CoStar - Mitch Strohminger

Canada welcomed the most immigrants ever in 2021. The government indicated that over 401,000 new permanent residents now call the country home, surpassing the prior annual record set in 1913. Preliminary data for 2021’s third quarter suggests that a rebound in nonpermanent residents is also underway, with nearly 61,000 people entering the country on a temporary basis, far above levels recorded in the first and second quarters of the year, which saw roughly 13,600 per quarter.

Since international migration in recent years has accounted for 75% or more of Canada’s overall population growth rate, an increase in these levels is vitally important to maintaining the health of the country’s real estate sector, especially the residential component that depends on more people purchasing or renting more housing space.

"If the government successfully meets its immigration targets then this would mean that 832,000 new permanent residents should enter the country over the next two years."

Although exact quarterly numbers are subject to revisions, Statistics Canada estimates that 267,658 permanent residents arrived in the first three quarters of 2021. Since at least 401,000 new immigrants arrived in 2021, this would imply that, at a minimum, 133,432 permanent residents were welcomed in the fourth quarter.

Taken together, these 2021 levels far surpass those of 2020, when less than 185,000 persons became permanent residents. This drop-off in 2020 was due to the outbreak of the pandemic, as opposed to Canada suddenly becoming a less desirable place for immigration. In fact, the swift rebound is likely due to the high level of pent-up demand among immigrants who perhaps would have wanted to immigrate in 2020 if there had been no restrictions.

Net nonpermanent resident levels have also been recovering, with a net 88,000 in temporary arrivals entering the country between the first and third quarters of 2021. In 2020, these levels were negative: More temporary residents in Canada were leaving the country than entering it. Many of these people were likely university students, and the fact that temporary in-migration has been rebounding in 2021 is a positive indicator for the country’s apartment and student housing sectors.


CoStar multifamily data suggests that developers and investors are betting big on Canada’s immigration recovery, and by extension robust population growth. Countrywide, apartment transactions for 2021 stood at over $7.6 billion, a 63% increase over transaction volumes in 2020. Meanwhile, the number of units under construction as a share of total inventory has increased to 4.2% as of the fourth quarter.

Despite this increase in appetite for apartments, the sector remains woefully under-supplied. Vacancies continue to sit at just 2% across the country, and annual rent growth, which had decelerated in 2020, is once again increasing and is expected to surge above 3% this year.

If the government successfully meets its immigration targets in 2022 and 2023, then this would mean that 832,000 new permanent residents should enter the country over the next two years. Nonpermanent resident levels are also likely to continue to recover.

All told, this increase in Canadian in-migration is likely to continue to overwhelm existing supply. This suggests that rent growth for apartments could potentially skew to the upside in the near term, even as capitalization rates remain stable, or possibly even slightly compress.




The rental apartment investment market in the GTA continues to remain strong even during a global pandemic.  Values based on a price per suite have dipped a bit being $310,000 in 2021 down from $315,000 a year before but up from $216,000 five years ago.  Cap Rates have remained level at around 3.2% over the past two years.  But they too have compressed from 3.7% five years ago.

Over the past five years values have gone up by over 43% or 8.7% per annum.  Cap rates have compressed in the same period by 13% or 2.5% per annum.  As such, the compression in cap rates alone can not explain the massive growth in value in the sector.  The real growth generator has been the growth in rents and to some degree reduction in expenses by prudent owners who have done energy retrofits and or sub metered utilities.  In the last five years, average rents as reported by Canada Mortgage and Housing (CMHC) have increased by 4.5% per year.  It is this rental growth and declining cap rates which pushed values higher.

Sales volumes over the past two years have been level at around 80 deals.  This is down from 110 deals in 2019 but that year was record breaking.  Suffice to say that volumes appear to be typical in 2021 as was the case for most years in the recent past.  Also sales in 2021 were around $1.8BB which is slightly lower than the $1.9BB in 2020.  The largest sale in 2021 was for $110M for 286 suites in Burlington where the Seller was Starlight and the Buyer was BentallGreenOak (a new foray into the multi family space).

The larger Buyers in 2021 were Starlight, Dream, Cap Reit and Timbercreek (now Hazelview).  On the Seller side the largest was Rockport, Starlight, Rio Can and Minto.  Over 70% of the Sellers were private and over 60% of the Buyers were Institutional or REIT.  This is a trend that we have been seen over the past few years.  Private owners and many of them long term owner are selling in todays market.  There are a variety of reasons. We think many understand that conditions are strong for a sale now – low interest rates – strong pricing – and many site increasing capital gains and other taxes coming into the mix that allowed them to push the “for sale” button.

What will the next few years bring?  On the negative side there has been much discussion on governments looking at the rental apartment sector and perhaps capping rental increase on turnover or taxing the value lift in some way.  The Federal government will be increasing the capital gains exemption at some point.  Interest rates will be going up in the next 2 years.

At the same time, over the past 2 years immigration into the GTA has been relatively zero.  Rents did decline a bit and vacancy has moved up but not that much.  Apartment rents are now near pre pandemic levels and once we come out this situation and 200,000 more people start to enter the rental market, rents will be on the rise again.  This coupled with rising house price and declining affordability will mean even more renters looking for suites.




Despite the unprecedented challenges of 2020 and 2021, the GTA rental market effectively rebounded by the end of Q4 with rental construction increasing to more than a 30-year high. According to a new report from Urbanation, the average vacancy rate fell back below 3 per cent in all property types in Q4, while purpose-built rental apartments completed since 2005 saw a decline of 2.4 per cent—down from 5.7 per cent a year ago.

In the former City of Toronto, vacancy rates returned to a balanced level of 3.1 per cent after reaching 7.4 per cent in Q4-2020 and 9.0 per cent in Q1 of 2021. In the outer-416 regions (Scarborough, Etobicoke, and North York) and 905 GTA markets, vacancy rates effectively returned to pre-pandemic levels at 2.3 per cent and 1.1 per cent respectively.

“The GTA rental market downturn that occurred during 2020 as a result of the initial effects of COVID-19 quickly reversed in 2021,” said Shaun Hildebrand, President of Urbanation. “While an expected record high for condominium completions and a multi-decade high for purpose-built rental completions in 2022 may help to keep some level of balance in the market this year, expect rents to continue growing on record high immigration, rising incomes, and low home ownership affordability.”

Purpose-built rental apartment development rose to its highest level in decades as 6,720 units started construction in 2021, nearly doubling the five-year average of 3,379 starts between 2016 and 2020. As of year-end 2021, 17,912 rentals were under construction and 93,321 rentals were proposed for development.  Total condo apartment lease transactions in the GTA rose 24 per cent in 2021 to a record 47,737 units. As a result, total active rental listings at year-end dropped 73 per cent from a year earlier to 2,158 units, equal to only 0.7 months of supply based on Q4 lease volume. The downtown markets were the growth leaders last year, with lease activity up 27 per cent annually in 2021 within the former City of Toronto.

Condominium rents for leases signed during Q4-2021 rose 10.8 per cent year-over-year to an average of $3.27 per square foot ($2,361), led by a 15.9 per cent annual increase in the former City of Toronto to $3.64 psf ($2,456). Rents in the outer-416 markets increased 8.9 per cent annually to $3.03 psf ($2,277), while 905 region rents were up 9.4 per cent to $2.95 psf ($2,282).

GTA rents were down 3.5 per cent when compared to the pre-pandemic average in Q4-2019, with City of Toronto rents down 4.5 per cent but 905 region rents growing 4.1 per cent over the two-year period. The rent recovery over the past year was strongest for studios units, which increased 15.9 per cent annually in Q4- 2021 to an average of $4.31 psf ($1,771), compared to annual growth of 12.5 per cent for one-bedrooms to an average of $3.44 psf ($2,117), 9.6 per cent for two-bedrooms to an average of $3.08 psf ($2,741) and 6.3 per cent for three-bedroom units to an average of $2.80 psf ($3,382).







ROBINWOOD PORTFOLIO - TORONTO - $78,885,000 / $350,605 Per Suite

This is a sale of 6 rental apartment building in the City of Toronto with a total of 225 suites.  The buildings ranged from 16 to 62 suites and was owned and managed by a group who had these buildings for many decades.  All of the buildings were well located and maintained with high level management and included:  608 Church Street; 161 St. George Street; 391 Sherbourne Street; 83-85 Silver Birch Avenue; 107 Redpath Avenue; and 723 Bloor Street West.  The deal appears to be direct with the Buyer being Dream.

27 AND 31 PAXTONIA BOULEVARD - NORTH YORK –  $34,500,000 /  $345,000 Per Suite

This property comprises two identical mid rise rental apartment buildings located on 2.5 acres just north of Keele and Wilson.  The 4 storey buildings date from 1960 and are solid concrete assets with brick exterior, double windows and flat roof.  There are balconies and surface and garage type parking.  The asset comprises mostly one and two bedroom suites of above average size.  The building had in place rents that were substantially below renovated market levels in the area.  The property appears to not have been fully marketed and owned by the same Company for many years.  The Buyer is Akelius Canada.

2051-2085 PROSPECT STREET - BURLINGTON - $110,000,000 / $384,000 Per Suite

This property is located in central Burlington and comprises of two mid rise apartment buildings and four blocks of recently built rental townhouses on over 5 acres.   In total there are 214 suites in the apartment buildings and 4 blocks of stacked towns for a total of another 72 units.  The apartment buildings date from 1968 but the common areas and many suites have been substantially updated and renovated over the past 5 years.  The townhouses were built in the last 2 years.  The Seller was Starlight Investments and the Buyer is Bentall Green Oak and appears to be their first foray in the GTA multi-residential market.

231 VAUGHAN ROAD - YORK - $14,800,000 / $284,615 Per Suite / 3.0% Cap Rate

This is a 1920's walk up rental apartment building siting on 0.35 acres in a strong rental location in the city.  There are a total of 32 suites with: 8 bachelors; 36 one bedrooms; and 8 two bedrooms.  The Seller had owned this asset since 1996 when they purchased for $1.66MM.  It has a gas fired hot water radiant heating system and no on site parking, blaconies or elevator.  This is a very simple building with below market rents and in good condition for its age and tenant profile.  The property was fully marketed and sold to a private investor.


Located in a prime rental market in Sudbury, the property consists of a single high rise concrete rental apartment building situated on over 2.6 acres of land.  Comprised of mostly 2 and 3 bedroom large suites this is a well capitalized and managed asset.  The building was constructed in 1973 and contains 146 rental suites, two elevators, on site laundry and over 160 surface parking spaces.  The building is heated electrically with the landlord paying the costs.  There is over 30% rental upside here along with upside in sub metering the hydro expense.  This asset was owned privately and fully marketed with the buyer being Panoramic Properties Inc. which is a well know apartment building owner and manager in Ontario.







Together the team has completed over 1,500 transactions and has sold over $7.0 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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