In the ever changing landscape of Toronto’s housing market, laneway & garden suites have emerged as an enticing opportunity for homeowners to seek additional space, or income generation. These well-sized, detached residential units, nestled within the backyards of existing properties, offer a unique blend of privacy and functionality, with great upside potential. Having said that, the significant costs associated with building a laneway or garden suite in Toronto often comes as a surprise to property owners. In this blog post, we delve into the intricacies of laneway suite pricing, shedding light on what they cost to build and why, as well as what to consider when selecting a builder.
Pricing Factors to Consider
Most property owners have never taken on a construction project as substantial as building a laneway or garden suite. Even seasoned developers and real estate investors are often taken aback by the intricacies inherent in these kinds of projects. When it comes to understanding pricing, numerous factors come into play that warrant attention.
Firstly, geographic location and site context play a significant role in determining construction costs. Not only are labour costs higher in big cities, but constructing suites in a dense urban environment like Toronto, a city often characterized by tight lots, limited access, overhead wires, and other obstacles, can significantly inflate costs when compared to suburban sites with more space. This reality also sheds light on why prefabricated units of a comparable size can often cost more than traditionally built structures for properties in Toronto.
In addition to construction costs varying from city to city, construction costs in general have dramatically risen across the board in recent years. Having built suites in Toronto for over a decade now, we’ve seen that the housing shortage, coupled with a shortage of skilled tradespeople, and increasing immigration has fueled sustained demand, driving prices upward. Unfortunately, this trend does not seem to be reversing in the near term.
Another important consideration to be mindful of when receiving estimates for laneway & garden suites is that inexperienced builders often underestimate the intricate nature of laneway & garden suite construction, resulting in initial quotes that fail to encompass hidden costs. This very often leads to unwelcome surprises during the actual build. Moreover, when comparing builder quotes, it’s all too easy to fall into the trap of assuming that lower-priced builders will use the same high-quality materials and components that other builders are using. This is also why it is crucial to work with a design team that is focused on providing robust building details and material specifications IN ADDITION to securing permits for the build.
The Problem With Dollar Per Square Footage Estimates
When discussing costs per square foot, it is important to consider the overall square footage of the building. Smaller buildings will have a higher cost per square foot when compared to larger buildings because they can’t take advantage of economies of scale. Trades have minimum startup costs and many components of a construction project are identical regardless of the size of the building. For example, when considering a forced air HVAC system, the incremental cost of adding ductwork to service a larger building is minor in nature compared to the cost of the equipment.
When comparing per square foot cost estimates, it is important to know if the cost estimate includes items like management fees, HST, utility upgrades and connections, landscaping etc. These costs are often left out by builders during the sales process, but account for a significant portion of the overall project budget.
At the time of writing, based on our historical data for projects in Toronto built by us and other builders, projects that were between 1,000-1,500 SF cost $400-500/SF + HST to build. On the other hand, projects that were under 950 SF cost $600-650/SF + HST to build.*
*These numbers are based on limited data at the time of writing and do not include allowances for contingencies, builder’s risk insurance, service connections through the existing house, upgrading incoming services, appliances, window coverings, or landscaping.
Quality Matters
We often see that the biggest determining factor when choosing a builder is price. Having said that, we have seen time and again that working with an experienced and reputable builder makes all the difference in the outcome of a project. A skilled builder understands the nuances of laneway & garden suite construction, navigates regulatory hurdles adeptly, and ensures high-quality workmanship throughout the process.
Unfortunately, these qualities are difficult if not impossible to see when browsing through a builder’s portfolio of completed work. It’s hard to understand how the client experience differs between builders, how closely the builder worked with the design team, and how smoothly the entire process went. Furthermore, on the physical side, it’s hard to see the elements in a building that contribute to its performance. Two laneway suites may appear identical on the surface, but their performance can vary significantly due to differences in the materials and systems used and how they were installed. High-quality materials, coupled with expert installation, enhance durability, energy efficiency, and overall livability. Conversely, inferior materials or shoddy workmanship may lead to premature deterioration, increased maintenance costs, and reduced resale value.
In general, we always recommend working with a builder focused on quality, that employs best practices, selects quality materials, and adheres to industry standards. This likely won’t be the cheapest builder, but will ensure that the end product not only meets expectations but exceeds them.
Unlocking the Value Proposition
Despite the initial investment, laneway & garden suites offer a myriad of benefits that can often justify the costs associated with building them. Firstly, they add tangible value to the primary property, with the value typically increasing by the cost of construction or more. Moreover, laneway & garden suites present an attractive income-generating opportunity, with rental incomes often exceeding $5000 per month in desirable neighborhoods. For those building a suite to house a loved-one, the value of a suite is priceless. They enable families to stay together while maintaining privacy and independence. For these reasons and more, a laneway or garden suite can offer homeowners a solution to truly optimize their property’s potential.
Conclusion
In the context of Toronto’s booming real estate market, laneway & garden suites stand out as a compelling option for homeowners and investors alike. While they do require a significant upfront investment, the inherent value they offer in terms of additional space, rental income potential, and property appreciation can make them a very worthwhile endeavor. By understanding the factors that drive pricing, and working with an experienced design team and builder, homeowners can make informed decisions that maximize their return on investment.
If you or someone you know is interested in building a laneway or garden suite, please follow this link to receive your complimentary report. Our team will respond with a complete review within a single business day.