Edmonton’s vacancy rates continue to decrease as 2021 comes to a close, according to Zonda Urban’s Q4-2021 Rental Take.
Overall vacancy at the end of the fourth quarter was 8.5 per cent, which is a 1.4 per cent decrease compared to the third quarter despite three new project launches that added 293 new units to the market.
The lower quarterly vacancy can be attributed to the stabilization of five projects during the fourth quarter of the year. A total of 17 projects were launched during the last year, six of which have already been stabilized, showing there is a demand for newer product.
Historically, the fourth quarter tends to see a slowdown in activity due to seasonal demand. The lower overall vacancy can be attributed to the absorption of all the new supply that launched this year as demand increased with the return of students and young professionals to the urban core.
The Northwest sub-market experienced the largest decrease in vacancy when compared to the third quarter of the year. Vacancy decreased by 5.5 per cent, from 19 per cent in Q3-2021 to 13.6 per cent at the end of Q4-2021.
Vacancy in St. Albert decreased by 1.6 per cent, from 7.9 per cent in Q3-2021 to 6.3 per cent at the end of Q4-2021. The Northeast experienced a slight 0.8 per cent decrease in vacancy, from 3.8 per cent at the end of Q3-2021 to three per cent at the end of the fourth quarter.
The average rent per square foot remained the same as last quarter at $1.74 per square foot, a 1.4 per cent increase from the fourth quarter of last year. Rents saw a big jump from the second to third quarter of the year as offices and schools re-opened, and have remained consistent since then.
Five of the seven sub-markets in Edmonton reported higher average net rent per square foot rates when compared to the previous quarter. The largest increase occurred in St. Albert, where rents rose by 6.5 per cent from $1.60 to $1.70 per square foot at the end of the fourth quarter. The increase in rents can be attributed to developers pulling back on incentive offerings as supply decreases.
The Northwest sub-market experienced the second-largest increase with a 4.9 per cent bump from $1.57 to $1.64 per square foot in Q4-2021. The Northeast experienced a three per cent increase from Q3-2021, rising from $1.58 to $1.63 per square foot at the end of the fourth quarter. The increase in rental rates in both submarkets can be linked to the lower amount of available supply in the areas.
Rents in the Downtown sub-market decreased by 3.8 per cent when compared to the previous quarter, from $2.10 to $2.02 per square foot. The decrease in rents can be tied to an increase in incentives as developers try to combat the seasonal trend of lower activity during the winter months. The Southeast sub-market experienced a 1.9 per cent drop in the average rents per square foot, from $1.57 to $1.54 per square foot.
Zonda Urban is currently tracking 132 newer purpose-built rental apartment projects comprising 17,587 units across seven sub-markets, including St. Albert and Sherwood Park. Currently, 16 of these projects are actively leasing (under 85 per cent leased and within the first year of launching a leasing campaign), with the remaining 116 buildings having been substantially absorbed and experiencing typical levels of unit turnover.
Zonda Urban is currently monitoring 32 newer concrete rental apartment projects (4,720 units), 92 wood frame rental apartment projects (12,356 units) and eight rental townhome projects (628 units) in Edmonton through ongoing primary research.
