After months of rent declines and a slump in demand, the Toronto-area rental market is poised for a fall comeback.
After experiencing sharp declines throughout 2020, the average rental rate in the Greater Toronto Area (GTA) appears to have bottomed in the first quarter of this year and has increased from $1,977 in April up to $1,999 in May, according to the latest Bullpen Research & Consulting and TorontoRentals.com Toronto GTA Rent Report.
On a price per square foot basis, this is an increase of 2.2% to $2.80 since the beginning of the year, when rent prices hit bottom. However, average monthly rents for all property types are still down by 11.4% year-over-year, but keep in mind we're comparing to a period amid the peak of the pandemic.
While it's clearly not a significant increase, it's still a sign that rents are turning a corner, and the market is on the right track for a significant pick-up in leasing in the fall.
“The rental market in the GTA has turned a corner and is trending back up again; bad news for tenants, and good news for landlords," said Ben Myers, president of Bullpen Research & Consulting.
"With Toronto entering the next stage of COVID-19 reopening, tenants will be reminded of the benefits of a centrally located apartment or condominium rental, as patios fill up and boutique retail shops open. We expect an increase in leasing activity as tenants look to take advantage of the current incentives at many buildings before they disappear.”
Rentals.ca May 2021
According to the report, different parts of the region are rebounding quicker than others -- particularly in the suburbs surrounding Toronto. In Vaughan, average rents for condo and apartment rentals rose 3.8% to $2,217 month-over-month in May, while Richmond Hill saw an increase of 3.1% to $1,742. Markham saw its monthly rents up 2.2% to $1,936, while Mississauga saw an increase of 2% to $1,967.
In Toronto, average monthly rents grew 1.5% to $2,035, suggesting that demand for suites in the downtown core is beginning to increase.
However, some areas are still experiencing declines, including in Oshawa, where average rents for condo rentals and apartments was down 2% to $1,607 in May.
According to the report, several American cities, including New York, San Francisco, and Chicago, are reporting strong lease-up activity over the past two months. With the Canadian vaccine rollout improving, the Toronto market might be only two to three months behind.
With the borders poised to reopen, leading to a ramp-up in tourism and students returning to campus, and office towers expected to return to full capacity, Bullpen Research & Consulting is now forecasting a rent growth of 12% to 14% next year.