Toronto rental sector bolstered by tech industry’s consistent growth
Strong employment – especially in the high-technology sector – is a major driving force in the steady growth of Toronto’s rental segment.
In turn, this trend is feeding the strength of the region’s investment property market, according to Marcus & Millichap’s Q3 2019 Multifamily Market Report covering the GTA.
In the first half of this year alone, 81,600 new employees were added to the GTA’s workforce, with a sizeable contingent representing tech companies. Such organizations have gravitated towards the region’s supportive environment.
“A less restrictive immigration policy in contrast to the U.S., coupled with a mature tech ecosystem backed by government incentives and world-class universities, has Microsoft, Amazon, Pinterest and many other global firms searching for talent in the metro,” Marcus & Millichap explained.
Overall employment in the GTA grew by 3.4% annually in June, exceeding the 2.9% year-over-year upswing during the same month in 2018.
The resultant stronger economy has led to the formation of more households, “a key driver of apartment demand.” The average price of an investment rental property has increased by 9% year-over-year, ending up at just above $277,000 per unit and as high as $300,000 in the downtown core.
Over the four quarters ending mid-2019, investment property transaction volumes went up by 8% year-over-year.
“Buyer activity was widespread, with elevated interest in the areas of Etobicoke, York and Scarborough,” Marcus & Millichap said, noting that much of the vitality could be attributed to “favourable” demographics and geographic conditions.
“Pent-up rental demand and strong rent growth will keep investors active this year, broadening their searches across the metro for remaining upside. A rollback of rent control regulations on new builds will boost demand for recently completed projects.”