Leasing of purpose-built rental in Metro Vancouver ‘healthy,’ as condo market stalls

Almost 60 per cent of the purpose-built rental units in Metro Vancouver that are nearly completed or completed are leased, according to a new report.

The pace of rental leasing in the region, even in the face of high rental costs, stands in sharp contrast to the glut of completed, but empty and unsold, strata condos, say experts, who note that many builders have been shifting to purpose-built rentals.

“The biggest ‘shift’ in (these) markets is that the providers of newer rental product were previously building investor-owned strata condominiums, and will now primarily be purpose-build rental apartments,” said Jon Bennest, vice-president at Zonda Home, which tracks real estate data.

He said it’s taking the average purpose-built rental project in Metro about 10 months to lease-up, “which is not sluggish or robust, a somewhat healthy rate.”

In September, Postmedia News reported there were over 5,000 finished, but unsold, condos and townhomes worth an estimated $4.4 billion across Metro.

According to new data from Zonda Home, 59.5 per cent of released, purpose-built rental units were leased in Metro at the end of last week. In the Greater Toronto and Hamilton areas, another expensive housing market with high rental costs, 60.6 per cent of released, purpose-built units were leased.

These lease rates are comparable with ones seen in Calgary (52.8 per cent); Edmonton (58 per cent); Winnipeg (54 per cent); and Ottawa (57.8 per cent), even though there are far fewer units actively leasing and in the future pipeline in these cities.

Bennest pulled out more detailed information for Postmedia looking at the number of purpose-built rental units leased in different municipalities across Metro. He said there are 49 actively leasing buildings across Metro and the Fraser Valley and that about 900 units are being leased per month in a market where there are 2,634 released and available rental units. It translates into about three months of new rental supply on the market, he said.

“I’d say an appropriate amount of new, purpose-built rental supply is being built in the market today when we’re comparing new rental absorptions with released rental inventory levels,” said Bennest.

Vancouver counted the highest number with 23 purpose-built projects that are actively leasing some 3,336 units. One of particular interest is the high-profile Senakw project near the Burrard Bridge where the first three of 11 planned towers have been completed. While 169 of the 261 released units have been leased, there are a total of 1,127 units in the three completed towers.

“Sometimes in phased or larger projects, the owner selectively releases parts of the development for leasing,” said Bennest.