Construction of rental apartments in the GTA hits a 30-year high

Rental apartment construction hit a 30-year high in the GTA last year, with a whopping 6,720 units starting construction in 2021.

According to a new report from Urbanation, 2021’s rental construction starts at nearly double the five-year GTA average of 3,379. And it’s in for even more units coming on the market in the not-so-distant future. At the end of 2021, a whopping 17,912 rental units were under construction, with another 93,321 having been proposed for development.

News of the increased number of units beginning construction comes as rental demand continues to bounce back in the GTA, especially in Toronto. The number of condo apartments leased in the GTA jumped 24% in 2021 to a record 47,737 units, with rental supply at the end of December sitting at just 0.7 months’ worth. Toronto, in particular, saw a staggering 27% jump year-over-year in lease activity, with leases on smaller units in particular (under 600 square feet) up 29%.

As to be expected, vacancy rates for rentals are down across the GTA, landing at just 2.4% in the fourth quarter of 2021 — a noticeable change from the 6.4% vacancy seen at the beginning of the year. In Toronto vacancy rates hit a high of 9% at the beginning of 2021 but dropped to 3.1% by the end of the year.

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During peak vacancy, many Toronto landlords began offering enticing move-in incentives to get renters into their buildings, giving out everything from gift cards to stocked wine fridges to free months of rent.

“The incentives in place since the pandemic began have been effective for rental operators, but they became less necessary as the market tightened and shifted back towards a landlord’s market,” the report reads. “Less than half (47%) of surveyed purpose-built rental buildings were offering some type of financial incentive to new tenants in Q4-2021, down from a 70% share a year ago.”

With the increased demand has come increased prices. GTA rent prices are up 10.8% year-over-year, with Toronto in particular seeing a 15.9% annual increase to a new average price of $2,456.