The wait is over! View the March 2023 Rentsync National Rental Demand Report.

  • Software
    • Content Management System
    • Listing Management
    • Lead Automation
    • Reporting & Analytics
  • Services
    • Website Design
    • Digital Marketing
    • Lease Up Marketing
    • Creative Services
  • Integrations
  • Resources
    • Blog
    • Podcast
    • Theme Gallery
    • Our Work
    • Customer Stories
    • Knowledge Base
    • The Waverley Case Study
    • Muse Case Study
    • Demand Report
  • Careers
RentSync LogotypeRentSync Logotype
EN Hey!

The State of Purpose Built Rentals in the GTA

Team Rentsync, February 27th 2023

Urbanation and Finnegan Marshall, in collaboration with the Building Industry and Land Development Association (BILD) and the Federation of Rental-housing Providers of Ontario (FRPO), has prepared a comprehensive report on the current state of the market for purpose-built rental (PBR) developments. This report is an important contribution to the ongoing discussions around how to increase purpose-built rental construction in Ontario. Rentsync has provided a helpful report summary, highlighting the key findings and policy recommendations.

Over the last ten years, the number of renter households in the GTA grew three times faster than the number of owner households. This trend is expected to continue in the next decade, with the GTA population projected to grow by 1.27 million by 2031, an extra 445,920 above growth recorded during the previous 10-year period. However, despite the rapid growth in renter households, the rental supply in the GTA has not kept up with demand.  More than 300,000 rental units are needed in the next decade, with the number of renter households in the GTA projected to rise by 58% over the next 10 years.

The most common form of rental housing in the GTA is purpose-built rentals, which account for a 41% share of all rented dwellings. However, purpose-built rentals contributed the least amount of new supply over the past 10 years and contributed only 9% of total new rental units. In contrast, most new rental supply comes from condominiums, which have comprised 89% of total apartment completions and 54% of total rental supply growth in the GTA during the past 10 years. This condo dominance was a direct result of more private investors renting out their units. However, skyrocketing mortgage costs are driving many investors away from the market. At the current trajectory, it is expected that condo rentals will begin to decline and represent a shrinking population of renters.

With construction costs increasing nearly four times faster than rents over the last three years, purpose-built rental construction starts are beginning to slow down after reaching their highest level in nearly 30 years in 2020. Recent purpose-built rental projects completed in the City of Toronto have taken an average of 100 months, illustrating the lengthy process of bringing new rental units to market. Although there is a high demand for rental housing, the rental supply deficit in the Greater Toronto Area (GTA) is expected to double to 177,000 over the next decade. While around 135,000 new rental units are anticipated to be added through purpose-built rental and condominium projects, this falls significantly short of the estimated demand for 312,000 rental units.

Financial modeling shows that building purpose-built rental housing is significantly less financially attractive than condominium development due to differences in upfront capital investments and the differences in timeframes required to reach profitability.  Despite the financial challenges, the need for rental housing continues to grow in the GTA. To address this issue, we suggest that all levels of government need to create an action plan to increase the supply of rental housing and make it easier for developers to build purpose-built rental housing. One solution is offering incentives to developers who build rental housing, such as tax credits or expedited zoning approvals. These incentives could offset the higher upfront costs of developing rental housing and make it more financially attractive for developers.

Increasing the density of new developments could also help address the rental housing shortage. This would allow developers to build more units on the same amount of land, which could lower the per-unit cost of construction and make rental housing more financially viable.

In conclusion, while the financial challenges of building purpose-built rental housing are real, they should not be a reason for us to ignore the rental housing shortage in the GTA. It is time for all levels of government and the private sector to work together to find solutions that will increase the supply of rental housing and make it easier for developers to build rental housing. With the right incentives and policies, we can ensure that our city has enough affordable and high-quality rental housing for all its residents.


You can find the full report here. 

Back to blog

You might also like...

want more great content?

RentSync Footer Logotype

SolutionsExpand Solutions Menu

  • Services
    • Website Design
    • Digital Marketing
    • Lease Up Marketing
    • Creative Services
  • Software
    • Content Management System
    • Listing Management
    • Lead Automation
    • Reporting & Analytics

CompanyExpand Company Menu

  • About Us
  • Listing Connections
  • Careers
  • Integrations
  • Contact Us

Solutions

  • Services
    • Website Design
    • Digital Marketing
    • Lease Up Marketing
    • Creative Services
  • Software
    • Content Management System
    • Listing Management
    • Lead Automation
    • Reporting & Analytics

Company

  • About Us
  • Listing Connections
  • Careers
  • Integrations
  • Contact Us

Head Office

672 Dupont Street, Unit 504

Toronto, Ontario

M6G 1Z6

905-397-5088

St. Catharines Office

271B Merritt Street, Unit 4

St. Catharines, Ontario

L2T 1K1

905-397-5088

905-397-5088

2021 Report on Business – One of Canada’s top growing companies
Rentsync ranks no. 81 on the 2020 GROWTH List
Growth 500 - One of Canada's fastest growing companies
Glassdoor Jobs
  • Cookies
  • Privacy Policy
  • Terms of Use
  • Sitemap
Rentsync on LinkedIn
Rentsync on YouTube
Rentsync on Instagram
Rentsync on Facebook
Rentsync on Twitter

Manage cookie settings

Rentsync collects cookie data to provide a better user experience, but we offer you choices regarding how we and our third party providers collect and use the cookie data. 

  • Necessary Cookies
  • Targeting and Tracking Cookies
  • Necessary Cookies

    These are essential in order to enable you to move around the website and use its features. If you do not allow these cookies, you won't be able to use our site properly.

  • Targeting and Tracking Cookies

    These record your visit to the Rentsync website, the individual pages you visit, the links you follow and the type of device you use. Our use of these cookies might also mean that you may see Rentsync adverts on other websites. Our partners may also use information recorded by these cookies to see how well their ads are performing. If you do not allow these cookies, you may see more content and adverts that do not match your interests.

    We use cookies from third-party advertising partners to deliver relevant advertisements to you both on the Rentsync website and on other websites. To opt out of a third party's use of cookies and behavioural advertising, you must visit their website and follow the specified opt-out procedures.