Across the country, competition is stiff among apartment hunters as the rental market gets tighter. In Calgary, that struggle to find rental space is fuelling an unprecedented amount of rental construction.
As of September, construction has begun on 2,799 new rental apartment units in Calgary this year. That’s the highest number on record, though 2021 was another banner year with 2,572 apartment starts, numbers from the Canada Mortgage and Housing Corporation (CMHC) show.
Developers describe it as a classic Economics 101 scenario: supply rising to meet demand.
For years, they say a lack of rental construction in Calgary has left that side of the market underserved. On the demand side, higher interest rates are driving more people to rent rather than own.
The province is also seeing a significant uptick in people moving to the province, with more than 50,000 coming to Alberta to live in the first half of 2022 alone.
Alkarim Devani is the president of RNDSQR, which started off building single-family homes, but has since shifted to purpose-built rentals. (Paula Duhatschek/CBC)
“We have this huge void space compared to a lot of the other major metropolitan cities within Canada of rental housing,” said Alkarim Devani, president of the Calgary-based development company RNDSQR, which has shifted in recent years to building rentals exclusively.
“We’ve had almost a 20-year gap of rental product, and so that’s why we’re seeing such an influx of it.”
According to the latest numbers from Rentals.ca, the average Canadian rental apartment was $1,810 a month in September, up about 12 per cent from the previous year.
In Calgary, the average one-bedroom rental was $1,629, an increase of 29 per cent year-over-year.
Outlook across Canada
Calgary isn’t the only city that’s seeing some shift toward rentals.
In several big cities, the share of apartments being built for rentals, rather than condominium ownership, has grown in the first half of this year compared to the average for the same period in the previous five, according to CMHC numbers.
One exception is Toronto, where the share of rental construction dipped in the first half of 2022, something CMHC analyst Michael Mak says is likely due in part to the high cost of land in that city.
“There are rising interest rates … and rising construction costs and labour costs, and those all play a factor in lower rental starts,” he said.
In Vancouver, development firm Anthem Properties is pushing hard on multi-family rentals, with about 3,000 units that are either in preliminary planning stages, under review or under construction, most in Metro Vancouver, according to Gage Marchand, the company’s manager of investment.
“I don’t see the affordability crisis getting any better anytime soon,” said Marchand, whose company also has offices in Calgary, Edmonton and Sacramento.
“I think moving forward in this next generation, renting will be more accepted as a sort of normal reality [and] Anthem wants to continue building homes for people.”
Policy also driving development
Public policy also has a role to play in driving rental development.
In Vancouver, Marchand pointed to policies that provide incentives to developers for building close to public transit, or higher density allowances if affordable housing is included, among other benchmarks.
Ken Toews is the senior vice-president of Calgary-based Strategic Group, a development firm that builds rental properties. He’s pictured outside the Barron Building, a historic office tower in Calgary that’s being converted into residential units. (Paula Duhatschek/CBC)
Another example is a City of Calgary program that provides grants for converting empty office space into residential buildings, said Ken Toews, senior vice-president of Strategic Group, which is in the middle of transforming one of the city’s first oil and gas office towers into residential apartments.
Toews said many developers are also using a CMHC program called MLI Select, which offers insurance incentives if a rental development hits certain targets for affordability, energy efficiency, accessibility or some combination of the three.
“It’s a really good program, and it brings more product online than you would normally have in a market,” he said.
Future outlook
Opinions vary about whether rental development will accelerate or slow in the months and years ahead.
High interest rates and construction costs are also putting pressure on developers, which Paul Battistella predicts will lead to some pullback in rental development going forward.
“Rents are just not going to be able to accelerate at that same proportion to be able to make the math work on those things,” said Battistella, a managing partner with Calgary-based condo developer Battistella Developments, which also sets aside some of its units for rental.
Paul Battistella, with Battistella Developments, says a long-time lack of rental supply has spurred developers to build more purpose-built rentals. But he warns the current climate of high interest rates and construction costs could cause some to pull back. (Paula Duhatschek/CBC)
“The [projects] that are in play now, they’ve been contracted for, their costs are locked, they’re OK … I just think anything new is going to be really, really difficult to get going.”
As for when, and if, the increase in supply will lead to relief for current renters — opinions vary on that, too.
Mak expects some buildings under construction now, especially the low-rise buildings, will wrap up in the months ahead leading to some loosening of the market.
But if demand continues at the current clip, Toews believes any new apartments added will likely be absorbed pretty quickly.
“I think we’re undersupplied and it’s gonna create challenges,” he said. “Less supply means that your prices are gonna go up.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
