Challenges continue for Calgary’s rental market
“Very cautious optimism” is how Gerry Baxter, executive director of the Calgary Residential Rental Association, describes the industry’s view of Calgary’s current rental landscape.
While Canada Mortgage and Housing Corp. (CMHC) pegged Calgary’s rental vacancy rate at seven per cent last fall – the highest it’s been in more than 25 years – Baxter says he thinks residential vacancies in the city are actually closer to the eight-to-10-per-cent range.
“There’s been some slight improvement in the rental market over the last few weeks, but it’s still a challenge to rent,” said Baxter, attributing the slack rental market to the economic downturn that started in late 2014 and early 2015.
“We lost a lot of people out of the province and many of them haven’t come back,” said Baxter, adding that until migration into the province picks up, rental vacancies will remain high.
“I think we’re in this for another year or so, at these vacancy rates.”
Richard Cho, principal market analyst for Calgary with CMHC, says he expects Calgary’s apartment vacancy rate to sit around 7.5 per cent (CMHC bases this number on purpose-built rentals, not the secondary market, which includes investor-owned condominiums) when CMHC releases its next Rental Market Report in the fall.
Cho says while CMHC actually expects the demand for rentals to increase – as it did in 2016 compared to 2015 – because of the supply of new units entering the market, the overall vacancy rate will remain high compared to Calgary’s historical vacancy rate of around three per cent.
“Over the last couple of years, we have seen supply levels rise, both with purpose-built rentals and investor-owned properties,” said Cho, adding that, in the fall of 2016, 30 per cent of apartment condos were investor owned.
“We’ve seen this tremendous influx of new units in the past few years, combined with a smaller pool of tenants. The supply is greater than the demand.” – Gerry Baxter, Calgary Residential Rental Association executive director
“We’ve seen this tremendous influx of new units in the past few years, combined with a smaller pool of tenants,” said Baxter. “The supply is greater than the demand.”
Come October of 2018, however, Cho says CMHC expects the rental vacancy rate to fall to 6.5 per cent, due to improved economic conditions – leading to gains in rental demand, as well as reduced supply of new units on the market.
David McIlveen, director of community development for Boardwalk Rental Communities, says Boardwalk is taking advantage of the slower rental market to refresh and upgrade hundreds of the suites it offers for Calgary tenants. The company is also rebranding some of its existing buildings, including the Chateau Apartments and Centre Pointe West, to move them into an upscale bracket.
“We had suites that were rented all the time, back-to-back, but when we began to see a significant slowdown and suites became vacant, that allowed us an opportunity to do renovations,” said McIlveen.
For the past couple years, Boardwalk has been offering rental incentives to potential tenants, sometimes adding up to as much as $300 per month.
“We’ve seen a decrease in move outs – and an increase in rentals – over the first six months of 2017,” said McIlveen.
Baxter believes that, given the challenging nature of the current economy, whatever landlords are doing in term of rental incentives to attract renters can be nothing but helpful. “It’s such a competitive market out there at the best of times,” he said.
One thing everyone agrees on is that it’s a fantastic time to be a renter in Calgary.
“It’s really good news for tenants in the city right now. They have lots of choice and lots of places they can go,” said McIlveen. “We’re competing very hard with a combo of fantastic service and product to make it a great experience to live at a Boardwalk building.”