GTHA Rental Vacancy Highest Since Pandemic

TORONTO – January 28, 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 year-end 2024 rental market results today.

The vacancy rate for purpose-built rental buildings completed since 2000 in the GTHA was 3.4% in Q4-2024, increasing from 2.5% a year ago in Q4-2023 to reach its highest level since Q2-2021. Vacancy rates have risen due to high asking rents and increased supply competition among landlords. 

Rents for new purpose-built rentals available to lease during Q4-2024 averaged $4.09 per square foot (psf), which was based on an average monthly rent of $2,967 and an average unit size of 726 square feet (sf). Rents edged up 0.6% from a year ago to reach their highest Q4 level on record, increasing by a total of 18.6% over the past five years. 

Rents for one-bedroom apartments decreased 0.6% annually to $4.26 psf ($2,536 for 595 sf), while increasing 1.7% for two-bedrooms to $3.84 psf ($3,327 for 865 sf) and rising 4.8% for three-bedroom units to $4.11 psf ($4,425 for 1,077 sf).

Purpose-built rental completions totaled 5,537 units in 2024, decreasing 4% from the recent high in 2023 (5,779 units) but remaining 86% higher than the 10-year average of 2,977 units. Purpose-built rental completions are expected to reach a multi-decade high in 2025 with 8,872 units scheduled for delivery.

Rental supply pressures were strongest within the condominium market last year with a record high of 29,800 units completed, approximately half of which were listed for rent. While the total number of condo leases signed during 2024 grew 29% compared to 2023 to a record-high, active condo rental listings at year-end rose 72% annually to 5,646 units, a record-high outside of the pandemic. 

As a result, average condo rents decreased year-over-year for the third straight quarter, down 1.8% annually to a seven-quarter low of $3.89 psf in Q4-2024. Average monthly condo rents experienced a larger annual decline of 4.7% to a 10-quarter low of $2,682 in Q4-2024. This occurred as an influx of small units reduced the average size of condo rentals from 710 sf in Q4-2023 to 690 sf in Q4-2024.

The smallest condos experienced the largest annual decreases in rents. Micro units less than 400 sf saw average rents drop 9.0% over the past year, with 400-499 sf units recording a 6.0% annual decrease and 500-599 sf units seeing a 4.8% annual decrease. Rents for the largest units 1,000 sf and over held steady compared to last year.

The softening rental market conditions and challenging cost environment for development caused purpose-built rental construction starts to decline 10% in 2024 to 5,960 units. In the City of Toronto, purpose-built rental starts dropped 35% between 2023 and 2024 to 3,534 units. 

“Despite demand being at an all-time high, the GTHA rental market is going through a period of softness. This is primarily being caused by a spike in completions, which is temporary given the sharp downtrend for new condo and rental construction activity. In the meantime, renters can enjoy a rare moment of improved affordability following exceptionally strong rent increases in prior years.” 

 Shaun Hildebrand, President of Urbanation