Multifamily

Trends to Watch

• 2026 to be a transition year for the multifamily market

  Demand is expected to remain soft in 2026 amid Canada’s immigration policies and projections for total population to contract over the next two years. Meanwhile, new supply will continue to be elevated and lift vacancy higher.

• Total market rent growth set to decelerate further

  With asking rents falling, total market rent growth is expected to be primarily a function of below-market rental units turning over into current market rates. While asking rents are on track to bottom out in 2026, incentives will remain prevalent in some markets as landlords look to boost occupancy rates.

• Exceptional market fundamentals to drive competition for seniors housing

  The seniors housing segment is benefitting from strong demographic tailwinds and limited new supply, supporting robust rent growth and attracting investors. Competition for this asset class will intensify as more investors look to enter this asset class.

Softer conditions to persist, but long term prospects remain strong

Multifamily demand softened in 2025 as the normalization of temporary resident permits weakened growth and rising unemployment in young adults held back new household formation. Meanwhile, more rental supply continued to deliver across the country. In particular for Vancouver and Toronto, which have large condo markets serving as secondary rental housing, an influx of new condo units further impacted rental supply. Accordingly, vacancy rates rose across every major Canadian metro area in 2025.

Demand is expected to remain weaker in 2026 and likely into 2027 given Canada’s population is forecast to slightly contract over this period. As a result, this will lengthen the time needed for markets to absorb their excess inventory. On the supply side, completions will continue to be elevated due to high levels of rental units still under construction. Overall, 2026 will be a transition year as the market works through its supply overhang with the national average vacancy rate forecast to keep rising by another 100 bps.

In the long term, population growth is expected to rebound near the end of this decade and drive demand growth once again. However, if construction starts end up slowing over the next couple of years, Canada could face another severe housing shortage as future new supply dries up just as demand starts to pick up again.

As the multifamily market recalibrates, asking rents fell across most major metropolitan areas in 2025. However, total market average rents including occupied units continued to grow, albeit mostly at lower levels than seen in previous years. Given the declining asking rents, this growth in total rents was primarily a function of below-market rental units turning over into current market rates. This dynamic is expected to continue in 2026 as increased vacancy opens opportunities for renters to move into units that better match their preferences.

Asking rents are also on track to bottom out sometime in 2026 as the pace of year-over-year decreases had been trending lower towards the end of 2025. Some markets will continue to see a prevalence of incentive packages, especially on new builds, as landlords look to boost their occupancy rates. Altogether, national total market rent growth is projected to decelerate further in 2026 to about 2% from the 4.4% and 6.8% annual increases recorded in the two years prior.

Seniors housing is one multifamily segment in particular that is set to benefit from strong market fundamentals over the next few years. A rapidly aging Canadian population is driving exceptional tailwinds in the asset class. Demand will surge over the coming years and continue to support double-digit rent growth that outpaces expense growth. Despite growing demand, new supply is expected to remain limited given the significant gap between current market rents and the rents needed to make new construction financially viable. In 2026 and beyond, competition for seniors housing assets is expected to intensify as more investors seek to enter this compelling asset class.