GTA Rental Market On Recovery


A new report from Urbanation confirms that GTA rental market recovery began in earnest during the second quarter of 2021, with a surge in new leases, reduced vacancy, and increased rents, in response to easing lockdown measures.

Notably, downtown Toronto led the growth in rental activity after months of lagging behind other GTA markets. Mass vaccination rollout and gradual reopening of the economy, combined with attractive rent discounts, are accredited with bringing renters back into the dense urban area.

“The number of leases signed for condominium rentals in the GTA more than doubled from a year ago, surging 108%.”

“The GTA rental market began to resemble pre-COVID times during the second quarter, which is a testament to a strong foundation of demand that will only grow going forward as immigration recovers, schools and offices reopen, and expensive ownership housing leads to greater levels of renter household formation,” said Shaun Hildebrand, President of Urbanation. “While new construction activity is also on the rise, the level of supply underway is expected to lag behind demand, creating conditions for rents to continue rising towards pre-covid levels and beyond in the months to come.”

Looking at “newer” purpose-built rental apartment projects completed since 2005, the report indicates an average vacancy rate of 5.2 per cent at the end of Q2-2021, decreasing from a high of 6.5 per cent in Q1-2021 but remaining well above the 2.1 per cent level from a year ago. Vacancy rates averaged 6.9 per cent in the City of Toronto and 1.4 per cent in the 905 region across all new builds excluding those still in the initial lease-up phase.

A total of 1,242 new purpose-built rental units were completed and began occupancy during Q2-2021, the second highest quarterly total for new supply additions in more than 30 years (behind the 1,782 units completed in Q1-2019). The new supply, which was entirely located in the City of Toronto, was met with high-level demand, as quarterly net absorptions (i.e. the change in total occupied units) within the rental stock built since 2005 rose to 716 units — four times higher than the level from a year ago (179 units) and 67 per cent above the five-year quarterly average (430 units).


Average rents for units that were available within newer rental buildings completed since 2005 in the GTA were $2,289 ($3.18 per square foot) during Q2-2021, declining 5.0 per cent year-over-year, but rising 1.9 per cent quarter-over-quarter — the first rent increase since the start of the pandemic.  That said, incentives were still prevalent in the market during the second quarter, with 88 per cent of surveyed buildings offering some form of discount. One month of free rent continued to be the most common incentive, followed by two months of free rent.

The number of leases signed for condominium rentals in the GTA more than doubled from a year ago, surging 108 per cent to 12,747 units — the highest Q2 level on record. Over the last four quarters, condo lease transaction activity reached an unprecedented 50,004 units, which was 58 per cent higher than the pre-COVID peak of 31,696 units leased in the four quarters leading to Q1-2020. Demand in the latest quarter was driven by the former City of Toronto (largely representing the downtown market), where the number of new leases signed grew 129 per cent year-over-year in Q2.

The 7,642 condo lease transactions in the former City of Toronto represented a record high share, indicating a migration of renters back into the core. 2/3 Renters have remained budget conscious during the initial stages of the market recovery and haven’t necessarily been seeking more space coming out of the pandemic. Studios, which experienced the sharpest drop in rents during COVID-19, recorded the strongest annual growth in lease transaction volume of 154 per cent in Q2.

On a per square foot basis, average GTA condo rents rebounded by 5.2 per cent between Q1 and Q2 (to $3.06 psf), with studio rents jumping by 6.7 per cent quarter-over[1]quarter to $3.75 psf ($1,532) but still 12.1 per cent lower than a year ago ($4.27 psf; $1,778).



he Consumer Price Index (CPI) rose 3.1% on a year-over-year basis in June, down from a 3.6% gain in May. As a result of price increases in June 2020, base-year effects had a downward impact on consumer inflation, contributing to the slowdown in June 2021. Excluding gasoline, the CPI rose 2.2% year over year.  The monthly CPI rose 0.3% in June 2021, down from a 0.5% increase in May. On a seasonally adjusted monthly basis, the CPI rose 0.1% in June.

While shelter (+4.4%) and transportation (+5.6%) prices contributed the most to the all-items increase, prices rose at a slower pace in four of the eight major components on a year-over-year basis in June. The headline CPI grew at a slower pace compared with May due in part to a slowdown in price growth for goods. Growth slowed the most in the clothing and footwear component, mostly due to lower prices for women's clothing.

On a year-over-year basis, gasoline prices rose to a lesser extent in June (+32.0%) than in May (+43.4%) due to a base-year effect. The slower price growth in June stemmed from an increase in June 2020, when gasoline prices partially recovered after falling significantly during the early stages of the pandemic. Gasoline prices rose 10.5% month over month in June 2020, the result of higher demand as businesses gradually reopened.

Year over year growth in shelter costs (+4.4%) continued to increase in June, driven mostly by the continued rise in the homeowners' replacement cost index, up 12.9% in the 12 months to June. Prices for new homes continue to be impacted by shifting consumer preferences as well as higher building costs compared with June 2020.


There has been much talk about softening rental levels in apartment buildings since the Covid measures began in early 2020.  It is true that rents have softened and vacancies have gone up over this period but rental collections still have remained strong.  Many investors were expecting a potential small correction in this market vertical in 2021 but their expectations were NOT met.  In fact, the market today is as strong as ever.  On thing Covid proved was the old adage "everyone needs a place to live no matter what is happening".  Most investors realized that the factors in the apartment market at this time are temporary and things will improve.

While the first half of 2021 was not the strongest in terms of dollar volumes prices are up over 5% from the same period in 2021.  In 2021 the average price per suite was $297,500 as opposed to $285,100 in 2020 and much higher than 2019 ($265,000).  Overall sales volume in 2021 was $881.5MM which is up slightly from 2021 but far below the record setting 2019 at around $1.1BB.

In 2021 the first half of the year saw 44 deals occur which is up from the 30 in 2020 but down from the 52 in 2019. Cap Rates remained relatively stable between 2021 and 2020 at around 3.3% on average.  This is down however from the 3.6% in 2019.

We can feel the pulse of the market as we are active in it.  In fact, in the first half of 2021 The Apartment Group had 25% market share of the total activity that occurred (based on sales volume).



Glenwood Drive - Barrie - $2,780,000 / $347,500 Per Suite / 3.8% Cap Rate

This property was sold by The Apartment Group and consists of a single block of 8 rental townhouse in a great residential location in Barrie.  The units dated from the 1970's are all two storey frame buildings about 1,100 sf each.  Six of the units were fully renovated to a high quality.  All units were 2 bedroom with one bathroom and full basements.  The site was over half an acre.  The property was not fully marketed and The Apartment Group represented the Purchaser a private investor in this case.

138 Liberty Street North – Bowmanville –  $2,000,000 /  $166,700 Per Suite / 3.75% Cap Rate

This property is located in the east GTA about 15 minutes east of Oshawa.  It consists of 12 suites all two bedrooms.  It is a walk up residential rental investment built in 1971.  There is surface parking only and the building is heated with a hot water gas fired system.  The property represents and entry level "C" caliber investment and was purchased by a private investor.  The property was marketed.

Bathurst and Tichester - Toronto - $81,000,000 / $361,600 Per Suite

The asset is know as 1531, 1535, 1539 Bathurst Street and 30 Tichester Road and consisted of 4 buildings on a 1.5 acre corner site just north of St. Michaels high school.  The buildings ranged from 22 to 96 suites and comprised walk ups and a building with an elevator.  In total there were 224 rental apartment suites.  The project was owned by Starlight Investments Ltd. for about 4 years and some of the suites were renovated to the Starlight level.  The property was purchased by Timbercreek Asset Management.  It is not clear if the property was fully marketed or not.

76 Ardagh Road - Barrie - $11,600,000 / $276,190 Per Suite / 4.25% Cap Rate

This property comprises a 3 storey rental apartment building constructed in 2015 and has one elevator.  There are a total of 42 apartment suites with 17 one bedroom suites and 25 two bedroom suites.  There is a brick exterior, double windows and flat roof and surface parking.  Each apartment has its own hot water tank, heating and air conditioning system.  The site is large siting at over 1.6 acres.  The asset was fully marketed and exposed.  The Buyer was Destaron Property Management.








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.

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