Condo Leases Soar by 22% while Rent Growth Accelerates above 4%
TORONTO – July 14, 2015: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its second quarter condo and purpose-built rental market results today.
The number of condo apartments rented through the MLS system during Q2-2015 in the Greater Toronto Area grew 22% year-over-year to a new high of 8,200 units, doubling the rate of growth recorded in the previous few quarters. Growth in supply wasn’t able to keep pace with demand as total listings increased by 14% year-over-year, pushing the ratio of leases-to-listings up to 79% from 74% a year earlier. The average condo was leased in 24 days.
Condo apartment rent growth accelerated to 4.6% after averaging less than 1% in annual growth since the beginning of 2014, lifting rents to a new high of $2.48 psf. Same sample rents grew a more modest 1.7%, also its fastest pace since 2013. Average monthly rents increased for the first time in nearly two years even though unit sizes continued to drop. Monthly rents grew 1.7% to $1,817 while average sizes for rented units fell to an all-time low of 734 sf.
Activity in the second quarter was impacted by an increased share of leases in the core, boosted by a large volume of rental absorptions in newly registered projects. The 1,807 units leased within new projects represented a 28% rental turnover, averaging $2.62 psf at a 90% leases-to-listings ratio.
“Rental demand in Toronto continues to defy expectations”, said Shaun Hildebrand, Urbanation’s Senior Vice President. “Absorptions have grown in tandem with record levels of condo supply and rents have proven remarkably resilient. It’s actually surprising there hasn’t been more action on the purpose-built rental development front” added Hildebrand.
Purpose-built Rental Survey
Urbanation’s second quarter survey of purpose-built rental apartment projects completed since 2005 revealed that average rents for marketed units was $2.34 psf, slightly lower than the condo rental market at relatively larger average unit sizes of 822 sf.
The number of new units in development changed little from the first quarter. Urbanation tracked 3,667 units that are under construction and a total of 9,350 units that are proposed for development. The inventory of purpose-built units under construction remains slightly above its long-term trend, while proposed inventory represents a 38% increase over the 6,765 units built since 2005. Purpose-built units represent only 3% of total apartment units proposed for development.