Sold across the entire Greater Toronto and Hamilton Area in Q1 2026. That is 94% below the ten year average, and zero new projects launched for the first time in three decades. A senior industry voice said in RENX last week that the condo product did not fail, the business model behind it did. Today, why FCPRET never had to watch that happen.
PV, Mit & Jeff
A senior industry voice broke it down clearly in RENX last week. The condo product was not the problem. The pre sale, investor first, exit price model was. FCPRET is the opposite side of that trade, chosen ten years ago.
RENX ran a piece on July 22 by Kristy Shortall, the Executive Vice President of Development at Northcrest Developments, a subsidiary of PSP Investments, one of the largest institutional real estate investors in the country. The headline was pointed. The condo market did not fail, it revealed what needs to change.
That is not a Foundation Capital take. That is a senior institutional development executive naming the same conclusion Foundation Capital arrived at ten years ago from the opposite direction. Today's letter is the read on why she is right, and why FCPRET was structurally on the other side of that trade from day one.
The Q1 2026 numbers Shortall points to are staggering.
You do not get a 94% sales collapse and zero new launches from a product problem. You get that from a business model that stopped serving actual residents somewhere along the way.
Her argument in RENX is that Canadian condo developers spent the last decade selling to investors, not to residents. Lenders required seventy percent of units to be pre sold before construction financing was released. That meant every project had to be structured to appeal to a buyer purchasing an asset for exit price, not a household planning to actually live in the unit.
Every design choice flowed from that. Compact units for maximum unit count. Striking exteriors for the pre sale brochure. Amenity stacks for the marketing suite. Very little attention to whether the person who eventually lived in the unit could raise a family in it, know their neighbours in it, or grow old in it.
When interest rates rose and the investor cohort walked away, there was no resident demand left underneath. The buildings still stood. The demand still existed. But the model that produced them was matched to a buyer who no longer existed.
FCPRET has never underwritten a unit on the price an investor would pay for it. We underwrite every unit on the rent a working Southern Ontarian can carry on their paycheque. That is not a marketing distinction. It is a structural difference in what business we are in.
Every FCPRET building we buy is bought to hold, operate, and re densify inside the existing envelope. Every voluntary turnover is an opportunity to convert oversized 1970s stock into two or three purpose sized workforce units. Every design decision, from the size of the reconfigured unit to the amenity choices to the tenant mix, is answering the same question. Can the working Londoner, or Chatham household, or Windsor family, actually live in this unit for the next ten years at a rent they can carry.
There is no pre sale window. There is no seventy percent investor cohort to satisfy. There is no exit price we have to hit to release financing. There is only a monthly rent cheque, a stable tenant, and the discipline of running a building the way a landlord runs a building.
That is the business model that was on the correct side of the shift Shortall is describing. Not the condo product. The rental operating model.
500 Units · Southern Ontario Transit Corridor · Workforce Rent
$1.5M Tranche 1 · Closing in weeks · Accredited investors and existing FC investors only.
Shortall's prescription for what comes next in Canadian housing is almost exactly the Foundation Capital operating playbook.
Diversity of housing types, not a single standard product. Design for actual residents at different life stages. Transit oriented, community anchored, mixed use. Buildings connected to parks, services, and amenities rather than isolated towers designed for pre sale marketing suites.
Read her article and then read one of our Development Towers letters from earlier this month. They are describing the same thesis, from opposite ends of the industry. The institutional realization is arriving now. The private operator got there a decade ago and has been quietly assembling the operating platform to deliver against it.
On the FCPRET side, the condo collapse is a tailwind, not a threat. Every household that would have bought a condo in Toronto in 2020, 2021, or 2022 and cannot today is a household that stays a renter for longer. That renter demand does not stay in the GTA. A lot of it flows into Southern Ontario mid market cities like the ones FCPRET owns buildings in, at exactly the rent bands we operate at.
On the development side, Foundation Development Fund II and Fund III are both structured on the operating model Shortall says the industry now needs. Development Towers and the Fund III parcel are both purpose built rental, transit anchored, community integrated, priced for the resident, not for the pre sale window. Fund III Tranche 1 remains open to our accredited investor community as of yesterday's announcement.
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible · Also Cash
Targeted: 15% Annualized (7% cash monthly + 8% appreciation)
Our Apartment Building REIT across Southern Ontario. The rental thesis a senior institutional executive is now naming out loud. FCPRET has been running it for a decade.
The three trustees on the road from 2023 launch to $10M raised, the rent model evolution, and the road to $20M and beyond.
Talk soon,
PV, Mit & Jeff
P.S. The RENX piece is worth ten minutes. Read Kristy Shortall's full article here. Then think about which side of that trade you want your capital on for the next decade.
