stake in an investor group, which also includes TPG Angelo Gordon and Stadium Capital Partners, that announced in September an agreement to acquire a Dutch residential portfolio for $1.04 billion. 

“We’ve got industrial in Canada, the U.S. and Europe and, with this, we now have apartments in Canada, the U.S. and Europe,” Cooper observed. “We like that and I think it's a significant step in the growth of our asset management business.”

The acquisition, expected to close by early 2025, includes nearly 3,000 single-family and multi-family units across close to 90 sites in the Netherlands. The units will be managed and operated by the investor group.

“The portfolio is owned by ERES (European Residential REIT) and has elements that can be sold off as individual units,” Cooper said. “It's like a self-liquidating portfolio that could turn out pretty well. A big chunk of it will stay as rental and a big chunk will be sold, and we think we can get a good return on it.”