Toronto Apartment Market

Toronto is Canada’s largest city and the economic capital of the nation. Toronto has a total population of 2,503,281 persons and offers 255,908 rental apartments in approximately 7,032 apartment buildings. Toronto therefore has an apartments to population ratio of 10.2, the second highest in Ontario after London. Apartment buildings in the city exist in all shapes and sizes, with several thousand less than 20 units in size and over 330 with 200 units or more in size. Toronto has the most developed, sophisticated, and mature rental apartment market in Canada, with the possible exception of Montreal.

Vacancy Rates and Average Rents

Toronto has an overall vacancy rate of 3.7%, low for Ontario, especially among larger cities, but vacancies vary significantly between the boroughs and neighbourhoods of the city. Average vacancies are highest in Etobicoke (4.2%) and the eastern and western extremities of the old city of Toronto (5.0% in each area). Vacancies are lowest in downtown Toronto (1.6%) and midtown Toronto (2.3%) and in Scarborough (2.3%). Vacancies will also vary significantly between neighbourhoods, too. Average rents are as expected among the highest in Ontario and range from $927 for 1 bedroom apartments to $1,253 for 3+ bedroom apartments. Average rents dropped by a few dollars from 2008 to 2009, but the change is so small it is difficult to interpret it as a trend—suffice it to say, it is reasonable to assume that vacancies will stay low and average rents high in Toronto for the foreseeable future.

For Investors

Toronto’s rental apartment market can be separated into two age groups: pre-1975 buildings and buildings built in the 1990s and beyond. Rent Control hit Toronto hard when introduced in 1975 and new apartment construction virtually stopped for two decades, only picking up steam in the late 1990s. Today, major developers are building new apartment buildings at the rate of one per year, focusing mostly on the high-end of the market to get the returns needed to justify development. This trend is expected to continue, although it will always be dwarfed by massive condominium development across the city (thousands of condo units being added per year). Investors have a kaleidoscope of choices in Toronto and should be able to find what they want, where they want. Unfortunately, many older apartment buildings are located in less desirable neighbourhoods, so investors should be aware that general statistics for the city are misleading and investment factors vary considerably from neighbourhood to neighbourhood.