TORONTO – January 14, 2016: Urbanation Inc., the leading source of information and analysis on the Toronto condominium market since 1981, released its year-end 2015 condominium and purpose-built rental market results today.
The number of condo apartments rented through the MLS system during 2015 in the Greater Toronto Area soared by 19% to reach 27,166 units, representing a sixth consecutive record. Activity at the end of the year grew at a torrid pace with total lease volume in Q4 up 26% year-over-year to 5,628 units. At the same time, purpose-built rental apartment construction starts increased to a 25-year high of 3,476 units in 2015, doubling the annual average since 1990.
Condo Rental Market
Condo rental activity grew disproportionately faster than the condo stock, which increased by 8% or approximately 21,500 units in 2015 — also a record. This was the result of a 34% rental turnover rate (via MLS) for newly completed units that registered last year — a share that jumped from 24% in 2014.
Despite the large infusion of investor-owned units for rent in 2015, demand for condo rentals increased by a faster rate than new supply. The 13% annual growth in total listings in Q4 was half the rate of growth for leases, lifting the ratio of leases-to-listings to a fourth quarter record of 74%, up from 66% a year earlier in Q4-2014. Furthermore, the average time on market edged lower to 20 days from 22 last year.
Strong market conditions led to an acceleration in rent growth to an annual rate of 4.2% in Q4-2015, producing an average rent of $2.48 psf ($1,857 at an average size of 748 sf). However, same sample rents continued to grow slowly at annual pace of 1.3%, as did rents in the former City of Toronto (+0.7% to $2.80 psf) where the bulk of new supply arrived on the market last year. In the outer 416 municipalities and the 905 region, newly completed units helped push average rents up by 4.9% and 5.7%, respectively, to $2.40 psf (outer 416) and $2.03 psf (905).
Purpose-built Rental Survey
Urbanation’s survey of purpose-built rental buildings completed since 2005 in the GTA revealed an average vacancy rate of 1.1% and an average availability rate of 2.3% in Q4-2015. A weighted average of rents for available units produced an index level of $2.74 psf for buildings in the City of Toronto and $1.56 psf for 905 buildings.
The inventory of proposed projects confirmed as purpose-built rentals that have yet to start construction increased to 53 buildings totaling 10,513 units.
“Rental demand in the GTA grew to feverish levels in 2015 and developers have taken notice,” said Shaun Hildebrand, Urbanation’s Senior Vice President. “While market conditions are expected to remain firm, supply will no doubt continue to weigh on rent growth in the core over the next couple years” added Hildebrand.