The percentage of Greater Toronto Hamilton Area (GTHA) landlords offering incentives continued to tick up in the second quarter, nearly doubling the amount offering incentives a year ago. From free months of rent to straight cash, Urbanation's Q2-2025 rental market report finds more and more landlords are getting creative about filling units.
65% of GTHA landlords were offering incentives last quarter, up from 36% in Q2-2024. This follows similar findings from Q1 where the percentage of buildings offering incentives had more than doubled, from 31% in Q1-2024 to 63%.
Across the GTHA, 39% of buildings were offering up to 1.5 months of free rent in Q2 and 24% were offering two months, up from 25% and 4% of buildings a year ago, respectively. On top of that, STOREYS has spoken to landlords and industry experts who say things like furniture store gift cards, complimentary wifi, free car washes, discounted moving services, and free virtual healthcare are all up for offer.
What Rental Incentive Would You Most Like To Receive?
But, not surprisingly, GTHA landlords aren't offering the signing perks out of the goodness of their hearts. In reality, the growing prevalence of incentives is the result of high vacancy rates stemming from lower immigration, a historic increase in rental and condo completions, and low turnover rates.
In the GTHA, vacancy rates jumped from 2.7% to 3.5% year over year in Q2, but the scope of the increase varied depending on region. In Toronto, the vacancy rate increased from 2.7% to 3.2% last quarter, while the 905 Region saw a jump from 2.8% to 4%.
At the same time, more product continues to come online, with Q2 seeing a 77% annual increase in purpose-built rentals reaching occupancy, at 3,156 new units, and the number of condo rentals listed for rent reaching 24,918 units — a 13% year-over-year increase and a new all-time high, topping numbers seen during the "COVID-induced turnover" in 2020, according to Urbanation.
In fact, Q2 saw a record high of 18,119 leases signed, but this still wasn't enough to keep up with supply. As a result, the ratio of leases-to-listings fell to a five-year low of 73% and rents have been on the decline. Last quarter, condo rents fell 4.5% year over year to $3.79 per sq. ft ($2,589 for 683 sq. ft) and, when adjusted for incentives, purpose-built rental rents declined 6.4% from incentive-adjusted Q2-2024 rates to $3.56 per sq. ft ($2,431 for 683 sq. ft).
In terms of unit types, rents for condo studio fell the farthest last quarter, dropping 6.0% annually to $4.87 per sq. ft ($1,920 for 395 sq. ft), followed by one-bedrooms, which fell 4.9% to $3.93 per sq. ft ($2,333 for 594 sq. ft).
“The GTHA rental market continued to face supply challenges from record high condo completions and rising purpose-built rental deliveries. However, strong underlying demand helped to keep market conditions fairly balanced," says Shaun Hildebrand, President of Urbanation. "The decrease in rents over the past year reflect increased competitive pressures and population growth slowing from the 2022-2024 boom. While supply will remain high for the rest of the year, a drop in condo completions starting next year and a lack of growth in rental construction starts should soon lead to higher rents.”
Providing a glimpse into this future scenario are last quarter's construction start numbers. According to Urbanation, there has been little change in the number of starts since the high of 5,307 units in the first half of 2021. In comparison, the first half of 2025 saw 3,446 starts, proceeded by 3,625 in 2024 and 3,355 in 2023. This remains above the 10-year average of 2,819 units.
