What started as a local landlord reaction to high vacancy rates has now become a corporate strategy: reducing rents in Alberta multi-family properties to hold and attract tenants as the vacancy rate soars to the highest level in 25 years.
Canadian Apartment Properties Real Estate Investment Trust (CAPREIT) has reduced rents across its entire Alberta apartment portfolio“in order to increase occupancies and reduce turnovers,” according to the company, one of Canada’s largest landlord.
CAPREIT holds 1,884 rental units in Calgary and 436 in Edmonton. The rent reductions also apply to the 367 CAPREIT apartments in Saskatchewan.
“Alberta and Saskatchewan have been facing increased pressure due to falling energy prices resulting in a weaker economy in these regions than in the rest of Canada,” CAPREIT stated in a third-quarter report.
The big REIT is not alone among landlords cutting Calgary rents.
Mark Hawkins, who owns the rental listing website RentFaster.ca, said rental reductions are now common in the city.
The average rent for all Calgary properties listed on RentFaster.ca has plunged 33 per cent from a peak of $2,137 in July 2014 to $1,426 in October 2016.
Calgary’s residential vacancy rate, meanwhile, jumped from 1.4 per cent in October 2014 to 5.3 per cent a year later, according to the Canadian Mortgage and Housing Corp. CMHC has predicted Calgary’s rental vacancy rate will reach 8 per cent this year, the highest level in more than a quarter-century.
“For landlords, it’s a very, very difficult time simply because the vacancy rates are very high,” said Gerry Baxter, executive director of the Calgary Residential Rental Association.
Baxter said many landlords have considered rent reductions, especially when it’s time to renew a lease, in a bid to keep their properties occupied. “What I hear from many landlords is if they’ve got good tenants, you want to keep them,” he said.