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Market Report

Montreal Industrial Market Report

4Q 2023

Artificial Intelligence Stoking Hot Demand;
Vacancy to Climb Amid Elevated Construction Activity

New supply providing more options for tenants. Montreal’s industrial vacancy rate was already low entering the pandemic, sitting at 2.1 per cent by the end of 2019. Strong demand over the course of the global health crisis pushed vacancy down further, and by the end of 2021, the rate reached 1.5 per cent. Since the onset of 2022, vacancy has been on an upward trajectory, due to elevated levels of new supply entering the market and a slowdown in leasing activity as a result of rising interest rates. Despite these near-term headwinds, Montreal’s industrial sector has remained resilient, as the metro’s vacancy rate has only returned to its 2019 level as of September. Additional vacancy pressure is expected for the remainder of the year amid a further moderation in demand. At the same time, greater space availability will provide some relief to tenants who struggled to find rentable spaces over the past few quarters. While metro vacancy is forecast to rise this year, rents are on track to hit a record level and see the highest annual growth rate among Canada’s major metros.

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