The Greater Toronto Area builds a lot more condominiums than purpose-built rental units. This isn't the case everywhere though. I was recently reading an article about Salt Lake City and how developers there don't want to build condominiums. It's mostly rental housing. There's simply too much risk and liability with condominiums. I guess this is one of the reasons why real estate is often said to be a local business.

In any event, because of this dynamic in Toronto, condominium rentals are often used to measure the health of the overall rental market. There are simply more recent comparables to point to when you're trying to figure out what is "market." The Toronto Regional Real Estate Board recently published its Q2-2021 rental market report and here is what they found when it comes to condominium apartment rental transactions in the Greater Toronto Area:

Q2-2021 - 14,920 transactions

Q1-2021 - 13,168 transactions

Q2-2020 - 7,300 transactions

What this report tells us is that rental demand is returning. Transactions and rents are up compared to the first quarter of this year and certainly compared to Q2 of last year (2020), which was the low point of this pandemic. We are not yet back to where we were in Q1-2020 when the city was firing on all cylinders, but I have no doubt that we will get there and ultimately surpass those figures.

For the full rental market report, click here.

Photo by Narciso Arellano on Unsplash

Bjarke Ingels’ West 57th Street project in New York (developed by The Durst Organization) has just started renting apartments (March 1). 

Since I’m in the rental business, I thought it would be worthwhile to take a look at the rents – though I tend to obsess over all buildings and not just rental ones.

Firstly, the project has a total of 709 apartments and 178 different unit types because of the architectural variations in the building. Of these units, 142 of them (20%) have been designated as affordable and were offered up via a lottery to people who fall within certain incomes ranges. 

Here are the affordable rents via 6sqft.com:

I don’t know the exact numbers, but Curbed New York speculated – based on what was seen at other buildings on the west side – that the total number of applicants for these 142 units may have reached over 100,000!

For the market-rate units, the average monthly rents are as follows (via Curbed NY):

• Studio: $2,770
  

• One-bedroom: $3,880
  

• Two-bedroom: $6,500
  

• Three-bedroom: $11,000
  

• Four-bedroom: $16,500
  

I wasn’t able to find average unit sizes (to calculate per square foot rents), but I estimate the overall average unit size to be around 1,000 square feet. 

940,000 sf (total gross floor area) - 45,000 sf of retail x 0.80 efficiency (lower than average because of the shape of the building) / 709 units = approximately 1,000 sf of rentable area per unit. That’s just my rough guess based on what I could find online.

Based on the Curbed comment section though, there are certainly some smaller units:

If anyone has any additional figures, please share them in the comments below. I think there are a few subscribers to this blog who are involved in the project.

Image from via57west.com

I was catching up with a friend of mine over coffee this morning and he was telling me about his recent trip to Porto, Portugal. I’ve never been, but it’s fairly high up on my list of places to visit.

He was telling me about how beautiful the center of the city is and how it’s a UNESCO World Heritage Site. But he was also telling me how eerie it was to see so many abandoned and decaying buildings.

And part of the reason for this – I learned – is that up until fairly recently, Portugal had some incredibly onerous pro-tenant rent controls in place that dated back to the beginning of the 1900s.

In fact, they were so onerous that, by some estimates, roughly 150,000 households in Portugal were paying less than €50 per month in rent before the laws were changed!

Because of this, landlords in many cases could not, and cannot, actually afford to maintain their properties. Buildings were left to decay, and in some cases they were completely abandoned. That was their only option. And it led to a virtually non-existent rental housing market (according to the IMF).

Clearly, this is a problem. If you have a market distortion as serious as this one – where there’s virtually no incentive to invest – you’re on a highly unsustainable economic trajectory.

Which is why when Portugal received its bailout package from the International Monetary Fund and European Union following the 2008 financial crisis, it was asked to reform its rent control laws – which it agreed to do.

The hope was that the reforms would allow Portuguese landlords to charge more reasonable and market-oriented rents, as well as do other crazy things like evict tenants that don’t actually pay their rent. Not surprisingly, many fought the changes.

I don’t know precisely how these reforms have ultimately played out in the market over the past few years (if you do, I’d love to hear from you in the comments below), but I do believe that liberalization of the market was, and probably still is, needed.

While paying €5 a month for a 4 bedroom apartment in a desirable central neighborhood might be great for that one individual family, it’s not so great for the economy as a whole. And ultimately that comes around to impact even that household.

Image: Flickr

The Greater Toronto Area builds a lot more condominiums than purpose-built rental units. This isn't the case everywhere though. I was recently reading an article about Salt Lake City and how developers there don't want to build condominiums. It's mostly rental housing. There's simply too much risk and liability with condominiums. I guess this is one of the reasons why real estate is often said to be a local business.

In any event, because of this dynamic in Toronto, condominium rentals are often used to measure the health of the overall rental market. There are simply more recent comparables to point to when you're trying to figure out what is "market." The Toronto Regional Real Estate Board recently published its Q2-2021 rental market report and here is what they found when it comes to condominium apartment rental transactions in the Greater Toronto Area:

Q2-2021 - 14,920 transactions

Q1-2021 - 13,168 transactions

Q2-2020 - 7,300 transactions

What this report tells us is that rental demand is returning. Transactions and rents are up compared to the first quarter of this year and certainly compared to Q2 of last year (2020), which was the low point of this pandemic. We are not yet back to where we were in Q1-2020 when the city was firing on all cylinders, but I have no doubt that we will get there and ultimately surpass those figures.

For the full rental market report, click here.

Photo by Narciso Arellano on Unsplash

Bjarke Ingels’ West 57th Street project in New York (developed by The Durst Organization) has just started renting apartments (March 1). 

Since I’m in the rental business, I thought it would be worthwhile to take a look at the rents – though I tend to obsess over all buildings and not just rental ones.

Firstly, the project has a total of 709 apartments and 178 different unit types because of the architectural variations in the building. Of these units, 142 of them (20%) have been designated as affordable and were offered up via a lottery to people who fall within certain incomes ranges. 

Here are the affordable rents via 6sqft.com:

I don’t know the exact numbers, but Curbed New York speculated – based on what was seen at other buildings on the west side – that the total number of applicants for these 142 units may have reached over 100,000!

For the market-rate units, the average monthly rents are as follows (via Curbed NY):

• Studio: $2,770
  

• One-bedroom: $3,880
  

• Two-bedroom: $6,500
  

• Three-bedroom: $11,000
  

• Four-bedroom: $16,500
  

I wasn’t able to find average unit sizes (to calculate per square foot rents), but I estimate the overall average unit size to be around 1,000 square feet. 

940,000 sf (total gross floor area) - 45,000 sf of retail x 0.80 efficiency (lower than average because of the shape of the building) / 709 units = approximately 1,000 sf of rentable area per unit. That’s just my rough guess based on what I could find online.

Based on the Curbed comment section though, there are certainly some smaller units:

If anyone has any additional figures, please share them in the comments below. I think there are a few subscribers to this blog who are involved in the project.

Image from via57west.com

I was catching up with a friend of mine over coffee this morning and he was telling me about his recent trip to Porto, Portugal. I’ve never been, but it’s fairly high up on my list of places to visit.

He was telling me about how beautiful the center of the city is and how it’s a UNESCO World Heritage Site. But he was also telling me how eerie it was to see so many abandoned and decaying buildings.

And part of the reason for this – I learned – is that up until fairly recently, Portugal had some incredibly onerous pro-tenant rent controls in place that dated back to the beginning of the 1900s.

In fact, they were so onerous that, by some estimates, roughly 150,000 households in Portugal were paying less than €50 per month in rent before the laws were changed!

Because of this, landlords in many cases could not, and cannot, actually afford to maintain their properties. Buildings were left to decay, and in some cases they were completely abandoned. That was their only option. And it led to a virtually non-existent rental housing market (according to the IMF).

Clearly, this is a problem. If you have a market distortion as serious as this one – where there’s virtually no incentive to invest – you’re on a highly unsustainable economic trajectory.

Which is why when Portugal received its bailout package from the International Monetary Fund and European Union following the 2008 financial crisis, it was asked to reform its rent control laws – which it agreed to do.

The hope was that the reforms would allow Portuguese landlords to charge more reasonable and market-oriented rents, as well as do other crazy things like evict tenants that don’t actually pay their rent. Not surprisingly, many fought the changes.

I don’t know precisely how these reforms have ultimately played out in the market over the past few years (if you do, I’d love to hear from you in the comments below), but I do believe that liberalization of the market was, and probably still is, needed.

While paying €5 a month for a 4 bedroom apartment in a desirable central neighborhood might be great for that one individual family, it’s not so great for the economy as a whole. And ultimately that comes around to impact even that household.

Image: Flickr