Toronto Star -Glut of Condos a Temporary Blip: Expert
September 28, 2024
Glut of rental condos a temporary blip: Expert
Ellen Moorhouse
Editor’s Notebook
There’s been a lot of gloom and doom about the apartment rental market recently, so we decided to check with Gerry DiLeo, a partner in The Rental Lifestyle Group (http://www.rentallifestyle.com) to get his perspective on the situation.
DiLeo’s company, launched two years ago, is in the business of leasing and managing residential units, including those in new condo buildings.
He says December saw some of the busiest weeks all year for condo rentals, and certain parts of the city, such as the St. Lawrence Market area, are particularly hot.
Units in two new projects near the market, MoZo and the French Quarter, are renting for $2.15 to $2.50 a square foot per month, says DiLeo. That compares to an average rent of $2 to $2.10 a square foot for new condos, down at least 10 to 20 per cent from a year earlier.
These two buildings, he says, have flair. MoZo’s modern architecture earned an A+ from our resident architecture critic Christopher Hume, while the French Quarter has a distinctive beaux arts look. Those qualities, plus the neighbourhood, make these projects attractive, says DiLeo.
Another area he thinks will do well, from a sales and rental standpoint, is King St. W., citing the DNA condo project under construction west of Strachan Ave.
“You have to look at the quality of the building and the neighbourhood,” he says. “It doesn’t have the competition that you have in the SkyDome and waterfront areas.”
DiLeo readily acknowledges that vacancy rates in new condo buildings can run in the low double digits, compared to an overall Toronto apartment vacancy of 6 to 7 per cent.
And those condo vacancy figures will spike again, when the Waterclub, at Queens Quay and York St., is completed and investor units come on the rental market.
He predicts an imbalance in favour of tenants for at least one or two years, depending on how many condo projects actually go ahead.
Because of the high level of presales required by lenders before they advance construction financing, and because investor purchasers who powered the condo market in recent years are on the sidelines, it’s expected some projects will likely die on the drawing board.
Still, rentals are being absorbed.
“We have seen greater activity in December than we have at any other time during the year. It’s steady, there just happens to be a surplus,” says DiLeo.
Owners have adjusted to market realities, and “there’s a lot more flexibility in the pricing where the layout’s not as attractive and the views are not attractive.”
For example, at the huge CityPlace development, DiLeo says the condo building adjacent to SkyDome at 80 Navy Wharf might have a 600-square-foot unit looking north renting for $2 a square foot, while an identical south-facing unit might command $2.25 to $2.30 a square foot.
Despite the high rental vacancy rates, DiLeo is still bullish on condos as an investment.
“If you’re buying for today, you’d really have to look at the figures,” he says. But if you’re looking at units coming on the market three years down the road, he predicts rentals could be $3 a square foot by then.
He regrets passing up some projects “but sometimes you’re too close and don’t see the opportunities.”
He wishes he had bought in MoZo, as well as a suite with southwest views in the SoHo Metropolitan, a condo-hotel project at Wellington St. W. and Blue Jays Way.
“Views are big for me,” he says. And, as the rents he talked about show, that’s what draws the tenants, too.