Developers in Toronto are facing a record number of completed but unsold condominiums, yet experts say combining existing units into larger layouts is generally not a practical way to reduce that inventory.
Urbanation reports 4,295 completed and unsold new condos in Toronto in the first quarter of 2026—more than double the total a year earlier and nearly five times the level two years prior. The market now holds roughly 92 months of completed new condo supply, and an additional 8,629 unsold units are under construction, scheduled for completion over the next several years.
The Bank of Canada notes that 60 percent of new condo units entering the Toronto market have three or fewer rooms, while only about 30 percent of new households match the typical profile of buyers for smaller dwellings. Many of these small units were developed during the boom years when low interest rates attracted investor demand. With that investor pool largely gone and interest rates higher, end users are now the dominant buyers—and they are less interested in compact units than investors had been, industry sources told REM.
One commonly raised idea is to combine adjacent small units to create larger suites that better match buyer preferences. In practice, however, that approach is rarely feasible except under very specific circumstances.
How one developer made it work — before construction was complete
Madison Group successfully accommodated buyer requests to create larger suites at The Capitol Residences during the pre-sale and early construction phases. Josh Zagdanski, Madison’s vice-president of high rise, said purchasers sought larger homes in the desirable Yonge and Eglinton area, and the developer was able to redesign roughly a dozen suites—from about 1,500 square feet to between 2,500 and, in some cases, 4,000 square feet.
Zagdanski emphasized that the ability to combine suites is highly project- and location-specific. When changes are made during presales or early construction, developers can adapt floorplates and services to meet buyer needs. But once construction is finished, options become extremely limited.
Why it’s nearly impossible once a building is finished
Corey Pacht, executive vice-president of operations at Fitzrovia, explained that post-construction unit combinations face major structural and mechanical hurdles. Many walls between suites are shear walls that contribute to the building’s stability and cannot be removed. Even where walls aren’t structural, electrical reconfiguration is complex and costly.
Plumbing is often the most prohibitive constraint: sanitary and water stacks typically run vertically in straight lines through the building, so relocating a kitchen or bathroom is technically challenging and expensive. Pacht suggested that combining units without moving plumbing stacks would still cost at least $100,000, and moving stacks would add substantially more—making the exercise financially unattractive for most developers.
The price problem
Real estate agent David Fleming noted that even if developers could physically combine units, the economics still matter. Larger suites may appeal more to end users, but if the sale price needed to recoup conversion costs is too high, buyers will stay away. In many cases the barrier to sale is price rather than size.
Other obstacles include obtaining condo board approval and avoiding awkward, disjointed layouts that feel like two units joined with a door between them. Fleming has seen combined suites that lacked flow and cohesion, leaving buyers uninterested despite the increased square footage.
Given those constraints, Fleming argues developers with unsold units are better off waiting for market conditions to shift. New construction in Toronto has slowed significantly, which could lead to a supply shortage by the end of the decade. If demand returns while new supply remains limited, the existing unsold inventory may become easier to sell without costly conversions.
“By 2030, we could see a major condo shortage and renewed demand,” Fleming said, suggesting developers may be able to hold inventory and begin selling as market dynamics improve.