By Tamara Aspeling
Could build-to-rent be a practical housing model in Ontario?
While there’s no debate that Canada has a housing problem, the solution is complex. Affordability remains the highest hurdle. Although Ontario’s average salary has increased to $69,068, according to a December 2024 report from Statistics Canada, the average home in Ontario costs $860,000, which means buyers would need a downpayment of $172,000 and minimum earnings of nearly $190,000 per year to qualify for a mortgage on that home. That means even dual-income households will likely fall far short of the required numbers in most cases.
That leaves investors, who so far have driven the property market in many parts of the country. However, with recent reports of demand for condos dropping in hot markets like Toronto and vacancy rates increasing, there’s clearly something up among the buy-to-rent demographic, too.
So it seems there’s a gap in the market, and a model known as build-to-rent (BTR), or sometimes purpose-built housing, could be poised to fill it.
History Repeats
No one knows for sure when the first project of this type was constructed, and there’s a good chance its earliest origins are lost in the mists of time. But we do know exactly when it started gaining ground in North America.
In 2008, immediately following the Great Recession, property developers in the United States, constrained by lower demand for new homes, pivoted to BTR in response to the economic climate. By 2022, there were about 350,000 BTR units in the U.S. In 2023, another 27,500 were added, and in the first quarter of 2024, construction on another 18,000 commenced.
It’s not just apartments, either. According to the U.S. Census Bureau’s Survey of Construction Data, 90,000 single-family BTR homes were started in 2024, up from 60,000 the year before. Although exact statistics about BTR inventory in the U.S. are hard to pin down, it’s safe to say that this type of development is well entrenched in our neighbours to the south. And while build-to-rent homes might be a newer concept in Canada, the current economic conditions would appear to support this kind of development.
David Gerrard and Adam Peaker certainly think so. Both come from construction backgrounds. David worked as a project manager at Graham for several years before moving on to management roles at Melloul-Blamey Construction. Adam’s experience ranges from founding an energy company to industrial sales for CGT (a global leader in high-tech plastics) and several years in the investment side of the development world with Brookfield and TD Bank.
In November 2022, the duo chose to go all in on build-to-rent development with the founding of Livwell Developments. And things have progressed quickly. Despite a core team of just four people, they’re on track to have over 600 BTR units completed, rented or ready for tenants in the near future.
They certainly seem to have cracked the code, and according to Gerrard, it’s all about the mindset. “I see a lot of people, predominantly condo builders, kicking tires on this model because they have many projects that can be switched over to rental. But I haven’t seen too many actually pull the trigger yet. When you get entrenched in a way of doing things, it’s sometimes hard to make the switch.”
Since Livwell has been a BTR developer from day one, they haven’t had to make any big changes to their way of thinking, which has allowed them to focus on the most important things to ensure success in this kind of property development. One thing they have clearly mastered is speed of delivery. They constructed their first 50-unit building in just nine months, which is, by any metric, a blistering pace. To achieve this, Livwell collaborates with municipalities that are committed to expanding rental inventories, which in turn accelerates the permitting and approval processes.
However, Livwell has also focused heavily on systems and uniformity, often in collaboration with Stubbe’s, whose precast systems they use on many of their developments.
“What we’ve tried to do is standardize and limit the customization of the units,” Gerrard explains. “So where a standard condo development might have 15 different layouts, we try to aim for five. And we try to make the designs repeatable across projects too.”
It’s a system that enables the Livwell team to procure materials in bulk, establish a network of tradespeople who are familiar with the designs and specifications, and stockpile replacement parts and materials for the rental phase of the project.
These new, purpose-built developments aren’t what you would expect from rental housing either. Rather than builder-grade finishes and notorious ‘landlord-grade’ repairs and maintenance, tenants in these developments enjoy secure, luxurious lobbies, indoor and outdoor communal areas, on-site gyms and other lifestyle amenities that you wouldn’t normally expect in a rental community.
Design-wise, these new rentals are also head and shoulders above most of what is out there, with sleek modern designs and quality materials that look more like a high-end condo than a typical rental unit.
Expanding into Build-to-Rent
If Livwell is the new kid on the block, at least as far as the company itself is concerned, Stubbe’s is a true veteran. The company has been in operation since 1982, when it began producing precast products for the Ontario agricultural industry. They later transferred their precast concrete experience into hollow core floors, adding wall panels, beams and other structural concrete components over the years. They even built a ready-mix plant and acquired a rail terminal to grow their precast concrete business. So it was probably no surprise when this seasoned innovator got involved in build-to-rent, nor that their chosen method of construction was precast concrete.
Stubbe’s builds rental communities, but they also sell their Fast Track precast system to other developers working in BTR and traditional construction. And like Livwell, they’re committed to systems and standardization. Or, as Jason Stubbe says, “We think of it as the Ikea of apartment buildings.”
He means it in the best possible way. By standardizing their Fast Track building system in partnership with BIM Studios, they can deliver completed projects faster and at a significantly lower cost than traditional builders. A recent development delivered 130 units in nine months at a cost of $224 per square foot. When you consider that comparable quotes from traditional builders in the same area are about $300 per square foot, that’s an astonishing cost savings.
And there is more good news. “Unlike traditional building where prices are volatile, we can typically lock in prices for six months to a year,” says Stubbe.
While Livwell is laser-focused on purpose-built housing, Stubbe’s is involved in many different areas of construction, from materials to construction and nearly everything in between. Still, the message about BTR is the same. You need to do it at scale, standardize as much as you can, and keep it simple.
Beyond Apartments
While many companies involved in BTR projects focus on high-density developments, such as apartments and low-rise, some are expanding into the single-family space. Toronto’s Core Development Group invests in renovating single-family homes specifically to keep them as rental housing, but they have also started to develop single-family BTR properties, duplexes and townhomes.
In fact, between Core Developments and its subsidiary Avanew, this purpose-built housing investor is betting big, with $1 billion planned for rental housing investment. But Core’s approach to BTR is, by their own admission, unique. On its Avanew page, the company describes itself as a pioneer in single-family rentals, or SFR.
The BTRM movement has projects like the Oxenfree Community in Princeton, Texas from Core Spaces.
Not that it’s all sunshine and roses in the SFR space. In fact, ACORN, a prominent anti-poverty group, is concerned that this kind of investment in rental housing might harm rather than benefit would-be renters in Ontario. Clearly, there is a misalignment between what renters want and need and what developers like Core are proposing, but the fact remains that based on its own research, 81% of Ontario renters don’t want to live in condos or apartments.
When you consider that statistic and the enormous investment Core has planned for this sector of the BTR market, there’s certainly room for a lot more of this kind of development.
Surprising Demographic
Younger people, starting out and unable to manage those eye-watering homeownership figures, are, expectedly, well represented among renters. But both Livwell and Stubbe’s have experienced considerable interest from a surprising market segment: empty nesters who have sold their too-large family homes and are embracing these high-end, lock-up-and-go developments for their retirement years.
That’s good news for the housing market, too, because there are tens of thousands of family homes occupied by senior singles and couples, and when they choose to sell, that stock becomes available to the next generation of families.
While companies like Livwell and Stubbe’s are doing something relatively new in Canada— building properties with the goal of retaining them long-term—they’re still running into some of the same issues. Occasionally, the bottleneck is with city engineers, as Stubbe experienced when they ran afoul of an engineer who would not approve a precast concrete project, permanently mothballing it. (The City of Toronto has since approved Stubbe’s Total Precast system.)
Sometimes, municipal planners are less enthusiastic about building rental homes in certain areas. But the simple solution, as Gerrard says, is to “work with the communities that want this kind of development.”
Often, the biggest problem is programs that are put in place with good intentions but need some tweaking to deliver maximum benefit. Livwell found that while the Canadian Mortgage and Housing Corporation’s MLI Select multi-unit mortgage loan insurance financing program helped fund their developments, the criteria changed frequently, making it much harder to standardize designs in the way they are critical for this kind of development. This type of funding also prohibits developers from holding condominium titles on their developments, meaning they can’t sell individual units while retaining others as rentals, which could be a roadblock for risk-averse developers.
Stubbe’s, who chose to use CMHC’s Rental Construction Financing initiative—now the Apartment Construction Loan Program (ACLP)—found the biggest hurdle to be the time from application to funding, which in their case was close to six months.
However, despite the hurdles and roadblocks, governments recognize rental housing as a critical part of the Canadian property puzzle. The CMHC’s ACLP has already invested nearly $22 billion, which has facilitated the construction of nearly 57,000 units,
Furthermore, CMHC notes that the processing time for ACLP applications decreased to an average of 60 days in 2024, while those who qualify for the MLI Select program can expect processing in approximately 44 days.
It’s not only the federal government that is interested in financing and supporting purpose-built housing. Cities like Toronto have programs such as the Rental Housing Supply Program, which provides funding of up to $260,000 for approved rental housing projects. As the building plan coalesces across all levels of government, expect to see even more funding and support options like these.
The key test for these kinds of programs, however, will always be how well every organization and level of government can engage with the people on the ground and build programs that work for them. While criteria must ensure that only bona fide projects are funded, they also need to be flexible enough to allow for widespread use and access.
Not Only Feasible but Necessary
If the big question about BTR developments is whether they are feasible for the Ontario market, the answer is a resounding yes. If the question is whether traditional builders and developers will embrace this kind of project, the answer is more of a maybe.
There’s no doubt that there are millions of Canadians who can’t afford to do anything but rent. There are hundreds of thousands more who are looking to downsize from larger, family homes into more manageable properties. There are also many families looking for single-family or duplex rentals that offer space for kids, pets and summer cookouts.
So the market is unequivocally there for purpose-built rental housing. But this type of development is also relatively new in Canada, and that means there’s also a little more risk and uncertainty. When companies build rental properties for a REIT or another kind of investor, there’s a clearly defined finish line. They know precisely how much they will make and when they will exit the project. However, when the project is a BTR development, there’s no exit date, and like anything new, that can be daunting for companies that are a little more risk-averse. Of course, with bigger risks comes bigger rewards in the form of long-term, semi-passive income.
There are no crystal balls in construction and real estate. But it certainly seems less risky to build with renting in mind than to bet on enough people being able to afford to buy—at least for the foreseeable future.
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