RENTAL MARKET GETS TIGHTER
Rates highest in city centre amid short supply while renters have more choice on the outskirts
Renters beware. Finding a new rental in the city is becoming more challenging, and that’s largely due to the ongoing struggles of the provincial economy.
A recent quarterly report by Urban Analytics that tracks the new multi-family market in the city for both rentals and condominiums points to tightening rental conditions in Calgary.
“Right now we’re seeing 95 per cent occupancy in Calgary’s new, purpose-built rental market,” says Kimberly Poffenroth, business development manager with Urban Analytics.
From the renter’s perspective that’s a five per cent vacancy rate among purpose-built, multi-family rentals constructed in the past six years.
The vacancy rate, however, is flat from the second quarter that ended in June 30, but it’s higher than the first quarter of 2018 and the last quarter of 2017. Despite the tightening conditions, rental rates — what tenants pay — fell by 2.1 per cent in the third quarter (July 1 to Sept. 30) from the previous quarter. In dollar terms, the average square foot rent fell from $1.96 in the second quarter to $1.92 in Q3. By contrast, the average price in the last quarter of 2017 was $1.82 per square foot. Rates remained highest in the city centre where supply is short while on the edges of the city, renters have more choice, especially when it comes to wood-frame rentals and townhomes. Consequently rents in these areas tend to be lower.
Poffenroth notes the overall drop in rates for the third quarter is likely the result of seasonal dynamics. And she says the rental market remains very strong because of falling demand for the condo market as buyers are more challenged by tightening borrowing rules and rising interest rates for mortgages.
“As we see the rental markets tighten up, we’re seeing the incentives lessen, so this time of year, there are usually a lot of incentives being offered in the rental market, but for the most part those have decreased.”
That said, many new builds offer more amenities than previously seen with purpose-build rentals.
“You don’t seen these amenities as much with condos because it adds to the fees,” she says. “But many of those sought-after amenities are already included in the rents, making them very attractive.”
The math is simple for many, she adds. Renters can, for example, save money by renting because they can work out at the fitness facility in their building as opposed to buying a gym membership.
All told, the city has 38 purposebuilt, multi-family rentals that are new to the market.
That’s “an increase in purposebuilt rentals in the last few years,” Poffenroth notes, adding this is a result of developers adjusting to the new normal for the city ’s economy, adding more rental units than condominiums.
Still, she says improvements in economic conditions could change the situation as renting remains for many a temporary phase.
“I think in Calgary people’s focus remains to own a home eventually, but we might see people renting for longer,” Poffenroth says. “People might have before rented for a couple of years when starting out and now that’s stretching out longer, which is boosting for demand for the purpose-built rentals.”