TORONTO – July 12, 2018: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its Q2-2018 rental market results today.
Highlights of the release include:
- Average monthly rents for condo leases signed in Q2-2018 grew by 11.2% year-over-year to $2,302 based on an average unit size rented of 732 sf
- Per square foot rents increased by 8.7% annually to $3.14, surpassing $3.00 psf for the first time
- Average rents grew strongest for studios (+12%) and one bedroom units without dens (+13%) to $1,720 and $1,968, respectively
- The number of condo lease transactions fell for the third straight quarter, declining 8% to 7,754 units as supply continued to drop
- Lease activity has been weighed down by declining rates of turnover and a low volume of new condo project registrations (i.e. final closings for new completions), which plunged by 28% from a year ago to 3,264 units in Q2-2018
- New purpose-built rental construction surged in Q2, with 2,635 starts recorded during the quarter, raising the total inventory under construction to 11,073 units — the highest in at least 30 years
- The number of planned rentals also grew, reaching a total of 120 projects and 37,403 units
- Operators of rental buildings completed since 2005 in the GTA raised rents for available units by 11% compared to last year, reaching an average of $2.97 psf. Vacancy rates in these buildings averaged just 0.3%, with an availability rate of 1.5%.
Condominium Rental Market
The GTA condo rental market remained exceptionally tight in the second quarter as trading activity continued to slow. In the year ending Q2-2018, a total of 25,955 units were leased through MLS, the lowest 12-month total in three years. As a share of the entire stock of condos in the GTA, 7.8% of units changed hands in the rental market during the past year, which was the lowest annual level of turnover in five years. The 85% ratio of leases-to-listings remained well above the Q2 average of 78% since 2011, while average days on market remained at a low of 15 days, with only two weeks of supply available at the end of Q2.
Average transacted rent growth of 11% was consistent with annual growth recorded during the previous three quarters, continuing to represent a significant shift away from the longer-term trend level of 4%. The $231 average increase over the past year was the largest ever recorded by Urbanation, with rents having risen by $367 in two years. In the City of Toronto, average rents grew by 12.1% to $2,379 ($3.33 psf), including a 13.5% increase in the former City of Toronto to $2,505 ($3.61 psf). In the 905 Region, condo rents increased 9.2% to $1,998 ($2.49 psf), with 11.9% growth in Mississauga to $2,105 ($2.63 psf).
Purpose-built Rental Market
A total of 2,635 purpose-built rental apartments started construction during Q2-2018, raising the total under construction count to 11,073 units — 69% higher than a year ago in Q2-2017 (6,539). The inventory of rentals underway is now higher than the total number of units built since 2005 (10,871).
During Q2-2018, new applications totaling 5,920 units were proposed for purpose-built rental development, nearly 3.5 times greater than the number of new units proposed a year ago during Q2-2017 (1,719), which followed the expanded rent control rules to new units. As of Q2-2018, the inventory of proposed purpose-built rentals totaled 120 projects and 37,403 units, nearly doubling in size over the past two years to reach the highest level recorded by Urbanation since tracking began in Q1-2015.
Urbanation’s survey of recently available units within the 58 purpose-built rental buildings completed since 2005 produced an average index rent of $2.97 psf, rising 11.3% year-over-year. The availability rate at the end of the quarter was 1.5% and the vacancy rate was 0.3%.
Urbanation is a real estate consulting firm that has been providing market research, in-depth market analysis and consulting services to the condominium industry since 1981. Urbanation uses a multi-disciplinary approach that combines empirical research techniques with first-hand observations and site visits. On a quarterly basis, Urbanation tracks the new, resale, rental and proposed condominium apartment markets in the Greater Toronto Area. Urbanation also actively conducts site specific market feasibility studies across the country for both condominium and purpose-built rental apartment projects.
www.urbanation.ca Media Contact: Shaun Hildebrand
416 922 2200 ext. 243