TORONTO – July 12, 2019: Urbanation Inc., the leading source of information and analysis on the GTA condominium and rental markets since 1981, released its Q2-2019 rental market results today.
Urbanation’s Q2 survey of new purpose-built rental apartments completed since 2005 across the GTA reported an average vacancy rate of 1.5%, rising from a low 0.3% in Q2-2018. While remaining exceptionally low, vacancy rates reached their highest level since Urbanation’s survey began in Q1-2015. The availability rate, which includes both vacant units and occupied units where the tenant has given notice to vacate, increased to 2.3% from 1.4% in Q2-2018. Vacancy and availability rate calculations exclude buildings that began occupying within the past 12 months.
Growth in purpose-built rents within buildings completed since 2005 remained strong in the second quarter at a year-over-year increase of 7.6% for available units, although moderating from the 10.3% annual rate of growth recorded a year ago in Q2-2018. The average rent within same sample buildings reached a record high of $2,475 based on an average unit size of 794, equal to $3.12 per square foot. Within the nine buildings totaling 3,078 units that began occupancy during the last 12 months, which represented a 25-year high for annual completions, 55% of units were leased as of the end of Q2-2019, with available rents averaging $2,697 for an average unit size of 710 sf, equal to $3.80 per square foot.
After reaching a three-decade high of 12,071 purpose-built rentals under construction as of the end of 2018, the level of construction underway declined for the second consecutive quarter to 11,075 units in Q2-2019. This occurred as only 370 rentals started construction during the second quarter, the lowest level of new construction starts for rentals since 2016.
However, intentions to develop purpose-built rentals continued to grow in the second quarter with the addition of 2,608 newly proposed units, raising the total inventory of planned units that have not yet started construction to 44,093, up from 39,444 units as of Q2-2018. Although it should be noted that only 20% (8,949 units) of total planned rentals have been approved. The growth in purpose-built rental applications follows the provincial government’s recent removal of rent control for new buildings, in additional to other programs to encourage new rental housing such as deferrals for development charges and the expansion of low-cost CMHC loans for construction.
“The uptick in vacancy in the first half of 2019 from rock-bottom levels occurred as an increase in new supply created somewhat more choice for renters. This trend will need to continue in order for there to be meaningful progress towards alleviating the tightness in rental market conditions in the GTA”
- Shaun Hildebrand, President of Urbanation.