London takes highrise rental crown
Fri, January 19, 2007
By NORMAN DE BONO, FREE PRESS BUSINESS REPORTER
London is going "vertical," with so many new highrise apartments it's become Ontario's rental capital.
Fuelled by baby boomers leaving their homes into carefree rental living, London is building more apartments than any other city in the province on a per capita basis.
And that's not including the biggest new rental project rising on the city's skyline, Tricar's twin-tower Renaissance project downtown.
The city led the province over the last three years in per capita rental units built, while other cities are building more condominiums for sale, said Ken Sumnall, senior market analyst at Canada Mortgage Housing Corp.
From 2003 to 2006, 12,859 rental units were built in Ontario, 2,948 -- or 23 per cent -- in London. Only Toronto, at 47.4 per cent, had more.
"London, for its size, has been very active. We have seen numbers go up the last few years," said Sumnall.
The figures back up what many developers in the city are saying, said Derek Anderson, president of the London Home Builders Association: London appears to have more baby boomers set to retire and move into rental units.
"It is very attractive for seniors who want to take the equity in their homes and go out and travel," said Anderson, president of Graystone Development Group in London.
"We hear all the time people do not plan for retirement, but they have $400,000 in equity after their home is sold."
With the vacancy rate hovering at about 3.6 per cent, "there appears to be demand, but developers are primarily targeting the empty-nester market with the apartment developments," said Sumnall.
Of the apartment units now under construction in the city, "they are all local developers with extensive portfolios, they know the market and have capacity to build," he said. "These are not short-term investments, they are building now because they think the market will grow for a while."
Londoners want to rent highrise units more than residents in other cities because it remains a good value, said Anderson. And if they're interested in buying, there's a large selection of homes.
"People still look at London as having open space, they have more choices before they go vertical," he said. "We are also gaining a lot of young professionals who want to rent; it's an attractive option."
The next great wave could be retirement home construction as leading-edge boomers -- now turning 60 -- start looking at options, said Barry Parker, vice-president residential for Sifton Properties.