Calgary Rental Market Forecast
Average rent to rise as vacancies move lower
Along with other areas in Calgary’s housing market, the purpose-built
rental market has experienced an up-tick in demand. The apartment vacancy rate in October 2011 declined to 1.9 per cent from 3.6 per cent in October 2010. The apartment vacancy rate is forecast to average 1.7 per cent in October 2012, and decline to 1.5 per cent in 2013. With people taking advantage of the growing employment opportunities in the region, migration flows to Calgary will continue to be among the strongest contributors to rental demand.
With vacancies declining, fewer incentives will be offered while rental rates are forecast to increase this year.
The average two-bedroom rent is forecast to reach $1,150 per month in October 2012, up from $1,084 in
October 2011. Pressure on rental rates will remain steady as people migrate to the region and no large net additions to supply are expected in the near term. Landlords and property owners may also see more demand from younger renters as youth employment has improved with Calgary’s expanding economy. As such, the upward pressure on rental
rates is not expected to ease in 2013. In October 2013, the average two bedroom rent is forecast to rise to $1,200 per month, up $50 from a year earlier.The number of apartment rental units under construction, not including units
for social housing, has increased from the previous year. There were 404 apartment rental units underway in March, up 41 per cent from 287 units a year earlier. Despite the increase, apartment rental starts have only contributed to a portion of the rental units under construction. Many of the apartment rental units underway were originally intended to be sold as condominium units. However, as market conditions changed, some property owners and developers
decided to re-position their projects to take advantage of the growing demand in the rental market. The completion of the rental units under construction will likely not have a large impact on vacancy rates as an expanding population absorbs the new supply. Some older rental units are also anticipated to be converted into condominiums.