Canada’s multifamily housing market is shifting, with value-add capital playing a key role in reshaping the sector. At the Canadian Apartment Investment Conference (CAIC) in Toronto, industry experts discussed the changing trends in major cities like Toronto, Vancouver, Montreal, and Edmonton/Calgary.
The multifamily sector, traditionally viewed as stable, encountered challenges in 2024 and 2025 due to increasing availability and declining rents. Nurit Altman, managing director at RBC Capital Markets, noted that these changes stemmed from shifts in immigration policies and a surge in supply across Canada.
Toronto’s Resilient Market
Toronto’s market has demonstrated resilience. Michael Betsalel, executive vice-president at JLL, reported that while rents have decreased since 2025, they have rebounded since the first quarter of this year. Vacancy rates have also dropped, and capitalization rates and transaction volumes have risen.
Betsalel pointed out a shift towards value-add investments, moving away from new purpose-built rentals. He attributed this change to the abundance of private capital and renewed institutional demand, describing it as a typical part of the market cycle.
Altman added that Toronto is witnessing strong institutional interest in new products, with many Canadian institutions choosing to buy rather than build, given the challenges in the construction market.
Montreal’s Rising Vacancies and Prices
Montreal presents a contrasting scenario. Thierry Samlal, principal partner at PMML’s real estate division, reported that vacancy rates have increased from 1.5% to 2.9% in six months, while apartment building prices have seen a slight increase. Transaction volumes have risen by 25.4%, and cap rates have compressed.
Samlal observed that private investment groups in Montreal are highly active, driven by substantial liquidity and intergenerational transition deals. He emphasized that the market is following capital, with a focus on value-add properties and buildings constructed after 2017.
Vancouver’s Market forces
Mark Goodman, principal at Goodman Commercial, reported that rents in Vancouver continue to fall while vacancies are at their highest rate in 20 years. Cap rates are rising. Transaction volumes have dropped by 35% compared to last year, sitting 61% below the 10-year average.
Surprisingly, transaction numbers are up by 19%, as investors shift their focus to older, smaller wood-frame apartment buildings. Goodman noted that the average building sold in the first half of the year had just 26 units, with an average sale price of $9 million.
Goodman attributed the shift to owners’ reluctance to sell new, purpose-built towers below replacement cost. He also criticized inclusionary zoning policies, which require a portion of units to be affordable, as a barrier to development.
Despite the challenges, Goodman sees opportunities, stating that the current market reset, with a 35 to 45% drop in values over the past three years, makes it an ideal time to buy apartment buildings in Vancouver.
Edmonton and Calgary: Adjusting to Market Pressures
In Edmonton and Calgary, the multifamily market is adapting to recent pressures. Brandon Imada, senior vice-president of multifamily at Avison Young, noted that rents in both cities have declined, while vacancies have increased. Transaction dollar volume has also decreased, though cap rates remain stable.
Imada highlighted a shift towards higher equity transactions in the past year, a new trend in these traditionally high-leverage markets. He attributed this to the influence of CMHC MLI Select financing, which has been prevalent in most deals.
Edmonton’s strong population growth had previously driven higher rents and apartment development. However, with population growth slowing, there is now pressure to fill new units. Imada remains optimistic, believing the underlying economics of the market will eventually absorb this excess supply.
Development remains viable in these cities, but underwriting has become more stringent, and exit assumptions more conservative. This reflects a cautious approach as the market adapts to changing conditions.
