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Apartment rents levelling off as parts of Ottawa are now ‘oversupplied,’ real estate exec says

March 6, 2025

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Apartment rental rates in Ottawa “have peaked” and multi-residential complexes without amenities like on-site parking are “going to struggle” as a wave of new units hits the market over the next two to three years, a prominent real estate executive said this week. Colliers executive vice-president Oliver Tighe told an audience of industry leaders Wednesday that rents skyrocketed over the past three years, from an average of about $2.25 per square foot to around $3.25, as new buildings were constructed to meet tenant demand. But Tighe said rates have begun to level off in recent months, while the number of active listings for Ottawa on rentals.ca has risen to about 1,400, up from 860 last year. “There’s no question that rental rates have peaked,” he said. “For brand-new builds, rental rates are no longer rising.” Meanwhile, a spate of major developments now in the pipeline – including projects in neighbourhoods that are trying to attract more residents, such as the Kanata tech park – is expected to add 5,000 new units to the city’s rental inventory over the next 24 months and up to 5,000 additional units the following year, he said. “I think there are areas that are oversupplied, where there are too many buildings,” Tighe told the crowd at the World Exchange Plaza. “The best buildings are going to succeed, and the buildings with few amenities, like on-site parking, they’re going to struggle.” According to the Canada Mortgage and Housing Corp., the vacancy rate for purpose-built rental apartments in Ottawa was 2.6 per cent last October when the agency conducted its annual survey. That's up from 2.1 per cent in 2023 and the highest since the rate was 3.1 per cent in 2021. Nearly 5,900 new apartments were added to Ottawa’s purpose-built rental supply between October 2023 and October 2024, CMHC said, as developers rushed to meet pent-up demand for housing. Yet even as more supply entered the market, rents continued to climb. CMHC said the average rent for a two-bedroom purpose-built apartment in the capital rose 10.7 per cent in 2024 to $1,880, compared with a four per cent year-over-year increase in 2023. In a report last December, the agency said the accelerating pace of average rent growth was “primarily driven by higher rent increases for new tenants at turnover and in newly completed units entering the market.” Tighe said the wave of construction is expected to continue for the next 24 to 36 months as developers finish projects that have been in the planning stages for years. But a brewing trade war between Canada and the U.S. threatens to add a new layer of uncertainty to the economy and drive up the cost of many goods imported from south of the border, including appliances and building materials such as steel. Tighe said that could send a chill through the development industry and prompt builders to press pause on future projects. “The margins have gotten really thin,” he explained. “I know at least one major developer in Ottawa, this will be the first year they haven’t commenced a new multi-family project in 20 years. It will be interesting to see how that market evolves.” Earlier this week, several developers told OBJ they may have to take a second look at upcoming projects to determine if they make economic sense in the face of rising costs. Taggart Realty Management president Jeff Parkes said developers were “already in a difficult position” even before the new U.S. tariffs, due to soaring inflation in the wake of the pandemic, “so any further cost increases caused by tariffs will make it even harder to make projects economically viable.” Parkes said tariffs “could have the potential to stall a lot of new construction in the industry should they persist for any length of time.” Warren Wilkinson, the senior managing director of Colliers’ Ottawa office, said that while rental rates have stabilized in recent months, new apartments are still out of reach for many tenants. He said additional incentives may be needed to encourage developers to build more affordable units. “I keep hearing about a supply crisis for housing,” Wilkinson said. “It really is an affordability crisis. You saw the development pipeline that we have. We see the cranes in the sky here. More (rental inventory) is coming online. “We need to do something about the affordability side, because I think we’re well on our way to having the supply side solved.”