Condo rents are expected to remain flat this year – at an average of $1,870 – says research firm Urbanation.
A record 7,132 condo apartments were rented across the GTA in July, August and September, but demand for all those granite-and-glass units now lighting up the city’s skyline appears to be easing, says condo research firm Urbanation.
While the number of condo leases signed was up 10 per cent in the third quarter over the same period a year ago, that’s about half the rate of growth seen during the first half of 2014.
In fact, that’s the slowest pace of growth in condo rental demand seen in the last two years, says Urbanation in a third-quarter assessment of what’s typically the busiest period of the year for signing new leases.
The slower pace of demand was blamed largely on a dip in listings from the record high of 8,961 in the second-quarter as fewer new projects registered, translating into a drop in the number of investor-owned units put up for rent.
But the slower pace of demand is also seen as a sign of what could lie ahead in this huge, and growing, sector of the rental housing market that’s seen fierce competition, and even rent bidding wars, driven largely by millennials keen to live close to the core in new, towering highrises.
“Rental activity is heading towards a more sustainable pace as demand levels out following extremely high rates of growth in previous quarters,” says Shaun Hildebrand, Urbanation’s senior vice-president.
“With the fundamentals such as immigration, population and employment growth in Toronto recently slowing while condo completions move higher, rents can be expected to stay flat over the next year, although remain supported (roughly at existing levels) by still low rates of vacancy.”
Condo rents averaged $1,870 during the third quarter of this year, essentially flat compared to a year ago, the research firm noted.
While condo developers have been building smaller and smaller units the last few years to cut costs and try to maintain affordability, the third quarter was noteworthy for one other reason: The average size of condos rented actually increased slightly, from 755 to 767 square feet, it says.