Photo: eskystudio / Adobe Stock
Vacancies dropped and prices trended upward in the Greater Toronto and Hamilton Area’s (GTHA) purpose-built rental apartment market during the first months of 2022.
In its recently-released Q1-2022 Rental Take for the GTHA, Zonda Urban noted that the region’s purpose-built rental market has continued to experience “positive momentum.” Rental vacancies dropped annually and from one quarter to the next as the cost of a new purpose-built rental apartment in the GTHA jumped up $0.06 per square foot.
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“Five projects were launched in the first quarter of the year adding 683 new units to the market,” stated the quarterly report. “Traffic continues to increase with young professionals and international renters driving demand for newer product.”
Here’s what we know about the GTHA new rental market based on the latest from Zonda Urban.
Vacancies fall on quarterly and yearly basis
Despite five new project launches during Q1-2022, vacancy rates still continued to fall in the GTHA.
Overall, GTHA vacancies dropped 1.8 per cent from Q4-2021 to an overall average of 9.5 per cent by the end of Q1-2022, marking a 4.8 per cent decrease in vacancies year-over-year.
Etobicoke currently has the highest average vacancy rate among the GTHA’s sub-markets at 35.5 per cent in Q1-2022, followed by Toronto West/ York at 21.3 per cent.
“The lower quarterly vacancy can be attributed to the steady absorption of the newer product,” the report noted.
Rental rates rise to $3.54 a square foot
As vacancy rates declined, the cost of a new rental increased in Q1-2022.
Average rental rates rose 1.7 per cent from $3.48 in Q4-2021, about $0.06 a square foot, to $3.54 per square foot at the end of Q1-2022. On a yearly basis, rental prices grew eight per cent, or $0.26 per square foot, up from $3.28 in Q1-2021.
Downtown Toronto is currently the most expensive sub-market to rent in, where you’ll pay an average of $3.87 per square foot for a new purpose-built rental unit as of Q1-2022, followed by Midtown/Uptown at $3.78 per square foot. If you’re looking to save on rent, the average rental rates in Brampton are $2.35, the cheapest in the GTHA.
By unit type, active and fully-leased concrete studio units fetched the least expensive prices, costing $1,661 and $1,802 a month.
Last quarter, renters found fewer property promotions as only 38 per cent of buildings offered an incentive package in Q1-2022. Due to the more competitive nature of downtown Toronto, the majority and highest-value incentives could be found in that location compared to the other sub-markets.
Some of the rental incentives offered in projects last quarter included move-in bonuses, a free storage locker, visa gift cards, free rent on long-term rental leases, reduced security deposits and free or discounted parking.
Majority of GTHA rental projects are fully leased
Of the 80 purpose-built rental projects tracked in the report, 25 per cent — or 20 projects — were considered to be actively leasing by the end of Q1-2022. The remaining 60 projects are fully leased.
Zonda Urban considers new projects with less than 95 per cent occupancy to be actively leasing, while those over this threshold are fully leased or stabilized, as this is when units typically begin to turnover for the first time.
Toronto West/York had the highest number of active projects compared to the other GTHA sub-markets, with 56 per cent, or nine projects, considered to be actively leasing.
Zonda Urban is monitoring 279 contemplated purpose-built GTHA rental projects, equalling 105,804 apartment units that are in the approvals and construction process. Of these developments, 169 projects, or 70,547 units, are currently under review by the City.
Over the next two years, Zonda Urban expects 56 projects will be ready to start leasing, bringing 31,105 new rental apartment units to the GTHA market.