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Originally Posted by danishh
And some of those older towers are being redeveloped into luxury rentals too (like the Liv building)
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The new 'luxury' rentals will also age down the market. However, probably the biggest challenge for the rental market and the distribution of rents is that there is a massive gap in the construction of rentals between the mid 1970s and now. Many of the older buildings are reaching a point in life where they either will need an expensive up grade or they will just be replaced. Either option has the potential to affect affordability on the lower end of the spectrum.
Although, with the continued influx of REIT money into rentals, eventually competition should negatively impact rental rates across the board. That said, we're far away from that yet. At 70k rental units on the market in Ottawa, another 1200 or so will need to be brought into the rental pool just reach (today's) target vacancy before the competition even starts to heat up. And that assumes that no aging rentals leave the market and there is no increase in demand - both of which are unlikely.
But to address the truly affordable portion of the market, there's likely a need for some incentive if the private sector is going to be the provider. Either development charge exemption (municipal level), tax rebates (provincial or federal) would help.