The firm’s latest report shows the average condo rent now stands at $3.97 per square foot
The firm’s latest report shows the average condo rent now stands at $3.97 per square foot in Toronto, translating to $2,723 a month for a typical 686-square-foot unit. Studio apartments had the sharpest decline, with rents falling 3.9 per cent to $2,047 for a typical 395-square-foot unit. One bedroom units weren’t far behind, decreasing by 1.8 per cent to $2,450 for 591 square feet. Rental rates for two bedrooms dipped by 0.9 per cent, averaging $3,143 for 889 square feet, while three-bedroom units held relatively steady, declining just 0.6 per cent to $3,988 for 1,041 square feet.
Despite the drop in rates, demand for rental units remains high. Toronto had an all-time record 16,169 condo lease transactions in the second quarter, a 29 per cent rise from the previous year. Typically, high demand applies upward pressure on prices, but due to the surge in listings (total number of condos up 47 per cent; 82 per cent for newly registered ones) rents have decreased.
Urbanation president Shaun Hildebrand noted that the current softening in rents is due to a temporary spike in condo completions, which he said will subside as new condo sales and construction activity drop.
In the second quarter, construction began on 1,558 purpose-built rentals, a 43 per cent increase from last year. Starts totalled 3,131 units, up 13 per cent annually and 190 per cent from early 2022 — though still 32 per cent below the first half of 2021.
Over the same period, 23,376 purpose-built rentals are under construction in Toronto, with 159,176 more proposed, including 67,431 approved units.
Still, Hildebrand believes construction levels won’t keep up with future demand, leading to increased rental rates once again.
“While some recent improvement to rental construction has been occurring, the level of starts for rentals remains much too low to keep pace with demand over the longer-term,” he said.