Toronto’s Condo Slowdown & the Rise of Purpose-Built Rentals
Why developers in the GTA are shifting strategy, and what that means for you
By Andrei Rodan, Principal, Mondconsult
For years, cheap money and investor demand made condo development the default play in Toronto. That tide has turned. What I’m seeing on the ground, and in the data, is a market recalibrating toward projects with steadier fundamentals.
What’s going on with condos
CMHC’s latest analysis shows condo apartment sales in Toronto are down roughly 75% since 2022. That’s not a blip; it’s a regime change driven by higher rates, affordability stress, and weaker investor appetite. Canada Mortgage and Housing Corporation
On the supply side, Toronto’s June housing starts fell 40% year-over-year, with multi-unit projects leading the decline. That’s developers hitting the brakes as pro forma stop penciling. Canada Mortgage and Housing Corporation
Rents tell a more nuanced story. Advertised rents dipped 2–8% year-over-year in Q1 2025 across several major CMAs, including Toronto, largely because more supply is finally arriving. But this is asking-rent relief, not a collapse. Canada Mortgage and Housing Corporation
Zooming into the GTA condo rental segment, the average one-bedroom rent was $2,499 in Q3 2024, down 5% from a year earlier, evidence of some easing after a very tight stretch. TRREB
Bottom line: the traditional pre-construction condo model is under real pressure. Higher carrying costs, softer presales, and changing investor math are all pushing developers to reassess.
Why purpose-built rentals are getting the nod
Many teams I speak with are pivoting to purpose-built rental (PBR) for one simple reason: durability. Toronto’s apartment fundamentals remain sound. City vacancy in 2024 sat around 2.3%, near long-term norms, even as new supply hit the market, an indication of underlying demand. Canada Mortgage and Housing Corporation
On the financing side, federal programs (e.g., CMHC’s MLI Select) can materially improve leverage and terms for well-structured rental deals. That’s not a silver bullet, but it can be the difference between “tight” and “workable.”
What this means for developers (and how to act)
1) Re-run the assumptions. If your condo business case depends on 2021-style presales and absorption, update the model. Sales volumes, cost of capital, and timelines have all shifted. Canada Mortgage and Housing Corporation
2) Explore rental-friendly capital stacks. Rental deals are judged on stabilized operations, not quick churn. Underwrite around occupancy, retention, and realistic rent growth. Understand the affordability and sustainability metrics embedded in today’s programs before you set the design and unit mix. Canada Mortgage and Housing Corporation
3) Move early on compliance and documentation. Strong MLI Select submissions are data-heavy: pro forma, sustainability pathways, affordability evidence, and risk mitigants. Getting this right upfront compresses approval time and improves terms.
How we help
At Mondconsult, our role is to de-risk that complexity. We assemble complete, compliant rental submissions that meet CMHC’s evolving standards, financial models that withstand review, sustainability documentation mapped to program requirements, and affordability frameworks that qualify for top-tier incentives.
By managing both the technical and strategic sides of the process, we help clients move faster, reduce uncertainty, and secure more favourable financing outcomes.
Closing thought
The GTA’s next cycle looks less speculative and more operational. Well-capitalized, well-documented rental communities with clear affordability and sustainability stories are positioned to lead. If you’re weighing a conversion or starting fresh on a rental build, let’s talk about the path that fits your site and your capital.
Follow Mondconsult on LinkedIn or visit mondconsult.com for more insights on building Canada’s next generation of communities.
