By the end of March, there were 13,580 rental units under construction across the Toronto region, the highest number since the 1970s.
This first quarter figure for 2020 represents a 17.5 percent increase over rental units under construction during the same period a year ago. The purpose-built rental data, published late last week by research and data firm Urbanation, also found that the GTA’s perilously low vacancy rate rose slightly to one percent in the first quarter of 2020. This was a marginal increase from 0.8 percent in the first quarter of 2019.
The number of rental units under construction across the GTA has been steadily rising for several years after a long stretch marked by low activity levels. Rental supply got another boost in November 2018 when the provincial Conservative government removed rent control rules for newly built units that had been introduced by the Ontario Liberals just over a year earlier.
While there’s obvious uncertainty in the GTA real estate industry as to how the COVID-19 pandemic will impact the housing market in the months and years to come, the rental market should still see an influx of new supply in the coming years. With rental construction hitting a multi-decade high and a huge number of projects waiting to begin construction, there are plenty of reasons to believe help is on the way for a city that was recently called out for having the worst rental supply deficit in the country.
Although timelines may be pushed back due to the impacts of the pandemic, the rental supply pipeline was looking like it was ready to burst at the beginning of the year, with nearly 70,000 units either proposed or under construction, according to Urbanation.
In a statement accompanying the most recent rental construction numbers, Urbanation President Shaun Hildebrand said that rents will be the metric to watch as the pandemic’s effects become more clear.
“As rental demand declines as job losses mount, incomes are reduced, and immigration shrinks, the slowing in the GTA rental market that appeared in the last half of March will progress for at least the next few quarters given the current economic outlook,” Hildebrand said.
“The impact on rents will be something to watch, which will also be influenced by the timing of the record number of units that were expected to complete this year,” he continued.
