Condominium Rental Units versus Purpose-Built Rental-Building Units
Recently, Urbanation has been engaged in consulting work, for the market in new purpose-built rental buildings.
In their research they found that some new purpose-built apartment rental projects have been achieving higher per sq. ft. rents than comparable condo project units.
They chose 5 recently completed rental apartment buildings, and compared them to condo projects that were of a comparable scale as the rental buildings.
With 4 of the projects, the average rent for purpose-built units was 4.4% higher or $0.12 more psf; but when the 5th project was included the average rent across the five projects fell to 1.7% higher or $0.05 more psf.
The end results indicate that currently there is some premium achieved by purpose-built rentals over competing condo supply. However, the rental operators may face competition from a higher volume of investor-owned condos coming on to the market in the next few years.