Shrinking Floor Plans: Why New Canadian Apartments Are Getting Smaller
New residential construction in Canada is shifting toward significantly smaller unit sizes as developers prioritize cost-efficiency in response to rising construction expenses. Data from the Canada Mortgage and Housing Corporation (CMHC) indicates that the average square footage of new apartments has consistently declined, particularly in high-density urban markets like Laval and Montreal, as builders attempt to maintain project viability amid economic headwinds.
The Trend Toward Smaller Unit Sizes
The reduction in apartment size is an intentional strategy by developers to manage escalating construction costs. According to Francis Cortellino, a market analyst at the CMHC, the industry has reached a point where floor area is being aggressively optimized to keep units affordable for tenants while ensuring developer profitability.
In Laval, the shift is statistically significant. Data compiled by the CMHC shows that among two-bedroom apartments constructed between 2021 and 2023, 63% measured 1,000 square feet or less. In the most recent 18-month period, that figure surged to 90%. A similar trend is evident in one-bedroom units; only one in ten new builds now exceeds 700 square feet, a sharp drop from a few years ago when such units accounted for one-third of the market.
Why Vacancy Rates Are Rising in Premium Units
While unit sizes are shrinking, vacancy rates in major metropolitan areas like Montreal are creeping upward. The CMHC’s mid-year housing market report shows the city’s overall vacancy rate reached 2.9% in 2025, a level the agency characterizes as a balanced market. However, this average masks a specific trend: higher-priced units are the most likely to remain vacant.
The CMHC reports that the highest turnover rates and vacancy levels occur in the “fourth quartile” of the market—units renting for more than $1,500 per month. This suggests a disconnect between the price of new, smaller builds and the willingness or ability of tenants to relocate. Many renters are opting to remain in their current, potentially larger, and lower-cost housing rather than paying a premium for newer, smaller apartments.
Demographic Shifts and Market Demand
The cooling demand for new rentals is compounded by a shift in migration patterns. For the first time in nearly 30 years, Quebec has experienced a negative net migration, with more people leaving the province than arriving, as reported by the Institut de la statistique du Québec.
This demographic change directly impacts housing demand. As the population growth slows—Montreal saw a 0.4% demographic decline in early 2025—the formation of new renter households has stalled. With fewer new households entering the market, developers face increased competition to attract tenants, leading to the current surplus of high-end, smaller units that are failing to capture the interest of local renters.
Key Metrics at a Glance
| Metric | Observation |
| :— | :— |
| Laval 2-Bedroom Units (≤ 1000 sq ft) | Increased from 63% to 90% in 18 months |
| Montreal 2025 Vacancy Rate | 2.9% |
| Primary Driver of Size Reduction | Escalating construction costs |
| Quebec Net Migration (2025) | -7,126 |
Looking ahead, the sustainability of the current development model remains uncertain. If the trend of shrinking living spaces continues to outpace the growth of the tenant base, developers may be forced to reconsider their unit mix or pricing strategies to prevent further increases in vacancy rates within the premium segment.