Third high­est

Calgary Herald - Calgary Herald New Condos - - New Con­dos -

By this fall, the fore­cast is for an in­crease to $1,100 per month.

The re­sults of the 2010 sur­vey show that Cal­gary’s twobed­room rent of $1,069 per month is the third high­est in Canada be­hind Van­cou­ver at $1,195 per month and Toronto’s $1,123 per month.

There will likely be fewer va­cant apart­ments this fall, says se­nior mar­ket an­a­lyst Richard Cho of CMHC.

The city­wide va­cancy rate is fore­cast to set­tle at about 3.6 per cent — about the same as 2010, but well be­low 2009’s 5.3 per cent.

“Of the 35,512 pri­vately owned apart­ments sur­veyed, we found the num­ber of va­cant units de­creased from 1,935 in 2009 to 1, 291 in 2010,” says Cho, adding the f ig­ure will re­main fairly con­stant this year.

David McIlveen, di­rec­tor of com­mu­nity devel­op­ments for Board­walk Rental Com­mu­ni­ties, ex­pects 2011 to be “flat” in terms of va­cancy and rental costs.

Board­walk is the largest pri­vate land­lord in the city, with an es­ti­mated 5,000 rental units in Cal­gary. Only the City of Cal­gary con­trols more rental units.

“Our va­cancy rate will stay the same as 2010 at about three per cent and rent rates won’t go up or down by much,” says McIlveen, adding board­walk’s rent city­wide av­er­ages $977 per month.

Among Cal­gary ten­ants is Kim Leriger, who con­sid­ers her­self a ca­reer renter.

“I have been rent­ing for 15 years, 10 of those with Board­walk,” says the sin­gle mom.

Along with 10-year-old Ni­co­las, she has an apart­ment in north­east Cal­gary. “I like the life­style,” she says.

Prior to f in­d­ing rental ac­com­mo­da­tion in Cal­gary, Leriger rented in Air­drie and Banff.

Why not buy? “As an ex­tremely busy sin­gle mom, I don’t re­ally have the time to do the things needed if I owned a home.”

Gerry Bax­ter, ex­ec­u­tive di­rec­tor of the Cal­gary Res­i­den­tial Rental As­so­ci­a­tion has his own un­off icial va­cancy num­bers for 2010.

“Based on what I hear from our mem­bers, I would still peg the va­cancy rate at around f ive per cent or so,” he says.

“I ex­pect to see some down­ward mod­er­a­tion in the va­cancy rate for this year while rents will re­main rel­a­tively sta­ble. If there are rent in­creases, I ex­pect them to be small.”

The sec­tor be­gan to no­tice an eas­ing in the mar­ket­place about mid­way through 2010 that “seemed tied to the eco­nomic re­cov­ery” that was be­gin­ning to take hold, says Bax­ter.

But just as quickly, the re­cov­ery sput­tered with the ar­rival of au­tumn.

“I be­lieve that over­all, the mar­ket im­proved slightly in the sec­ond half and has plateaued — and I’m cau­tiously op­ti­mistic that this year will be bet­ter than 2010,” says Bax­ter.

Board­walk’s McIlveen says that in 2010 va­cancy rates and rent rates de­clined in re­sponse to eco­nomic con­di­tions and sup­ply and de­mand.

“In fact, our mar­ket rent — what a ten­ant pays for a new one-year lease — has come down a cou­ple of hun­dred dol­lars per month,” he says.

Al­though the de­cline in in­mi­gra­tion has had an im­pact, McIlveen says the big­gest fac­tor af­fect­ing Board­walk has been the “one-off in­vestor who can’t sell their condo and puts it into the rental pool.”

Cho says rental de­mand this year will be sus­tained as the econ­omy grad­u­ally im­proves.

“Im­prove­ments in labour mar­ket con­di­tions and re­cent gains in provin­cial net mi­gra­tion have con­trib­uted to higher rental de­mand,” he says. “In ad­di­tion, with rental rates mod­er­at­ing from the pre­vi­ous year and real es­tate prices in Cal­gary eas­ing since the spring, the mo­ti­va­tion for ten­ants to move into home­own­er­ship has mod­er­ated.”

CMHC re­ports the av­er­age two-bed­room rent de­clined for the sec­ond con­sec­u­tive year as va­cancy rates, al­though mov­ing lower, re­mained el­e­vated by his­tor­i­cal stan­dards.

“How­ever, the de­cline has been enough to re­move some in­cen­tives from the mar­ket that ten­ants en­joyed prior to the Oc­to­ber sur­vey.

Since the 2009 fall sur­vey, land­lords and prop­erty own­ers have ad­justed monthly rents and of­fered var­i­ous in­cen­tives to at­tract ten­ants,” says Cho.

In ad­di­tion to the va­cancy rate, CMHC also has what it calls an “avail­abil­ity rate.” A rental unit is con­sid­ered avail­able if the ex­ist­ing ten­ant has given no­tice of a move and a new ten­ant has not signed a lease, or the unit is va­cant.

The avail­abil­ity this past Oc­to­ber was pegged at 5.8 per cent com­pared with 7.5 per cent in 2009.

McIlveen uses the term turnover rate which he says gives a bet­ter pic­ture of what is hap­pen­ing in the mar­ket­place.

“Most ten­ants are a lit­tle more tran­sient and we have turnover rate of 40 to 50 per cent per year. That would sug­gest that there are as many as 1,500 units avail­able for rent over the course of the year that are never con­sid­ered va­cant,” he says.

Gerry Bax­ter, ex­ec­u­tive di­rec­tor of the Cal­gary Res­i­den­tial Ren­tal As­so­ci­a­tion, with the group’s new logo.

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