Edmonton VS Calgary - Rental Pricing

[Seandroid]

Multiple times on this website I’ve seen this notion that Edmonton does not have the demand for “luxury rentals,” or that Edmontonians are unwilling to pay the kinds of prices required to have beautiful rental buildings. I’ve seen this justified by everything from the claim that we don’t have enough young professionals who can afford it to the idea that all of our wealth is in trades where people want to live on the edges of the city.

Recently, in Calgary, I was staying at the Marriott Residence Inn which is part of a complex with the SoDo apartment tower. It’s a beautiful tower with seemingly great amenities. I was anticipating a cringe when I looked up the rental prices, but was absolutely blown away by how inexpensive it is. 770 square foot 2 bedroom units for $1880. So, curious, I looked at the building across the street. A rental in 6th and 10th was available for $1850.

This… honestly was incredibly shocking to me. Rental prices in Edmonton are insane by comparison. My partner and I were recently looking in CX; similarly sized units start at $1900+ on lower floors. In Augustana, 2 bedroom units start over $1900 and immediately skyrocket into the 2000s, and Augustana is considerably less nice of a tower than the aforementioned ones in Calgary. The Hendrix on average is over 2K, same with the MacLaren and these units are microscopically small. Even old office conversion towers like e11even have prices nearing $1800 and the units don’t even have balconies.

So… what gives? Why are these towers in Edmonton so expensive? How can developers in Calgary build these luxury rentals with way lower lease rates….? Even the prices for condos seem to be significantly less than equivalent units in Edmonton (In the Beltline, at least).

 

[Edmonchuk]

There are not many luxury rentals in Edmonton, less competition, hence higher prices.

 

[Seandroid]

There are not many luxury rentals in Edmonton, less competition, hence higher prices.

But that doesn’t really make any sense - the fact that the prices are higher would indicate demand exceeding supply, yet what I always read here is that the reason they aren’t built is there’s not enough demand/prices are too low for it to be worth it for developers. Calgary is showing that new buildings can successfully be built at lower lease rates than Edmonton, so why aren’t they being built here? Why is there always this self-deprecating excuse for the lack of options?

I’ve seen on multiple threads on here about new buildings breaking ground the sentiment of “how much demand is there really for new rentals in Edmonton?” Well, from personal experience, I can tell you I’d be renting in a new building if I could get the quality I could in Calgary for the prices I see there.

 

[Edmonchuk]

I feel like Edmonton was always overlooked. Calgary is a nicer place, better downtown, more white collar jobs, so why invest in a shady Edmonton when you have Calgary just 300 km south.

 

[IanO]

Calgary has something like 7000 rental units being delivered or u/c right now... Edmonton was in the 2000 range.

*central area

Basic supply and demand?

 

[MacLac]

Exactly! So watch YYC’s prices drop even further…….can’t even imagine whose moving into all of those buildings…..are there that many shaved monkeys with first and last months rent?

 

[Seandroid]

Calgary has something like 7000 rental units being delivered or u/c right now... Edmonton was in the 2000 range.

*central area

Basic supply and demand?

But. Why are they still building them there when they are supposedly financially unfeasible at those prices? The prices would indicate that there is unmet need in Edmonton. Why are developers building beautiful towers in Calgary for $1800/mo lease rates when we get Falcon…?

 

[IanO]

Gotta place capital?

 

[ChazYEG]

I agree with everything almost everything @Seandroid said, but there's a caveat.

While there's a demand for this kind of thing here that hasn't been matched with the adequate supply, our current stock is not leasing because part of the equilibrium is not these: prices.
They're unrealistically high, even considering a stock shortage (which I believe exists). You can barely find ANYTHING new under $1500 for a two bedroom and, although these will lease, it doesn't mean that there's a market to price stuff much higher ($2000+) in the amount that we've seen.
I believe the rental companies are reading the market wrong and price matching each other, instead of looking at the market as a whole.
This is distorting the analysis and makes it impossible to assess the real equilibrium demanda, supply and lease rates.

My guess is that we should be at roughly the same price as Calgary (maybe some 5% lower), with a demand for roughly twice as many units as we have U/C or being delivered now, meaning a supply of around another 1500 to 2000 units delivered in the next couple of years would probably be enough.

 

[thommyjo]

I 100% and have noticed this as well. What you can buy for 250-450k in East village is insane vs anything in edmonton. 400-600k for anything new in DT edmonton. Its brutal. Way nicer buildings in Calgary for cheaper. Its super annoying.

I had a buddy say it maybe have to do with oil. Such much has been built up down there, but demand has dropped, so there's a bigger supply of new builds. Where edmonton has been a slow climb up in supply.

 

[archited]

^^^^ When you have to take a financial hit, you don't want to have it resonate through your whole portfolio -- selling at a loss is better for some than not selling at all. Calgary presently is in a world of hurt.

 

[Seandroid]

^^^^ When you have to take a financial hit, you don't want to have it resonate through your whole portfolio -- selling at a loss is better for some than not selling at all. Calgary presently is in a world of hurt.

Why can’t we be in a world of hurt with beautiful condos and vibrant street life 😭😭😭😭

 

[IanO]

I 100% and have noticed this as well. What you can buy for 250-450k in East village is insane vs anything in edmonton. 400-600k for anything new in DT edmonton. Its brutal. Way nicer buildings in Calgary for cheaper. Its super annoying.

I had a buddy say it maybe have to do with oil. Such much has been built up down there, but demand has dropped, so there's a bigger supply of new builds. Where edmonton has been a slow climb up in supply.

You can get A TON of stuff in the 250-400k range in Downtown and Oliver.

 

[ChazYEG]

You can get A TON of stuff in the 250-400k range in Downtown and Oliver.

You can, indeed, but none of the newer buildings. I don't think I've seen anything below the 400k mark for a building constructed recently.

 

[IanO]

You were able to find some in Encore, Falcon, View and others.