Four years ago, a City of Toronto survey found that although the downtown population had grown 10% in five years -- the largest such increase in 30 years -- families with children were still under-represented. Citing concerns about unused infrastructure and suburban sprawl, city planners began looking at ways to put more family condos in the downtown area.

The leading proposal, which would require large new condos to have a certain percentage of family-sized units, has irritated developers and underscored debate about whether market demand or municipal policy should ultimately shape the course of downtown development.

"The Canadian dream has always been the house with the backyard, right? But the demographics have changed," says Jim Ritchie, senior vice-president of sales and marketing at Tridel. "Look at New York City. You have families living in Manhattan now, in high-density areas, and instead of having a yard they're taking the elevator down to the nearest park."

One of Tridel's projects is 300 Front St. W., a 683-unit condo slated for summer 2012 occupancy. As it happens, 300 Front St. W. is in Ward 20 (Trinity-Spadina), where Councillor Adam Vaughan already requires builders to set aside 10% of new buildings for family-sized units, so 300 Front St. W. has 69 three-bedroom units, starting at $1.05-million and priced at $648 to $850 per square foot.

Mr. Vaughan is spearheading the effort to apply this requirement to the rest of downtown, arguing that doing so would bolster its economic diversity and make better use of its infrastructure.

"The downtown of Toronto has always been a mix," Mr. Vaughan says. "That's why it's one of the safest, most vibrant downtown areas in the world."

The planning commission defines a family-sized dwelling as a three-bedroom unit, or a smaller unit with knockout walls. Three-bedroom units in the big towers are generally among the last to sell because of their cost.

"His principle is great. But to mandate an across-the-board quota of family-size units at 10% -- there's no way the market's that big," says Stephen Dupuis, president and CEO of the Building, Industry and Land Development group, the GTA homebuilders' association.

In the 416 area code, sales of three-and three-plus-bedroom units represented about 2% of the market in 2009, and 1% through August 2010, according to RealNet Canada, which provides housing statistics to BILD. In the downtown area, the numbers are 1% and 0.4% for the same time period.

"Our experience has been that in more of a suburban area, we've been able to put families in condominiums, but the closer we get to downtown, fewer families are buying," Mr. Ritchie says. "I know what [Mr. Vaughan's] trying to do. Whether it will work in these high-rise environments, I'm not sure."

Mr. Vaughan dismisses such thinking as shortsighted.

"We on the council are trying to think 100 years out," he says. "There's not a developer in the world that's thinking 100 years out."

The BSAR Group of Companies negotiated with the city for almost two years before 12°, a boutique 11-storey condo on Beverley Street with nine three-bedroom units, was recommended for zoning approval, says Tyler Hershberg, a principle at the start-up development company. The 12° condos, also in Ward 20, are just south of Grange Park and the Art Gallery of Ontario.

"You're 100 feet away from Queen Street, but it's still quiet and you're in a true residential neighbourhood," Mr. Hershberg says. "So you can walk to work, or take the TTC, but you'll still be able to come home to something that's more white picket fence."

Mid-size, infill developments like 12° occupy a middle ground for families who want to live near downtown but have limited options outside of the "450-square-foot shoeboxes" in the supertowers, he says. "They don't want to be in the club district with a stroller."

Even in busier quarters, though, some developers are betting that the cosmopolitan life will draw families in.

"There's a lot of interesting stuff happening downtown, so if you have those parents who are very urban-oriented and who would like to expose their kids to that kind of cultural diversity -- you have parks, museums, there's a range of things to do," says Mark Mandelbaum, chairman at Lanterra Developments, which is offering three-bedroom units in ICE and ICE2 at the York Centre.

Providing family-sized units doesn't necessarily mean families will move in, of course. When families compare what they can get in Brampton or Ajax for the same money -- more space, more privacy, a backyard -- they have traditionally opted for the suburbs, commute or not. And couples with children, or plans for children, are reluctant to put money down on a condo whose completion date is, like so many other things, beyond their control.

Meanwhile, developers are finding other markets to fill out their larger units.

"We found that a lot of people who had been living in the Bay Street corridor, and had been living there for a while, didn't want to leave the area. So they decided to move up to have a little more elbow room," Mr. Mandelbaum says.

It was the move-up market, among others, that Canderel Stoneridge targeted when it began planning Aura, the 75-storey condo adjacent to College Park. Aura will be the tallest residential tower in Canada when it's completed, and with 931 units, it will also be among the most dense.

Riz Dhanji, vice-president of sales and marketing at Canderel, says planning for Aura began before the discussions about a mandatory-inclusion bylaw. Canderel incorporated a stack of 50 southern-exposure, three-bedroom units anyway, hoping that homebuyers would be drawn to Aura's luxury and prime location.

"We didn't know how the market was going to take to it," Mr. Dhanji says. "They were quite expensive -- in the $750,000 range--and we were really surprised that they were among the first to go. It was a hit. We sold them out very quickly."

Above these, on the 51st to 71st floor, will be a column of slightly nicer three-bedroom units with higher-end finishes, more room and more amenities. The cost, at $1-million plus, is commensurate.

"You're minutes from the Eaton Centre, and Ryerson University is literally right across the street," Mr. Dhanji says.

All this was music to the ears of Dr. Mahmood Shaheen, an oncologist who bought a three-bedroom unit in Aura partly as an investment for his five children. His two older girls have moved out, but he still has three boys, ages 12 to 15, who want to be close to the action. More important for dad, they'll be close to the universities, and he feels safer living downtown: Aside from round-the-clock security in his building, he says he is more comfortable "being among people."

"It has three big rooms, a nice big area, a good view," he says. "Almost everything you ever wanted in your house is there in a condo."