The COVID-19 pandemic has slowed the flow of people into North America’s fastest-growing city. It hasn’t stopped Toronto’s bullish developers from banking on a quick recovery.

Construction of rental apartments in Canada’s financial capital is near record levels despite a decline in immigration. In the second quarter 13,358 units were under construction in the Toronto region, close to a 40-year high, according to research from real estate consulting firm Urbanation Inc.

More than 3,000 new apartments were proposed in the past three months, lower than in the first quarter but a 45 per cent increase from the same period in 2019.

Toronto has enjoyed a decade-long building boom, fueled by an influx of immigrants and international students and growth in the finance and technology sectors. The exponential growth has made life difficult for apartment seekers: before the pandemic the vacancy rate in Toronto was just 1.1 per cent, Urabanation said.

That jumped to 1.8 per cent with international students leaving their downtown residences for their home countries and foreigners largely unable to enter Canada due to travel restrictions. Last year, Canada took in an average of 9,800 new permanent residents a month destined for Toronto. Those numbers plunged to 1,520 in April and 3,630 in May, according to Canadian government data.

But developers see no reason to slow down.

“The market will absolutely bounce back,” Jared Menkes, executive vice-president of high-rise residential at Menkes Developments, said. “I’m optimistic we will see it flatten out by fall and hopefully by the end of the year, new year, we will experience a recovery.”

Urbanation President Shaun Hildebrand said that although construction currently underway was planned years ago, new development proposals continue to pour in.

“Developers are looking at the market with a long-term horizon, and they realize that vacancy rates in Toronto have been structurally low for a long time and have been trending down really most of the past 20 years,” he said in an interview.

The 1.8 per cent figure is still relatively low, Hildebrand added. Manhattan had a rental vacancy rate of 3.7 per cent in June, according to a report from real estate company Douglas Elliman.

“There’s an understanding that over the longer term, immigration will rebound, the job market will recover and rental demand will ultimately continue to exceed the amount of new supply that’s being delivered,” Hildebrand said.