Toronto’s condo rental market is showing signs of strength, according to a Q1 Urbanation report that revealed, at 11,928 units leased, transactions surged by 70% over Q1-2020.

Listings declined by 12% from Q4-2020 and brought the ratio of quarterly condo leases-to-listings to 61%—the highest since the COVID-19 pandemic struck in March of last year. However, it remains 10 percentage points below the decade-year average, although it’s at least broaching the lower end of balanced market conditions.

“In a sign that the urban rental market may be starting a comeback, the City of Toronto outperformed the 905 Region in terms of annual growth in lease activity in Q1 by a wide margin of 78% versus 46%,” said the report.

“Evidence of a bottoming-out for rents appeared in the first quarter data. On a quarter-over-quarter basis, average per sf rents decreased 1.4%—a significant improvement compared to the 7.5% quarterly drop recorded in Q4-2020. Furthermore, average monthly rents increased month-over-month in both February and March (each by more than 1%), suggesting that the market reached its low in January at about $2,000 and is already on the path to recovery.”

Rents averaged $2,037 last quarter in the Greater Toronto Area and $2,033 in the City of Toronto, year-on-year declines of 14% and 16.2%, respectively; in the 905, average rents, at $2,053, dropped by 6.7%, marking the first time that’s ever happened. City of Toronto rents were higher on a psf basis at $2.98 compared to $2.67 in the 905.

Purpose-built rental buildings registered as far back as 2005 saw vacancies increase by 6.6% GTA-wide at the conclusion of Q1-2021, according to Urbanation’s survey data, increasing from 5.7% one quarter earlier and 1.1% from the same quarter last year. In the City of Toronto, purpose-built rental vacancies rose to 8.8% last quarter from 7.3% in the fourth quarter of last year, and from 1.1% in Q1 of 2020. However, the vacancy rate in the 905 was 1.5% last quarter.

In the GTA, rental supply hit 100,000 units, and while there was deceleration in new rental construction activity, long-term planning for purpose-built rentals picked up. There were 1,009 new rental units that began construction at the conclusion of last quarter, which is a 73% decrease from 3,735 starts during the same time last year. At the end of Q1-2021, there were 13,563 units under construction, which is a marginal decline from 13,863 units at the end of Q1-2020, although it’s more than twice how many were under construction at the end of Q1-2016 (5,833).

“The total number of proposed purpose-built rental units that haven’t started construction reached a recent high of 86,683 units—34% higher than a year ago (64,757 units) and bringing the total pipeline of rental units under construction and planned in the GTA to over 100,000 units.”