Thursday, April 16, 2015

Wave of new condos keeps rents in check

Published in TheStar.com/Business
By: Susan Pigg Business Reporter, Published on Wed Apr 15 2015


There are so many new rental condos hitting Toronto market that landlords are under pressure to retain tenants.

Renters rejoice.

So many new rental condos are now hitting the Toronto market that competition is mounting among landlords to keep rents in line and tenants from flocking to the newest glass-and-granite boxes in the sky.

The 23,240 condo leases signed in the past year outstripped both new and resale condo sales combined, says a new report from condo market research firm Urbanation.

Total rental listings were up 21 per cent in the first quarter of this year alone as the number of new projects registering in the GTA skyrocketed by 42 per cent.
While rents remain at record levels after five years of strong growth, all the new supply is already putting a damper on rental rate growth, which slowed to just 1.1 per cent in the first three months of 2015, an average of $2.37 per square foot.
That’s despite another record quarter for leasing activity: some 4,938 condo units were rented from January to the end of March, up 11 per cent over a year ago, Urbanation said in its state-of-the-rental market report released Wednesday.
“We’ve seen a modest reduction in some key sectors of the rental market that have experienced rapid rent growth over the last five years,” said Urbanation senior vice-president Shaun Hildebrand.
Vacancy rates, which have slumped to new lows of 1.1 per cent in the city core, are likely to slowly start climbing, the report notes. And the tenant search for the newest, shiniest thing means it may be tougher for landlords to hang onto tenants in even year-old or two-year-old buildings.
Already, says Urbanation, there’s been some weakening of rents in half of the six major submarkets in the city, especially the densely populated CityPlace area south of Front St. at Spadina.
Rents there have declined an average of 4.5 per cent in the first quarter of 2015, year over year, to an average of $2.56 cent per square foot, says Urbanation.
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