New data from Urbanation Inc. shows a growing trend among developers offering incentives to renters in the Greater Toronto Area (GTA). As of Q2 2025, 65 per cent of purpose-built rental projects completed since 2000 provided incentives—up sharply from 36 per cent in the same quarter last year. Notably, 39 per cent of buildings offered up to 1.5 months of free rent, while 24 per cent offered two months free, compared to just 25 per cent and 4 per cent, respectively, in Q2 2024.
“The GTHA rental market continued to face supply challenges from record high condo completions and rising purpose-built rental deliveries,” said Shaun Hildebrand, President of Urbanation. “However, strong underlying demand helped to keep market conditions fairly balanced. The decrease in rents over the past year reflect increased competitive pressures and population growth slowing from the 2022-2024 boom. While supply will remain high for the rest of the year, a drop in condo completions starting next year and a lack of growth in rental construction starts should soon lead to higher rents.”
The overall average rent for units available to lease in purpose-built rental projects completed since 2000 was $4.06 psf ($2,909 for 716 sf) in Q2-2025, representing a small 0.8 per cent year-over-year decrease from Q2-2024 ($4.09 psf). That said, when adjusting rents to account for incentives, the overall average drops to $3.56 psf in Q2-2025 — 12.4 per cen below unadjusted “face rents” and a 6.4 per cent annual decrease from incentive-adjusted rents in Q2-2024 ($3.80 psf). In the City of Toronto, incentive-adjusted rents declined 7.2 per cent annually to an average of $3.82 psf, while declining 4.7 per cent in the 905 Region to an average of $3.06 psf.
In the first half of 2025, purpose-built rental activity surged in the Greater Toronto and Hamilton Area (GTHA), with 3,156 new units reaching occupancy—a 77 per cent jump from the same period in 2024. Vacancy rates also climbed across stabilized buildings, reaching 3.5 per cent overall in Q2 2025, up from 2.7 per cent a year earlier. The 905 Region saw the highest increase, with vacancy rising to 4.0 per cent, while Toronto’s rate ticked up to 3.2 per cent. Despite heightened occupancy and vacancies, construction starts held steady: 3,446 units began construction in the first half of 2025, in line with the previous two years. The total number of purpose-built rental units under construction as of Q2 remained relatively unchanged at 24,520 units.
In the secondary condo rental market, Q2 2025 saw a record-breaking 18,119 leases signed—up 10 per cent year-over-year. Yet, listings outpaced demand, climbing 13 per cent to nearly 25,000 units and pushing the lease-to-listing ratio to a five-year low of 73 per cent. This imbalance led to declining rents, with average rates dropping 4.5 per cent to $3.79 per square foot, the lowest in three years. Studio rents saw the steepest decline at 6.0 per cent, while one-, two-, and three-bedroom units posted year-over-year drops between 3.3 per cent and 4.9 per cent.
