Burlington, a city of 200,000 people at the western edge of the Greater Toronto Area on the Lake Ontario shoreline, has grown in popularity with condominium developers over the years.

But one hometown company that’s had success with condos in the past, Adi Development Group, has shifted more of its attention to the construction of purpose-built rental apartments.

“It’s been quite anemic when it comes to purpose-built for years,” Adi chief executive officer Tariq Adi told RENX. “Burlington has had one of the lowest vacancy rates for rentals for decades, really since we started the company.”

Adi previously saw his company as a conduit to the rental market via investors who would buy condo units and then rent them. But with the rise in interest rates and affordability issues, which have been accompanied by declining condo sales and new construction starts, Adi now has about 1,000 rental units in its pipeline that should begin construction this year.

“We believe in the market and we think it's a robust market,” Adi said. “It has been very resilient from a multifamily perspective.”

Different areas of Burlington appeal to renters

Adi has a recently approved development site near the Aldershot GO Transit station where he hopes to break ground for a large apartment building later this year.

“You're seeing more purpose-built rental product cropping up around transit stations and downtown Burlington is also a hot spot,” Adi observed. “It’s a phenomenal neighbourhood that has a ton of cachet, beautiful amenities, a beautiful waterfront, Spencer Smith Park and walking trails.”

Adi said about 15 units have been selling per month at the recently completed Nautique Lakefront Residences, a 26-storey, 254-unit condo at 374 Martha St. Occupancy began in May and prices have been adjusted downward to reflect the reality of the market. 

“Now is the time to buy if you are a buyer because, with interest rates coming down, we expect the inventory that’s standing to be absorbed quickly,” Adi said. He noted there is a three-and-a-half month pipeline of condo unit inventory in the Greater Toronto Area that he believes will be absorbed over the next nine to 12 months. 

Nautique has a high percentage of upscale professional renters paying premium rents because other rental options are in lower-quality buildings and less desirable locations in Burlington.

“We're seeing a flight to quality and there’s a ton of demand on the rental side,” Adi said.

Rental apartments for Realm and Stationwest

Adi is building Realm, a sold-out project featuring 401 condo units in two 16-storey buildings joined by a podium, plus 20 townhomes flanking a central parkette, in Burlington’s northernmost neighbourhood, Alton Village. 

The development’s next phase has been approved and will include a rental apartment. Adi said the project is “shovel-ready” and construction will begin later this year.

Adi completed the first phase of Stationwest, comprised of the six-storey, 172-unit The West condo and 233 townhomes, at 101 Masonry Court in Burlington in 2021. 

Stationwest’s recently approved next phase will feature three 30-storey-plus towers: two rental apartments and one condo. There will be approximately 1,000 units in total, about three-quarters of them purpose-built rental.

“We're just finalizing site plans and permits and whatnot,” Adi said. “We're looking for a Q3 start on that project.”

Adi launching new investment fund

Adi will launch a new investment fund later in this quarter to enable retail and institutional investors to enter the multifamily market. The growth fund will be focused on both developing and holding rental apartment buildings and acquiring existing apartment buildings and adding long-term value to them through repositioning.

The fund is targeting investors looking for 20 to 30 per cent annualized, compounded growth over the next 15 to 20 years, according to Adi. 

“It’s a great opportunity for investors that are trying to access those larger-scale multifamily deals and become an owner in those assets, but to be able to do it with a smaller registered investment where you’re not putting all your nest egg into multifamily development product,” Adi explained.

“We think it's a great opportunity for investors to create wealth. Everybody's looking for return today and the multifamily space, in our world, is the ideal place.” 

Future projects in the pipeline

There are a couple of other early-stage projects in the pipeline, but Adi said it’s too soon to provide details on them.

“We are going long in multifamily,” Adi said. “People always need a place to live.

“In the good times they're buying and in the bad times they're renting. So we're going to be there at both ends of that spectrum.”