Low interest rates and an uncertain future for the condo market have combined to signal a resurgence in the rental unit construction market.
According to a report from real estate brokerage CBRE Group Inc., nearly 24,000 rental units were under construction across the country in the second half of last year. That’s up a full 52 per cent from the same period a year earlier.
And in Canada’s urban areas, the numbers are even more impressive. There are 21 rental apartment buildings under way in Toronto—up from 12 in 2013—and rental starts are double their five-year average in the country’s six biggest cities.
“Canada is at the early stages of a new apartment construction renaissance, really,” Derek Lobo, CEO of Rock Advisors Inc., told The Globe and Mail.
That spells good prospects for the country’s construction insurance brokers.
Carriers have already moved in to capitalize on that growth. Mark Parry, president of CORE Canada Insurance Solutions, told a symposium in February that the marketplace for mid-rise construction in Ontario is competitive and while such insurers are “not in the majority,” there are “enough out there to find a solution.”
However, he did warn that because the construction resurgence is in its infancy, carriers could see a lot of claims resulting from fires, injuries and deaths, which would drive up premiums for clients.
Brokers should keep an eye out for, and favor, carriers that offer “Best Practices” manuals with their policies—particularly for buildings including riskier materials like wood.
