Condo Rental Leases Fall 10% from Last Year while Rents Rise 5%
Development Applications Surge by 5,600 Units in Q2
TORONTO – July 15, 2016: Urbanation Inc., the leading source of information and analysis on the Toronto condominium and rental market since 1981, released its second quarter 2016 rental results today.
The number of condo apartments rented through the MLS system during Q2-2016 in the Greater Toronto Area declined by 10% year-over-year to 7,397 units. Activity moderated from record levels, following a 25% rise in the first quarter and coming alongside a 39% drop in new unit registrations compared to a year ago. Total listings declined 15% year-over-year in Q2, leading to tighter market conditions and annual condo rent growth of 5.2%, with rents averaging a record $2.61 psf or $1,934 monthly for the average 741 sf unit rented.
Applications for new rental development continued to soar in the second quarter, with an additional 5,603 units proposed during the last three months, bringing the total inventory in the proposed pipeline to 19,230 units. Under construction activity remained steady from the previous quarter at 6,354 units, up from 3,939 units a year ago. Vacancy rates and rents within the 7,309 purpose-built units completed since 2005 averaged 0.4% and $2.41 psf, respectively.
“Rental supply in the GTA has tightened due to fewer completions and less turnover, which is creating conditions for stronger rent growth” said Shaun Hildebrand, Urbanation’s Senior Vice President. “With not as many would-be buyers vacating their units for the ownership market, competition among renters has increased over the past year” added Hildebrand.
Condo Rental Market
Within buildings existing a year ago, leases grew by 6% annually in the second quarter, a deceleration from same building growth of 10% last year and 23% recoded in 2014. Quarterly turnover (measured by leases as a percentage of the condo rental stock) declined to an estimated 5.5% in Q2-2016 (21% over the past year), down from 5.9% in Q2-2015 and a recent high of 10.6% in Q2-2012. Same sample rent growth edged up to 3.6% from the 3.0% annual pace in the first quarter.
The decline in available supply contributed to a record high ratio of leases-to-listings at 84% (up from 79% last year), with the average time on market dropping by a full week from 24 to 17 days. Of the 3,992 new condo apartments registered during the second quarter, 26% were rented through the MLS, with a leases-to-listings ratio of 94% and an average rent of $2.80 psf.
Purpose-built Rental Survey
Three new purpose-built rental apartment buildings totaling 298 units began occupying during the second quarter, with 66% of units absorbed during the period. An additional 1,750 purpose-built units are scheduled for occupancy during the second half of the year and 2,486 units in 2017.
Across the 5,158 purpose-built rental units completed in the City of Toronto since 2005, surveyed rents averaged $2.76 psf, slightly higher than the average for condo apartments in the 416 Region at $2.74 psf and substantially higher than purpose-built units in the 905 Region ($1.67 psf). Second quarter purpose-built vacancy rates were only 0.1% in the 905 and 0.7% in the City of Toronto.