Just under 32,000 new condo units are slated for completion in the Greater Toronto Area (GTA) in 2023, according to real estate consulting firm Urbanation.
Urbanation President Shaun Hildebrand tells STOREYS the figure may more realistically be in the ballpark of 25,000 to 30,000 units -- he says the industry typically falls short of its projected deliveries -- but even so, completions are poised to climb to a new high.
In addition, he says 2023 is shaping up to be “the biggest year for purpose-built rental deliveries in three decades,” with around 7,740 purpose-built rental units scheduled for completion in 2023.
“And that's happening at the same time as condos reaching a record level as well in terms of completions,” says Hildebrand. “The industry is still facing some supply chain issues, but projects that are scheduled this year have been under construction a long time, and they've made considerable progress.”
READ: “Don’t Expect Premium Pricing”: Is a Softer GTA Condo Market in Store For 2023?
It’s important to note, however, that Toronto is coming off of two slow years for condo completions. Less than 14,000 units were completed in 2021, and although Urbanation has yet to compile the number of completions for 2022, Hildebrand estimates that less than 16,000 units were realized last year. The ten-year average is just over 17,000 units.
“In that sense, the completions that are happening this year are making up for some lost ground and bringing things back on trend in terms of deliveries,” he says. “But it will be a high level, a record level, and obviously coming at the same time as demand being challenged by quickly rising interest rates. I think, in that sense, it's going to be one of the more challenging years we've seen for the condo market in 2023.”
Hildebrand adds that, in contrast to previous years, condo completions will deviate from the downtown core in a meaningful way, with less than a third slated for downtown Toronto. The rest are in the 905 region of the GTA, indicative of a shift in presale condo activity to suburban markets.
“In many cases, these projects that are coming to completion in the 905 region do have higher end-user components, so there's not going to be as much turnover for units for rent or units for sale as you would in a downtown core investor-heavy project,” he says, adding that, with rents being so strong, those who bought units pre-sale will see a sizeable return on investment. “So I think a lot of investors will be inclined to hold on to their units this year, rather than flip them for sale. And that will limit supply pressures on the market and any sort of negative downward forces on prices.”
