Photo: Vladyslava Andriyenko / Unsplash
Still recovering from the effects of the pandemic, Canada’s multi-suite rental market is expected to continue strengthening in the new year.
Morguard Corporation recently released its 2022 Canadian Economic Outlook and Market Fundamentals Report, painting a picture of increased rental demand leading to reduced vacancy rates and higher rents heading into the new year.
“Rental demand will gradually strengthen in 2022, as postsecondary schools and offices continue to open,” said Keith Reading, research director at Morguard. “Additionally, rental demand will increase with the return of international students to the country’s major urban centres.”
Rental demand dropped during the early stages of the pandemic as border closures affected international postsecondary students, while the cancellation of in-person classes resulted in students transitioning to online learning and living further away from campus.
Meanwhile job losses, particularly in the service sector, reduced employment levels and kept them below pre-pandemic levels through the first half of 2021.
That combination of factors impacted rental markets in Canada’s urban centres, shifting long-established tenancy trends in downtown cores and areas closes to postsecondary campuses.
“The forecast demand strengthening will drive vacancy levels steadily lower, particularly in the central and downtown submarkets of the nation’s major cities,” said Reading in the report. “The combination of stronger demand and declining vacancy will eventually drive rents to a benchmark high level in most markets.”
As economic output increases unemployment rates are expected to drop, boosting rental demand in the country’s largest markets, Toronto and Vancouver.
Morguard forecasts that Toronto’s economy will expand four per cent in 2022 after 3.6 per cent growth during the past year, with Vancouver’s economy forecast to increase nearly five per cent this year, followed by 3.7 per cent growth in 2022.
In Toronto, the return to in-person classrooms has only recently pushed rents back to pre-pandemic levels. Vancouver has experienced limited supply of vacant multi-suite rental units, while an increasing number of renters have relocated to larger units in suburban areas.
Morguard also reports that multi-suite residential rental properties attracted record-setting investment during the first half of 2021, with $6.6 billion in closed transactions recorded for the period.
“Generally, investors continued to bid aggressively, particularly for concrete high-rise properties or assets with development or rent upside potential,” Reading said. “Residential investment volume will remain well above the long-term average, which will also support the above-average economic growth trend.”
Courtesy: livabl.com
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