Montreal Office Market Report

Vacancy breaking previous records. Net absorption for office space in Montreal has remained in negative territory for four consecutive years, resulting in 4.3 million square feet, or 4.0 per cent of total inventory, being vacated from 2020 to early 2024. This weakening demand pushed the vacancy rate to an all-time high in the first quarter of this year, and year-to-date data indicates that this trend persists into mid-2024. As elevated interest rates continue to impact the economy, firms’ hiring activity is expected to decelerate for the remainder of the year. This may put further pressure on leasing demand, pushing the vacancy rate higher toward the end of 2024. In this high-vacancy environment, leases for recently occupied office space are typically of short duration, as tenants are still assessing their long-term needs for office space. This has prompted property owners to offer attractive incentives to retain current tenants.