Vacancy signs are rampant across Kelowna, B.C., as roughly 1,100 new units have been added to the rental pool so far in 2025, with up to 2,000 more more coming over the next year or so.
“Rental housing has been persistently one of the big problems in our community, really low vacancy rates, really high prices,” said James Moore, manager of the housing policy and programs department with the City of Kelowna.
“Finally, we’re starting to see a lot of new housing coming into play and that’s really starting to relieve a lot of pressure.”
The influx of rental units is the result of government incentives to boost what’s been a stagnant market, with builders focusing largely on the construction of condominiums in recent years.
For Troika Developments, those incentives have translated into 85 per cent of its current construction involving rentals.
“As financing became certainly more available and less expensive to deliver rental housing and the other incentives that were available, you know, that was a property type that made a lot of sense,” said Jeff Kennedy, Troika’s chief financial officer.
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The rental boost has pushed up Kelowna’s vacancy rate in a big way.
According to the city, the rate has gone from 1.7 per cent in June of 2024 to 4.5 per cent in June of this year, benefitting renters with lower rental costs.
It’s also turned the tide and now has landlords competing for tenants instead of renters competing against one another for housing.
The competitiveness has some landlords offering major incentives for renters looking for a place to live.
That includes incentives at Troika’s newest purpose-built rental building called ‘285 Dougal’ that was completed two weeks ago.
“We’re offering up to two months of free rent. We’re offering move-in bonuses, you know, we’re offering incentives on parking. We’re offering incentives on internet,” said Kennedy.
They are the types of incentives that, according to experts, aren’t typically seen in cities like Kelowna.
“In markets with tight rental markets historically, such as Kelowna and especially in Vancouver, that’s a little bit rare,” said Micheal Mak, an economist with the Canadian Mortgage and Housing Corporation (CMHC).
“But across the country — you know, in markets in the Prairies, especially in Calgary, for example — that’s not exactly a new thing.”
The incentives, however, aren’t expected to be long-term as rental unit construction is expected to slow down over the next couple of years.
“We are expecting a slowdown over the next couple of years, as kind of broader economic conditions and interest rates and construction costs start to weigh on the construction of new housing,” Moore said. “But we really want to make sure that we continue to build new purpose built rental.
“If we stop now, the vacancy rate will go back down to an unhealthy level and we’ll start to see more price growth. And we don’t want to see that.”
It’s a sentiment echoed by Kennedy.
“We need to continue to push, continue to engage with policy makers on what does it look like to deliver an adequate amount of housing to keep that vacancy rate between three and five per cent,” Kennedy said, referring to that as a healthy range.
“I don’t think we should, as an industry, take our foot off the gas. There’s more work to be done.”
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