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Market Report

Montreal Office Market Report

2Q 2023

Structural Shift in Work Model and Large Inventory
Expansion Keep Vacancy Elevated

Vacancy at a historic high. Over the course of the pandemic, Montreal’s office market showed few signs of recovery. Net absorption remained in negative territory, pushing the metro’s vacancy rate to 13.4 per cent as of the first quarter of 2023, the highest level since 1999. As the hybrid work model has been widely adopted, many businesses have consolidated their office footprints by moving into smaller and amenity-rich properties to lure employees back to the office. This has caused higher vacancy rates in Class B and C buildings, which sit around 15 per cent, while maintaining relatively healthier demand for Class A properties, where vacancy hovers around 12 per cent. In response to elevated vacancy, developers are converting under-utilized buildings into rental properties and hotels, a trend that is gaining popularity nationwide as a way to revitalize Canada’s urban cores. Lachance Immobilier and the Fonds immobilier de solidarité FTQ, for instance, have provided funding to transform a 10-storey office building into a 142-unit, upscale multifamily property on Nuns’ Island. 

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