Toronto's Housing Fix: From Zoning Paper to Bricks and Mortar

TORONTO, ON – September 09, 2026 – Toronto has rewritten its housing rulebook, championing a future of "gentle density" by legalizing multiplexes across its residential neighborhoods. The move is a celebrated policy victory in a city choked by a severe housing crisis. Yet, as the ink dries on new zoning bylaws, a more complex and formidable challenge is coming into sharp focus: execution. The transition from policy on paper to actual homes for Torontonians is proving to be a gauntlet of financial hurdles, regulatory bottlenecks, and construction complexities, a reality that industry leaders will confront head-on at the upcoming "Unpacking Multiplexes Toronto" summit on September 15.

Among those leading the discussion is Hooman Tabesh, CEO of Alliance REIT, a firm that has spent a decade navigating this very terrain. His perspective underscores a critical juncture for the city. "Toronto has made important progress in creating the policy framework for missing-middle housing. The next challenge is execution," Tabesh stated in a recent announcement. "There is a significant difference between identifying theoretical density and actually delivering housing that residents want to live in and that makes economic sense over the long term. That is where experience matters."

The Policy is Set, But Can Toronto Build?

The urgency behind Toronto's policy shift is undeniable. The city's housing crisis is a story told in stark numbers. With the average household in some areas spending over 66% of its income on homeownership, and one in five households in Core Housing Need, the pressure for new rental supply is immense. While the rental market saw a brief softening in early 2026 due to a temporary influx of condo units, the Canada Mortgage and Housing Corporation (CMHC) warns this is a short-lived reprieve. Projections show Ontario facing a staggering 121,000-unit rental shortage by 2036, on top of an existing deficit.

In response, City Hall has made bold moves. Since May 2023, zoning changes have permitted the development of up to four-unit multiplexes city-wide, with permissions for five and six-unit buildings in key districts. These reforms are bolstered by financial incentives, including waived development charges on the first six units—a potential saving of up to $270,000 per project—and a massive $2.7 billion federal-municipal partnership aimed at fast-tracking thousands of new rental homes. Yet, despite this supportive framework, the pace of new housing starts, particularly in the crucial "missing-middle" segment, has not met expectations. The gap between policy intent and on-the-ground reality remains vast.

Decoding the 'Missing-Middle' and Its Real-World Hurdles

"Missing-middle housing"—a term for multi-unit buildings like duplexes, triplexes, and low-rise apartments that fit within the scale of single-family neighborhoods—is widely seen as a key to sustainable urban growth. It promises to increase density without sacrificing neighborhood character, offer more diverse and affordable housing options, and support walkable, transit-oriented communities. The problem is that building it is far from simple.

Developers attempting to pioneer these projects are running into a wall of practical obstacles. Financing, for one, occupies a difficult "no man's land." Projects are often too large for conventional residential mortgages but too small to attract the institutional capital that typically funds large-scale towers. Even with favorable government-backed loan programs, many smaller-scale conversion projects don't qualify, leaving developers to navigate a landscape of high interest rates and stringent lending criteria.

The approvals process presents another significant bottleneck. While new bylaws permit multiplexes "as-of-right," many projects still require minor variances for things like height or setbacks. This triggers a review by the city's Committee of Adjustment, a process that can add two to six months and tens of thousands of dollars in costs per unit. This risk is compounded by community opposition, as some residents voice concerns over increased density and potential changes to their neighborhoods, further bogging down the timeline. Finally, the sheer cost of construction remains a major deterrent. With hard costs for conversions running from $250 to over $400 per square foot, plus significant fees for design, engineering, and permits, the financial viability of many projects hangs by a thread.

A Blueprint for Gentle Density: The Alliance REIT Model

While many grapple with these challenges, some firms have carved out a successful niche. Alliance REIT, a Toronto-based real estate investment trust, has spent the last decade perfecting a model for this exact type of development. The company’s strategy offers a potential blueprint for how to turn underutilized properties into desperately needed rental housing. Instead of focusing on large-scale, ground-up development, Alliance intelligently intensifies existing properties, primarily single-family and mixed-use buildings in established, transit-accessible neighborhoods.

Their vertically integrated platform—spanning acquisition, development, and property management—provides crucial oversight throughout a project's lifecycle. This control allows them to manage costs, ensure design quality, and maintain high occupancy rates, which they report as being near-full across a portfolio of hundreds of units. By transforming existing buildings, they not only add new housing supply but also preserve the architectural character that makes Toronto's neighborhoods desirable. This approach has become increasingly relevant as the broader development industry contends with soaring costs and lengthy timelines for new builds.

"Missing-middle housing gives Toronto another way to grow," Tabesh explained. "There are thousands of properties where thoughtful intensification can create new homes without fundamentally changing the character of established neighbourhoods. The opportunity is significant, but realizing it will require collaboration among policymakers, designers, builders, lenders, investors and experienced operators."

The Crossroads of a Crisis: Industry Gathers to Find a Path Forward

The upcoming "Unpacking Multiplexes Toronto" event represents a critical convergence of these stakeholders. With representatives from across the housing ecosystem—including developers, planners, and key policymakers like CMHC Deputy Chief Economist Aled Ab Iorwerth—the summit is poised to move the conversation from abstract policy to tangible action. The agenda is built around the practical realities of site selection, zoning navigation, financing strategies, and construction execution.

The central question is no longer whether Toronto should embrace missing-middle housing, but how it can be done viably and at scale. As experienced operators like Alliance REIT share their hard-won lessons, the industry will be listening closely. The event marks a pivotal moment for the city, a crossroads where ambitious housing policy must meet the unforgiving realities of the market. The solutions hammered out in these discussions could well determine the future shape of Toronto's neighborhoods and the accessibility of the city for generations to come.