WATER LEAKS COST YOU MONEY AND DECREASE YOUR BUILDING VALUE
WATRTEK
While Canada is home to approximately 20 per cent of the world’s freshwater and renowned for its lakes and rivers, many residents are under the wrong impression that water is an unlimited renewable resource.
The truth, however, is that water and sewage costs have risen in Canada by nearly 100 per cent since 2005, and energy prices have almost doubled since 2003. For multi-residential property owners, tenant non-compliance and water inefficiencies have a direct impact on their Net Operating Income (NOI).
"A leaking toilet can cost the landlord $500 to $1,000 per month in wasted water in one suite alone"
Since tenants typically do not pay for (or even see) the utility bill, they tend to ignore leaky or faulty fixtures and are less mindful of over-usage. Furthermore, tenants do not generally feel a sense of ownership for their apartments; therefore, persuading them to take a more conservative approach to consumption can be tricky. Yet, studies show that simple behavioral tweaks such as turning off a running tap while brushing teeth or washing dishes vs. using the dishwasher can save hundreds of litres of water per year. It’s in everyone’s best interest to make a habit of reducing their water usage, but those paying the bills are most apt to comply.
Taking a proactive approach
The two main issues building owners face when dealing with water inefficiencies are the ever-increasing cost of water and tenant over-usage—both of which lead to an increase in operating costs. Taking a proactive approach to asset management begins with understanding that you cannot manage what you cannot see or measure.
While building owners and managers often understand the variables that contribute to their monthly water costs, without the capability to accurately measure consumption and loss, there is no adequate and available data to manage. This will ultimately negatively affect one’s competitive position, resulting in the potential need to compensate for the additional cost by raising monthly rental rates.
The best first step is to address inefficient fixtures and appliances. Given occupant behavior is always an unknown variable, landlords will see a direct benefit from upgrading to a more efficient showerhead and other key appliances. This layer of efficiency prepares building owners to implement more advanced technologies that can monitor and manage consumption at the Point-of-Use (PoU), ensuring unwanted or unintended events (outside of normal occupant behavior) are identified, mitigated, and communicated to appropriate resources.
Implementing various automation technologies to monitor and manage PoU appliances and fixtures for forced consumption should only be considered once the building’s asset base is as close to high efficiency as possible.
Track, measure and manage
Until recently, building owners relied on monthly utility bills to monitor monthly water consumption; however, this method of monitoring was and continues to be extremely limited in scope, as toilets in individual units cannot be assessed, nor can leaks be easily identified. With toilet and appliance leak detection hardware and water management devices, it is now easy to monitor, analyze, and manage each unit individually and in real time.
This ability to track, measure, and manage consumption means that building owners are in a better position to optimize their buildings’ in-suite water usage and take immediate corrective measures, thereby potentially saving thousands of dollars monthly. This is the primary reason why building owners are now recognizing the importance of real-time data capture and are beginning to install and implement water management devices and software designed to create smarter buildings.
WatrtekPro Inc. has developed an "In Suite Fit Up" program in which we go into each suite and address all aspects water with new technologies and devices all aimed to reduce water consumption. To date we have done thousands of suites and savings are substantial with paybacks under 2 years in most cases. If yourwater bill is $100,000 and you save $30,000 then at a 5% cap rate you have increased your buildings value by $600,000.
Did you know…
Statistically, Canada is one of the worst offenders when it comes to water consumption. Canadians use an average of 329 litres of water per person per day, which is second only to Americans in the developed world. This is more than double what Europeans use, where water costs substantially more. Data shows that Canadians consume a staggering 65 per cent of their water in the bathroom, mostly from showering and bathing. Given one third of Canadian households are renters, which translates to approximately five million families, tenant non-compliance is a key issue, yet most tenants remain unaware of their true water consumption footprint.
WatrTekPro Inc. is an innovative water management consulting company that provides numerous advanced water technologies and services. For a free water analysis and consultation, email Nando Presciutti at nandop@watrtek.com
APARTMENT RENTS STILL SOFT
BUT HIGHER THAN 3 YEARS AGO
RENTALS.CA
After Nine Months of Decline, Rents in Canada Still 12% Higher than Three Years Ago The 2.7% year-over-year rent decline in June was smaller than the 3.3% decline recorded in May. Despite the dip in rents during the past year, average asking rents in Canada remained 4.1% higher than the level from two years earlier ($2,042) and 11.9% higher than the level from three years earlier ($1,899). Longer and shorter-term metrics are showing rents flattening out after a strong run-up between 2022 and 2024. On a 12-month rolling basis, average asking rents in Canada decreased by 1.5% annually in June, while more recent changes indicate a 0.3% increase since March 2025.
Purpose-built Rents Up 25% in Past Three Years
Asking rents for secondary market units continued to experience the largest annual declines in June, with condo apartment rents down 4.9% and rents within houses and townhomes down 6.6%. While purpose-built rents recorded a small 1.1% annual decline in June, they were 9.8% higher than two years ago and 24.6% higher than three years ago. Meanwhile, condo rents have recorded barely any growth over the past three years (+1.6%) and rents in houses and townhomes were 0.2% lower than three years ago. Note, however, that purpose-built rental operators are increasingly providing incentives on available units that are not accounted for in reported rent changes.
Studio Rents Have Performed Best During Past Three Years
Across all property types, one-bedroom and two-bedroom units both saw rents fall 3.5% compared to a year ago, while studio and three-bedroom rents both recorded a smaller 0.4% annual decrease. Over the past two- and three-year periods, rents have grown the most for studios, with increases of 12.2% and 19.3%, respectively.
Three-Bedroom Purpose-built Rents Up 4% from Last Year
Rents continued to rise for three-bedroom apartments in purpose-built rental properties, up 4.4% annually in June to an average of $2,755. Studio rents in purpose-built rentals edged up 0.2% from last year to $1,617, while one- and two-bedroom rents decreased 2.6% (to $1,878) and 2.2% (to $2,286), respectively. Rents declined over the past year for all condo unit types, holding up best for three-bedroom units (-0.2% to $2,950) and falling the most for one-bedroom units (-6.0% to $1,986).
THE GTA APARTMENT MARKET TRENDS
The Apartment Group
We have now passed the halfway mark of the 2025 real estate year, and we are now 18 months into the new interest rate environment. What is the status of the market? And more importantly what does all the data tell us about the current state of affairs and what to we expect moving forward in the multi family space in the Greater Toronto Area (GTA)? There will be two things to consider - the raw data which tells volumes about now and the past - the market sentiment which will give us some insight of things to come.
The first half of 2025 there were 29 deals completed in the GTA consisting of 1,935 suites being sold and a deal volume of around $600MM. The price per suite averaged around $305,000 and cap rates hovered around 3.8% on average. Contrast this with the first half of 2022 (market peak) where there were 47 deals completed consisting of 3,555 suites being sold and a deal volume of over $1.35BB. This is a massive decline in deal volumes by over 50%. At the same time the amount of product listed for sale (on MLS and exclusive) has more than doubled. In the first half of 2024 prices per suite averaged around $370,000 and cap rates were just under 3% on average. These are paradigm shifts in market direction.
2025 has been a bit better than 2024 but not by much. Where are the transactions and deal volumes? The decline in volumes and value is a direct result of the rise in interest rates over the past 18 months. Yes, rates have come down a bit lately but there is no indication at this time that they will move lower. Rates have not come down enough to entice the buyers back into the market at this time.
We now have global geopolitical issues to deal with. Trump and tariffs as well a softening of the Canadian economy and poor jobs and GDP growth expectations. The Israel Palestinian issues - Iran and the Ukraine are not assisting matters as well. The re-election of the Liberal government in Canada with more and more spending promised also has not improved matters.
The Federal governments recent reduction in immigration and highly limiting the foreign student entrance to Canada also has had a negative impact on apartment rental demand. Couple with the fact the rents between 2021 and 2023 skyrocketed - this too caused renters to double and triple up or even stay put with parents for longer periods of time. While this issue of softening rents will be a temporary one, it still injects caution and negativity into the overall marketplace.
The multi family space has always been the most sought after asset class due to its resiliency and continues to be so. So resilient is the space that many owners are not in need to sell as has always been the case. However, given the current state of affairs and were values were in 2022 many just are holding onto assets. Yes there are more listings on MLS today than two years ago but most of those listings are for smaller marginalized product and pricing is generally high and the listings just sit on the market.
Those buyers operating in this environment are making sure that anything they do purchase is underwritten with the most conservative approach. No room for error and nothing left to chance. Buyer demand is far below the levels seen 2-4 years ago. They will only do "the right deal for them". They too are dealing with softening rents and the impact that is having on their projected ROI's.
As with everything as they say "this too shall pass". Remember that when markets are moving up, no matter which market, investors see things in a much more positive light and the cliff is never in the horizon. The same is true when markets move down ..... investors will find excuses not to buy or participate in the market even when the best deal in 20 years appears in front of their eyes.
What is the "feeling" out there? Even though volumes are down we have been active and in contact with traditional buyers and the new buyers entering the space. Overall, buyers are still cautious but optimistic. The traditional buyers are still slow to enter the market with the newer smaller buyers dipping their toes into the water. Most the deals in the past year have been those under $5MM.
Moving forward we suspect the softening of the rental rates will ease. We also think that interest will be at this range for some time and that may undo the paralysis in the market today. Newer buyers will enter the market and we suspect the traditional ones will as well as money needs to flow. The next 18 months will be challenging but we suspect there will be some good buyer opportunities out there and the smart astute buyers who get in now will do very well looking back 2 years from now.
THE APARTMENT GROUP
Together the team has completed over 1,500 transactions and has sold over $8.0 billion in apartments and development land. Put us to work for you and see the results. NO ONE has sold more buildings than our group. Experience, knowledge and professionalism will insure you get the right deal or the highest price if you are selling.
The Apartment Group is a dedicated team of professionals specializing in the sale of multi-residential investment properties. With over 40 years of combined experience, the team brings together their strengths including strong negotiation and sales skills along with highly technical market analysis and appraisal methods.
We are a boutique Brokerage but have the capabilities of the larger houses without the overhead. We have: an internal database of over 10,500 active apartment and land Buyers; a list of all apartment building owners in the Greater Toronto Area; our web site gets over 50,000 hits a month; we highlight properties for sale through our newsletter which reaches 10,000 investors monthly.
MITCHELL CHANG
President & Owner,
Salesperson
Direct: 416-219-0436
mchang@cfrealty.ca
LORENZO DIGIANFELICE, AACI
Broker of Record, Owner
Direct 416-417-9098
ldigianfelice@cfrealty.ca
JAKE RINGWALD
Salesperson
Direct 416-996-7713
jringwald@cfrealty.ca
