Why is the Toronto Rental Market on Fire?
By Lucas on Apr 15, 2015
Urbanation, Toronto’s leading source for condo market intelligence, has released its first quarter rental market report for 2015, which includes a new survey of purpose-built rental apartments.
Through the MLS system, there were 4,938 condo units rented out in the first quarter of 2015, which is an 11% increase compared to the same period last year. While leasings were up, listings went up even more with a 21% year-over-year increase. The reason listings shot up at the beginning of the year is because of the 42% annual jump of newly completed and registered condo units. Even with this crazy jump, the leases-to-listings ratio decreased from 70% to 64%.
“The condo rental market has become more competitive on the supply side in an effort to keep vacancies low”, says Shaun Hildebrand, Urbanation’s Senior Vice President. “Record levels of rental demand are helping to keep overall rents stable and market conditions balanced, although some moderate downward adjustments to rents have been noted in a few key areas of high supply growth.”
The average rent increased steadily by 1.1% to $2.37 per square foot across the GTA. Rent per square foot has been steadily increasing by around 1% since the start of last year. While price per square foot is gradually rising, the average monthly rent is on the decline due to the shrinking unit sizes. Average monthly rent went down 1.8% to $1,790 (the lowest in three years), and the average size of a rental unit went down by 22 square feet to 756 square feet.
The podium of The Selby, Cityzen's new rental building
The Purpose-Built Rental Survey analyzed every rental project completed in the GTA since 2005, which equals a total of 34 buildings and 6,723 units. The average index rent was $2.38 per square foot, basically exactly the same as the condo rental market. The average unit size was slightly higher, as expected, at around 800 square feet.
When it comes to new developments, there are eight buildings under construction with 2,458 units, all of which are scheduled to be completed by next year. Add that to the 37 proposed buildings with a total of 9,207 units and there’s a 75% growth compared to the number of purpose-built units completed in the last decade.
The rental market has seen some big shifts recently. Both Cityzen and Urbancorp have decided to make one of their developments rental, and Westbank’s grand unveiling of their plans for the Honest Ed’s site turned out to be 100% rental. Will we start seeing more entirely rental communities coming to Toronto? Time will tell!
