June 26, 2024 Metro Vancouver Rental Market: Stability Amidst High Demand

The rental market in Metro Vancouver remains fiercely competitive, characterized by low vacancy rates and stable rent growth, reflecting a sustained high demand. While the pace of rent appreciation has decelerated compared to the previous two years, new developments continue to attract significant interest due to a more premium and well-rounded offering. Recent policy changes and enhanced amenity offerings in rental buildings are some of the factors expected to influence market dynamics over the remainder of the year.     

The State of the Market Today 

The current rental market in the Vancouver area is marked by sustained and high demand, though the explosive rent growth observed in 2022 and 2023 has levelled off. Vacancy rates remain low, and new rental projects are stabilizing quickly, typically within three to six months. Despite robust demand, rent growth has moderated over the past six months. In 2023, average rents saw a nearly 10% annual increase, but this year, rental rates at newly completed projects have remained relatively flat. The median monthly rent has appreciated by a modest 2.1%, rising from $2,320 to $2,370. Notably, Burnaby and Coquitlam have still experienced significant annual rent growth of 10.7% and 12.7%, respectively. 

Vacancy rates have remained tight, with a 2023 average of 0.9%, a three-year average of 1.6%, and a five-year average of 1.4%.

Last Year’s Rent Growth ‘Front-Loaded’  

The significant rent appreciation last year was primarily driven by strong immigration and high barriers to home ownership, including elevated prices and interest rates. This "front-loaded" growth has led to the current stabilization in rent rates as they align more closely with wage growth. The rental market, more closely tied to real income than the presale market, which is driven by wealth and accumulated equity, has potentially reached a soft ceiling where rental appreciation cannot far outpace wage growth. 

The Impact of Recent Policy  

A key policy change affecting the rental market is the Short-Term Rental Accommodations Act, which became effective on May 1st of this year. The policy limits short-term rentals to an owner’s principal residence, which theoretically would increase the number of long-term rental listings as secondary properties exit the short-term rental market. While it is still too early to assess the full impact, this policy is expected to enhance the availability and numbers of long-term rental property listings. 

Trends To Watch For 

New rental developments are increasingly integrating robust amenities to attract tenants and command higher rents. These include rooftop decks, fitness centres, bike- and car-share programs and pet-friendly features such as pet wash stations and dog runs. All of these serve to differentiate new rental offerings and appeal to qualified tenants. 

The Broadway Plan in Vancouver is another significant change to watch. With over 125 housing applications and nearly 20,000 proposed units of various housing tenures, this plan signals a substantial increase in rental housing developments over the next decade. The approval of the plan two years ago has spurred a rush of industry stakeholders into the municipal development queue, with an anticipated 30-40% of these projects coming to market within the next decade. 

Project Feature: The Colton 

The Colton, a luxury rental building in Langley's Willoughby neighbourhood, is one example of the modern, connected living arrangements we’re seeing in new rental builds. Developed by Tannin Developments, The Colton offers spacious, pet-friendly homes with one- to three-bedroom units, designed for families of all sizes. Each unit has air conditioning, and the building boasts a private rooftop amenity space, including garden plots and a secure play area for children. Conveniently located near transit and retail options, The Colton is ideal for tenants looking for a connected and amenity-rich home. 

MLA Lease-Up: Expertise in Rental 

We’ve leveraged our extensive market sales knowledge to manage the lease-up process, ensuring quick and successful stabilization of purpose-built rental assets. This comprehensive service guides clients from project envisioning to completion, offering strategic recommendations to maximize results and mitigate risks. Our marketing experts coupled with a dedicated leasing team ensure timely stabilization and strong rental revenue, which leads to exceptional experiences for the project owner and its tenants.  

Metro Vancouver's rental market continues to exhibit high demand and low vacancy rates, with rent growth stabilizing in recent months. Policy changes and the integration of enhanced amenities in new developments are poised to shape the market dynamics further. For more information on rental services and advanced analysis on the state of the rental market in Metro Vancouver, contact the MLA Canada Lease Up team.