As a consequence of rapid unanticipated population growth, rents in Ottawa have been rising sharply since 2017 (apart from a brief break when international students returned home during the pandemic). Rents are now about 30% higher than the national average.
In this article, we’ll examine vacancy rate data for Ottawa’s investment real estate market. We’ll compare the vacancy rate here to other major markets; look at how the rate has changed overtime; and examine how the rate varies, within Ottawa, by neighbourhood, apartment size, and price.
Ottawa Rental Income Data at a Glance
Median 3-bedroom market rent: $2250
Median 2-Bedroom market rent: $2195
Median 1 Bedroom market rent: $1875
Median studio market rent: $1550
12 month rent change: + 5.1%
60 month rent change: +20.5%
Premium over national rents: 29%
Rental Income in Ottawa vs Other Cities
The median rental income in Ottawa is approximately 30% higher than the Canadian median.
Source: CMHC, johncastle.ca
Change in Rent in Ottawa
Median rents attracted by investment properties in Ottawa have increased 40% since 2013. That’s 3.2%/year.
In 2017, rents in Ottawa inflected from their historic growth rate. The accelerated growth persisted until the pandemic, when demand moderated as international students returned home in order to take advantage of remote study opportunities. With the return of international students to Canada in 2022, and the increased costs of ownership (owing to increased interest rates), the pandemic era vacancies were resorbed. Consequently, rents resumed their accelerated trajectory.
GRAPH
| Media | Average | |
| 2023 | 2100 | 2238 |
| 2022 | 2000 | 2132 |
| 2021 | 1900 | 2060 |
| 2020 | 1923 | 2077 |
| 2019 | 1950 | 2066 |
| 2018 | 1750 | 1924 |
| 2017 | 1600 | 1716 |
| 2016 | 1550 | 1666 |
| 2015 | 1545 | 1644 |
| 2014 | 1550 | 1629 |
| 2013 | 1500 | 1605 |
Source: OREB
Market Rents vs Paid Rents in Ottawa
In Ontario, landlords can increase the rent on a unit to market rent when the occupant of that unit vacates it. So long as the occupant remains in the unit, annual rent increases are limited to the lesser of the rate of inflation or 2.5%. Rents have increased faster than inflation. As a result, market rents are notably higher than the rents most tenants pay.
Source: OREB, CMHC
How much does location affect rents in Ottawa?
| Bachelor | One Bedroom | Two Bedroom | Three Bedroom | |
| Ottawa | $1,550 | $1,875 | $2,195 | $2,250 |
| Vanier | $1,350 | $1,700 | $2,040 | $2,100 |
| Carlington | $1,470 | $1,550 | $1,640 | $1,710 |
| Lowertown | $1,900 | $2,150 | $2,400 | $2,650 |
| Sandyhill | $1,825 | $1,850 | $2,200 | $2,850 |
| Westboro | $1,900 | $1,925 | $2,538 | $2,875 |
| Glebe | $2,200 | $2,250 | $2,750 | $3,115 |
It’s important to note that the differences between rents attracted by investments in different location aren’t entirely attributable to the different location of the investments. Units in premium locations typically come with premium finishes, which further increase rents. In other words, the median rent in a premium location, such as the Glebe, is substantially higher than the median rent in a discount location, such as Vanier, not only because the Glebe is a more desirable location, but also because the quality of apartments in the Glebe tend to be superior overall.
To illustrate, if we put together an apples to apples comparison by limiting the records we compare to 1 bedroom 1 bathroom condominium apartments built during or after 2015 that have garage parking and weren’t built by luxury builders, and if we eliminate all the records of rentals of units with exceptional features (extraordinary views and so on), we derive the following figures.
Ottawa: $2000
Vanier: $1950 (-$50)
Carlington $1850 (-$150)
Lowertown: $2050 (+$50)
Sandyhill: $2050 (+$50)
Glebe: $2150 (+$150)
Westboro: $2100 (+$100)
All things being equal, rents in most neighbourhoods are within $50 of the mean, with the very best and very worst neighbourhoods deviating by as much as $150.
Predicting Rents Attracted by Investment Properties in Ottawa
The following formula provides a crude estimate of the rents an investment property in Ottawa might attract.
$1600 + $150/bedroom +/- $150 for location +/- $200 for quality of finishes + $100-$250 for parking.
Alternatively, you can also make the same estimate by square foot of space.
$2.22/SF +/- $0.20/SF for location +/- $0.26/SF for quality of finishes + $100-250 for parking.
All these numbers assume the landlord pays heat, AC, and water and that the tenant pays for hydro.
This isn’t a universal formula. Most noticeably it falls short in its ability to predict rents of apartments that stand out from most others. For example, the formula doesn’t predict the rents attracted by ultra-luxury apartments, which often rent for over $4000/month. Nevertheless, in 95% of cases, you should find it works reasonably well.
