Last Updated on October 24, 2023 by Neil Sharma
Toronto’s condo rental market is showing signs of strength, according to a Q1 Urbanation report that revealed, at 11,928 units leased, transactions surged by 70% over Q1-2020.
Listings declined by 12% from Q4-2020 and brought the ratio of quarterly condo leases-to-listings to 61%—the highest since the COVID-19 pandemic struck in March of last year. However, it remains 10 percentage points below the decade-year average, although it’s at least broaching the lower end of balanced market conditions.
“In a sign that the urban rental market may be starting a comeback, the City of Toronto outperformed the 905 Region in terms of annual growth in lease activity in Q1 by a wide margin of 78% versus 46%,” said the report.
“Evidence of a bottoming-out for rents appeared in the first quarter data. On a quarter-over-quarter basis, average per sf rents decreased 1.4%—a significant improvement compared to the 7.5% quarterly drop recorded in Q4-2020. Furthermore, average monthly rents increased month-over-month in both February and March (each by more than 1%), suggesting that the market reached its low in January at about $2,000 and is already on the path to recovery.”
Rents averaged $2,037 last quarter in the Greater Toronto Area and $2,033 in the City of Toronto, year-on-year declines of 14% and 16.2%, respectively; in the 905, average rents, at $2,053, dropped by 6.7%, marking the first time that’s ever happened. City of Toronto rents were higher on a psf basis at $2.98 compared to $2.67 in the 905.
Purpose-built rental buildings registered as far back as 2005 saw vacancies increase by 6.6% GTA-wide at the conclusion of Q1-2021, according to Urbanation’s survey data, increasing from 5.7% one quarter earlier and 1.1% from the same quarter last year. In the City of Toronto, purpose-built rental vacancies rose to 8.8% last quarter from 7.3% in the fourth quarter of last year, and from 1.1% in Q1 of 2020. However, the vacancy rate in the 905 was 1.5% last quarter.
In the GTA, rental supply hit 100,000 units, and while there was deceleration in new rental construction activity, long-term planning for purpose-built rentals picked up. There were 1,009 new rental units that began construction at the conclusion of last quarter, which is a 73% decrease from 3,735 starts during the same time last year. At the end of Q1-2021, there were 13,563 units under construction, which is a marginal decline from 13,863 units at the end of Q1-2020, although it’s more than twice how many were under construction at the end of Q1-2016 (5,833).
“The total number of proposed purpose-built rental units that haven’t started construction reached a recent high of 86,683 units—34% higher than a year ago (64,757 units) and bringing the total pipeline of rental units under construction and planned in the GTA to over 100,000 units.”
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
