The Greater Toronto and Hamilton Area (GTHA) rental market is tightening—if you exclude new supply. A new report from Urbanation shows a falling vacancy rate for stabilized purpose-built rental buildings in Q3. However, including new buildings still trying to find their first tenants reveals roughly 1 in 8 units are vacant, with a lot more in the pipeline. 

Greater Toronto Rental Vacancy Reaches 13.3% Including New Buildings

When we reported on Q1 back in May, nearly 1 in 19 apartments sat vacant in Greater Toronto’s stabilized rental buildings completed since 2000. That’s now dropped to 1 in 33, with the vacancy rate falling from 5.4% to 3.0% in Q3. The catch here is the term stabilized, which Urbanation defines as having reached 95% occupancy. 

Stabilized is an industry term used to assess buildings that have moved beyond their initial leasing phase and established an operating income. However, focusing on those buildings excludes newer projects still struggling to attract tenants—even though those vacant apartments compete for the same renters.

A more comprehensive look tells a very different story. The rental vacancy rate jumps to 13.3% in Q3 when including buildings in the “lease up” phase to hit that 95% goal, up from 12.1% last year. The 1 in 33 vacant units looks more like over 1 in 8 when those are included. 

New Rental Apartments Arrive Faster Than Tenants Fill Them

The number of occupied purpose-built rental apartments rose by 1,911 units in Q3. Builders completed a record 2,704 apartments over the same three months, exceeding the growth in occupied units by 793. Even during the busiest leasing quarter of the year, new supply outpaced demand.

That gap comes despite record growth in occupied apartments. Through September, the number rose by 5,092 units, up 22% from the same period last year.

Rents after incentives remained 1.5% below a year earlier in purpose-built rental buildings surveyed in both periods. Landlords also pulled back on incentives: 60% of projects offered them, down from 67% in Q2, while one month of free rent replaced two months as the most common offer. Headline incentives shrank, but rents remain lower than last year even after accounting for fewer incentives. 

Greater Toronto Has 34,500 Purpose-Built Rentals Under Construction

Even as the overall purpose-built vacancy rises, a lot more supply is on the way. Builders started 12,106 purpose-built rental units through September, up 82% from the same period last year and already exceeding the full-year total for 2025. That brought the number of units under construction to 34,545. Purpose-built rentals now account for nearly half of all apartments under construction in the GTHA. 

Urbanation expects the drop in condo completions to outweigh the rise in purpose-built rental units. The shift isn’t an accident, as it follows policymakers’ push to use taxpayer-backed incentives to grow institutional investment in the sector.