Canderel with its bank lenders at the ground-breaking ceremony. The speakers started their remarks acknowledging the difficult times the real estate industry is facing.Canderel
A consortium of five banks taking a novel approach to construction financing on a new Toronto condominium project highlights the difficulty developers are facing getting shovels in the ground.
On June 18, Toronto builder Canderel invited brokers and bankers to a groundbreaking ceremony for the first of a proposed three-tower community called Forêt in Toronto’s Forest Hill neighbourhood at Bathurst Street and St. Clair Avenue. Despite the celebratory moment, all the speakers started their remarks by noting the difficult times in the industry, including Canadian Imperial Bank of Commerce’s Rocco Calarco, a vice-president at the bank that is leading the consortium.
Renderings of Canderel's new project called Forêt in Toronto's Forest Hill neighbourhood at Bathurst Street and St. Clair Avenue.Norm Li
“The industry is facing strong headwinds and financing pressures. The fact that this project is launching is a testament to the strength of Canderel’s execution track record, discipline and ability to advance a complex project through to delivery,” said Mr. Calarco. He also thanked the other finance executives from National Bank of Canada, Toronto-Dominion Bank, Desjardins Group and Laurentian Bank of Canada for their partnership: “It could not be done without the support of everybody.”
Canderel chairman Jonathan Wener noted it wasn’t the largest syndicate he’d worked with to get a building finished, recalling a time in 2008 when market confidence was shaken by the global financial crisis and the company was trying to obtain construction loans worth close to $300-million for a project at College Park in downtown Toronto. At that time, it required a consortium of 10 banks to advance the loan.
“Imagine 10 banks; I didn’t even know we had 10 banks in Canada like that,” he said. “Believe it or not, we were 95 per cent pre-sold. We couldn’t find the money.”
Sales for Forêt’s first tower have reached about 75 per cent. According to Ben Rogowski, Canderel’s president and chief investment officer, perhaps 50 per cent of those sales came in the first year when the project launched in 2022, with about 10 or 15 per cent more in 2023 – before two very quiet years in 2024 and 2025.
That tracks with the drop-off in preconstruction activity across the greater Toronto region, with real estate data companies such as Urbanation Inc., reporting the market fell 95 per cent from a high of more than 30,000 sales in 2021 to just 1,599 in 2025.
Banks are agreeing to fund the below-ground infrastructure needed to finish all three towers. despite Canderel only having the financing to build one.Norm Li
Such conditions also necessitated an unusual construction plan. While Canderel is planning three towers on the site, it only has financing to build one. The banks are agreeing to fund the below-ground infrastructure needed to finish all three towers.
Essentially building the basements for two buildings that it doesn’t have preconstruction commitments or construction financing to complete represents a risk for Canderel and those lenders. But the consortium’s agreement to fund it all is a vote of confidence in the company, Mr. Rogowski said.
“We are comfortable taking the risk,” he said. “As the market started to cool down, we realized it was going to be unrealistic and secure financing on all three at the same time.”
Canderel and its partners are also betting on what is referred to as the looming “supply cliff” that many believe could help revive market demand in a few years’ time.
According to Urbanation, in 2026 about 21,850 newly completed condos will be delivered in the Toronto region, down 26 per cent from 2025’s 29,616 total. While the projection takes another sharp drop of 32 per cent to 14,659 in 2027, in 2029 it tumbles down that “supply cliff,” with just 2,209 condominium units expected to be delivered – an 89 per cent drop from this year.
Even though there are thousands of new rental apartment buildings planned and under construction in Toronto – often on sites that were originally planned as condominiums – Riz Dhanji, president of RAD Marketing, expects there will be demographic pressures that will create new buyers out of those who might be on the sidelines right now.
“When it comes down to like three or four years from now, what’s going to happen when people are starting to switch – moving up or wanting to buy – and there’s no inventory?” asked Mr. Dhanji. “In 2029, when this building is done, there’s very limited supply in this neighbourhood.”
The current plan is to begin sales on the second and third towers when they are perhaps only two years away from completion. The timing fits with the expected dwindling delivery of new condos in 2029. But a quick turnaround from preconstruction to delivery also makes it easier to sell larger, family-sized units (which Canderel intends to build) to those considering downsizing and who may live in the area already. According to Mr. Dhanji, such end-user buyers are often reluctant to wait the five to seven years typical of condo construction.
Mr. Rogowski agrees that while it was easier to get financing in boom years, it may not be a bad thing that it takes a little more work and planning now.
“When the market was very frothy, no one was thinking twice about financing these projects,” said Mr. Rogowski, who said, over his 25 years in the industry, the boom times were definitely not the norm: “For a number of years, people were lining up to buy units. That’s not normal, it’s not a good situation.
“The current situation is more reflective of how you’d define normal,” he said.