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Ian Smith and Amara Yamamoto must have walked by their future home 100 times before realizing it was even an option.

Throughout its construction, the Edmonton couple assumed the Station on Whyte, a four-storey residential in their artsy Strathcona neighbourhood, was, like most new buildings in Edmonton, a condo. And they would have been right, until last fall, when GWL Realty Advisors purchased the multifamily condo from its builder and converted it to apartments just before it hit the market.

“All of a sudden, we saw a rental sign go up on the building,” recalled Mr. Smith, who signed a lease in October after an exhaustive three-month search.

Edmonton's razor-thin vacancy rate, 1.7 per cent according to Canada Mortgage and Housing Corp., has made apartment hunting an exhaustive task and driven rental rates up faster than anywhere in the country, according to Colliers International’s Edmonton multifamily outlook report.

The rental market in Edmonton isn’t just stagnant: It’s also dated. Most of the stock was built in the 1960s and 1970s, leaving today’s renters to choose from underwhelming suites or a shadow market of basement dwellings and investment properties.

Ian Smith and Amara Yamamoto are paying $1,600 a month for a 650-square-foot one-bedroom suite. ‘You could see … that it was built as a condo,’ he said. All photos by Amber Bracken for The Globe and Mail

Recognizing a dearth of high-quality rentals, builders are jumping into apartment construction for the first time in five decades, adding 5,000 units over the next couple of years, according to CBRE Inc., a commercial real estate firm.

But the buildings can’t go up fast enough, leading to the conversion of hotels and condos into apartments.

“The property owners of the old stock will need to start doing work on their buildings because there’s been a pent-up demand for better quality rentals in this market,” said Paul Gemmel of Jones Lang LaSalle property services.

He recently brokered the sale of Alberta Place hotel, built as an apartment tower in 1973, to an institutional buyer who plans to convert it back to apartments as a long-term investment.

At $15.75-million, the investor spent $4-million more than was offered by a hotel group looking to add it to its portfolio, he said. A second downtown hotel, the Coast Edmonton House, also came full circle in 2012.

“People are sending in their applications, sight unseen, from Eastern Canada, saying there’s nothing to rent, we need one, we need one, we need one,” said Edmonton “Condo King” Robert McLeod.

Last week, the first 56 occupants moved into his newest property, Avalon Court, a 217-unit low-rise in the southeast suburbs aimed at young families and mature tenants. Like the Station on Whyte, Mr. McLeod initially thought he’d add it to his condo catalogue, but was swayed by demand and an institutional investor.

It’s Mr. McLeod’s first new-construction rental. A two-bedroom starts at $1,425, about $200 above the local average. “We’re doing one-and-a-half leases a day,” he said. “It's been a roaring success.”

Avalon Court boasts “condo-quality” on all its marketing materials – and many Edmonton renters are listening.

For $1,600 a month, Mr. Smith and Ms. Yamamoto get a 650-square-foot one-bedroom suite with granite counter tops, a dishwasher, heated parking and the option of house cleaning. “You could see the elements in the service that it was built as a condo,” he said.

But the young professionals wanted these perks without buying and without moving to the suburbs, where the vast majority of new apartments are cropping up. But that, too, is changing.

“It’s been a long time since we’ve seen rental high-rise developments in downtown Edmonton,” said Jandip Deol, Colliers’ associate vice-president of multifamily investment. He pointed to Hendrix, a slender, 29-storey glass tower atop row-houses opening in the core next year.

It’s the first apartment tower in Alberta for Vancouver-based Edgar Development, which has proposed another tower not far away. “We think that, given the choice between buying a condo or renting in one of our buildings for significantly less than the cost of ownership, people will choose to rent,” said vice-president Henry Edgar.

It’s a bold statement to make about Edmontonians, who historically have been homeowners. According to CMHC, 64.9 per cent of them own their home, compared with 48.5 per cent in Vancouver. (Calgary, which has the highest ownership rate, 72.4 per cent, also has the smallest rental universe – 34,000, not quite half of Edmonton’s count, according to Calgary Residential Renters Association.)

Many of the Edmonton dwellings are condos converted from apartments during the housing boom of the mid-2000s, which by some estimates shrunk the rental inventory by 8.3 per cent. Those were the days when Mr. McLeod could sell a whole floor in a day.

“Starting in 2005, I only focused on condo conversions,” he said. “I could source a building, renovate it and have it on the market in six months.” Although Metro Edmonton’s inbound migration kept accelerating – 42,000 people in 2014, the second highest in the nation – Mr. McLeod thinks those days are over.

“But as real estate gets more expensive and the down payments cost more, what we’re finding is the quality of the tenants renting are getting better,” he said. “They have better jobs. They have more income. And they have a higher expectations of the product now.”

What does this mean for owners of aged apartment buildings? “It’s probably going to force owners of the old product to renovate their suites,”Mr. Deol said, “or they’ll see a drop in rental rates.”

That will be music to the ears of many Edmontonians.