In what is being called a ‘remarkable’ turnaround in the rental sector, it appears that the pandemic delay for tenants in the Toronto area is coming to an end as vacancies have fallen and rental incentives have declined in the last quarter of 2021.
Vacancies in purpose-built rents completed since 2005 hit 2.4 percent in the fourth quarter, down from 6.4 percent at the beginning of 2021 and down from the 5.7 percent vacancy rate of the fourth quarter of 2020, according to a Wednesday report from development-following market research firm Urbanation.
Before the pandemic in the last quarter of 2019, the region’s vacancy rate fell to below 1 percent.
In last year’s last quarter, the downtown rental sector remained in a balanced area at 3.1 percent, less than half the 7.4 percent of a year earlier and the 9 percent high vacancy rate of the first quarter of 2021.
Vacancies were lower at 2.3 per cent in Scarborough, Etobicoke and North York, and even lower in the 905 areas where they reached 1.1 per cent in the last quarter. Even at the height of the pandemic, vacancy rates never exceeded 2 percent in the 905 areas, said Shaun Hildebrand, president of Urbanation.
“It really illustrates the lack of rental supply in the 905 markets,” he said. “By far the largest part of the offer delivered is located in the city of Toronto. However, we are beginning to see the demand for rental rentals spread across the region. ”
This is partly due to the growth of work from home and hybrid work arrangements and traditionally units in the 905 tended to be a bit larger, Hildebrand said. But the growing cost of home ownership is probably also a factor.
“Home ownership has become more expensive everywhere, but especially in the 905 region. This is where we saw the strongest price growth rates. It has therefore praised many people living in these markets and it has led to a lot of growth in the demand for rent, ”he said.
Hildebrand said the turnaround in the rental sector was remarkable. A year ago, rents were 15 percent lower and vacancy rates reached new highs with 905 rents starting to make city apartments more expensive. Where 70 per cent of purpose-built rental buildings offered lures to tenants a year ago, only 47 per cent offered those incentives in the last quarter.
He mentions 2021 “a breakout year for (rental) construction starts with 6 720 units underway, higher than the average of 3 379 that the region saw between 2016 and 2020. At the end of last year, there were 17,912 rental units built and another 93,321 in the proposal stage.
“We do not think this is enough to satisfy the demand, but it speaks to the confidence in long-term vision that developers have for the rental market,” says Hildebrand.
The average apartment rent in the fourth quarter of last year was $ 2,361 dollars per month – $ 300 per month less than the cost of owning an apartment of the same size. The annual increase of 10.9 percent in regional rents in the fourth quarter was led by a 15.9 percent increase in the city, Urbanation said.
Reference-www.thestar.com