Cap rates by city / Toronto
Toronto cap rates in 2026
Apartment buildings in Toronto traded at cap rates of 3.85% to 5.15% in CBRE's second-quarter 2026 survey, 2nd lowest of the 13 Canadian cities CBRE surveys. Here is what sits behind that number, what CMHC says about vacancy and rents, and what a building is worth at the local yield.
Apartment cap rate
3.85% to 5.15%
CBRE, Q2 2026, Class A to B
Vacancy rate
3%
CMHC, October 2025
Average two-bedroom rent
$2,034
CMHC purpose-built, October 2025
Rent growth, 2025
3.5%
CMHC, two-bedroom, year over year
Run a Toronto building through the calculator
Preloaded with a six-unit building at Toronto's CMHC average two-bedroom rent, the city's vacancy rate, and generic expense assumptions ($1,800 tax and $600 insurance per unit, 8% maintenance, 5% management, $900 utilities per unit). The price is set so the building lands at the middle of the local range. Replace every number with your own.
Property & income
What you would actually pay, not the assessment
All units combined
Operating expenses (annual)
Of gross rent; 5–10% is typical
0 if self-managed
Condo fees, snow, lawn care
Your market
What similar properties trade at in this market
Cap rate
4.50%
$103,216 NOI on $2,294,000
Cap rate deliberately ignores financing: it is NOI divided by price, so you can compare properties regardless of how each buyer pays. The implied value inverts it: the price at which this NOI would hit your target cap rate. Useful as a negotiating anchor.
What the same building is worth across the range
The six-unit example above produces $103,216 of net operating income a year. Value is NOI divided by cap rate, so a half-point move in the market's cap rate changes the price by more than most renovations would:
| Cap rate | Building value |
|---|---|
| 3.85%low end | $2,680,943 |
| 4.5%middle | $2,293,696 |
| 5.15%high end | $2,004,200 |
Per unit: $446,824 at the low end to $334,033 at the high end.
Why Toronto trades where it does
Toronto's range is wide because the market is wide: new Class A high-rise trades from 3.85% while older Class B product in the inner suburbs goes to 5.15%. Rent control splits the market too. Buildings first occupied after November 2018 can raise rents to market every year, so buyers pay more for them; older rent-controlled stock with long-tenured tenants carries a discount because the in-place rent is stuck below market.
Vacancy, rents and the 2026 outlook
CMHC recorded a 3% purpose-built vacancy rate in October 2025, the first time since the pandemic, with turnover rents falling and tenant mobility rising. Two-bedroom rents still grew 3.5% on the survey, but asking rents on new leases were flat to down through early 2026. A record condo completion pipeline is adding secondary rental supply on top of purpose-built completions. For an investor that means underwriting flat market rents for 2026 and treating the 2.1% guideline as the realistic growth rate on a rent-controlled building.
Rent rules in Ontario
Ontario's 2026 guideline is 2.1% for sitting tenants, with 90 days' written notice. Units first occupied after November 15, 2018 are exempt from the guideline. That rule sets how fast in-place income can grow, which is why two buildings with identical rent rolls can trade at different cap rates depending on how far below market their tenants sit.
Cap rate against your mortgage rate
At a 4.5% cap rate, a mortgage costing more than 4.5% makes leverage work against you: every borrowed dollar earns less than it costs until rents grow. In Toronto that is roughly a wash at 2026 mortgage rates, so cash flow depends on the down payment and how far below market the rents sit. Put the same building through our rental property calculator to see the cash flow with the Canadian semi-annual mortgage formula.
Frequently asked questions
What is the average cap rate in Toronto?+
Apartment buildings traded between 3.85% and 5.15% in CBRE's Q2 2026 survey, with new Class A high-rise at the low end and older Class B product at the high end. A Toronto condo rented out by an individual investor typically produces 2.5% to 3.5% after condo fees, tax and vacancy.
Does rent control affect Toronto cap rates?+
Yes, materially. A building first occupied after November 15, 2018 is exempt from Ontario's guideline and can reset rent to market each year, so buyers pay a premium for it. Rent-controlled buildings with long-tenured tenants earn below-market rent and trade at higher cap rates to compensate, with the upside only realized on turnover.
Is a Toronto condo rental cash-flow positive in 2026?+
Rarely with a normal down payment. At a 3% cap rate and mortgage rates in the mid-4s, the mortgage costs more than the net income the unit produces. With 35% or more down, or a pre-2010 unit bought well, it can break even. Run your actual numbers in our rental property calculator rather than trusting a listing's pro forma.
How Toronto compares
| City | Cap rate | Vacancy |
|---|---|---|
| Vancouver | 3.5% to 4.75% | 3.7% |
| Toronto | 3.85% to 5.15% | 3% |
| Montreal | 4.25% to 4.75% | 2.9% |
| Victoria | 4.25% to 5% | 3.3% |
| Winnipeg | 4.5% to 5.25% | 2.8% |
| London | 4% to 6% | 4% |
| Calgary | 4.5% to 5.5% | 5% |
| Halifax | 4.5% to 5.5% | 2.7% |
| Quebec City | 4.25% to 6% | 2.4% |
| Edmonton | 4.5% to 5.75% | 3.8% |
| Ottawa | 4.5% to 5.8% | 3% |
| Kitchener-Waterloo | 4.5% to 6% | 4.1% |
| Saskatoon | 5.25% to 6.75% | 3.3% |
Sources: CBRE Canadian Cap Rates & Investment Insights, Q2 2026 (cap rate summary, high-rise and low-rise Class A to B); CMHC Rental Market Report, October 2025 survey. Survey ranges describe stabilized, professionally managed buildings; individual sales print outside them. Measure your own deal with the cap rate calculator.