Managing an apartment building is a very stressful job. One of the factors that can be an ongoing struggle is maintaining a low vacancy rate. Paying attention to the rental market analysis is an essential part of managing your building.
Ideally, you want your multi-family building to have a low vacancy rate so that your real estate investment can generate more revenue. However, keeping your vacancy rate low might be out of your hands.
Apartment vacancy rates are influenced by the provinces economic growth rate, employment rate, and population change rate. The rental market analysis of Alberta is looking positive for Edmonton.
Alberta Market Outlook
According to Maclean’s magazine, Edmonton was the best place to live in Alberta in 2017. It can be said that this ranking is not going to change anytime soon.
Due to Edmonton's location at the centre of the province, it is the hub for several major transportation routes. It is expected that Edmonton will be one of the first cities to exit the downturn that this province has been experiencing for the past few years.
This means that Edmonton has the best potential for growth and investment over the next five years. In fact, it is predicted that a GDP that is above the national average is forecasted for 2018.
Since the city is expected to see a jump in GDP growth, employment and job creation are next in line to follow. This will lead to more people moving to Edmonton, which means there will be more tenants looking for places to rent.
Edmonton is a unique combination of a large metropolitan area with a diverse economy that also happens to be affordable. Edmonton has done an exceptional job of weathering the awful economic storm that hit the province. This resiliency will soon be reflected in the vacancy rates in multifamily buildings.
Vacancy rates to fall
Last year, vacancy rates varied across the province. Some cities experienced regular rates while others had higher vacancy rates.
According to the Canada Mortgage and Housing Corporation, rental apartment vacancy rates are set to decline in 2018. This is because increases in rental demand will outpace the current supply. In the recent past, abundant listings of condominium apartments in the existing home market, and rising inventories of newly completed apartments contributed to an elevated vacancy rate.
Finally, after three consecutive years of increases, Edmonton's rental apartment vacancy rate is expected to move lower over the forecast period. It is estimated that the 2018 October vacancy rate will be 6.2. The 2016 October vacancy rate was 7.1.
Due to high vacancy rates, landlords were forced to offer discounts and incentives to fill their units. This trend will start to end this year because the decline of vacancy rates will also cause apartment rents to stabilize in 2018. Things might be a little unsteady until 2019, but they will improve when compared to 2016.
This is excellent news for investors, owners, and tenants.
Tips to fill vacancies
There are some processes that you can follow to fill vacancies until the market completely stabilizes.
- Compare your unit to others on the market to make sure you are charging the proper rent.
- Advertise your rentals using unconventional methods such as Social Media.
- Stay up-to-date on repairs and other necessary maintenance.
Edmonton, and Alberta as a whole have had a tough go in the rental market in the past few years. This struggle is going to subside in 2018. Even though Edmonton is still considered to be in an economic slump, 2018's vacancy rates are expected to improve. Real estate investors just have to hold on a little bit longer to see their investments grow.
Coming soon: CBRE's Edmonton Review.