Downtown’s luxury condo rental market takes big hit

Prices fall at least $100K after drop in demand and migration of furnished Airbnb suites

Condo rents in some of Toronto’s toniest downtown neighbourhoods are feeling the effects of COVID-19 with the biggest impact on larger and luxury units, according to a new report based on listings at Rentals.ca. The rental report was released Wednesday, the same day real estate brokerage Zoocasa published an analysis of median selling prices for condos during the public health emergency.

The Zoocasa analysis found that prices fell by at least $100,000 in two central Toronto neighbourhoods — the Regent Park/St. James Town area defined as C08 in the Toronto Regional Real Estate Board’s Multiple Listings Service (MLS) and the Mount Pleasant East area, C10 on MLS.

On the rental side, the King Street West area from about Yonge Street to John Street, with the M5H postal code, saw the largest month-over-month decline in rents per square foot in April — down 12.6 per cent, compared with March.

In the M5R postal code area that covers the Annex and Yorkville, the average rent per square foot fell 9.4 per cent in the same period.

The study shows condo rents in waterfront neighbourhoods, the Entertainment District and the Distillery District have dropped between 2.2 per cent and 8.2 per cent per sq. ft. in April compared with March.

It’s a situation that could have longerterm implications, said the report’s author Ben Myers of Bullpen Research and Consulting. The high cost of investing in a condo, coupled with downward pressure on rents could make it more difficult for investors to carry their units.

“If rents are going down, there’s a chance prices will be going down as well,” he said.

“A majority are buying because (condos) have been going up in value. But at some point, you’re losing a lot of money on a monthly basis so that it no longer becomes worth it,” he said.

Myers cites falling demand for apartments as renters stay put and unemployment spikes, trends evident in the resale housing market where sales have dropped about 70 per cent during the COVID-19 crisis.

“Maybe people who were thinking about moving downtown are nervous because of the density and the amount of people down there, the lack of grocery