RENTAL MARKET UPDATE

2022 saw benchmark highs in many regions across Canada

Canadian multi-suite residential rental market conditions improved substantially during 2022, driven in large part by strong demand characteristics. Rents continued to rise across the country, with new benchmark highs set in many regions.

“Demographic trends, rising interest rates, job growth and economic uncertainty boosted demand for rental accommodation,” observed Keith Reading, Director of Research at Morguard. “New supply was leased relatively quickly upon completion.”

The national vacancy rate for purpose built rental apartments dropped from 3.1 to 1.9 per cent year-over-year as of October 2022, according to the Canada Mortgage and Housing Corporation. Over the same time-period, rents continued to climb and reach all time high levels.

The av erage two-bedroom rent increased by 5.6 per cent year-over-year. With a recession looming, renters will generally stay put. As the economic and job market slows, renters will continue to rent. Over the balance of 2023, rental

Recent New & Notable Transactions

Investment market

Multi-suite residential rental properties remain a prime target of various investment groups; however, Reading points out that activity levels have slowed sharply as interest rates continue to rise and economic uncertainty remains elevated.

“Vendors continue to command peak pricing while buyers look for pricing adjustments to offset the increased cost of debt,” he added. “As a result, a gap between vendor and purchasing pricing expectations has reduced investment activity significantly.”

Investors, meanwhile, continue to exhibit interest in acquiring rental properties given the sector’s stable and healthy long-term outlook. Reading predicts activity levels will remain muted until vendors and purchasers can agree on price, or interest rates fall back down to levels that are acceptable to buyers.

Skyline reports strong performance in 2022

In a recent update, Guelph-based Skyline Apartment REIT announced it finished the year off in good standing and anticipates further growth opportunities in 2023. Last year, the REIT made several new additions to its rental portfolio, adding more than $360.4 million in land and property assets and bringing its total number of suites to 22,259.

Over the course of the year, the REIT acquired the following properties:

• A seven-property portfolio in Nova Scotia and Ontario

• 176 Vidal Street South & 985 Maxwell Street in Sarnia, Ontario

• 6117 Uplands Drive in Nanaimo, British Columbia

• 230 Forsyth Street North in Sarnia, Ontario

• 411 & 423 Despard Avenue in Parksville, British Columbia

• 455 rue Sicard in Mascouche, Quebec

• 76 Mary Street in Chatham, Ontario

While Skyline Apartment REIT typically maintains a buy-and-hold strategy, in 2022 it disposed of six assets, totaling 582 suites and 81,531 square feet of commercial space for a combined sales price of $182.9 million. The equity from these sales will be used toward accretive property acquisitions. In 2022, it also completed construction on two new Ontario developments in communities with low vacancy rates: Lancaster Park Apartments in Welland and Twamley Manor Apartments in the small community of Listowel.

In B.C., Skyline purchased two new properties adding 108 rental suites to the rental market in Nanaimo and 122 rental suites in Parksville.

ARE YOU CONTEMPLATING THE SALE OF YOUR APARTMENT PORTFOLIO/PROPERTY?

Consider the following:

• Who will represent your best interest?

• Who will give your property maximum exposure?

• Who will deliver the highest value for your property?

With over 30 years of experience, tens of thousands of units sold, and hundreds of clients represented, we have consistently delivered superior results. Through our local and national coverage, we create maximum exposure, ensuring maximum value for your property.

For more info, please contact:

David Montressor

Vice Chairman Sales Representative (416) 815-2332 david.montressor@cbre.com

Tom Schuster Associate Director Sales Representative (416) 847-3257 tom.schuster@cbre.com