Edmonton rents stable, vacancy rate dips

Edmonton rents stable, vacancy rate dips


EDMONTON - Finding an apartment to rent in Edmonton is expected to get a little tougher next year when the vacancy rate is forecast to slip and rents are expected to creep up.

The vacancy rate for rental apartments will drop to about 3.5 per cent by the fall of 2011 as the economy improves, Canada Mortgage and Housing Corp. said Thursday.

A typical two-bedroom unit is expected to go for nearly $1,035, up $20 from 2010. Fewer landlords will offer rental incentives as demand for their units rises, CMHC added. "A growing economy will help to reduce unemployment and encourage more newcomers to the region," the federal agency's annual fall survey said.

The apartment vacancy rate has already edged down to 4.2 per cent in October for rental apartments across the Edmonton census metropolitan area from 4.5 per cent in October 2009. The drop comes after three straight years of increases.

The vacancy rate also fell for Edmonton-area rental townhouses, going to 3.5 per cent from an average of four per cent in October 2009. Average row-house rent rose $46 a month from October 2009 to $1,127.

"The reduction in vacancies in the Capital Region has been modest in the past year due to continued high unemployment, relatively low levels of provincial net migration and competition from investor-owned condominium units in the secondary rental market," CMHC senior market analyst Richard Goatcher said.

Rents were relatively stable in the same period. An average two-bedroom apartment went for $1,015 in October -- unchanged from a year earlier, CMHC said.

However, the dip in the vacancy rate wasn't big enough for landlords to cut incentives to tenants such as a month's free rent, the survey said. In fact, there was a two-percentage-point increase in rental buildings offering incentives to nearly a quarter of the market -- the highest level since October 2004.

But incentives will start disappearing as occupancy levels improve next year, the survey said.

Despite fewer vacancies in the purpose-built commercial rental market, the vacancy rate in the secondary rental market -- investor-owned and rented condos -- rose to 5.2 per cent in October from 3.1 per cent a year earlier.

"New-condominium inventories have remained elevated in 2010, leading some investors to rent out their new units rather than sell them at reduced prices," the report said.

Rent for a typical two-bedroom condo apartment fell an average of $72 a month over the year to $1,050 this year from $1,122 in 2009. The decline "can be attributed to owners seeking to generate cash flow rather than have their units sit vacant."

Provincially, the apartment vacancy rate in Alberta's urban centres was 4.6 per cent in October, down from 5.5 per cent a year earlier, CMHC said. The total average rent in the province was $943 in October, compared with $949 last year.

For Canada, the average rental apartment vacancy rate in 35 major centres slipped two points from October 2009 to 2.6 per cent and the average two-bedroom rent was $860 this year, up from $836 in 2009.

A national group representing residential landlords said rents fell slightly across Canada when adjusting for inflation.

"Six of Canada's major centres now have average two-bedroom rents above $1,000, namely Vancouver, Toronto, Calgary, Ottawa, Victoria and Edmonton," Canadian Federation of Apartment Associations president John Dickie said. "Even at those rents, apartment values are not as high as replacement costs."

bmah@edmontonjournal.com

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