GTHA RENTAL MARKET SHOWS IMPROVEMENT IN Q2

TORONTO – July 27, 2026:  Urbanation Inc., the leading source of data and analysis on the Greater Toronto Hamilton Area (GTHA) condominium and rental apartment markets since 1981, released its Q2-2026 rental market results today.

Condominium lease transactions reached a record high of 18,923 units in Q2-2026, rising 5% from a year ago. Over the first half of 2026, a total of 34,150 condo leases were signed — an 11% increase from the same period last year and the third consecutive year of record first-half activity. Leasing has continued to break records despite a pullback in population growth, reflecting pent-up demand being released as rents have become more affordable. Growth in lease transactions outpaced the 2% increase in condo rental listings during Q2, marking the fourth consecutive quarter that growth in demand exceeded supply growth.

Active condo rental listings at the end of Q2 declined to 5,366 units, down 13% from a year ago and representing the largest annual decrease in four years. Months of supply fell to 0.9 months from 1.2 months in Q2-2025, moving below the long-term average of 1.0 month. The tightening in the market coincided with the beginning of a much-anticipated slowdown in condo completions, which had pushed a record volume of investor-owned units into the rental pool over the past two years.

With inventory receding, average condo rents increased 2.5% from the first quarter to $3.74 psf ($2,545 for 681 sf) in Q2 — the strongest quarter-over-quarter gain in three years. On an annual basis, condo rents were down 1.3%, the smallest decline since rents began falling in Q2-2024.

The purpose-built rental market recorded its strongest first half on record. Net absorption within buildings completed since 2000 totalled 1,888 units in Q2, a 59% increase over last year, bringing the first-half total to 3,205 units — up 44% from 2025. At the same time, the pace of new supply began to ease, with 2,664 units in 10 projects reaching first occupancy in the first half of 2026, down 21% from the recent high of 3,391 units delivered a year earlier. 

Within buildings completed since 2000 that were at least one year old, the vacancy rate declined to 6.8% in Q2 from 7.9% in Q1, while remaining higher than the 5.5% vacancy rate in Q2-2025[i]. Including the 44 buildings still in their initial lease-up phase, which contained 12,192 units, total vacancy across the stock built since 2000 declined to 12.4% from 14.7% a year ago and a peak of 15.5% in Q1-2025. Incentives remained widely used but began to edge lower, offered at 64% of projects in Q2 compared to 66% in Q1. The most common incentives were one- or two-months of free rent. 

Average face rents for units available to lease in purpose-built rentals completed since 2000 were essentially unchanged from the first quarter at $4.05 psf ($2,864 for 707 sf), decreasing 1.7% from a year ago. After accounting for the monetary value of incentives, net rents averaged $3.51 psf — also unchanged quarter-over-quarter — with the 13% discount from face rents worth approximately $377 per month for the average unit.

Rental development activity continued to expand. A total of 6,291 purpose-built rental units started construction in the first half of 2026, a 50% increase over the same period last year and the highest first-half total in decades. New rental project submissions and condo-to-rental application conversions added 27,715 units to the future supply pipeline during the first half, down 14% from the record 32,387 units added a year ago. As of Q2-2026, a total of 31,645 purpose-built rental units in 102 projects were under construction across the GTHA, the highest in decades.

However, the growth in rental construction is not offsetting the contraction in condo development. Condominium units under construction in the GTHA fell to 38,252 in Q2-2026, down 39% from a year ago and 64% below the peak of 105,421 units in Q2-2023. Combined, total apartment units under construction across the GTHA declined 21% year-over-year to 69,897 units. Since roughly half of new condo supply is typically used as rental, the additional purpose-built rentals now getting underway will replace only a portion of the rental supply being lost as the condo pipeline unwinds.

“The GTHA rental market is showing its first real signs of progress towards recovery. Renters are responding to two years of falling rents, and with condo completions now receding, demand is outpacing supply. Rents have likely found their floor, with strong upside in the years ahead as condo completions continue dropping and population growth rebounds.”

• Shaun Hildebrand, President of Urbanation

ABOUT URBANATION

Urbanation is a real estate consulting firm that has been providing market research, in-depth market analysis and consulting services to the apartment industry since 1981. Urbanation uses a multi-disciplinary approach that combines empirical research techniques with first-hand observations and site visits. Urbanation offers subscription services and custom market studies covering the new construction condominium and purpose-built rental apartment markets in Ontario. 

www.urbanation.ca                                                                   Contact: [email protected]

[i] Previous news releases reported vacancy rates in stabilized buildings (i.e. those that have achieved at least 95% occupancy). However, this excluded the large and growing number of buildings in the occupancy phase that have been leasing up for an extended period. To provide a more informative reading on vacancy, while allowing buildings time to progress through their lease-up, Urbanation began reporting on vacancy rates within buildings that are at least one year old.