Yet Edmonton’s new purpose-built rental market experienced even less growth in 2022, with rents increasing about two per cent for a one-bedroom to about $1,400 a month, Zonda Urban data for its third quarter report shows.
“Overall, Edmonton is more traditionally known as a more purpose-built rental and single-family home market,” says Cameron Slavik, analyst with Zonda Urban.
“Edmonton has seen a similar trend to Calgary with lower vacancies at an average of 8.5 percent across the market,” says Kendall Brown, manager of rental data for Zonda Urban for Alberta and Ontario.
“Lower vacancy can be attributed to the absorption of new supply that occurred last year as demand has increased with the return of students and young professionals,” Brown says.
Despite rising demand, rents per square foot decreased slightly. Average rents decreased 2.2 per cent from the third quarter of 2021 to the fourth quarter. Brown notes the drop in rent is due to the rise in supply, but also seasonality of the rental market with fewer people moving during the fall and winter.
“Judging by how active most builders continue to be during the pandemic, it seems to have been more or less fine,” says Jackson Cornelius, director of advisory at Zonda Urban, which was formerly Urban Analytics. “A lot of these developers have fixed pricing in place and contracts with the suppliers. That’s allowed them to mitigate the volatility of the market … and contributed to why most pricing remained flat. In fact, if anything, the changes have been more demand-side adjustments.”
"Townhouse and apartment benchmarks rose approximately 30 per cent year-over-year, to $771,200 and $520,700, respectively, by the end of December.
“Initially during the early stages of the pandemic, purchasers were looking for more space and pricing was more reasonable in Langley and neighbourhoods south of the Fraser in comparison to Vancouver,” said Zonda Urban market analyst Melissa Nestoruk."
“Calgary has seen more consistent activity, as well as more consistent project launches in both wood-frame condominium and townhome projects,” said Cornelius. “Demand in Calgary has tended to outpace the supply of new projects.”
While condominium sales in Edmonton have slowed, Cornelius attributes the shift to a lack of new product rather than reduced demand. Several condo projects have been delayed or converted to rentals in the past few years, shrinking the supply of new homes for sale.
“Because of the downturn in oil and gas (a few years ago), developers reassessed their projects and converted a lot of existing new condominium units to rentals,” says Jackson Cornelius, director of advisory services for Alberta at Zonda Urban.
The report from Zonda for the third quarter of 2021 (July 1 to Sept. 30) notes that sales fell, year over year, from 282 units to 257 sales — the lowest figure for the period in the last five years.
Yet the picture is better than it appears because existing new condominium units are selling well, Cornelius says.
A new report suggests investors are returning to the long slumping part of the market, seeing potential for a good return on their investment dollars, says Jackson Cornelius, manager of market and advisory for Zonda Urban in Calgary.
“Anecdotally, many sales representatives for new projects in the city are seeing more buyers over the last quarter who are investors,” he says.
Kendall Brown, manager, rental data (Alberta/Ontario) for market research and data advisory firm Zonda Urban (formerly Urban Analytics) told viewers at the virtual Calgary Real Estate Forum the majority of the completed developments are already stabilized – buildings that have achieved over 85 per cent occupancy.
Another 13 of the projects are actively leasing.
“The younger crowds are now moving downtown again with things opening up,” says Kendall Brown, manager of rental data at Zonda Urban (formerly Urban Analytics), which recently published its third-quarter new rental report for the city.
