Urbanation’s latest survey of purpose-built rental buildings reveals that the average Toronto vacancy rate has dropped from 5.1 per cent in Q2-2021 to 3 per cent in Q3. This is less than half the rate it reached in Q1-2021 (6.4%) and is now at a level considered to be balanced.
In the downtown market specifically, the average Toronto vacancy rate fell to 3.8 per cent in Q3 from 6.6 per cent in Q2, after reaching a high of 9.0 per cent in Q1-2021.
“The rental market recovery heated up considerably during the third quarter as economic restrictions continued to be lifted and the population began returning back to the core,” said Shaun Hildebrand, President of Urbanation. “The stage has now been set for the GTA rental market to return to pre-COVID levels in short order.”
Average rents for units that were leased within newer buildings completed since 2005 reached $2,389 ($3.30 per square foot), up 3.8 per cent from the second quarter and 1.7 per cent year-over-year. Urbanation says this is the first annual rent increase recorded in the City of Toronto since the start of the pandemic; however, this growth is attributed to a small number of pricier new builds.
Notably, there was also a reduced presence of incentives being offered during the third quarter of 2021, with 57 per cent of surveyed buildings giving some form of incentive compared to 88 per cent last quarter. One month of free rent remained the most common incentive, followed by two months’ free rent and move-in bonuses.
Record condominium lease activity
The number of leases signed for condominium rentals in the GTA totaled 13,969 units in Q3-2021—increasing 6 per cent from Q3-2020.
Market conditions tightened considerably during the third quarter. The ratio of leases-to-listings grew to 82 per cent—the highest level since Q3-2019—while the average days on market fell to 16, which is the lowest since Q3-2019.
Active quarter-end listings dropped 69 per cent from a year ago and equalled 0.7 months of supply based on lease volumes averaged over the past 12 months, which was the lowest amount of inventory on the market since Q3-2018.
At an average of $2,304 ($3.31 psf), condo rents in the GTA surged by 8.2 per cent in Q3-2021 from the previous quarter, pushing rents up 3.8 per cent year-over-year. Rents were almost fully recovered to pre-COVID peaks, coming within 4 per cent of the Q3-2019 high. The increase in rents was strongest in the former City of Toronto, which posted an 11.4 per cent quarter-over-quarter and 6.2 per cent year-over-year increase to $2,405 ($3.62 psf). However, compared to two years ago, rents were down 6.9 per cent.
For more info on the Toronto vacancy rate and other rental market data, visit: www.urbanation.ca
