Real Estate Report: Vacancy Rates Surge as Rents Drop in the GTHA
Background: The Greater Toronto and Hamilton Area (GTHA) is an inclusive term for the urban conurbation that includes some of Ontario’s largest cities and metropolitan areas. It encompasses the city of Toronto and the municipalities of Mississauga, Brampton, and Hamilton. The region spans 7,000 square kilometers and is home to over 7 million people.
The GTHA is a vital driver of Canada’s economy, hosting thousands of small and medium-sized enterprises (SMEs) and major companies alike, which provide high-quality jobs for residents.
According to a recent report from Urbanation, the first quarter of 2026 saw a “deluge of supply” alongside slowing population growth, which together pushed vacancy rates among stabilized buildings to 5.4 percent. This marks the highest level since early 2021, when rates peaked at 6 percent during the pandemic.
The region’s availability rate, which includes both vacant and occupied units where tenants have indicated their intent to vacate, has risen to a record high of 8 percent.
Rents across cities have also dropped to a four-year low, declining by 3.8 percent year over year. After accounting for discounts, such as free rent and cash incentives, the average rent tenants pay has reduced to $2,525 per month across all unit types. These incentives have resulted in a 13 percent decrease in rent, or about $379 less.
To attract new tenants, the report found that 66 percent of new rental developments are now offering increased incentives. In 47 percent of these new rental projects, landlords are providing two months of free rent.
“Rental operators are grappling with massive supply due to intense competition from the condo market and an influx of tenants seeking better deals,” said Shaun Hildebrand, president of Urbanation, in a news release.
“Supply pressures will continue this year as apartment completions remain high and population growth slows, creating a window of opportunity for renters to take advantage of improved affordability,” he added.
Despite higher vacancy rates and declining rents, developers across the region have not slowed construction. In the first quarter of 2026, purpose-built rental construction increased by 12 percent.
In contrast, the new condo market saw no new projects launched in the first quarter of 2026, the first time this has occurred in decades.
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