Rendering of The Mirabella by Mirabella Corp. The building with more than 700 units registered in 2022 and had already rented out all the units.Mirabella Corp.
As the number of finished but unsold condominium apartments reaches new heights in the Toronto region there’s more competition among lenders and investors offering options for builders to either sell units in bulk or refinance their standing inventory.
“We’re seeing people show up out of the woodwork. I’ve had various bulk-buying offers,” said Harley Nakelsky, president of Baker Real Estate Inc., a brokerage that specializes in preconstruction condo selling, speaking of groups and companies who have approached him with millions of dollars to buy perhaps dozens of recently completed condominiums in one large deal.
He’s also seeing the other side approach him as well: Developers hoping to sell significant amounts of leftover inventory. “I have everything from projects that want to move 77 units to ones that want to move seven. … it depends on each developer,” he said.
Many unsold units were initially marketed with prices higher than the current market is selling at.COLE BURSTON/The Canadian Press
According to analysts at Zonda Urban, in the first quarter of 2025 there were 708 finished but unsold units in projects in the greater Toronto and Hamilton area that were marketed for sale since 2020. That’s a 13-fold increase compared with the 52 unsold units in the same period in 2024.
It also excludes another thousand unsold units from buildings that began marketing before 2020. Considering the average new condo sells for around $700,000 but can climb above $1-million per apartment, that amount of unsold inventory represent hundreds of millions of dollars in capital tied up in projects.
“A lot of these guys, that’s a good chunk of their profit sitting there unsold,” said Mike Czestochowski, vice-chairman, land services group at CBRE Canada.
The sticking point for most builders looking to get rid of extra units is price: many of the unsold units were initially marketed with prices higher than the current market is selling at. That keeps the average buyer away and encourages the bulk-buyer to look for a discount.
“They are asking for very good deals,” said Mr. Nakelsky. “The problem is, some of these offers are lower than what my clients want and should sell for.”
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Instead, what more and more builders are doing is looking into another financing option that has been popular in the past during market crunches: a short- to medium-term inventory loan.
Mark Kay, president and principal broker for CFO Capital, has been providing inventory loans in commercial real estate since 2004.
The last time he had a brisk business was during the 2008 financial crisis, when retail and office condominiums had no buyers or leasing interest as the economy essentially froze for a couple years. With residential condos being on a bull run of price growth for almost 15 years, there wasn’t much call for inventory loans in that market.
Now things have changed.
“We’re just closing another one right now in Southern Ontario,” said Mr. Kay, who said his company has worked with builders from coast to coast and has provided inventory loans for hundreds of residential condos in the past 12 months.
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The way it typically works is CFO Capital will provide a loan for perhaps 55 per cent of the current value of the unsold condos with a mortgage charge that is registered on each individual condo; the term on these loans for downtown Toronto is one year (18 months outside the city) and Mr. Kay is offering interest rates between 6.5 and 8.5 per cent.
The choice is often quite clear according to him: “You’re making that judgment call. If I know I’m selling it lower than I have to today, do I sell in a fire sale or do I take an inventory loan?”
The deals are predicated on the belief that the market will recover, allowing a developer to pay off the inventory loan with better selling prices in the future.
Most deals for standing inventory are kept quiet, but one bulk sale was recently announced with a bit of fanfare: In May, Stafford Developments announced it had purchased 33 units (as well as 27 parking spaces) in partnership with Osmington Inc. and Gal Investments.
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Despite Stafford hiring a public relations firm that shared the news, and posted it on LinkedIn, executives from the companies declined to participate in follow-up interview requests about the purchase. The seller, Julie Di Lorenzo, president and chief executive officer of developer Mirabella Corp., was more than happy to share her side of the deal.
“We’d already paid off our bank loan. We weren’t in any hurry. For us, it was to obtain liquidity for future projects,” said Ms. Di Lorenzo, who added that her company is looking at new projects in Calgary and Ottawa.
The building, a two-tower project with more than 700 units called the Mirabella Lakeshore, registered in 2022 and her company had already rented out all the units. Mirabella worked with commercial realtors at CBRE to market the bulk sale (a mix of one-, two- and three-bedroom apartments) and work through about seven serious bids it attracted.
She did admit there was a discount on the price because of the bulk nature of the deal.
“If you sell the units individually they are worth more money,” she said. But she was looking for a buyer who intended to keep them as rentals. “What we didn’t want was someone who was going to put those units right back on the market; we still have some units in the building.”
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The consensus among industry watchers is that the largest developers in the country are unlikely to do either bulk sales or inventory loans, but that plenty of middle- and smaller-sized builders may be considering it if they haven’t already pulled the trigger.
“I think we’ll see more,” said Mr. Czestochowski. “In the mid-90s, we saw some of this, more under distress though. In this market, there are opportunities for other distressed real estate or owners under pressure to sell.”
Those pressures have stacked up in recent years: delays from COVID, inflation driving up prices, higher interest rates as the Bank of Canada fought inflation, and now a drop in demand from buyers as well as ongoing economic jitters due to the trade war.
With thousands of units still under construction and planned to deliver over the next year, there may be more unsold inventory yet to come.
In a recent meeting with a developer, Mr. Kay discovered some builders are planning ahead.
“The conversation was, ‘We will most likely come to you for an inventory loan, not quite sure how many units yet,’” he said.
With an uptick in defaults by buyers, some builders have as little as 10 per cent to as many as 30 per cent of their units unsold, he said. “The majority are taking a proactive approach over the next six to 12 months.”
Editor’s note: This article has been updated to accurately describe Stafford Developments’ partnership with two other firms in the purchase of 33 condo units, and to clarify that Stafford was responsible for hiring a public relations firm to highlight the deal.