Following three years of sub-1% vacancy rates and record-breaking absorption in Montréal’s industrial market, the sector is showing signs of normalization. With e-commerce driven demand cooling and development pipelines adjusting to new market realities, understanding the path forward is crucial for stakeholders.
Ryan Cymet is vice chair at CBRE with over 20 years of brokerage experience in the Greater Montréal Area, consistently ranking among CBRE Canada’s top industrial producers. Alessandro Migliara is research manager for Montréal and Québec City at CBRE.
The Montréal-based commercial real estate experts work with major industrial tenants and landlords across the region, providing strategic advisory services and market intelligence. Their insights come at a time when the market is recalibrating from its historic lows of 0.9% vacancy in 2021 to what market pros expect will be a more sustainable pace.
How do you see the limited new industrial supply pipeline affecting the GMA market through 2025-2026?
Migliara: There’s 2.4 m sq ft of available space predominantly in the build-to-suit category. We’ve seen a shift from the pandemic era to something more conservative with developers favouring build-to-suit. In Q4 2022, build-to-suit represented 2% of construction. Today, that figure stands at 62.1%. The majority of the speculative development in 2022 came from the Montérégie region. As this pipeline dries up to where it was historically, we won’t see as much negative absorption as we did in 2024. The people who bought land with the premise to go spec in 2026, they’ll have the opportunity to do so. The Monarch Specialties’ facility expansion in Laval — a mix of speculative and build-to-suit — is 400,000 sq ft, but I do see this number dwindling down.
Cymet: We anticipate builders Rosefellow, Montoni and Loracon will continue to build on spec but at a slower pace. Rosefellow’s always been a spec player, while Loracon plays in both categories: spec and build-to-suit. When we were at less than 1% vacancy, it was a no-brainer to build on spec.
“Quality 40-ft clear Class A doesn’t stay on [the] market long”
Ryan Cymet
Spec projects currently available have done relatively well, though you have to put aside Valleyfield business centre and Beauharnois industrial park, which will tally up and lease up. For context, Intelcom took Rosefellow’s project at 330 Saulnier, which was delivered vacant but by the time it came to us for reporting stats, it was already rented. Quality 40-ft clear Class A doesn’t stay on the market long. Laval is a great location, but other sectors can be trickier. Flight to quality is all the rage right now. We’re seeing clients run cubic cost analysis because instead of staying in 18-20 ft, they’re looking for 40 ft to run the math of how much they can fit into the cubic space.
Migliara: This is predominantly happening in the 25,000-75,000 sq ft range. Pricing also reflects it, with a pretty big delta between the two. Montoni secured multiple deals in Saint-Bruno, which shows the flight to quality and consolidation tactic: most tenants that came there moved from 20-22 ft clear buildings into these 40 clear developments.
With availability rates climbing since the 2021 record-low of 0.9%, which submarkets are showing resilience?
Cymet: We’re seeing it in the bay size where mid-bay is performing quite well with minimum 24-ft ceilings. Flight to quality exists in mid-bay as well — in mid-bay and small bay, that’s where the flow is happening. Montérégie is slow on absorption and vacancy rates are high, which is really a consequence of location more than anything.
“We’re taking a cautiously pessimistic lens for Q2”
Alessandro Migliara
Migliara: Laval is seeing increased vacancy, and while the forecast shows it did well this quarter with absorption over 850,000 sq ft, looking towards the rest of the year, we expect Laval to see its vacancy run up. This submarket can potentially reach the 10% vacancy range as significant large-bay spaces are expected to enter the market by Q3. We’re taking a cautiously pessimistic lens for Q2 and Q3 to see how Amazon Canada’s departure and tariffs will unfold.
How are clients adapting their strategies in response to decreased large bay absorption?
Cymet: Tenants are on the sidelines because of uncertainty with tariffs. Landlords are trying to be more creative in deal structure with free rent, tenant inducements and simpler, streamlined leases while reducing operating costs. They’re trying to sharpen pencils and lower face rates. There are tons of large-bay spaces available so everything is on the table. Tenants are acting opportunistically because we haven’t seen this type of environment for five years, and landlords are more reasonable and open to deal structure.
Which property types are maintaining the strongest rental rates, and why?
Migliara: Mid-bay with high ceilings is holding its own in terms of rates. It’s not just property type but property type in tandem with clear height. No category is outperforming, but most resilient is mid-bay.
According to CBRE’s Q1 2025 report, in Q2 2021 there was homogenized pricing across clear heights, despite the increased demand. The reason is that “available now” meant more to clients than cubic space since vacancy was at 1.1%. Today’s dynamics signify how much this has shifted, as 26-ft-plus has an 11.8% premium. The gap is even wider if Montérégie is removed from the analysis, as most of the availability in that region is new supply. When removing Montérégie, the delta extends to 18.2%.
“Mid-bay with high ceilings is holding its own in terms of rates”
alessandro migliara
What is your projection for the remainder of 2025?
Migliara: With U.S. uncertainty, it’s difficult to speak to where we’ll be by the end of the year. We predict north of 6% availability by end-of-year, with a tenant market in big-bay and tenant-leaning in small and mid-bay. On the positive side, headwinds hopefully will dissipate with the Canadian election and tariff negotiations pending.
Cymet: I don’t think we saw the tip of the iceberg from tariffs. Decisions being made today can be stalled, but our forecast is confident of availability reaching north of 6% just from what we see in the pipeline.
Migliara: Before the political fiasco, we were seeing market improvements, albeit slow, but projections have changed and there’s a delay in decision-making.
Cymet: CBRE reported in Q4 that we’re moving towards a tenant market, and we’re seeing this in lease structures. For example, we’re seeing what we call a one-for-one deal structure, where for every year of a lease term, tenants are getting a month of free rent. So on a five-year lease, tenants are getting five months free.
