apartment market

Canada’s apartment market today

Q3 market trends and insights from Morguard’s Keith Reading
Tuesday, September 13, 2016
by Erin Ruddy

Canada’s apartment market continues to capture the attention of investors craving stability in what has become an uncertain economic backdrop. Notably, Calgary apartment market conditions have softened significantly with vacancy rising and landlords offering inducements, such as free rent, against a backdrop of a slumping economy.

“But we have seen this before,” said Keith Reading, Director of Research at Morguard. “Investors with a long-term view continue to look at Calgary given its long-standing record of positive performance.”

Across the country, vacancy levels remain low, even with competition from the secondary condo market. Rents for the most part continue to hold at the peak for the cycle.

“Apartments have typically performed well during periods of economic weakness, which bodes well for the sector given a slow-growth Canadian economy over the past year,” Reading said, noting the MSCI indexed properties posted an average overall return of 8.4 percent.

Canada’s rental apartment sector continues to see demand outpace the supply of assets currently available for purchase. That said, CAPREIT has been very active in acquiring apartment assets, and as a long-term market participant they continue to recognize the sector as a good place to park investment funds.

Notable Q3 apartment market transactions:

  • Conundrum Capital/Q Residential acquired 80 Morelle Court, a 265-unit building in Scarborough for $38 million ($149,057 per unit)
  • Skyline Apartment REIT purchased a 416-unit portfolio in Sarnia/Niagara Falls for $32.1 million ($77,439 per unit)
  • Boardwalk acquired Axis, an Edmonton property containing 165 units for $30 million ($182,750 per unit)
  • CAPREIT acquired a portfolio of 850 units in Ottawa for 180.3 million ($212,059 per unit)
  • Boardwalk purchased Auburn Landing, a 238-unit property in Calgary for $51 million ($215,000 per unit)

    61 Yorkville Avenue  

    In early September, Avison Young announced the sale of 61 Yorkville Avenue in Toronto, a residential property containing 19,646 square feet of land with 181 ft. fronting on Bay Street and 109 ft. fronting onto Yorkville Avenue.

    Property highlights:

    • The property is improved with an 18-storey (55m) building completed in 2003
    • Freehold interest, subject to a long term land lease offering “blue chip” long term return
    • Premier location steps to the “Mink Mile”, ROM, Queen’s Park, Jesse Ketchum Public School, University of Toronto, 5 star Hotels, TTC and Bay/Bloor PATH

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