Bloomberg News - Shelly Hagan and Krik Hertzberg

Canadians may need to brace themselves for higher borrowing costs earlier than expected.

That’s the message from economists at some of Canada’s largest banks after a report Friday showed gross domestic product grew more quickly than anticipated at the end of 2020, even amid a new wave of lockdowns. The numbers are calling into question whether a first-quarter contraction will materialize after all, and leading analysts to suggest growth in 2021 could be stronger than earlier believed.

“The prudent thing to advise heavily indebted Canadians is to plan their finances around rate hikes commencing considerably sooner.”

The data carry “potentially strong policy implications for the Bank of Canada that is increasingly looking as if it over-committed itself to keeping rates on hold until 2023,” Derek Holt, an economist at Bank of Nova Scotia, said in a report to investors. “The prudent thing to advise heavily indebted Canadians is to plan their finances around rate hikes commencing considerably sooner.”

The bank has held its overnight interest rate at a record low 0.25 per cent since March to spur lending in the economy. Interest rates that commercial banks give to their prime customers are typically just over 2 percentage points above the policy rate.

To stoke demand for credit, Macklem has also committed to not raising interest rates until damage to the economy from the pandemic is fully repaired. With the recovery stalling over the winter because of the lockdowns, that wasn’t expected to happen for another two years.

But the Canadian economy appears to be coping much better with the second wave of COVID-19 than the central bank expected as recently as this month.



Output grew about 8 per cent annualized in the fourth quarter, according to estimates released Friday from Statistics Canada. That topped the central bank’s 4.8 per cent projection released on Jan. 20.

The better economic outlook could prompt Governor Tiff Macklem to indicate as early as April a quicker liftoff in rates, Simon Deeley, a fixed income strategist at Royal Bank of Canada, said in a report Friday.

“If the starting point is better,” Deeley said, referring to stronger fourth-quarter numbers, “then an earlier elimination of slack is a natural conclusion.”


Another concern for Macklem could be plans by Prime Minister Justin Trudeau’s government to move ahead with additional stimulus, according to economists at Canadian Imperial Bank of Commerce. If the economy is in better shape than expected, that extra spending may simply add to the pressure on the Bank of Canada.

“Add enough to demand after 2021, and the economy might be closing in on full employment, with additional government spending being offset by an earlier need to hike interest rates to contain inflation,” Avery Shenfeld, chief economist at CIBC, said in a report.

Finance Minister Chrystia Freeland has said she plans to spend another $70 billion to $100 billion over the next three years to help the recovery.


Multifamily assets were the second best performers last year for the 44 institutional real estate portfolios represented in the REALPAC/MSCI Canada Property Index. Newly released 2020 investment results find industrial and multifamily on the positive side of the national average total return for 2,356 directly held standing assets, which registered -4.1 per cent.

That further breaks down to a 3.9 per cent income return and a 7.8 per cent decline in capital value. The index value rested at $158.1 billion at year-end 2020, compared to 2,723 directly held standing assets collectively valued at $184 billion 12 months earlier.  With a total return of 5.7 per cent, multifamily performance slipped further behind industrial than in 2019, but also pulled further ahead of office properties, which slipped to a negative 1.5 per cent total return. Multifamily assets delivered average capital growth of 2.2 per cent and an average income return of 3.5 per cent.

While the asset class may not look terribly favourable right now, it’s that stability that really comes through. With a 4 per cent yield, this is actually not a bad asset to hold whatever is going on, and, clearly, 4 per cent is attractive over the other asset classes. The new money going into these portfolios has actually gone up, from about $3.7 billion (in 2019) to $3.9 billion. That’s maybe not what people would have expected.  Multifamily drew more than $660 million of that net new capital investment. That’s about half of the nearly $1.3 billion directed to industrial development, but well ahead of the $220 million the retail sector captured.

While the multifamily sector has shared the same concerns about tenants’ economic stability that office and retail owners/managers have experienced, there is less uncertainty about long-term demand or the rising competition from work-at-home options and e-commerce that the other two sectors now confront. However, in contemplating possible pandemic-fallout, commercial real estate insiders do foresee potential vulnerabilities of non-portable assets in a world where employees are increasingly untethered from their workplaces. Industry executives enlisted to provide on-the-spot insight into the 2020 returns reflected on possible implications for multifamily assets in major and secondary markets.





The average rent for all Canadian properties in January 2021 was $1,714 per month, down 8.7 per cent compared to last year. This decline is slightly worse than the average we saw in the second half of 2020, according to the latest data from and Bullpen Research & Consulting.

“Prospective tenants continue to experience a market flush with choice and have more bargaining power than they’ve had in many years,” said Matt Danison, CEO of

For the month of January, Toronto was the second most expensive city out of 35 with average price for a one-bedroom coming in at $1,811. Vancouver, meanwhile, remains the most expensive market for both one- and two-bedroom homes at $1,901 and $2,592 respectively. Year over year, rent for a one-bedroom home in Toronto was down 21.9 per cent, and 18 per cent for a two-bedroom.

For apartment and condominium rentals in Toronto, prices have dropped 21 per cent year over year to $2,000 on average. A year ago in January, Toronto had the most expensive average rent for apartments and condo rentals at $2,528, which at the time was up 8 per cent.

The latest Canada Mortgage and Housing Corporation data came out in late January, showing the vacancy rate in Canada increasing to 3.2 per cent from 2.2 per cent year over year for apartments, as the pandemic has cut immigration, reduced household formation, and kept many students at home with their parents.




15 Thornburn Avenue – Toronto – SOLD $1,950,000 / $150,000 per suite / 3.39% Cap Rate

This sale consists of 15 rental apartments in prime Parkdale in downtown Toronto.  This walk up building was well maintained over the years and is a house form structure.  The building contain 13 bachelor suites.  Average rents were really low with upside will over 70% here.  This property was sold by The Apartment Group and the Buyer was a first time private investor.

2892 St. Clair Avenue East – East York – SOLD $10,000,000 / $285,715 per suite / 3.11% Cap Rate

This is the sale of a low rise walk up apartment building containing 35 suites.  It contained mostly one and two bedroom suites and was heated with a hot water gas fired system.   The building had been updated over the past few years but still had below market rents.   The property was fully marketed and sold to an Starlight Investment who own many other buildings in the area.

1302 King Street West – Toronto – SOLD $6,500,000 / $203,125 per suite / 2.65% Cap Rate

This sale is reflective of a 4 storey walk up rental building dating from the 1920's located Parkdale. It contained a total of 32 suites with most of them being small bachelor suites.  There is a masonry exterior, double glazed windows and flat roof.  There are 10 surface parking spaces at the rear of the building.  The site is 0.22 acres and the building was in good condition for its age.  The property was fully marketed and sold to a private investor.

516 Daws Road – East York – SOLD $9,890,000 / $215,000 per suite

This is an east Toronto building which was built in 1958 and is a concrete 4 storey rental apartment.  The building has a brick exterior, double windows, flat roof and some balconies.  The site is 0.50 acres and there is surface parking at the rear of the building.  There are 29 one bedroom suites and 17 two bedrooms suites, on site laundry and storage lockers.  The price per suite appears to be on the low side give comparable market data for buildings of this type.  This asset sold direct and was not fully marketed.




Together the team has completed over 1,500 transactions and has sold over $6.5 billion in apartments and development land. Put us to work for you and see the results. NO ONE has sold more buildings then 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.


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