Demand for rental apartments in Toronto continues to expand amid robust immigration numbers and sustained job growth, according to Marcus & Millichap’s Q4 Greater Toronto Area local apartment report.
Another major driver of this trend is the consistent increases in single-detached home prices.
“Homeownership remains elusive in the GTA as the single-family benchmark price climbed 3.5% in September from the same time last year to $899,700,” Marcus & Millichap explained.
In comparison, rental units are more accommodating towards households with tighter budgets.
“The average apartment rent in the metro was $1,370 per month at the end of 2018, up 4.7% from the previous year, roughly $2,000 less than monthly payments on the single-family benchmark,” the report noted. “A challenging market for many first-time buyers and other residents contributed to an exceptionally tight vacancy rate of 1.1 percent at the end of 2018.”
During the third quarter, the region also saw its strongest 12 months of apartment construction since the early ‘90s, with more than 3,000 units completed year-to-date, and just below 3,800 built year-over-year.
This pace was “well above the 2,960 purpose-built rentals added to the market during the prior year-long stretch,” the study added.
“Greater focus was placed on Central Toronto, where 1,067 units were added to the rental stock over the past year, followed by North Toronto, where 888 apartments were completed. Rental inventory is anticipated to increase at the greatest rate in more than two decades with more than 3,500 apartments scheduled for delivery this year.”
A significant proportion of the demand stemmed from high-skill tech professionals establishing roots in the city. Indeed, fully 209,400 Toronto tech industry jobs were created in the year ending Q3 2019.
“The employment base expanded 6.3% over this period, well above the 0.5% pace recorded at the same time a year ago,” Marcus & Millichap said. “A simpler immigration system in contrast with the U.S. along with government programs and world-class universities that have led the metro to be a major tech hub have encouraged many global tech firms to open offices and bring on new workers.”