Economic realities like rising interest rates and the stricter mortgage stress test are making it tougher for Canadians to purchase homes these days, causing renting to become a much more desirable option.
That scenario has benefited Calgary-based Avenue Living Asset Management which holds an 8,000+ residential rental unit portfolio in Alberta, Saskatchewan and Manitoba.
“Demand drivers are higher this year than they were in the past,” said Jason Jogia, Chief Investment Officer of Avenue Living Asset Management. “People’s propensity to rent is rising, because the ability to buy is becoming more difficult.”
“We’ve been creatively investing in our properties to improve the quality standard that we offer our customers – really focusing on the customer service aspect of our business. We’re becoming the landlord of choice for people in the markets that we are in.
“We’re seeing more renters out there, more activity, more viewings and more applications. We’re getting a better choice of people who want to live in our buildings. In return, they’re getting better service from us, from the investments we’ve been making in renovations and upgrades.”
Avenue Living Asset Management began in 2006 with the purchase of 24 rental units in Brooks for $3 million. Jogia said the company plans to add another 3,000 residential units to its portfolio in 2019.
He said the company’s occupancy rate is about 94-95 per cent, improving by a couple of percentage points from just one year ago.
Rising interest rates, and the threat of further hikes, combined with tougher measures for Canadians to obtain a mortgage are both helping drive increasing rental demand.
“We have always focused on what we call workforce housing – housing for the average Canadian, who might not be necessarily choosing to rent but may be required to rent due to their personal budget and their ability to purchase their first home,” explained Jogia.
“With a recent raise in minimum wage, income levels are higher in Alberta and Saskatchewan than most other places in Canada. The affordability is there to rent, especially in the product type that we have. They’re not priced out of the market because there’s high demand, like Toronto where you can spend $3,000 a month for a three bedroom condo.”
Jogia said renters for Avenue Living’s portfolio comprise of a varied demographic from students to families to seniors.
So what does he expect in the rental market for Avenue Living in the near future?
“I think we’re going to see a continued tightening of supply. By Q2 of this year we will have renovated our suites to premier and classic categories. And with vacancy rates decreasing, there will be a lot of upside on the rent potential.”