Calgary's rental vacancy rate hits four-year high due to COVID-19

Calgary’s vacancy rate has risen to the highest levels the city has seen since 2016 due to the COVID-19 pandemic and economic woes.

Based on a new report from Canada Mortgage and Housing Corporation (CMHC), the apartment vacancy rate in Calgary’s metropolitan area grew to 6.6% in October 2020.

In October 2019, it stood at 3.9%.

Rental units with three or more bedrooms saw the highest vacancy rate, at 7.3%. One-bedroom apartments followed, with a rate of 6.8%.

Two-bedroom units recorded a 6.3% vacancy rate last year, while 5.9% of bachelor apartments were vacant.

“Pandemic related impacts, oil sector job losses, and continued rental supply increases led to increased vacancy rates,” said Michael Mak, a Senior Analyst of Economics at CMHC.

Downtown saw the highest increase in vacancy rates across the city.

In 2020, 8.8% of rental units in the area were vacant, compared to just 3.4% in 2019. There are a total of 5,722 rental units downtown, the second highest level in the city.

As well as a building’s location, its age also had an effect on how many of its apartments were vacant.

Units that were built before 2005 had a lower vacancy rate or were on par with the city’s 6.6% average. Buildings built after 2005, though, had a vacancy rate of 10.1% in October 2020.

The CMHC chalks the difference up to higher rents for newer units, as well as poor economic conditions and weakened migration.

A total of 1,306 new rental units were completed in Calgary last year, growing the market by 3.2%. Most were one and two-bedroom units, and nearly half were located downtown and in the northwest of the city.

Although condo rentals have more than doubled in the last decade – up from 11,168 in 2010 to 26,240 in 2020 – growth slowed in the last year.

Only 1.3% more condo apartments were rented out in 2020 than had been in 2019, the second-lowest rate since 2011.

With more purpose-built rentals being completed and no increase in demand, fewer condo owners put their apartments up for rent, the CMHC said.

Despite the increasing vacancy rates and decreasing employment, the average rent in Calgary was unchanged in 2020 at $1,195.

Two bedrooms were the most expensive in the city, with an average rent of $1,323 per month.

“This data provides evidence that property managers are using non-price measures to compete for tenants,” the report stated.

Incentives such as free utilities, lower deposit fees, cash bonuses, and free rent are being used to drive demand for rental units.

There was only a slight difference in rent price between occupied and vacant units, with the latter averaging 4.4% higher rents. In other major city centres, such as Toronto and Vancouver, the average difference is over 20%, the report stated.

Although Calgary’s rental market is considered “affordable” to 80% of the rental population, the report revealed a gap for the city’s lowest-earning households.

Households with an annual income below $36,000 make up 20% of Calgary’s rental population, but can only affordably access 11% of the city’s rental units.