The Toronto Regional Real Estate Board said average rents for one- and two-bedroom units are now sitting about $300 cheaper than the peak rents achieved in the third quarter of 2023.Frank Gunn/The Canadian Press
Tenants appear to still have the upper hand in Canada’s biggest rental market as Toronto’s condominium developers continue to add more newly completed apartments to the mix.
“Tenants are moving from their higher-priced units they acquired last year, if they see the same unit they can get for $100-$200 less on the same floor,” said Oyla Walker, a realtor with Chestnut Park Real Estate Ltd. “There’s a lot of that kind of unit jumping.” Ms. Walker specializes in condo rentals and closes about a dozen leases a month.
There are many segments of the rental market in big cities like Toronto – from basement apartments in downtown detached homes to high-rise purpose-built rental buildings. But one of the highest-value segments over recent decades has been condominium apartments, which typically rent at a premium to other options. But as tens of thousands of new condos have been delivered to the Toronto region in the last year, tenants are increasingly negotiating for better deals.
“Tenants can certainly be a little pickier now,” said Joshua Raxlen, broker of record for Homewise Real Estate, who also handles property management for condominium rentals. “There’s a substantial amount of rental supply on the market in the condo space.”
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According to the latest rental market report from the Toronto Regional Real Estate Board (one of the largest single sources of data on condo rents in the region) the first quarter of 2025 was the busiest that quarter has ever been in terms of transactions with 14,797 apartments leased out of 22,652 listed for rent (an absorption rate of 65 per cent). What’s unusual is that despite this record activity the average rents for the most commonly rented units – one bedroom ($2,343) and two-bedroom ($3,036) apartments – declined for the second quarter in a row, and are now sitting about $300 cheaper than the peak rents achieved in the third quarter of 2023. Monthly data from Rentals.ca suggests rents for all types of one-bedroom apartments were down 7 per cent year over year in May, and down 10.7 per cent for two-bedroom units.
“Tenants are reaching out to reduce the rent, not all of them, but some are,” said Sundeep Bahl, realtor with Re/Max Plus City Team Inc. Mr. Bahl said the bargaining power tenants have is similar to the period during the pandemic when many residents fled the city. “In some situations, we’re telling landlords: ‘Don’t let them leave, compromise.’” He said the time it might take to replace the tenant could mean months of lost rent, costing more than even a several hundred dollar per month rent reduction.
But not all landlords, particularly those who own newly completed units, are playing the game with the same financial hand.
“I’ve had units at [the condo building at] 55 Mercer that I have not leased; the landlord looked at market rents and said ‘I’m not locking in there,’” said Mr. Raxlen. His company represented about 50 units out of hundreds that went up for rent when the downtown Toronto project by developer CentreCourt finished construction in 2024. As with many downtown Toronto condos in the current market, the most cash-hungry landlord often determines the market price for the entire building.
“There’s two kinds of investors in the building; people who don’t need the money to cover the mortgage – and they will say, ‘Screw it, I’ll leave it empty.’ And some are desperate,” Mr. Raxlen said. If a better-financed landlord wants to rent a two-bedroom unit at 55 Mercer for $3,400 but a desperate landlord is willing to take $3,100 for an identical apartment, tenants will take the lower price. “That second person becomes the market-maker.”
But agents who work in the condo rental market say it’s not all the same.
“We can’t just put everything in one pool and say this is what’s going on in the market,” said Ms. Walker. In some buildings the lower floors have obstructed views, in others the higher floors have too few elevators servicing them. These are factors that can impact price and desirability. Ms. Walker said tenants are keenest on two-bedroom units so they can share rent with a roommate, and many one-bedroom-plus-den options can work as a substitute, so long as the layout is “functional.”
Smaller one-bedrooms designed for thrifty investors aren’t so functional, with design compromises that few people want to live in.
“If you’ve got one of these dark bedrooms with no internal light, these are the kiss of death to a lot of these condo units. Renters have other choices,” said Brandon Sage, a realtor and property manager with LandLord Property and Rental Management.
There are signs the market may be shifting. Mr. Raxlen said that he’s dropping rent incentives of one or two months free and can still rent at the price he’s looking for.
“The bottom of the market, I would say was this winter: January, February, March,” he said.
Showings and listings have been picking up, too.
“I’ve been very busy – I’ve been swamped I would say – since April-May,” said Ms. Walker. Many of the tenants she’s seeing are either folks whose workplace are demanding they spend more time in the office, or have gotten sick of suburban life.
But one group has not been looking at condos: buyers.
“Condos have become toxic: nobody wants to own one, nobody wants to buy one,” said Mr. Bahl.