Alberta’s purpose-built rental market has experienced unprecedented growth over the past two years, with over 30,000 rental units breaking ground between Q1 2022 and Q3 2024. Driven by interprovincial and international migration, Alberta’s population has grown by 4.36% since July 2023, fueling demand for rental housing, particularly in Calgary and Edmonton, where 95% of new units are concentrated.
Key Trends in Alberta’s Rental Market
Migration and Affordability Drive Demand
Alberta’s relatively affordable housing market and employment opportunities have attracted more than 348,000 new residents since 2022. About a quarter of this growth comes from interprovincial migration, as people seek refuge from higher rents in regions like Vancouver and Ontario.
Supply Catching Up to Demand
Despite the boom in rental construction, supply still lags behind demand. The CMHC estimates Alberta will face a housing shortfall of 130,000 to 170,000 units by 2030. This ensures a steady need for new developments, particularly purpose-built rentals.
Rental Rate Dynamics
While October saw a modest 1% decrease in average rental rates across Alberta, Edmonton recorded an 8% year-over-year increase, while Calgary’s rates fell by 5% due to an influx of over 8,000 new units in 2024. Developers are optimistic about sustained demand due to Alberta’s affordability advantage and population growth.
Challenges Facing Developers
Construction Costs and Financing
Rising construction costs are making it harder to justify large-scale projects, particularly high-rise developments. Financing programs like CMHC’s MLI Select and Apartment Construction Loan Program have become critical to mitigating risks and enabling projects to proceed.
Shifting Government Policies
Recent federal limits on international migration could dampen demand for rentals, as newcomers often rent before buying homes. However, Alberta’s continued interprovincial migration and relative affordability are expected to buffer the impact.
Strategic Scaling
Developers are carefully phasing projects to match forecasted demand. For example, Maclab Development Group’s ambitious 1,000-unit project in Edmonton is being rolled out in phases, with the next steps contingent on the success of its initial lease-up period.
Goodland Equity Partners’ Perspective
At Goodland Equity Partners, we recognize that the success of any real estate project hinges on understanding the interplay of demand and supply. Alberta’s thriving rental market presents opportunities, but only for those who strategically align their projects with market realities.
Demand-Driven Development:
Like Calgary’s mid-market projects by Bankside Properties, we prioritize developments that target segments with sustained demand—whether it’s young professionals, students, or families seeking affordability.
Flexible Phasing and Scaling:
As demonstrated by Maclab’s phased approach, Goodland adopts flexible strategies to mitigate risk. By scaling projects according to demand, we ensure optimal occupancy and financial performance.
Leveraging Incentives:
We actively utilize programs like CMHC’s MLI Select to unlock favorable financing terms, enabling us to navigate rising construction costs and deliver competitive rental options to the market.
Affordability as an Advantage:
Alberta’s affordability compared to other regions makes it a magnet for migration and investment. Our developments focus on capitalizing on this competitive advantage while addressing the province’s housing shortfall.
The determining factor in any real estate project’s attractiveness is the balance of demand and supply. Alberta’s booming rental market, driven by migration and affordability, highlights the importance of strategically planned and phased developments. By focusing on demand-driven projects, leveraging financing programs, and adapting to market changes, developers can ensure long-term success while addressing Canada’s housing needs.
Interested in learning more about our strategic approach to real estate investment? Contact Goodland Equity Partners today.
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