A recent report reveals that Calgary’s commercial real estate sector is experiencing a rental boom driven by the demand for housing. According to the Re/Max 2024 Commercial Real Estate Report, there has been a surge in purpose-built rental development in the city, surpassing the construction of apartment condominiums for the first time in 2023.
The growth in rental development can be attributed to record migration to Calgary, with Canada Mortgage and Housing Corp. reporting a rental vacancy rate of 1.4 percent in the fall of last year. This influx of interprovincial migration and immigrants has put pressure on the city’s housing stock, leading to vacancy rates at their lowest level in a decade.
The report highlights that over 3,000 new rental units were added in Calgary in 2023, particularly in areas like the Beltline, downtown, and the North Hill. Changes to zoning bylaws allowing for higher density housing in single-family detached home neighborhoods have also contributed to the boom in small-scale multi-family projects.
Furthermore, CMHC’s MLI Select program has made it more affordable for builders to finance multi-family rental projects, with a five percent down payment requirement for new builds or renovations that meet specific affordability, accessibility, and climate compatibility criteria.
Multi-family development, along with industrial real estate, is the most active sector in Calgary and across Canada due to high international migration. The report emphasizes the investment in purpose-built rentals and affordable multi-family housing, driven by the strong demand for housing that has outpaced supply.
Calgary’s success in redeveloping downtown office spaces into rental and other housing options is also highlighted in the report, with a projected increase in downtown core residents by next year. The multi-family market in Calgary is likened to Toronto’s market in the early 2000s, with a surge in new construction and investor interest in rental properties.
Overall, the demand for housing in Calgary, fueled by migration and investment, has led to significant growth in the rental sector, similar to the success seen in Toronto’s market two decades ago.