Ten years ago, a new home in London, Ontario, usually meant a detached house on the edge of the city. Today it is more likely to be a unit in a purpose-built rental building. A recent guest column in RENX makes the case that this shift is now mature enough to change the question developers should be asking. It's no longer whether the region needs rental housing. It's what kind of rental housing will hold up as the market moves from shortage to choice.[1]
How fast the tilt happened
The column describes London as one of Southwestern Ontario's most important multifamily testing grounds, with one of the strongest starts to residential construction in a decade, driven mostly by apartments.[1] Nearby markets show the same pattern. The column cites housing starts up 106% in Kitchener-Cambridge-Waterloo, 67% in Guelph and 45% in Windsor.[1]
The drivers are familiar: population growth, student demand from Western University and Fanshawe College, ownership costs that push households toward renting, and a long-standing lack of modern rental stock.
The market has already shifted
The same column notes that London vacancy is approaching 4% to 5%, up from 1% to 2% about two years ago, and that landlords are using leasing incentives to absorb new buildings.[1] CMHC's most recent annual survey, from fall 2025, put London's purpose-built vacancy rate at 4.0% and Kitchener-Cambridge-Waterloo's at 4.1%, both above the national average of 3.1%.[2]
Those aren't crisis numbers. They describe a market where tenants have options, and that changes what wins. In a shortage, almost any well-located new unit leases. In a market with 4% to 5% vacancy, the buildings that lease fastest are the ones that fit a specific group of renters.
Three product types that are working
The column highlights several formats that are leasing well, sometimes at rents above London and Kitchener averages:[1]
- Smaller wood-frame rental buildings in towns of 10,000 to 20,000 people. These communities often have little modern rental stock, so a new building faces less direct competition.
- Stacked townhouse rentals. These offer three- and four-bedroom homes in suburban locations near schools, aimed at families priced out of ownership or households who plan to rent long-term.
- Single-floor, accessible rentals for seniors in smaller markets. Practical features such as pull-in garages, wider doorways and secure layouts appeal to older renters who want to downsize without moving to a city.
None of these are glamorous. But each one is aimed at a group the one-bedroom-heavy apartment tower doesn't serve well.
Shorter timelines, lower risk
There is also a risk argument for the lower-rise formats. A 50- to 100-unit stacked townhouse project can be built and leased on a much shorter timeline than a 20-storey tower, which needs years of construction and a longer lease-up.[1] Shorter timelines mean less exposure to interest-rate changes, construction cost swings and shifts in local demand between approval and occupancy.
The column points to Activa's Trussler West, a stacked-townhome rental community in Kitchener financed by First National for construction and take-out, which is now complete and fully leased. It describes the project as an example of a single-family builder adapting to mid-density rental as the condo and detached markets softened.[1]
Land cost is an advantage, not a guarantee
London has historically had cheaper land than the GTA, and that remains one of its main draws for rental developers. The column warns against treating it as automatic. The numbers vary widely by site, zoning, servicing, density and timing, and the land price has to leave room for realistic rents, absorption and financing costs.[1]
That means local detail matters more: school catchments, actual transit service, and the reputation of a neighbourhood among renters. A site can look good on a map and still lease slowly if it misses on those.
What this means for the region
Southwestern Ontario's first rental wave proved that purpose-built rental could be built again at scale outside the GTA. The second wave will be judged by different measures:
- Fit. Unit mix and location matched to identifiable renters, not copied from downtown towers.
- Speed. Formats that can be built and leased within a single interest-rate environment.
- Basis. Land and construction costs that work at today's rents, with incentives treated as temporary.
The column's conclusion is that London doesn't need indiscriminate rental supply but housing matched to what local households want.[1] For developers and capital providers in the region, that is a more demanding test, and probably a healthier one.
Sources
[1] Tilt to multifamily in Southwestern Ontario is testing traditional residential models, RENX guest submission (Aug. 19, 2026): https://renx.ca/a-tilt-in-swos-residential-market-to-multifamily-is-testing-traditional-models
[2] Canada's vacancy rate rises amid historically high rental construction, CMHC 2025 Rental Market Report: https://www.cmhc-schl.gc.ca/media-newsroom/news-releases/2025/canadas-vacancy-rate-rises-amid-historically-high-rental-construction