CBRE’s Québec City team hosted a panel to review the Greater Québec City market with clients, CBRE market analysts and commercial real estate pros at the Quai du Cap Blanc. Panelists offered a breakdown by asset class while highlighting trends that persist across sectors.
Construction cost uncertainty has not halted residential development, as peak sales continue in the Québec City market. Industrial is stabilizing, but experts continue to see the potential for market shifts. Retail, following national trends, is seeing renewed confidence with essential service providers and grocery-anchored assets seeing the lowest vacancy rates.
Office performed throughout the pandemic with fewer vacancies in Québec City compared to Montréal and has maintained stability, though market experts looking ahead are slowly moving towards potential conversions as the housing crisis looms.
Macroeconomic outlook: Tariff uncertainty clouds recovery
“During Covid, optimism returned, but renewed tariff threats, especially under the Trump Administration, have slowed investor and tenant demand significantly,” said Louis Karam, senior vice president and managing director at CBRE Québec. “Should these threats persist, the impact could cost the Canadian economy up to 2.5%.”
Still, Canada ranks second among G7 nations for both population and employment growth. Karam urged the audience to look beyond negative headlines. “Québec City is less vulnerable to economic shocks, with the lowest welfare rate per capita in the country. That’s a testament to the city’s underlying strength.”
Office: Stability through conservative development
“Office fundamentals in Québec City remain stable, but we face some challenges,” said Philippe Lambert, vice president at CBRE Québec City. “No major new office developments have come online in recent years, leaving no excess square footage to absorb during the pandemic downturn.”
Public sector and financial institutions maintained office footprints throughout the pandemic, helping to stabilize the market. Lambert noted that Québec City is “ahead of the Canadian market,” with vacancy rates performing better than economists projected.
“We’re not over-supplied — we’re under-demolished,” he said, echoing Paul Morassutti, chair of CBRE Limited, who has observed that a lack of demolitions, rather than too much supply, is the bigger issue. Conversion of office space remains an open question, with time needed to gauge its ultimate impact.
Industrial: High costs, tight supply
Québec City’s industrial market is stabilizing, but new construction faces significant headwinds.
“Compared to other major Canadian cities, conditions are similar with the notable exception of Halifax, which saw growth throughout the pandemic,” Lambert said. “Construction costs match the national average but rental rates are lower, so new builds have stalled. In the last quarter, no new projects broke ground. With ongoing tariff concerns, don’t expect that to change soon.”
William Grenon, associate vice president at CBRE Québec City, added that “securing major tenants is key to facilitating sales in the industrial sector.” On redevelopment, he highlighted the Tour Frontenac office-to-residential conversion as a leading example.
“For office assets, the worst is likely behind us,” Grenon said. “By 2026, the market should normalize, and Class A space will remain in high demand.”
Industrial vacancy sits at 4.8%, well below the U.S. average of 8.3%. Grenon emphasized that “industrial real estate continues to drive Québec City’s economy.”
Retail: Resilient anchors, cautious consumers
The retail sector is adapting and consolidating. Jean-Philippe Daunais, vice chair at CBRE in Greater Montréal, noted, “There have been about 1,200 store openings and closings combined (in the last year).” Primaris has emerged as the dominant player, focusing on acquisitions in growth markets.
“The majority of sales are anchored by grocery stores, which remain a stable foundation,” Daunais said.
For 2025, the panel cautiously predicts that rental rates will continue to rise and low construction activity will maintain tight vacancy rates. Essential service tenants may increase investment, but tariff threats are weighing on consumer confidence and could hurt retail performance.
Multifamily: Strongest asset class, but challenges persist
Simon Bolduc, vice president of debt and structured finance at CBRE Capital Markets Québec, described the multifamily sector as “the most active in Québec City.” The mayor’s administration has accelerated development, approving larger projects, often with 250 or more units, compared to the previous norm of 35 to 50 units. Construction timelines are running 12 to 24 months, but financing remains difficult to secure.
Notably, the vacancy rate in Québec City is the lowest in Canada, at just 0.9%.
“We’re seeing more Montréal investors looking at Québec City, attracted by the room left for rent growth,” Bolduc said.
Immigration-driven demand has deepened the housing deficit, further tightening the market. “We’re coming from very low rent levels, so there’s still significant upside,” Bolduc said. He also pointed to Trudel’s strategy of acquiring retail assets in 2016 and now pivoting to redevelop them into multifamily sites, particularly those with underused parking lots.
“Opportunities still exist across all asset classes, despite the current momentum in multi-residential,” he said.
Overall positive outlook
Despite macroeconomic noise and sector-specific challenges, panelists agreed that Québec City’s fundamentals — strong employment, population growth and prudent development — position it for continued resilience.
The city’s real estate market, while not immune to national and global forces, continues to offer opportunities for investors and operators willing to adapt.
