Vancouver Multi-Family Market Enters Correction: 24,000 New Units, Rent Growth Delayed to 2028

Vancouver Multi-Family Market Enters Correction: 24,000 New Units to Hit Market, Rent Growth Delayed to 2028

Vancouver’s rental market is undergoing a significant recalibration. A first-quarter 2026 report from Cushman & Wakefield shows that a surge in new rental supply is colliding with slower immigration and population growth, creating the conditions for a sustained correction in the multi-family sector.

Nearly 24,000 rental units are expected to be delivered over the next two years, a volume that will intensify leasing competition across the metro area.

Record construction completions in 2025 combined with high delivery volumes in 2026 are pushing down rent growth and creating a tenant-favourable market.

## Meaningful Rent Growth May Not Return Until 2028

Cushman & Wakefield warns that absorbing the existing inventory could take several years, with meaningful rent growth unlikely to resume until 2028.

The report notes that longer-term supply constraints could re-emerge at that point — if development activity slows significantly and immigration policy reverses course.

David Venance, Executive Vice-President at Cushman & Wakefield, told BIV:

“This is a cyclical normalization after an overheated period, it’s not a structural weakening.”

He said brand-new rental apartment buildings underwritten during the pandemic and completing now are more exposed to declining rents than mid-level or legacy assets built decades ago. Developers who secured financing based on high rent assumptions during the pandemic’s peak are facing the starkest disconnect between pro forma and actual market conditions.

## Investors Demand Higher Cap Rates

In this environment, investors are repricing risk. Venance noted that today’s rents may not hold next year, which is pushing investors to demand higher capitalization rates to compensate for uncertain future cash flows.

The cap rate — a key metric for measuring property performance — is widening, meaning investors require higher yields to justify purchases.

There is also rising loan-to-value pressure. Declining asset values are pushing some sellers toward near-100% LTV positions. Developers are increasingly using rent concessions and incentives to bolster rent rolls and support valuations during the leasing-up period.

“Demand hasn’t disappeared, it just hasn’t kept pace with supply,” Venance said.

## Government and First Nations Projects Driving Supply

Greg Ambrose, Vice-President at Colliers Canada, said government and First Nations projects like Sen̓áḵw are driving a significant share of current construction.

Sen̓áḵw is one of B.C.’s largest First Nation development projects. The first phase includes three buildings, with leasing now underway. The market is watching closely to see whether the project can achieve premium rents in today’s competitive environment.

Ambrose said the new Canada-B.C. partnership could offer a pathway to absorb some of the condo supply glut, though he questioned the livability of very small unit configurations being proposed.

## Nine Years of NDP Governance Weighing on Demand

Ambrose pointed to nine years of NDP government in B.C. as a drag on the economy and, by extension, on rental demand. His key data points:

Five credit-rating downgrades in the past five years, reflecting market concerns about provincial fiscal health.

A projected $13.3-billion deficit for 2026-27, which signals potential for further fiscal pressure.

BC’s population fell by over 41,000 in 2025, a direct hit to rental demand given that population decline is largely driven by reduced non-permanent resident inflows.

At the same time, Canada’s overall population has contracted due to fewer temporary foreign workers and international students. This trend is contributing to the repricing of rental apartment buildings across the province.

## A Buyer’s Market for Investors

For investors, the market has shifted. Ambrose said it’s now a buyer’s market in an asset class that has traditionally favoured sellers.

With housing starts down significantly, fewer new projects under construction could mean tighter supply in the near-to-mid term.

“I suspect 24 months from now, we could be surprised by how quickly the rental market may tighten up with reduced supply and potentially new government policy around population growth,” Ambrose said.

## Outside Metro Vancouver: Yield-Chasing Continues

Carey Buntain, Principal at Avison Young (Canada) Inc., said purchasers outside Metro Vancouver are chasing higher yields to compensate for greater risk from softer rents and lower immigration in secondary markets.

In addition to record new inventory, listings of apartment buildings are rising, giving investors more options and forcing sellers to compete on price.

## Private Investors Dominate, Institutional Buyers Wait

Demand is primarily driven by the private investor market. About 70% of transactions involve private, local investors — typically legacy apartment operators looking to expand portfolios when they see value.

Institutional buyers, by contrast, have been highly selective. Non-profit demand is also weakening due to tighter public funding constraints.

## Growth Suburbs: Langley and Coquitlam

Infrastructure investment, rapid transit expansion, and abundant land make suburbs like Langley and Coquitlam long-term growth areas. Greater Victoria and Nanaimo could benefit from net migration and strong lifestyle appeal.

## Practical Takeaways for Investors

Watch cap rate movements: Vancouver’s multi-family cap rates are widening, which may present a buying window for cash-rich investors. But carefully assess whether the rent decline trend has further to run.

Differentiate new from legacy: Newly developed rental apartments carry the highest risk — pandemic-era pro formas were built on rent assumptions that no longer reflect reality. Legacy buildings may prove more resilient.

2028 is the inflection point: If the next two to three years absorb excess supply and immigration policy eases, rent growth could resume. Positioning ahead of that turnaround could be worthwhile.

Higher yields, higher risk outside the core: Non-metro markets offer better yields but greater risk. Evaluate local population flows and employment conditions carefully.

As 24,000 new rental units approach the market, Vancouver’s multi-family sector is at an important inflection point. For renters, this generally means better choices and downward pressure on rents. For investors, it means careful due diligence on risk and return.

If you are considering multi-family investment in Vancouver, understanding the current market dynamics and future trajectory is critical. In our earlier analysis of Canada’s True Home Buying Costs, we covered how to calculate rental yields and evaluate investment properties, which can help inform your current assessment.