- What Montréal’s industrial market demonstrated signs of improvement in Q3
- Why Vacancy rates rose at a lower rate and net rents declined less than in the prior quarter
- What next The firm expects 2025 to be a strong year for the market
Montréal’s industrial market is showing signs of stability, Colliers said in a Q3 report this week.
The vacancy rate continued to tick up, but it did so at a lower rate in Q3 than it did the prior quarter – 40 basis points versus 60 bps. Also, net rental rates dropped 14 cents/sq ft, less than the 40 cent/sq ft drop notched in each of the last three quarters.
Net absorption was negative-1.3m sq ft, an improvement from the negative-1.8m sq ft in Q2 and the 12-month rate of negative-4m sq ft.
Jean-Marc Dubé, executive vice president and group practice leader with Colliers in Montréal, said the first six months of 2024 were very difficult, with low demand from users.
“I think we will see another quarter of retraction, and we will bottom out in Q1 2025,” he told Green Street News. “We are expecting 2025 to be a strong year, and 2026 to result in a space crunch.”
Some submarkets – East Island, Midtown and St-Laurent – actually saw rents increase over last quarter. The North Shore submarket saw rents grow compared with a year ago.
The uptick in the vacancy rate largely stems from outsized negative absorption in Laval and Lachine, where sublease and direct lease space came onto the market.
Additionally, 700,000 sq ft of new supply was added in the Montérégie region, raising the vacancy rate more than 400 bps quarter over quarter.
On the transaction front, sales volume was down 2.8% year over year. The average price per sq ft was $209.
Article amended at 8:18 a.m. ET on Oct. 18, 2024, to reflect that Colliers sees Montréal’s industrial market bottoming out in Q1 2025.
