Two-Thirds of Rental Buildings Offering Incentives in Q2

TORONTO – July 29, 2025:  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 Q2-2025 rental market results today.

Among purpose-built rental projects completed since 2000 across the GTHA, a 65% share offered incentives to renters, up from a 36% share last year in Q2-2024. A 39% share of projects offered up to 1.5 months of free rent and 24% offered two months of free rent in the latest quarter, rising from 25% and 4% shares a year ago, respectively. 

The overall average rent for units available to lease in purpose-built rental projects completed since 2000 was $4.06 psf ($2,909 for 716 sf) in Q2-2025, representing a small 0.8% year-over-year decrease from Q2-2024 ($4.09 psf). However, when adjusting rents to account for incentives, the overall average drops to $3.56 psf in Q2-2025 — 12.4% below unadjusted “face rents” and a 6.4% annual decrease from incentive-adjusted rents in Q2-2024 ($3.80 psf). In the City of Toronto, incentive-adjusted rents declined 7.2% annually to an average of $3.82 psf, while declining 4.7% in the 905 Region to an average of $3.06 psf.

In the first half of 2025, a total of 3,156 new purpose-built rental units reached the occupancy stage, a 77% increase compared to the first half of 2024 and 49% higher than the first half of 2023. Among stabilized buildings completed since 2000, the vacancy rate increased to 3.5% in Q2-2025 from 2.7% in Q2-2024. Vacancy in the 905 Region rose to 4.0% in Q2-2025 from 2.8% in Q2-2024. In the City of Toronto, the vacancy rate was 3.2% in Q2-2025, up from 2.7% in Q2-2024.

Purpose-built rental construction starts in the GTHA have seen little change during the past few years. The 3,446 units that began construction in the first half of 2025 was consistent with the 3,625 units started in the first half of 2024 and the 3,355 units started in the first half of 2023. Rental construction starts remained below the recent high of 5,307 units in the first half of 2021, while keeping above the 10-year average of 2,819 units. Overall, the 24,520 purpose-built rental units under construction across the GTHA as of Q2-2025 was virtually unchanged from a year ago in Q2-2024 (24,684 units).

In the secondary condo rental market, a record-high 18,119 leases were signed in Q2-2025, rising 10% from a year ago. However, lease transaction activity was unable to keep up with the 13% annual growth in condo rentals listed for rent during the second quarter at 24,918 units, surpassing the previous all-time high set in Q3-2020 (23,386 units) during the peak period of COVID-induced turnover. As a result, the ratio of leases-to-listings fell to a five-year low of 73%, causing average condo rents to decline 4.5% annually to a three-year low of $3.79 psf ($2,589 for 683 sf). 

Studio condo rents fell 6.0% annually to $4.87 psf ($1,920 for 395 sf), while one-bedroom rents were down 4.9% from a year ago to $3.93 psf ($2,333 for 594 sf), two-bedroom rents decreased 3.3% to $3.42 psf ($3,012 for 881 sf), and three-bedroom rents declined 3.9% to an average of $3.45 ($3,920 for 1,136 sf).

“The GTHA rental market continued to face supply challenges from record high condo completions and rising purpose-built rental deliveries. However, strong underlying demand helped to keep market conditions fairly balanced. The decrease in rents over the past year reflect increased competitive pressures and population growth slowing from the 2022-2024 boom. While supply will remain high for the rest of the year, a drop in condo completions starting next year and a lack of growth in rental construction starts should soon lead to higher rents.”

- 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. 

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