The developer of a recently completed Toronto condominium project is not concerned about the city’s abundance of the asset type.

Some analysts have described the large number of developments as an oversupply. But Carlo Timpano, CEO of Capital Developments, regards that view an oversimplification.

“I think oversupply is the wrong nomenclature,” said Timpano in an interview with Connect. “And, I’ll tell you why oversupply is the wrong nomenclature: Because vacancy rates are still low.

“They’re still still far below what people would consider, generally speaking, to be a healthy market, which would be consistently three to 5%.”

There is currently a large supply of sitting inventory because of macroeconomic risk, uncertainty about interest rates and low demand, he added. Prospective buyers and developers alike are holding off on purchases because, for both groups, housing is a major investment decision.

“I think people are looking for stability in the market like they are for any of their other major investments,” he said.

“And right now, with an election which has recently happened, and with tariff overhang, which will impact the state of our macroeconomy for the next couple of years, until we get some certainty on that, I can see people not making major investment decisions.”

Capital Developments managed to outrace the uncertainty on its 29-storey Olive Residences condo project in the Yonge and Finch corridor in the heart of the North York area. The company has recently topped off Olive, which was mostly presold, and occupancy is slated for fall 2025.

Olive is designed to complement the Azura Condominiums tower, which is situated about 100 metres away and was the company’s first project in the Yonge and Finch node. Capital is keen to develop more condo projects in the area, which Timpano views as a “shockingly underserviced” node considering its relatively close proximity to transit, the downtown core, York University and other locations.

But the firm plans to wait until the dust surrounding the macroeconomic picture and tariff situation settles before starting to construct any new condo projects.

Timpano noted that the condo market is experiencing an absorption rate of about 600-700 units per month. He expects the market to experience short-term uncertainty until a three-year standing inventory is absorbed.

But he suggested that rental-apartment developers could face pressure because of the lengthy time required to complete projects and a “drastic undersupply” that will be exacerbated after the tariff situation is resolved in the next two years.

Still, Timpano, whose firm has begun to develop rental housing projects, expects the region’s condo sales to slow over the next year.

“I think you will find footing in the market in the next, hopefully, three to six months, and I think that’s ultimately going to be dependent upon when the trade situation with the United States resolves itself, so that you’ll have macroeconomic certainty,” he said.

He believes that investors, with 20,000 to 25,000 square feet of units to be delivered to purchasers this year, will have to sell them to end users or rent them out before buying more.

“How long that takes, especially the rental side of it, is going to be dependent upon the macroeconomic state of the economy,” he said. “But I think once we see stability in the market, then we will start to see presales pick up again.”

He predicted that development projects that cater to end users, rather than investors seeking assets to rent out, will continue to do well. When certainty returns, presale activity will pick up again in “triple-A locations, namely transit-oriented locations and established nodes, he added.

“They’re not going to want submarket risk in addition to market risk,” said Timpano. “They’re going to want to know where they’re investing is a really good, established location. I think they will look for reasonable spreads to resale value.”

Pictured: Olive Residences condominium development project in Toronto.

Rendering: Courtesy of Capital Developments

May 28 in Toronto | Industry experts, investment and market leaders, and dealmakers are convening at Connect Canada to discuss how global capital is adapting to uncertainty. Register to attend! www.ConnectCanada2025.com | May 28, 2025 | Malaparte, Toronto.