The condo completions are coming

By Ben Myers
February 27, 2020

Every year alarm bells are sounded about the number of new condominium apartments that are scheduled to complete in the Greater Toronto Area (GTA). Could all these units drive down rents? Could they drive down resale prices? Will investors sell on mass? Is there enough people to fill all these expensive new units?

Last year when I made my forecast for huge rent growth in the City of Toronto, people claimed that GTA condo completions could reach 25,000, which would result in muted rent growth. According to data from Canada Mortgage and Housing Corporation (CMHC) there were just 12,672 condominium apartment completions in the Toronto metro area, the lowest level in 10 years. The forecasts for completions almost always fall well short of projections.

However, rent growth was still fairly muted last year despite the lack of new condo apartment supply hitting the market. Data tracking firm Urbanation Inc indicated that the rent per-square-foot (psf) for leased condos in the former City of Toronto was $3.79 psf in Q4-2019, an increase of just 1.9 per cent year-over-year.In contrast, the “905” or suburban condo market, rent per-square-foot hit $2.85, an increase of 7 per cent year-over-year. Secondly, rent per-square-foot purpose-built rental apartments increased by 7 per cent in the fourth quarter of 2019 over Q4-2018 in Toronto, rising from $2.80 psf to $3.00 psf based on data from

People have hypothesized that the downtown Toronto rental market for brand new condominium apartments has hit an affordability ceiling, and investors cannot continue to increase rent at the level they have in the past.CMHC data from October of last year showed that the vacancy rate in downtown Toronto for rental apartments was 2.9 per cent, close to the balanced level of 3-4 per cent. So despite the demand for apartments in the core, people just can’t make the numbers fit their budget.

What does all this mean if you’re a budding real estate investor?Will supply put a damper on rent growth moving forward? According to Urbanation data, as many as 29,000 condominium apartments could complete and occupy in 2020, but they forecast that the number will be closer to 25,000. Those seem like massive numbers, but it must be kept in mind that the Toronto metro area is expecting population growth of nearly 140,000 people this year per CMHC forecasts, and the tech boom continues to bring in high-income tenants from across Canada and across the globe to Toronto.

If you’re looking to buy a new condo, keep these figures in mind: Urbanation data shows that suburban condos were priced at $761 psf at the end of 2019, compared to $930 psf in the “outer 416” area (which is primarily Etobicoke, North York, East York, and Scarborough), while pricing hit a whopping $1,349 psf in the former City of Toronto. A buyer really needs to consider which market they want to be in.

For potential investors worried that new condo prices will come crashing down, it is important to note that a big part of the reason that new condo prices have increased is due to the significant jump in construction costs. According to Altus Group project monitors, it cost about $120 psf to build a new apartment 20 years ago, that rose to approximately $195 psf in 2010, a 62 per cent increase. Developers looking to build a new condominium or rental apartment in 2020 are facing construction costs upwards of $325 psf, a nearly 70 per cent increase from a decade ago.

Batory Management and my firm Bullpen Research & Consulting Inc just recently released our Q4-2019 GTA Land Insights Report that showed condo land prices in 2019 increased by 28 per cent in the former City of Toronto. Everything is going up.

There is clearly huge upward pressure on costs via land prices, government fees and construction escalations, which will ultimately prevent developers from making the numbers work on new projects in the future, ultimately reducing supply and increasing prices over the next decade. Should be interesting to watch.

If I can offer one piece of advice for new and even experienced investors, check the track record of the developer to ensure that they the have experience and financial capability to complete project that you’re buying into. Do your own research on price and rent values, buy what you can afford, and good luck!

About Ben Myers

Ben Myers is President of Bullpen Research & Consulting, a boutique real estate advisory firm, that works with landowners, developers, and lenders to better inform them of the current and future macroeconomic and site-specific housing market conditions that can impact their active or proposed development projects. Follow Bullpen on Twitter at @BullpenConsult or find Ben at

Have great ideas? Become a Contributor.

Contact Us

Our Publications

Read all your favourites online without a subscription

Read Now

Sign Up to Our Newsletter

Sign up to receive the smartest advice and latest inspiration from the editors of NextHome