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Rental construction in the Toronto area has hit its highest point in half a century, a new report has found — as dozens of builders are pivoting from condo proposals to purpose-built rental projects. As of late September, 24,893 rental units were under construction across the Greater Toronto and Hamilton Area, including 5,475 units that broke ground in 2025, according to a new report from market research firm Urbanation. And more are coming, with another 18,570 units proposed through development applications filed so far this year, as a growing number of condo developers shift gears. Urbanation found 61 projects with already submitted condo applications have adjusted their proposals this year to build purpose-built rentals, in the face of a cratering condo market that has seen sales and prices slump. Those projects include more than 27,000 units, and do not include nearly 1,800 others that switched to a rental model after launching their unit sales. “A lot of condo developers are turning into rental developers, out of necessity,” Urbanation president Shaun Hildebrand said in an interview. The Urbanation report was released the same day as a separate analysis by Altus Group on behalf of the Building Industry and Land Development Association that found just 53 new condo units were sold in September throughout the city of Toronto. “It’s not uncommon to see tenure switching depending on the state of the condo and rental markets,” Hildebrand said, “but this is pretty extreme.” The shift has taken place despite rent prices dropping, Hildebrand said, and building owners increasingly struggling to find tenants for their new units. Their report found rents in purpose-built rental buildings have declined 2.6 per cent in a year, and a growing number of building owners are offering two months or more of free rent as incentives to move in, with 33 per cent offering that degree of incentive up from 11 per cent last year. Other incentives include cash move-in bonuses, gift cards, and free or reduced-cost amenities such as parking spots or lockers, the report said. Hildebrand believes developers are continuing to pump out rental projects not only because they were the only “viable” option, and the government assistance available, but also with an eye to future profits — knowing that condos have historically made up a significant chunk of Toronto-area rental supply and fewer new projects will be hitting the market in the years ahead. Builders of rental projects, Hildebrand said, are “anticipating supply tightening up considerably,” from the current vacancy rate among GTHA purpose-built rental units of 3.5 per cent. With condo output expected to “dry up” in the coming years amid sputtering presales, Hildebrand said even the stronger output of rentals likely won’t balance the scales, with overall supply dropping. Tenants shouldn’t expect the wave of new supply to meaningfully drive down rental costs, he said. In fact, once the condo market tightens, he expects rent to rise again. “On its own, I don’t think this is enough supply to have much of an impact on affordability,” Hildebrand said, while noting new buildings tend to rent at the pricier end of the market. Still, he sees purpose-built rentals as a generally less precarious living environment for tenants than condos, as they offer more stability and security of tenure for a rental household than condo units that can be bought and sold individually. “This is not something the city has seen in at least five decades,” he said of the Toronto market. “This is representing a major shift that’s on the horizon.” Correction – Oct. 29, 2026 A headline on this article was updated from a previous version that incorrectly said 61 projects had converted to condos. In fact, the 61 projects had converted from condos to purpose-built rentals.
