The vacancy rate for Canada's rental market hit a new low this year, and a veteran urban planner said construction of units is falling behind demand.
Developers are having a tough time launching projects that would add supply to the nation's rental market. Bousfields partner Emma West said. It comes as sales of new condos, a large chunk of which investors buy to add to the rental pool, fell to a 30-year low in the third quarter in Canada's largest metropolitan areas, according to condo research firm Urbanation.
Because presales aren't happening, new condo towers, where a good portion of the units likely would be put on the rental market by their owners, are being shelved. As a result, inventory remains very limited.
"The vacancy rate is very low, but there's not a lot of development that's happening there," West said in an interview with CoStar News. "It's a real challenge because we do need housing in Toronto, in Ontario, all across Canada. But the numbers aren't working right now for those new multifamily buildings to be built."
The national vacancy rate for Canada’s rental market reached a new low of 1.5% in 2023, the Canada Mortgage and Housing Corp. reported early this year. That's the lowest rate on record since 1988 when CMHC started to track Canada's national rental vacancy rate. Construction has started to pick up, especially on purpose-built apartment complexes whose developers could be eligible for tax rebates and the waiver of certain fees.
Watch the video to find out how West's clients and other firms are pivoting to focus on purpose-built apartment projects and whether the lack of rental supply in Canada might attract companies from the United States to develop north of the border.