Purpose-Built Rentals Poised for a Comeback
May 5, 2023 | In The News
Today’s rental buildings look and feel more like condominiums than their predecessors
Purpose-built rentals are catching on in Toronto because, after years of being funnelled into condominium rentals, renters and demanding control of their own destinies.
“In terms of why a purpose-built versus a condo, really, the reason is control over our stay,” said Angela, who moved out of her condo rental and into a unit at Residences at the Well, the the purpose-built component by Woodbourne Capital Management in the seven-building mixed-use development at Spadina and Wellington called The Well.
“In my case, the condo owner went through a divorce and was planning to move back in, so I was facing having to find a new place to live.”
Residences at The Well is two buildings managed by property management firm, Rhapsody.
Angela, who declined to provide her last name, works in downtown Toronto’s financial services sector and moved into The Well with her partner, who also works downtown.She says the structure of a purpose-built rental lease affords the two flexibility to revisit where they are in year should they decide to buy a place or simply stay put.However, even a mere eight years ago, renters had fewer options in Toronto, says Rhapsody’s Rob Martin, and would typically call brokers to view condo rentals.Echoing Angela’s sentiments, he says renters in the city have grown tired of the rental market’s vagaries, and the market has responded with growing choice.“There’s always been the desire to have purpose-built,” Martin said. “The fact major REITs in Canada are majorly invested in purpose-built is a huge step forward and I think that’s where the future is, country-wide, not just here in Ontario.”
The fact that REITs are integrating their retail holdings with residential components is another example of times changing, Martin added.Purpose-built rentals were built en masse in Toronto between the ‘60s and ‘80s, but since then scant attention was paid to the sector until recently. Today’s rental buildings look and feel more like condominiums than their predecessors.One example is the suite of amenities offered in these buildings. Residences at the Well has everything from a rooftop gym with commercial-grade equipment like Peloton to an outdoor entertainment area that has an 85-inch television and an enclosed dog park. There is even a spa where, through an app, residents can book a third-party masseuse.
Another purpose-built rental, Kingsway Village Square by Dunpar Homes, even hired a personal trainer for its state-of-the-art gym.However, rents tend to skew higher in these purpose-built rentals than in the condo market. In the case of Residences at the Well, each unit is pried differently — depending on a host of factors including balcony view or whether there’s a walk-in closet — as determined by YieldStar, a software that uses a algorithm to set prices.Nevertheless, as Martin sees it, a renaissance for purpose-built rental construction is taking hold in Toronto.“We’ll see major growth in next 10 years in the sector, assuming government continues being engaging,” he said. “At the provincial and municipal levels, there will be nothing to slow that down going forward and we’ll see more and more really exciting projects open up.”
Source: Toronto Sun