It was the lineup that did it: on a chilly November day in 2007, 100 salivating condo zombies queued in front of the sales office of One Bloor East, and the spectacle entrenched the $500-million tower (its name shortened, with Hollywood action-movie panache, to 1BE) in the public imagination. Many of them were hired by real estate agents for as much as $2,000. They huddled in the cold for over a week, determined to claim one of 612 luxury units gussied up with Miele appliances and lanais (Hawaiian for covered balcony). The hysteria was as inflated as the prices: newspapers reported that an unnamed Hong Kong businessman had offered $25 million for a two-storey penthouse suite with an infinity pool gazing out over Lake Ontario.

At the time, the real estate market was as fat and smug as a Wall Street hedge fund manager, and 1BE’s developer, Bazis International, milked the frenzied crowd accordingly. As people waited in line, staff came outside and changed a sign displaying unit prices, hiking the range of $300,000 to $2 million up to $500,000 to more than $8 million. According to Andrew La Fleur, a real estate agent and an active blogger who was there that day, when the prices were raised the crowd let out an exasperated “Come on!” Still, 80 per cent of the units were sold in a matter of weeks.

One Bloor East was by no means the only condo project to inspire such fervour during the boom. The Shangri-La hotel and condos at University and Adelaide, the Aura condo at Yonge and Gerrard and the Trump Tower at 311 Bay all garnered their share of excitement and controversy. But there was something special about 1BE. It cast its spindly shadow over the entire industry. Roy Varacalli, the in-house architect for Bazis International, described the Yonge-Bloor intersection as “the crossroads of the city and the country.” The tower promised to transform a moribund jumble of low-rise retail into a bustling urban nexus. Its 78 luxurious storeys would perch atop a three-level, gilded podium of retail; celebrity chef Gordon Ramsay was reportedly approached to run the restaurant of a five-star Sofitel Hotel. No aspect of the project went unhyped: an e‑vite depicting a backhoe scooping up a clump of oversized gems asked people to “come and be a part of demolition” on May 29, 2008. Yet since the demolition, One Bloor East has been as quiet as a mausoleum. The project has become an emblem of our collective financial insanity. The questions of industry watchers, condo purchasers and curious passersby are twofold: what stalled the tower’s heavenward march? And will it go up at all?

Toronto is home to the most active condo industry in North America. One reason for this is our greenbelt legislation, which has encouraged developers to build up rather than out. Another is that most of the city’s apartment buildings were constructed in the ’50s, ’60s and ’70s, and little purpose-built rental accommodation has been added since. The condo market has become our rental market.

In 2007, at the height of the boom, the number of new condo units sold in Toronto was 22,654, up a whopping 40 per cent over 2006. There were 103 new condo projects launched that year in the census metropolitan area (or CMA, which accounts for most of the GTA). In 2008, sales of new condos dropped to 14,469, with the number of new projects reduced to 78. This year, by the end of the first quarter, only one project had been launched. If the market doesn’t improve, the current supply of new condos (i.e., those already or nearly built) could be quickly absorbed over the next couple of years, and there won’t be enough supply to meet the demand of a growing population and a changing demographic.

Jane Renwick, executive vice-president of the real estate consultancy Urbanation, projects there will be a further 45 per cent fall-off in new condo sales this year. For developers, it’s a vicious circle: new condos rely entirely on pre-sales (in Canada, projects can’t qualify for financing until 70 per cent of units are sold), and when consumer confidence is low, buying a property before it’s built seems like an especially risky proposition. You are essentially buying a promise.

“Overall, things are not in irredeemable shape,” says Renwick. But the spotlight is on one or two mega-projects, and their fate has the power to chill an entire buying population. That spotlight, once carefully cultivated and guarded by eager developers, has now become an inconvenience. Companies are learning that there’s no off switch when things go awry.