Definitely not in a boom and perhaps more like in a gradual recovery, Calgary’s rental market seems to be on the mend. And it has been a bumpy, two-year ride! It has been battered by the double economic whammy of slumping oil prices, the economy, COVID-19 lockdowns, unemployment (Calgary’s unemployment rate hit a high of 15.3 per cent) and the moving train that is increased rental supply.
Now, unlike resale and new home real estate, Calgary’s rentals are a balanced market. “Despite immigration and domestic and foreign students dropping off, low economic thrust, and people moving less during the pandemic, we’re seeing equilibrium between supply and demand,” says the plugged-in and upbeat Bob Dhillon, CEO, president and founder of Calgary-based Mainstreet Equity, investing in older mid-market multi-family rental properties and repositioning them to provide comfortable and well-managed apartment rentals in Calgary, Edmonton, lower mainland B.C., Regina and Saskatoon. “The Calgary market is positively affected by the mixed bag of product alongside geographic diversification and Calgary’s inner city has the reputation of being one of the world’s best, with emerging areas like Inglewood, Mission, Beltline, Lower Mount Royal, Bankview and the East Village.”
Most aspects of the real estate sector are impacted by different but similar factors. So are rentals. “Affordability (price), location, amenities and availability are all important for Calgary renters when they are looking for a new rental home in which to live,” explains Gerry Baxter, executive director of the Calgary Residential Rental Association (CRRA). “Overall, there is still a decent amount of inventory and selection on the market, at various price-points. We don’t hear much about people struggling to find decent accommodations. There appears to be a lot of availability, with many two-bed/two-bath condos and new luxury rentals, which appeal to a small segment of renters due to price.” He mentions stats and numbers that show the downtown and inner city areas have a lot of availability, both apartments and condos, in the downtown and Calgary’s inner city. “The buildings range from brand new to older. So, there is a great choice available to renters. But rents may tend to be higher, especially in newer building with more amenities.”
Currently, the range for average Calgary rents is $1,000 to $1,200 for one bedroom and between $1,150 to $1,400 for two bedrooms. Condos and new buildings may be higher.
He points out that the past few years has seen considerable growth in the number of condos in the Calgary market. Many of these condos are turned into rental properties. In fact more than one third of all Calgary condos are rentals.
“The increase in the number of rental condominiums has dramatically increased the supply and availability of rental properties. Condos typically offer more amenities and rent for more than many older purpose-built rental properties,” Baxter says. “However, it makes it harder for landlords with purpose-built apartment buildings, particularly those with older buildings, to compete.”
There is a lot of positive buzz about Calgary’s new home builds and Baxter notes the increase in new home construction, while being good for the city, has seen many renters leave to purchase a new home, which has an impact on the rental vacancy level.
For landlords and owners, it’s been harder to find qualified tenants who can prove employment and income, as many people seem to have changed jobs or are now self-employed, which is harder for a landlord to be comfortable with.
Most Calgary real estate insiders emphasize that rental market ups-and-downs fluctuate, but the market is still very much an income/expenses business. “Increasing costs are the biggest challenge,” Baxter says. “Things such as significantly increased insurance costs, utilities, property taxes, parts and service costs to maintain the property and labour costs. Employment is another major challenge and the economy, coupled with the pandemic, has made it harder to find qualified employees.” He underscores the uniquely valid point that the past two years of lockdowns, work-from-home trends and social distancing have had a definite impact on Calgary’s rental market.
“It has been transformative for our capital allocation strategy, but has affected us differently because of the nature of our buildings. We’re boutique, inner-city, low-density. These are all things that our target demographic (inner-city, Millennial and Z-Cohort renters) is looking for.
“Low-density means fewer people, it means more space to themselves. Safer and great for lifestyle. They want to be near transit, bike paths, amenities like cafes and bistros, activity and people. And that’s where our buildings are.” By all indications, Calgary rentals are well-poisitoned for the immediate future, particularly compared to other major market rentals.
“Alberta and Calgary will have a competitive advantage in the coming years,” Dhillon says with positivity. “With our low costs of operation, from taxation to rental rates, not to mention our quality of life. We’ve seen rental rates flatline or reduce for close to a decade, unheard of in cities like Toronto and Vancouver, where young people can’t afford to live.”