Gentrification, suburban decline, and the financialization of multi-family rental housing: The case of Toronto

While traditional forms of gentrification involved the conversion of rental units to owner-occupation, a new rental-tenure form of gentrification has emerged across the globe. This is driven by financialization, reduced tenant protections, and declining social-housing production, and is characterized by the replacement of poorer renters with higher-income tenants. Many poorer renters are in turn being displaced out of the inner city and into older suburban neighbourhoods where aging apartment towers had provided a last bastion of affordable accommodation, but which are now also targeted by large rental housing corporations. These dynamics are increasingly dominated by what we call 'financialized landlords,' including those owned or run by private equity funds, financial asset management corporations, and real estate investment trusts (REITS). Such firms float securities on domestic and international markets and use the proceeds to purchase older rental buildings charging affordable rents, and then apply a range of business strategies to extract value from the buildings, existing tenants and local neighbourhoods, and flow them to investors. This paper documents this process in Toronto, Canada's largest city and a city experiencing both sustained gentrification and advanced suburban restructuring. The financialization of rental housing in Toronto was enabled by neoliberal state policies to withdraw from social housing, deregulate rental protections, and decontrol rents - creating an affordability crisis for tenants and an opportunity for investors to profit. The paper maps out the history and locations of buildings that have been purchased by various financial investment vehicles, and analyzes the various strategies that such firms have adopted. We document two key strategies for extracting value, which we call squeezing, and gentrification-by-upgrading and show how these two strategies are conceptually and spatially linked in speeding up the restructuring of the social geography of the city.