Chatham-Kent and Ontario's Smaller Markets: What Rising Vacancy Means for the Thesis
Ontario's major centres are seeing vacancy rise. Smaller markets like Chatham-Kent, where CMHC coverage is thinner, require more nuanced analysis — and offer different dynamics.
When CMHC releases its annual Rental Market Report, the data covers census metropolitan areas and census agglomerations — cities above a certain population threshold. Markets like London, Hamilton, and Ottawa get detailed coverage. Smaller municipalities like Chatham-Kent, Ingersoll, and St. Thomas fall into a data gap.
This matters for investors in two ways. First, you cannot rely on CMHC data alone to understand these markets. Second, the dynamics driving vacancy higher in major centres do not necessarily apply with the same force in smaller ones.
Why Smaller Markets Differ
The vacancy increase in cities like London has been driven by two specific factors: a surge of new purpose-built supply and a decline in international student demand. Both factors have less impact on smaller markets.
Chatham-Kent does not have a major university. The international student demand that has declined sharply in London was never a major factor in Chatham-Kent's rental market to begin with. Similarly, the CMHC-funded construction programs that produced thousands of new units in London have had less activity in smaller municipalities where development economics are different.
The demand drivers in Chatham-Kent are more tied to local employment — manufacturing, agriculture, and increasingly, industrial investment linked to Ontario's growing EV supply chain — than to the student and immigration flows that have softened in larger centres.
What Investors Should Watch
Without CMHC data, investors in smaller Ontario markets need to do their own demand analysis. Key indicators include local employment trends, permit activity for new residential construction, asking rents for available units versus in-place rents, and the pace at which vacant units are being absorbed.
Direct conversations with local property managers and brokers remain the most reliable source of ground-level market intelligence in markets where formal data is limited.
The Investment Consideration
Smaller markets carry different risks than larger ones. They are more economically concentrated — a major employer departure or contraction has an outsized effect on rental demand. They also tend to have less liquidity: fewer buyers and sellers, longer transaction timelines, and a smaller pool of comparable sales data for appraisals.
In exchange for accepting these risks, investors have historically found better entry pricing and higher initial yields than in markets where institutional capital is more active. Colliers data shows that even in the GTA, multifamily cap rates consistently sit 1 to 2 percentage points below other major asset classes — in smaller markets, the yield premium can be even more pronounced.
The key is underwriting these markets at conservative assumptions — higher vacancy in stress scenarios, longer hold periods, and more modest rent growth projections — rather than extrapolating the conditions of the tightest years.