Rental Recovery Begins in the GTHA as Vacancy and Incentives fall

Record purpose-built absorption and shrinking condo inventory set the stage for rising rents

TORONTO – October 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 Q3-2026 rental market results today, showing strong signs that the GTHA rental market began to recover during the busiest leasing period of the year.

Q3-2026 HIGHLIGHTS

• Record leasing. New purpose-built rentals absorbed 1,911 units in Q3, bringing net absorption for the first nine months to a record 5,092 units, up 22% from 2025. Condo lease transactions also reached a record 54,324 units year-to-date, up 6%.

• Tighter supply. Purpose-built vacancy fell to 3.0% in stabilized buildings from 3.5% a year ago, and to 5.8% in buildings at least one year old from 6.1%. Active condo rental listings fell 25% from a year ago and are down 43% from their peak, with growth in leasing outpacing growth in listings for five straight quarters.

• Incentives pulling back. The share of purpose-built projects offering incentives fell to 60% from 67% in Q2, the largest quarterly drop since Q2-2022, and one month of free rent replaced two months as the most common offer.

• Rents turning higher. Average condo rents rose 2.4% from Q2 to $3.83 psf, the strongest third-quarter gain since 2023, and same-building purpose-built rents net of incentives rose 0.9%, the largest quarterly gain since Q3-2023. Annual declines narrowed to 0.6% for condos and 1.5% for purpose-built rentals, while condo rents in the Former City of Toronto rose 0.7%, the first annual increase in the core since early 2024.

“The Q3 data provides enough evidence to confirm that the GTHA rental market has entered a recovery phase. Rentals are leasing up at a record pace, vacancy is falling and landlords are pulling back on incentives, while available condo inventory is down more than 40% from its peak. The recovery in rents will gain momentum as overall rental supply declines, since the increase in purpose-built construction will only replace part of the drop in condo completions.”

Shaun Hildebrand, President of Urbanation

PURPOSE-BUILT RENTALS

Net absorption in purpose-built rentals completed since 2000 totalled 1,911 units in Q3, bringing the year-to-date total to a record 5,092 units, 22% above 2025 and 72% above the 10-year average. Absorption kept pace with a record 2,704 units completed in Q3. Vacancy in stabilized buildings (those that have reached 95% occupancy) declined for a third straight quarter to 3.0%, down from 3.5% a year ago, while vacancy in buildings at least one year old (which includes some buildings still in lease-up) fell to 5.8% from 6.8% in Q2 and 6.1% a year ago. Including all buildings in lease-up, total vacancy rose to 13.3% from 12.1% a year earlier due to the record volume of new units.

Landlords began pulling back on incentives. The share of projects offering incentives fell to 60% in Q3 from 67% in Q2, the largest quarterly decline since Q2-2022, and one month of free rent replaced two months as the most common offer. In buildings surveyed in both periods, rents net of incentives rose 0.9% from Q2, the largest quarterly gain since Q3-2023, and were down just 1.5% from a year ago, the smallest annual decline since Q2-2024. Average face rents were $4.11 psf ($2,921 for 710 sf).

CONDO RENTALS

Condo rental supply tightened sharply. Active listings fell 25% from a year ago to 3,705 units at the end of Q3, the largest annual decline since Q2-2022, and months of supply dropped to 0.7, below the long-term average of 1.0. Leases equalled 81% of listings, a level that has been followed by rising rents over the next year more than 80% of the time. Condo leasing reached a record 54,324 units over the first nine months, up 6% from 2025, while Q3 lease transactions of 20,175 were the second highest for a third quarter on record, with the 1% decline from last year’s peak entirely the result of fewer new completions.

Average condo rents rose 2.4% from Q2 to $3.83 psf ($2,604 for 681 sf), the strongest third-quarter gain since 2023, and were down just 0.6% from a year ago, the smallest decline since the downturn began in mid-2024. Downtown is leading the recovery. Condo rents in the Former City of Toronto rose 0.7% from a year ago, the first annual increase in the core since early 2024.

SUPPLY PIPELINE

A multi-decade high of 5,067 purpose-built rental units started construction in Q3, up 172% from a year earlier. Starts over the first nine months totalled 12,106 units, up 82% from the same period of 2025 and already above the total for all of last year. Purpose-built units under construction reached 34,545, while condo units under construction fell 38% from a year ago to 35,920, the lowest level since early 2012. Purpose-built rentals now account for nearly half of all apartment units under construction in the GTHA.