Andie Daggett is manager of rental market data (Alberta) for Urban Analytics.
What is Urban Analytics and what do you do?
Daggett: Urban Analytics is a real estate based market research and advisory firm. We track all of the new multi-family home and purpose-built rental projects in Vancouver, Calgary and Edmonton.
Half of our business is maintaining our online database, NHSLive. NHSLive is a subscription database that’s available to any industry stakeholders; this includes developers, financial lenders, home warranty providers, construction companies, marketing companies, etc. All of the data on NHSLive is collected through primary research methods on a quarterly basis at minimum.
We visit every sales centre and every leasing centre and speak with the sales and leasing staff to obtain all of the information that goes into NHSLive. In addition to gaining proprietary information from the sales and leasing staff, we will verify information from the developers.
In between quarters, we’re visiting project launches and capturing any extreme incentive offerings at projects to update in our NHSLive database.
The other half of our business is providing custom advisory reports for developers. These are done on a case-by-case basis and can be as detailed as the client needs in regards to the multi-residential market.
My job at Urban Analytics is the rental market data manager for Alberta. I conduct all of the primary research for all of the purpose-built rental projects in Calgary and Edmonton and write the quarterly reports for the purpose-built rental market.
Can you tell me how many new purpose-built rental buildings have been built or are under construction currently in Calgary?
Daggett: Currently in Calgary we are tracking 50 newer purpose-built rental buildings. There are approximately 33 new rental buildings in the pipeline.
What’s happening with the occupancy rate?
Daggett: Occupancy rates in Calgary’s purpose-built rental market have fluctuated over the past year. Since the beginning of 2018, we saw occupancy rates rising until the third quarter of the year, where the city achieved 95 per cent occupancy.
The following quarters saw slight decreases in occupancy rates, with the second quarter of 2019 achieving 91 per cent occupancy. However, this can be attributed to the number of projects that have come to the market over the past few quarters, including Underwood, The Cube, Northview Vista II, Marda, Switch Bloc, and Emerald Sky Building 4000, bringing 668 new rental units to the market.
We anticipate these occupancy rates to rise as newer product becomes absorbed.
What about the rental rates?
Daggett: Rental rates have been very strong in Calgary’s purpose-built rental market. Even with increasing vacancy rates, Calgary has seen a steady increase in rents across the city as projects are becoming more and more competitive.
In quarter two of 2019, Calgary saw average rental rates hit $2.01 per square foot. This is the highest rental rate Urban Analytics has seen since we began tracking the purpose-built rental market in 2017.
What are the key factors driving rental demand and where do you think that’s going for the rest of the year?
Daggett: The new mortgage stress test rules that came into effect in January 2018 really helped spur activity in the purpose-built rental market. Individuals who could no longer qualify for a mortgage had to remain in the rental market.
The purpose-built rental market has also done a very good job of offering very appealing buildings to these individuals. They offer amazing amenities and almost better than condo style finishings in the units.
Another key factor that’s driving rental demand is the convenience aspect. Renting is more convenient for some individuals because it allows them more freedom in their personal lives, to go travelling or to apply for a job in a new city, without having the burden of a mortgage.
I believe as long as the mortgage stress test rule is in place, the purpose-built rental market will continue to see lots of activity, and I think the trend of convenience is far from over.
Interviewed by Mario Toneguzzi, a Troy Media business reporter based in Calgary.