A quiet revolution is underway in Canadian housing: purpose-built rental construction has become the strongest segment of the market, outpacing condominium development for the first time in decades. This shift has significant implications for renters, investors, and the broader housing market.
What Is Purpose-Built Rental?
Purpose-built rental (PBR) refers to apartment buildings constructed specifically to be held and operated as rental housing — as opposed to condominiums that are sold to individual owners (who may or may not rent them out). PBR buildings are typically owned by institutional investors like pension funds, REITs, and insurance companies.
Why the Shift Is Happening
- Condo presale weakness: Developers can't sell enough condo units to launch projects
- Government incentives: Federal programs like the Rental Construction Financing Initiative provide low-cost loans for PBR projects
- GST exemption: The temporary removal of GST on new purpose-built rental construction reduces costs
- Institutional capital: Pension funds and global investors are attracted to the stable, long-term returns of rental housing
- Municipal support: Cities are fast-tracking rental approvals and reducing development charges for PBR projects
Impact on Renters
More purpose-built rental supply means more options and better quality for renters. New PBR buildings typically offer amenities like fitness centres, co-working spaces, rooftop terraces, and professional management — a step up from aging rental stock or investor-owned condo units.
Impact on the Condo Market
The rise of PBR is creating competition for condos in the rental market. Tenants now have professional alternatives to renting from individual condo investors, which puts downward pressure on both condo rents and resale values.
Where PBR Is Being Built
Major PBR developments are concentrated along transit corridors and in established urban areas across the GTA, Vancouver, Montreal, and Calgary. In the GTA, significant PBR activity is occurring in Midtown Toronto, the Waterfront, North York, and along GO Transit corridors.
Whether you're a renter looking for quality housing or an investor assessing the market, the PBR trend is reshaping Canadian real estate.