Major international cities like New York and London have rental rates that rival ownership, but in Canada’s largest metropolitan area the reasons to relinquish owning a home are mounting.
“I don’t know I’d say that people are embracing rental because of the virtues of security of tenure and professional property management; it’s the default option because a lot of Canadians can’t get the 20% down payment to get a home and carry the costs,” said Todd Nishimura, senior director of marketing, leasing and communications at GWL Realty Advisors (GWLRA). “The destigmatization of rentals has been going on for the past five or seven years. With new product on the market that has elevated service and sophistication, rental is more palatable and people are saying it is as good as ownership, like it is in New York City or London. It truly is a lifestyle decision, freeing up cash flow by not wanting to own something. Toronto is approaching that, but we’re still not there yet, in my opinion.”
By 2012, GWLRA noticed that rental demand in Toronto was exceeding supply, and using the United States, where Nishimura says development is five to seven years ahead of Canada, as a measuring stick, the company decided to begin developing state-of-the-art purpose-built rental buildings to meet a need in the city’s housing market.
“If you create finishes that are comparable to condos, there is a market for that,” said Nishimura. “There’s a market for sophistication people would pay a premium for.”
It isn’t just condo-grade finishes that are attracting people to purpose-built rental buildings, though. The rival anything found in some of Toronto’s most exclusive condominium buildings and, in addition to property management companies and 24-hour security, carrying mortgage after mortgage is not appealing to everyone. GWLRA operates the Livmore purpose-built rental apartments in Toronto—the first location was opened at Bay and Gerrard Sts. and the second is in High Park—and Nishimura says their tenants aren’t especially difficult to understand.
“They’re older retirees, empty nesters whose kids have left or completed school and moved out, and they have a whole lot of house they don’t need with a whole lot of maintenance they don’t want to do, like shovelling snow and mowing the lawn. Empty nesters want to live in the city and have greater access to restaurants, shows and all the entertainment there is on offer now that they have more time to enjoy these things.”
According to Mirella Sarrapochiello, VP of sales and marketing at Dunpar Homes, which built and manages Kingsway Village Square on Prince Edward, a tony purpose-built rental development largely tenanted by Kingsway neighbourhood empty nesters, there is, unquestionably, voracious demand for full-service apartment buildings in the city, which people are opting to rent over condos.
“There are a lot of empty nesters who live in the area and want to sell their big homes and move into a rental. They’re snowbirds who go to Florida, so they are comfortable and secure knowing we take care of them, that everything is taken care of while they’re gone,” she said. “Our rentals have a lot of VIP services that we provide to people, like dog walking and a snowbird package. We go in to water their plants, we offer cleaning services, personal mail pick-up, restaurant reservations and 24-hour concierge security, so any issues are taken care of for them. With a condo you have a landlord-investor, but with a purpose-builts you have a property management company to take care of everything for you.”
Unlike condos, which are owned by landlord-investors who could pull the rug out from beneath their tenants at any time and are legally required to give only 60 days notice, purpose-built rentals have security of tenure, and that alone is appealing to renters.
“The security of tenure is that if you are a lifelong renter, for a company like GWLRA, this has been and will continue to be your rental apartment,” said Nishimura. “If you’re a resident of good standing and you pay rent on time, you’ll never be asked to leave. With a condo, if you’re asked to move out, you’re out because it’s the law.”
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
