New data from Urbanation Inc. shows rental construction accelerated sharply in Q4‑2025, with 9,821 purpose-built rental units breaking ground—up 42 per cent from 2024 and the highest annual total since the 1970s. By year-end, the number of purpose-built rentals under construction across the GTHA climbed to 27,815, a 77 per cent increase over the past five years.
“Some developers are looking past the current softness in the market by starting construction on new rental projects, with an understanding that conditions will improve in the years ahead as condo supply dries up,” said Shaun Hildebrand, President of Urbanation. “But even with rental starts reaching nearly 10,000 units last year, it won’t likely be enough to move the needle on improving affordability. The GTHA currently has over 150,000 approved rentals in the pipeline waiting to become economically feasible.”
The acceleration in development occurred despite the rental market being at its weakest point since the pandemic. The vacancy rate for buildings completed since 2000 rose to 3.7 per cent in Q4‑2025, up from 3.4 per cent a year earlier and the highest level since Q4‑2020 (5.5%).
Purpose-built rental completions also reached a more than 40‑year high, with 6,379 units delivered in 2025. More than half of these units (59%) remained available for lease at year-end. In total, 44 buildings were still in their initial lease-up phase and had not yet reached stabilization (defined as 95% occupancy). This included 23 buildings completed in 2025, 14 completed in 2024, and seven completed between 2022 and 2023.
The softening in the rental market was driven not only by rising purpose-built supply but also by sustained high levels of condo completions—about half of which typically enter the rental pool—alongside slowing population growth, increased economic uncertainty, and ongoing affordability challenges. Among purpose-built rentals completed since 2000 and available for lease in Q4, average asking rents were $2,916 per month for an average unit size of 720 square feet. While this represented a 2% annual decline, rents remained 16% higher than five years earlier.
To attract tenants, rental operators continued to rely heavily on incentives. Two-thirds of buildings completed since 2000 offered some form of concession in Q4, with two months of free rent emerging as the most common incentive, offered by 35% of buildings. After adjusting for incentives, effective rents averaged $2,565—down 5.5 per cent from the incentive-adjusted average of $2,713 in Q4‑2024.
Purpose-built rentals also faced mounting competition from the condo rental market, where rents continued to fall. Condo rents declined by an average of 4.0 per cent in 2025, the steepest drop since 2020, when rents fell 6.7 per cent. This occurred despite a record 64,531 condo lease transactions last year. Investor-owned supply continued to grow even as many units generated deeply negative cash flow. For condo units completed in 2025, monthly ownership costs—including mortgage payments, condo fees, and property taxes—exceeded achieved rents by an average of $1,338.
